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Politics : Liberalism: Do You Agree We've Had Enough of It? -- Ignore unavailable to you. Want to Upgrade?

To: MJ who wrote (71316)	8/31/2009 10:54:23 AM
From: SGJ	3 Recommendations Read Replies (1) \| Respond to of 224748

Seems to me that a mortgage and home equity loans are contracts that should go both ways. Typical mortgage contracts are not written that way. Of course, they could be. I think there would be fewer home mortgages done in that case, and those that would would be at much higher interest rates. When you borrow to buy a house you do so ostensibly to live in it, not speculate on its value. By wanting protection against market swings in price, you are then including another factor to insure against. This would be a residential RE market price swap. This is going to add to the price of financing the home, putting it out of reach for many I'm afraid. lenders devalued their homes and cut the home equity loans in half....If a mortgage banker devalues the home by 50% Bankers are not responsible for the market value of RE. then the homeowner should have their debt reduced by a commensurate percentage. The bank has no responsibility for the market price of a home. The interest rate does not compensate for that risk. Insurance could cover it at additional cost. See above. In other words you can't devalue part of the economic system and not also revalue the amount of the loans. There is a small kernel of truth in this statement. About 25 years ago, I faced as a banker a similar RE meltdown situation in the Texas/OK/LA markets. Bankers back then were much closer to their customers. Deals were cut to salvage what we could of loans for people who were under water. Most of the deals were better for the bank and the borrower than a foreclosure. Part of the problem to accomplish this today is loan syndication. Its more difficult to get an originator/borrower connection to negotiate a deal. Ultimately this may be what will happen with the National Debt; however, as long as our debt is secured by other nations it seems likely that that would not happen. Non sequitur