Mortgages Still the Problem

Housing Speculators Already Bailed Out

I'm not a mortgage guy. I have never bothered to read any of my own and I only know that I better make payments every month or I lose my house. In business I just trade Treasuries, not even corporates, so I have no erectile malfunction in this sex story. However I do know a little bit. First, there is so much speculative mortgage activity that we aren't going to know the real depths of this so-called "credit problem" til the 28th of Never. Bush's statement (Oh my God. Not a bailout) covering 80,000 home owners is like putting the proverbial fig leaf over a steam engine. Nobody knows how many million speculators have already been bailed out by just "walking away" and leaving the lenders holding the bag (house). Walking away is made possible by the system, one which forbids the collection of the loan by any means other than repossessing the house. This is because a Depression battered Congress passed a law that makes all housing loans "non recourse," which means they have no recourse but grab your house, and only your house, if you can't make the payments. They can't even grab the contents. So these spec homes are still hanging over the market and must be washed away somehow. The question is how many solvent buyers are left who can purchase them for actual living space?


Xiaoding said...

Two notes: If you have HELOC'ed your house, that is a good old recourse loan, sucker!! Also, the bank issues a 1099 for the amount you owe on the mortgage...pay taxes on that 600 grand mansion, sucker!

We truly need to differentiate between actual, retarded, home owners, and speculators. Often, they are the same anyways. We should make them all eat a bullet., bamkers too.

Anonymous said...

HELOC is not a mortgage, it is a risky home equity line of credit which amounts to a second taken as a first. You only get ten years to pay it back so you have to re-fi a second time. interest is calculated daily so that you are in a super ARM; there are no adjustment rate caps and is actually a loan at high interest. And yes, this deal is a recourse loan. Nobody I know has ever had to take a HELOC once they learn what it is. 1099 on an investment property that goes bust? Give me a break. Value at time of re-po can be a lot less than when purchased and so the "investor" can take a loss as well as be assessed for a gain. No matter how you cut it, the speculator has used taxpayer money to finance a speculation and "walking" from a home mortgage is a time honored (dishonored) means of eliminating debt.