We've Got A Rescue Plan

[Marshall]

From what I understand, a mortgage is secured by the value of the property, period. In the old days, banks required you to invest with them in the property (down payment). Therefore, if you default, they've got that cushion in the transaction when they go to sell it to recoup thier investment.

But during the bazaar times we just went through, there were no-money-down loans given (coerced, really) on people who never should have qualified. And on property that was over valued.

The banks truely screwed up. If you walk away from a mortgage, it affects you credit rating. But the bank can't sue you for damages or go after your other assets. Because, they agreed to take the real estate as their only collateral.

Duh

It's mind boggling how stupid the whole thing was.

Sadly, the homes were never worth what was granted in mortgage value. It was Monopoly Money that was driving up the price.

And there are no criminal or liabel issues from walking away from a debt that more than equals the value of the asset. None.

Businesses and people do it every day. it's called going bankrupt, or going out of business. Even those arangements have more risk than mortgage foreclosure.

What a mess.

I suppose it does make some sense to revalue mortgages down to the present market value. it's got to be better for the home owner. It's got to be better for the bank, cause they're never going to get more than market-value anyway for that asset they over paid for.

[Marshall]

There's another wierd aspect to this whole thing. these risky loans were split up into these securities that were sold. As i understand it more than one (3 ?, 4?) securities would each own a percentage of the questionable Loopy Sanchez mortgage.

So it's impossible to renegotiate, because there's no one single entity that owns that debt. That's what teh govenrment is going to have to do: make the securities companies re-subdivide all that bad paper so each questionable mortgage is held by one legal entity. THEN you can sit down an negotiate a deal (or resll the property). Right now there's no way possible to make that happen.

What a friggin mess. I want to shoot somebody.

[jdd]

And I think that a mortgage-holder's day in court allows that they will be able to face the holder of their paper--and since it have been slice, diced and subdivided so much and so many times, nobody is now sure of who really owns what small fraction of anybody's mortgage.

[Cosmic Wonder]

I have decided to put all my extra money into blueberry pancakes.

You know the real bummer about this whole thing? On my bus route, I drive through a neighborhood in Beaverton called Hartung Farms. It is a really nice place, large architectural homes on lots of land, horse stables, just gorgeous.

It occurs to me that a couple of years back we could have bought there. Of course we could never have afforded it, but we could have lived there for a few years before the bottom fell out. Missed opportunities.

Mike