Rynar wrote:
You do not have the right to a profit on your investments. You make a strong argument for the reimplication of debtors prison. And no, it isn't about the strength in numbers. It is about a business turning a profit, and banks are businesses. Loans are offered (or had been) based on ones ability to repay. If someone has demonstrated not only an inability to repay, but also an unwillingness, I wouldn't loan them a nickle. Banks won't either, if they are smart, unless legislatively forced, at which point a system has ben erected which enshrines perverse incentive and moral hazzard as a central pillar, and puts the tax payer on the hook in perpetuity. Your system is unworkable.
My "system" is the one that exists, I'm not going to blame people for taking full advantage of what is offered to them. Do you want to put people in prison for, say,
divorce too? They did promise "till death do us part," after all.
Expecting the family to pay off their $500k mortgage in the current environment is just absurd. The foreclosure only stays on your credit report for 7 years! Even if we assume that the foreclosure completely destroys your credit, which it doesn't, it would STILL be worth it. Given the interest rate on typical mortgages in this position, you're basically writing yourself a check for $50,000 every year for the next 15 years with your strategic default. I think that's worth 7 years of not being able to get any kind of loan. Hell, you'll probably get to live in the home for at least another year payment-free while the foreclosure process proceeds, and that's assuming the bank even bothers to foreclose on you at all. Some people have managed to just stop paying with no repercussions because the bank has so much unsold inventory it doesn't see the point of paying a bunch of lawyer/court costs just to stack up more of it. At least by letting you squat there they keep the property maintained and protected from things like metal thieves that love to strip all the copper and aluminum from empty foreclosed properties.
So yes, a family in this position would have to be utter idiots not to default. Sure it's unethical, but this is business, being "moral" just makes you a loser. You think the bank was being ethical when they sold them that mortgage in the first place? They expected housing prices to keep going up, so they could foreclose on them after 10% of the loan term and reap both the interest payments AND the appreciation.
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No, the real problem is vote buying power mongers.
Politicians are vote buying power mongers by default. When your existence as a politician depends on having the most votes, anyone who is not won't be in politics for long.