Government plans intended to keep people out of foreclosure are too complex and are not being used.
Posted by
Mop (234 lbs) (aka rburriel)
Aug 13 '09, 16:45
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Of those who do go through the process, a staggering number end up in foreclosure after all. And the problem isn't only those who can't afford their houses, it's those who can't but who owe more than it's worth who are simply walking away, choosing to take the credit hit, and who know the dirty little secret that actually makes it less painful... banks are hesitant to pursue foreclosure since, so long as the house remains on the books as an asset, it's value is $x, while if they foreclose, it's actually only worth $x - $y, a loss. Banks are announcing staggering profits on the back of lies. They're still holding the bag on countless mortgages which aren't worth the paper they were written on. Either banks keep holding these mortgages for years to come and we see a catastrophic suburban collapse similar to the inner city collapse witnessed in the '60s (streets where every other house is abandoned means some very mean streets), or banks finally face the music and some "too big to fail" banks suddenly fail. It's bad news and no one's willing to admit it.
Mop
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