Recourse Bob

Why Felix Should Walk Away

Good luck getting a mortgage loan in the future if you walk away from an underwater home with a larger loan. You will now become a renter. We need more renters for all of these California homes that are being dumped on lenders. After you are a renter for a while, you might just scratch you head and say: "Should I have done that?"


On Mar 05 03:19 PM Chris B wrote:

> Society invented contracts and laws so that the question of whether
> to pay or not could be considered a legal issue, rather than an unsolvable
> moral issue. Your obligation under your contract is exactly what
> the contract says and exactly what the law requires. You can walk
> away from the collateral under the terms of the contract and state
> law, just as the person who sold you the house for $600k is able
> to walk away with that cash and you have no recourse to him/her now
> that the house is worth less. Those are the rules.
>
> Does this have a negative impact on society or innocent bystanders?
> Yes and no. Neighbors' houses decline in value, which equals the
> better deal that new buyers can get, which nets to zero cost/benefit.
> Property tax collections go down, the effect of which is good or
> bad depending on your ideology. Your lender loses hundreds of thousands
> of dollars processing the foreclosure but the lender's money has
> flowed to the person who sold you the house - another net effect
> of zero. Expenses are incurred in the foreclosure process, moving,
> selling, storage, redecorating, etc. but one man's cost is another's
> revenue - another net effect of zero.
>
> If you worry about these kinds of moral dilemmas, you might as well
> agonize about which car company you want to keep in business when
> you buy a car.

Rick Santelli Speaks for the Silent Majority

If, rather than borrowing the money from our grandchildren to rescue those who cannot pay their mortgages, the U.S. government immediately raised all our taxes to pay the tab, you would see more than a Chicago tea party. There would be blood in the streets and in Washington DC. But we let the government get away with this bailout because we are not the ones who will have to pay the price. It will be our grandkids.

Bad Bank and Draft Bill Spook CDS Traders and Wall Street

Counterparty investors who engage in CDS without having equity to back them up should have their contracts voided. Even in Las Vegas, you don't play if you don't have chips on the table.

Investment Advisory Business Will Suffer Because of Madoff

This was an unregistered fund. As best I can tell, there were no independent accounting firms involved.

Refiners Finally Increase Margins

Don't forget that the decrease in the price of crude and refined products is due to demand destruction resulting from the economic downturn. Decreased demand results in excess capacity for refiners. Excess capacity results in greater competition among refiners which can keep their margins low, but certainly somewhat higher than the margins earned in the first half of 2008.

Two Fight Back - Cramer's Mad Money (9/11/08)

Cramer has never seen a government bailout that he didn't like. He'll let his kids and grandkids pay for those bailouts.

As far as his charitable trust investments, does anyone know how much money is invested in the trust. It may be only a small amount, but it gives him something to brag about.

Why would a supposedly great investor, as Cramer would have you believe his was, leave Wall Street and become a clown on CNBC? There must be a reason that he is no longer handling large investors' money. Something must have happened with his investing activities.

The Weekend American Capitalism Died

What ever happened to tar and feathers. That's how our country dealt with crooks in years gone by.

Forget the Moral Outrage: Just Restore the Mortgage Markets

Alan's comment: They also don't seem to mind that they are allowed to deduct mortgage interest (subsidized by renters) or to exempt capital gains from their taxable income when they sell their homes.

When you say "subsidized by renters," let us not forget that landlords who own rental property deduct mortgage interest, as well. And that deduction potentially benefits renters. So I don't see where renters are subsidizing homeowners.

Wells Fargo Sham Revealed

As a point of interest, I have thought that the banks may be maintaining their high dividend as a means to discourage short sellers. A short seller must pay the dividends of banks they short to the party to whom they borrowed the shares, even though the short seller does not receive the dividend from the bank. The payment of the dividend by the short seller must come out of their own pocket.

Interview with Jim Rogers, Part I: Bigger Financial Shocks Loom

I wonder how much Jim lost, investing in China entities, since he left the US. China's market is down more than the US.

Dollar's Up, Oil Is Down: But Why?

Kudlow and his guests say that Free Markets are the Best Path to Prosperity. Now he wants the US to intervene in the currency markets to pump up the US dollar. This guy doesn't know what a free market is.

Meredith Whitney and the Hierarchy of Payments

User 52095 - I am not blaming anyone. We just need to ensure that, when a buyer takes out a home loan and promises to repay it, the borrower cannot walk without paying a stiff price.

Citigroup Reports Loss on Credit Card Securitizations

Emerald - It is my understanding that in California the first mortgage is considered by law as non-recourse. This law needs to change.

Meredith Whitney and the Hierarchy of Payments

As I have posted elsewhere, anyone who turns in the keys to their home should be prohibited from obtaining another first mortgage for at least seven years. And first mortgages should all be with full recourse to the buyer/mortgagor and enforceable under federal law. These measures would put a stop to those who think they don't need to repay their home loan. Congress, do you hear me?

WaMu Borrower Purposely Defaults, Gets Foreclosed On, Sues

Anyone who turns in the keys should be prohibited from obtaining another first mortgage for at least seven years. And first mortgages should all be with full recourse to the buyer/mortgagor and enforceable under federal law. These measures would put a stop to those who think they don't need to repay their home loan. Congress, do you hear me?