"Canuck57" wrote in message
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On 25/06/2010 4:48 PM, Frogwatch wrote:
Answer: Probably nobody. However, due to either poor planning or
circumstances beyond their control, it happens. It is in everybodies
best interest that we foster a morality that expects people to pay
their debts even though it is a hardship and even though we may lose
money on them. Is it unusual for people to default on a debt where
the collateral is worth less than the loan? Answer, NO. Consider how
many people default on car loans where the car is immediately worth
less than the loan as soon as it is driven off the lot but the repo
man coming after a persons car is very common. OK, but that is a not
much money, what about bigger loans? Boats are an example. For some
reason, people have no qualms about defaulting on boat loans and we
all know how much boats depreciate and repoing boats is a normal
business in Florida.
For some reason, we all think very hard about considering defaulting
on a home loan even when the home is underwater. In general, this is
good. However, does it make sense individually when many people have
no problems defaulting on other loans? We seem to have one morality
that applies to cars and boats and another that applies to homes.
In the past, this was never a problem because homes always appreciated
(in general). Now that the fundamentals of the economy have changed,
is it unreasonable for our attitudes toward default on home loans to
change? If people begin to default in larger numbers, lenders will no
longer do the absurd zero down loans and will demand at least 5% or
10% down like they used to.
We should not favor defaulting but when the lender who has been given
federal money at very low interest will not even refi at a lower rate,
what do they expect? They do not lose money by refinancing on the
principal and in cases of being severely underwater they could even
reset the loan at the rate they get from the feds until the principal
was down to the actual value and then raise it back.
Home owners have taken a huge hit economically whereas the large
lenders have done well because the feds gave them billions which the
lenders are not lending. Why should the poor economy fall only on the
homeowners? If the banks are taking taxpayer money at low rates and
then will not lend it. do they expect individuals to operate on a
higher moral plane?
I would never consider an adjustable rate mortgage but apparently it
is the norm in most of the world. Most of the world has economies far
less stable than ours so lenders demand to be able to adjust
mortgages.

I used an adjustible rate, as it was cheaper. But always had my eyes on
the future locking in over turbulant times and low rates. But I didn't
over buy, could afford the cash flow if it went up and most importantly
paid it down ASAP.

Mortgage rates in the US might be tax deductable on the interest but that
isn't free. In Canada, a no brainer as no tax credits are given for home
residence debt not directly involved in real income.
--
The bigger government gets, the more it tends to rule out common sense.

I don't think your single-wide trailer is a good example... MORON