🚀 go-pugleaf

On Mon, 11 Feb 2008 10:24:46 -0800 (PST), Foobar
<bamberbert@gmail.com> wrote:

>On Feb 7, 1:22 pm, PaPaPeng <PaPaP...@yahoo.com> wrote:
>> On Wed, 06 Feb 2008 19:29:18 -0600, Snowbound
>>
>> <loosebow...@ixnay.invalid> wrote:
>> >Just don't declare bankruptcy, like someone in real financial trouble
>> >might consider. If you declare bankruptcy, like some joker who lost
>> >everything to unforseen disaster or illness, you are putting yourself at
>> >the mercy of courts and banks (who make today's bankruptcy laws). If you
>> >just walk away from a massivemortgageYOU freely chose, you get off
>> >scott free, without any substantial penalty! After all, what
>> >asset-draining cancer or chronic workplace injury could POSSIBLY be
>> >worse than losing a home you couldn't afford in the first place?  
>>
>> This sounds good.  The most logical part is the lender who made that
>> unjustifiably risky loan to Mr. J Doe will lilkely disappear as a
>> corporate entity before they catch up with Mr. Doe who walked away
>> from his foreclosed house.  Whichever new company that takes over the
>> property will likely find it impossible or just too costly to clear
>> the paperwork necessary to track down John Doe the walker and make him
>> pay.  There will be a few millions of such foreclosures that willtrashany industrywide attempt to clean them up.
>
>Which is a good thing?


In normal situations there is enough of a paper trail to track you
down anywhere in the country.  So you have to declare bankruptcy (the
new rules I don't know about but its no longer easy to declare it) and
your credit rating goes to hell.  

But in this subprime crisis the banking system isn't sure who actually
holds the original mortgage, who holds the invertment to a bundle of
these original mortages, who is the third party (bank or financial
institution)  that had lent to the secondary party who held the
bundled mortages to the original mortgage.  And this can cascade into
the fourth or fifth tier.  If you can't follow the connections so far
neither can the banks and the financial institutions.   The original
one million dollar bundle of mortages may have generated another four
to five millions if not more in secondary market..

Now if you are already in deep doggydoo and cannot pay your mortage
anyway. You walk away.  In the good old days they will get you.  In
the current crisis your original mortgage dollar has enabled other
parties to generate a debt worth five or more dollars.  All these
people hold are IOUs and have no fixed asset (a house or property)
backing the debt.  They are going to worry how to get payment on their
IOUs pronto before some other IOU holder gets his hands on the money
first.  The guy who holds the bundle of actual mortages will have to
fight off three or more IOU holders who, as banks and financial
institutions, have considerable clout and legal resources.   Whatever,
the actual mortgagee is a small fry with a single house.  Its not
worth the legal fees or the effort to go after the more than a million
small frys yet.  Don't forget there are perfectly good mortgage loans
mixed up with lapsed subprime ones that they will have to sort out.
With the mess they are in they may just lose the paper trail.  I would
just walk away.  Nothing worse can happen.