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TMFDanDzombak (84.31)

Roger Lowenstein: Walk Away From Your Mortgage!

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January 07, 2010 – Comments (4) | RELATED TICKERS: SPY , BRK-B , BZH

In an article today in the NYT Magazine, Roger Lowenstein calls for people to walk away from their mortgages.

http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html?src=tptw

Enjoy,

Dan Dzombak

Dan Dzombak

4 Comments – Post Your Own

#1) On January 07, 2010 at 3:25 PM, PeteysTired (< 20) wrote:

I had a friend and her husband just walk from their 2 homes purchase in 03 and 06.  They are now renting and saving money like crazy. 

I wonder when defaults will stop.  Does every home purchase from 1995ish need to default, to find the bottom?  I don't know.

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#2) On January 07, 2010 at 4:22 PM, leohaas (31.85) wrote:

Skin in the game.

That's what it is all about.

A home owner with no equity has none, so nothing will keep him/her from walking. Lesson for the banks: require 20% down.

A bank that routinely securitizes loans has none: shortly after the loan closes, the loan is sold. So why do DD, or require 20% down?

Bottom line: put limits on banks' ability to securitize. Require them to keep a 30-year mortgage for at least 10 years on their books, a 15-year mortgage for at least 5 years. Bingo: skin in the game. Problem solved.

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#3) On January 07, 2010 at 4:58 PM, ocsurf (< 20) wrote:

Great read!

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#4) On January 07, 2010 at 5:09 PM, FleaBagger (29.21) wrote:

Dan Dzombak: so nice, you say it twice. (Sorry, I just had to say that.)

leohaas - Bottom line: put limits on banks' ability to securitize. Require them to keep a 30-year mortgage for at least 10 years on their books, a 15-year mortgage for at least 5 years. Bingo: skin in the game. Problem solved.

Or you could just not bail out companies and individuals. That way people would learn to do DD in a hurry. So basically, not my skin in anybody else's game.

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