"A Tsunami Of Voluntary Defaults"
America's house price time bomb
"Faced with seemingly never-ending falls in the value of their properties, some American home-owners are taking radical action; they are choosing to walk away from homes and their mortgages. (...)
In the city of Stockton - the foreclosure, or repossession, capital of the US for 2007 - estate agent Kevin Morgan sells repossessed houses on behalf of the banks that now own them.
According to him, walking away has become commonplace.
"I would say it's probably 70% of the volume of our foreclosures right now," he says.
"It's a business decision for their family that the smartest thing they can do is walk away from their home."
As a sign of the changing times, some 60% of borrowers do not even bother to contact their banks to attempt a renegotiation of their loan, Mr Moran explains.
"They stop paying and they stop talking," he says. "They just plain walk away.
"The losses for the financial system from people walking away could be of the order of one trillion dollars when the entire capital of the US banking system is only $1.3 trillion.
"You could have most of the US banking system wiped out, so this is a total disaster."
"Faced with seemingly never-ending falls in the value of their properties, some American home-owners are taking radical action; they are choosing to walk away from homes and their mortgages. (...)
In the city of Stockton - the foreclosure, or repossession, capital of the US for 2007 - estate agent Kevin Morgan sells repossessed houses on behalf of the banks that now own them.
According to him, walking away has become commonplace.
"I would say it's probably 70% of the volume of our foreclosures right now," he says.
"It's a business decision for their family that the smartest thing they can do is walk away from their home."
As a sign of the changing times, some 60% of borrowers do not even bother to contact their banks to attempt a renegotiation of their loan, Mr Moran explains.
"They stop paying and they stop talking," he says. "They just plain walk away.
"The losses for the financial system from people walking away could be of the order of one trillion dollars when the entire capital of the US banking system is only $1.3 trillion.
"You could have most of the US banking system wiped out, so this is a total disaster."
posted by nolocontendere at 7:04 PM
2 Comments:
I am still waiting to read, somewhere, the definitive account of what Great Depression 2 will be like. It would be useful to help prepare for it, since its now a foregone conclusion thats it going to happen.
I believe it's here already, mth.
The Greater Depression.
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