Here’s the latest “scheme” around here...sorry I can’t call it a plan (I’m old school, i.e. pay your mortgage if you can.)
Quit paying your mortgage (even though they can afford it, they say it’s a bad investment...so whoever promised that they wouldn’t lose money and if they did then just walk away), save up all those mortgage and tax payments until the bank kicks you out (usually about 2 years) and then just buy a house for cash with the money you’ve saved because that’s how low prices have gotten around here. Only problem is, the folks who choose to honor their contract and stay in their houses are losing too because this type of behavior is driving prices even lower.
It’s only a ‘scheme’ when a regular ‘Joe’ does it, or its being a ‘Dead Beat’ as several fellow Freepers call it, but as Lazlo pointed out it’s called “Deleveraging” when the ‘To Big to Fail’ do it. I was wondering if possible could you explain the difference?
This is true. But we must go back to the original sin if we want to find the true culprit. The culprit is not the homeowners making a business decision to walk from a bad investment. Let's start with S&P and Moodys, the ratings companies that said the consolidated mortgage packages sold to investors were good. They were getting a commission off the sales. They were motivated to rate them as good so they could put money in their pocket. The homeowners are just making sure their money stays in their pocket.