Posted on 07/20/2010 8:14:19 PM PDT by JimPrevor
The “idiot” is not the mortgage holders, it is Fannie Mae -- either for not pursuing its rights or buying mortgages that were non-recourse loans.
Contracts of all types typically include either explicitly or by the incorporation of law the penalty for ending the contract early. You might sign a lease and it might be a ten-year lease but give the tenant the right to cancel at any time by paying six months’ rent. A tenant who seizes that option to get out of its lease is not behaving unethically.
Every mortgage out there is either a recourse or non-recourse mortgage -- meaning that the lender either has or does not have the right to sue to recover any deficiency owed to the lender after the house is sold. If the deal was that it was a non-recourse loan, then turning over the keys to the bank is not immorally breaking a deal – it is part of the deal.
(Excerpt) Read more at weeklystandard.com ...
The government should get out of the lending business and make bad lending decisions the problems of the lenders and not the tax payers.
From past experience (in the housing meltdown of 92 - 94), I would never sign any sort of a mortgage without an escape clause.
The horse is already gone by the time that barn door gets closed...unless you are advocating changing the contracts made back in the day retroactively today, unilaterally, without the borrowers’ consent.
At least they’re starting to ask some questions ,, actually the problem is much more involved and FRE/FNM are getting stonewalled by the banks they bought the mortgages from on information requests...
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