Posted by
Andrews on Wednesday, May 27, 2009 9:46:09 PM
Another shocking
WSJ opinion piece, one on which I will write more later. It appears, despite all expectation, when people can't afford their mortgage, refinancing them into another unaffordable mortgage does not prevent them from defaulting. Shocking!
Actually, one topic they failed to mention was the risk many banks took in 100%, or nearly 100%, financing. With homes over-priced, people who put little or nothing down have no reason not to simply walk away from a bad mortgage. After all, the house they lose in worth much less than they owe. So they lose little by making the bank eat the loss in a foreclosure. Which makes all the government dreams of solving this problem through refinance a pipedream.
Well, I wrote about this before in many posts, but I think it is significant enough, and such a major impediment to the Obama administration's plans, that I should write a new summary of all my thoughts on the matter. So, rather than my usual lengthy list of links to past articles, I will hold off until I write that summary. For now I will just say I am completely shocked that refinancing bad loans produces nothing but new bad loans. Utterly shocking!