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View Diary: A Manufacturing-centered economics, part one (40 comments)

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  •  So did they also get to write off (2+ / 0-)
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    psyched, salmo

    their losses?  Our loan was $240,000 when they foreclosed.  They sold the house 10 months later for $130,000.  If they had simply reduced our principle to match what the house was suddenly worth, we could have stayed.  Instead, they had lots of cleanup to do before they could turn it over, plus they didn't get any payments for months, so the only thing that makes sense is that they knew they could write it all off.  Multiply that by millions and it adds up.

    •  CA Nana - write offs are never worth (1+ / 0-)
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      as much as cash. No one ever takes a cash loss so they can book a write off. The maximum value of a write off is the effective tax rate. So even if the tax rate was as high as 40% a write off is only worth 40 cents on the dollar and a dollar of profit is worth 60 cents. They foreclosed on your home for other reasons.

      "let's talk about that"

      by VClib on Tue May 31, 2011 at 07:10:51 PM PDT

      [ Parent ]

      •  Insurance, (1+ / 0-)
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        they may have had a derivative that pays for their losses.

        But, more importantly, the people driving the housing bubble had already taken their profits and moved on by the time of the collapse.

        A ponzi scheme ends up "losing" a lot of money too -- but by the time it's due the cons have fled for the Caribbean.

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