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View Diary: Closely-Watched Court Decision Breaks Bad for Wall St. Has A Day of Reckoning Arrived? (154 comments)

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  •  Fish for selling -- that's different. (5+ / 0-)
    Recommended by:
    cotterperson, Sychotic1, BYw, Lujane, DocGonzo

    If I offered to sell you a widdget for $100 payble in a year by representing to you that the market price would double in that year, and 5 years of widget market history corroborates this, why wouldn't you take the deal?  It doesn't matter if you have a job.  You can't lose.  And you have the use of a widget for a year.  I find it very hard to make a case against buyers based on their knowlege that they "can't afford" it.  The argument that the buyer is somehow "responsible" for the widget market collapse woud be utter silliness.  

    Oh, and add to the facts that your state law limits the lender's remedy on default to repossession of the widget.

    A right answer to the wrong question is a wrong answer.

    by legalarray on Wed Feb 06, 2013 at 10:44:01 AM PST

    [ Parent ]

    •  Who Didn't Try to Sell? (0+ / 0-)

      I agree with you, but to a point. Lots of people who held mortgages they truly couldn't afford didn't sell when the market showed sustained signs it wasn't going to "double", but was decreasing. Indeed there was something over a year, from late 2006 through late 2008, that the market decreased while ARM interest rates increased on schedule. While people who bought an interest they couldn't afford on the assumption they'd sell soon enough for a profit that would cover the costs just held on. People held on to multiple investment properties while the market pushed them further under water, but never sold.

      If you buy on the premise the appreciation will cover the cost, then you have a year to see it isn't, but don't at least cut your losses, then that's your fault.

      Yes, more people selling when the bubble popped would have accelerated the market depreciation. But it was an option that plenty of people didn't take. I bought my own house in 2009 after a 2008 foreclosure. I know several people who kept properties rather than sell them, clinging to the dream of a market increase that was proven wrong by 2007-2012. They should have taken what they could get, and paid their other debts with any proceeds (reaping a return equal to the interest they were stopping). But they didn't.

      What I describe wasn't necessarily an option for some people. Some markets left properties unpurchased even at fire sale prices for more than a year. But as I shopped for homes 2008-2009, and continue to monitor the market both locally and elsewhere in the US, I saw lots of people insisting on a market that didn't exist, without accepting a lower payment from the real one that was at least higher than what they'd get in a few months. I blame them for that, not the lender who got them into it. They're the ones who didn't use their chances, however diminished, to get out.

      "When the going gets weird, the weird turn pro." - HST

      by DocGonzo on Thu Feb 07, 2013 at 05:57:27 AM PST

      [ Parent ]

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