Replies (5)
it is state law, not bank policies that you are talking about here. Spain had a huge bubble, despite extremely tough deficiency laws and bankruptcy laws, their debts will follow them the rest of their lives. However, thy still had a bubble, and are still having a crash.
Ditto Japan.
Ditto Japan.
forgot to mention Florida... did recourse loans save Florida?
- SteadyState
- Contributions:873
Rob -
Thanks for the response. I am dismayed that cheap money without severe consequences for default is kindling imprudent behavior again. Perhaps debtors prision but even Dubai recently had a boom and bust. I suspect the answer is self-restraint on all parties involved including buyers, REAs, lenders, and the government but that assumes enough education and critical thinking to plan a prudent course of action. I see no hope - you are experienced in these matters is there some way to prevent another tax-payer funded rescue? (BTW - I sold in 2004 and every year I think prices will be compatible with rents then I can buy again. After 6 years I am basically throwing in the towel and may buy in China/Canada - the market is distorted here).
Thanks for the response. I am dismayed that cheap money without severe consequences for default is kindling imprudent behavior again. Perhaps debtors prision but even Dubai recently had a boom and bust. I suspect the answer is self-restraint on all parties involved including buyers, REAs, lenders, and the government but that assumes enough education and critical thinking to plan a prudent course of action. I see no hope - you are experienced in these matters is there some way to prevent another tax-payer funded rescue? (BTW - I sold in 2004 and every year I think prices will be compatible with rents then I can buy again. After 6 years I am basically throwing in the towel and may buy in China/Canada - the market is distorted here).
I would hesitate to buy in China/Canada. I lived in Shanghai, and was able to rent for < $400 a month a very nice 2/2 right above the metrorail, a condo that at that time (5 years ago) would have sold for nearly $100k. today it might be $300K. My ex shanghainese girlfriend helped me rent it, and the landlady was quite pissed that she rented it to a laowei (foreigner) so cheaply, so it will be very tough for non chinese to find out what real price/rent ratios are. But from all I can see, they are in the mother of all real estate bubbles, and will probably explode historically at some point.
60% of china's economy is building, at the height of our bubble, it was something like 20 or 25%. That kind of crash will be epic.
60% of china's economy is building, at the height of our bubble, it was something like 20 or 25%. That kind of crash will be epic.
- shasta_steve
- Contributions:448
Steady I don't think making all loans recourse will do much at all. It will maybe stop some of the fence sitters who might otherwise just stay but as was pointed out earlier Florida and Nevada are both recourse states and have as much problem as any others. To me the real culprits in this whole thing were the loan officers and mortgage companies who fudged the numbers so anyone could qualify for a loan. The banks sold most of the loans to investors who did not know they were buying worthless paper. The whole time it allowed way more houses to get built than would have otherwise in a normal market. Price were driven up beyond belief and in many places fell well below normal levels. We have places here in California that are selling for 7 or 8 times yearly rent.
Now the real victims of this whole thing are not the people who bought at the top of the bubble with 80/20 loans or very low downs but the people who legitimately thought they were doing the right thing and put 20% or more down. No one is talking about bailing them out.
Roberto I know what you are talking about in China. I spend quite a lot of time in Cambodia and own a fair amount of property too. Lots of money has been flooding in the last few years from Korea, China and during the bubble American Cambodians were mortgaging their houses to buy property. I watched houses that were selling for 20k suddenly sell for 100k or more. The problem is the rent was still about $100 a month. Prices have fallen recently but I would not say crashed. Really the only thing holding up prices is the expectation they will continue to rise. I keep pointing out what happend in Thailand but for the most part they do not want to listen.
Now the real victims of this whole thing are not the people who bought at the top of the bubble with 80/20 loans or very low downs but the people who legitimately thought they were doing the right thing and put 20% or more down. No one is talking about bailing them out.
Roberto I know what you are talking about in China. I spend quite a lot of time in Cambodia and own a fair amount of property too. Lots of money has been flooding in the last few years from Korea, China and during the bubble American Cambodians were mortgaging their houses to buy property. I watched houses that were selling for 20k suddenly sell for 100k or more. The problem is the rent was still about $100 a month. Prices have fallen recently but I would not say crashed. Really the only thing holding up prices is the expectation they will continue to rise. I keep pointing out what happend in Thailand but for the most part they do not want to listen.
An end to non recourse mortages
Stating a discriminatory preference in an advertisement for housing is illegal. If you think this content is discriminatory or otherwise inappropriate and feel it should be removed from Zillow, please let us know by completing the information above.
We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.