People vs The Banks

[UndercoverElephant]

...and that is not going to happen without people defaulting on their mortgages and losing their homes.

I agree with you if we're talking about tens of thousands per year (33,900 in 2012). But, I think, the game changes when it's hundreds of thousands or more. Then some mechanism will be put in place to allow folk to stay in their homes - even though they've defaulted on the loan.

I don't mind people being allowed to stay in their homes, but they cannot be allowed to remain as owners and house prices must not be artificially propped up in order to help these people.

I don't think it matters what the numbers are. The principle remains the same whatever.

The problem is that by helping these people - who made mistakes of their own choosing - to stay in their homes, you are further penalising the younger generation - who had nothing to do with the mistakes. This is not acceptable.

Here's an interesting chart:

What was it like in '91? Where did the 75,000 evicted households go?

Into rented accomodation, presumably.

[RenewableCandy]

Principle, yes, but looked at from HMG's point of view, what about the practicalities, of running a country in which several tens of thousands of families can't find a place to live at any cost (because of the sheer lack of rented places near any work)? If even a small proportion of these people turn to a life of crime simply to get by, it'll actually work out cheaper to just let them stay put.

[UndercoverElephant]

Principle, yes, but looked at from HMG's point of view, what about the practicalities, of running a country in which several tens of thousands of families can't find a place to live at any cost (because of the sheer lack of rented places near any work)?

That's a different problem, and what I'm proposing is part of the solution, because when you drive down property prices you also drive down rents.

Lots of other measures are needed, such as banning people from owning more than two homes. Who even needs two homes, let alone more? And anyone who already owns more than two houses can afford to take the hit of having to sell them and find something else to do with their money.

Then there's another problem of how low paid workers like nurses can afford to live near wealthy areas where the residents do actually want nurses around! I don't know what the solution is. Direct government intervention in those cases, problably.

If even a small proportion of these people turn to a life of crime simply to get by, it'll actually work out cheaper to just let them stay put.

Again, that's a different problem. We are going to have to deal with an ever-increasing tendency of desperate people being "driven" into criminal activity. This is going to have to be dealt with regardless of what happens to the housing situation.

And before any of the multiple homeowners round here complains...yes, I am quite intentionally trying to make it harder for you to keep hold of more than your fair share of this planet, and easier for those who currently have no share to be able to afford a bit. I'm suggesting it because I believe the gap between rich and poor in our society is obscene.

[vtsnowedin]

Great video and advice.

The US banks have been unlawfully evicting people from houses because they can't show that they have title to most of the houses they repossess. The loans have been sold on as dodgy financial instruments by the original mortgagors and the loan paperwork has not followed in most cases so the current mortgagor can't prove title. The US courts are colluding with the banks by giving warrants for repossession without proof of title.

Yes but they do have the title, just not the paperwork to prove it. They did loan the money and the money was not payed back so it is just a matter of straightening out the paper trail from original lender to the current holder of the loan...

I can see the logic there but left out from this explanation is that loans often get sold on to third parties for less than their theoretical value, sometimes they're bought for "cents on the dollar", the reduction in value representing the probability that they'll never be repaid. Under those circumstances, all a mortgagor (person who owes) can morally be said to owe the 3rd company, once they decide or become able to repay, is that fraction. And, getting back to the paper trail, if someone wants to go about making somebody else homeless (which is effectively what repossession of a house amounts to) you can't go around letting them do so without an audit trail of who owns what. To do so would amount, in the end, to allowing homes to be grabbed by force virtually at random.

No the borrower signed a contract stating how much he owed, principal plus interest. The purchaser of that contract has the right to collect the whole of the original contract. If he purchased it at a discount it was because the original amount was unlikely to be repaid in full if at all and the purchaser of those contracts was placing a bet on how many of those contracts would default. If you had to accept the discounted price there would be no point in buying such contracts.
As to the paper trail I don't know of any bank that wants to foreclose on a property. They lose between forty to sixty percent of the money lent and many of those loans have the property as the only security and they can't hit up the borrower for the balance. But proper procedures are important and must be adhered to. I know of at least one instance where they foreclosed on and evicted an owner that in fact had no mortgage on that property. Lets face it the housing collapse put the banks into a panic and rational thought became a rare commodity.

[RenewableCandy]

The purchaser of that contract has the right to collect the whole of the original contract.

In law, yes. I'm talking about what's morally right, though. Obviously under "normal" circumstances, when one borrows one is morally obliged to repay. However, in the event of the whole country's economy taking a massive hit, it is no use trying to proteect asset values (here I'm counting the mortgage as an "asset" for the bank or the 3rd party) if this results in some people being sent away with nothing. This is morally repugnant but even looked at without one's moral specs on, people who are sent away with nothing, are a menace to everybody else.

[Little John]

The thing to remember is that under our current fraudulent system of FRB, the borrower has not actually borrowed any real money because the bank has not actually lent any real money. The bank has, in fact, magicked credit into existence when the mortgagee signs on the dotted line.

Since the money never actually existed in the first place, it is perfectly possible to argue that the mortgagee cannot owe something that does not exist.

[Totally_Baffled]

The thing to remember is that under our current fraudulent system of FRB, the borrower has not actually borrowed any real money because the bank has not actually lent any real money. The bank has, in fact, magicked credit into existence when the mortgagee signs on the dotted line.

Since the money never actually existed in the first place, it is perfectly possible to argue that the mortgagee cannot owe something that does not exist.

And on top of this, if the non existant money is defaulted upon by the borrower, the bank gets more magic money to bail them out.

The borrower on the other hand is shafted and ends up living in a cardboard box or a skip (and has to pay his or her taxes to pay for the magic money that bailed out that bank which went bust because too many borrowers defaulted on their magic money loans!*)

*- confused? You should be!!

[Little John]

The thing to remember is that under our current fraudulent system of FRB, the borrower has not actually borrowed any real money because the bank has not actually lent any real money. The bank has, in fact, magicked credit into existence when the mortgagee signs on the dotted line.

Since the money never actually existed in the first place, it is perfectly possible to argue that the mortgagee cannot owe something that does not exist.

And on top of this, if the non existant money is defaulted upon by the borrower, the bank gets more magic money to bail them out.

The borrower on the other hand is shafted and ends up living in a cardboard box or a skip (and has to pay his or her taxes to pay for the magic money that bailed out that bank which went bust because too many borrowers defaulted on their magic money loans!*)

*- confused? You should be!!

Exactly TB. It's all bollocks.

[vtsnowedin]

The purchaser of that contract has the right to collect the whole of the original contract.

In law, yes. I'm talking about what's morally right, though. Obviously under "normal" circumstances, when one borrows one is morally obliged to repay. However, in the event of the whole country's economy taking a massive hit, it is no use trying to proteect asset values (here I'm counting the mortgage as an "asset" for the bank or the 3rd party) if this results in some people being sent away with nothing. This is morally repugnant but even looked at without one's moral specs on, people who are sent away with nothing, are a menace to everybody else.

How does that square with the neighbor that paid off his mortgage in full and now owns a house that is worth much less then what he paid for it?

[UndercoverElephant]

The thing to remember is that under our current fraudulent system of FRB, the borrower has not actually borrowed any real money because the bank has not actually lent any real money. The bank has, in fact, magicked credit into existence when the mortgagee signs on the dotted line.

Since the money never actually existed in the first place, it is perfectly possible to argue that the mortgagee cannot owe something that does not exist.

I'm not sure the argument "money isn't real" will convince many of the people currently locked out of the market because of absurdly inflated prices. The house has to have a value, and that should be determined by the free market (unless you can suggest a better way.)

[vtsnowedin]

The thing to remember is that under our current fraudulent system of FRB, the borrower has not actually borrowed any real money because the bank has not actually lent any real money. The bank has, in fact, magicked credit into existence when the mortgagee signs on the dotted line.

Since the money never actually existed in the first place, it is perfectly possible to argue that the mortgagee cannot owe something that does not exist.

Rubbish!! A willing seller accepted the check from the willing buyer and the check didn't bounce. It was real money or at least as real as any money other then LB's gold hoard. Even if you call it funny money those that owe will have to come up with enough funny money to pay the bill. And that part won't be funny.

[UndercoverElephant]

The purchaser of that contract has the right to collect the whole of the original contract.

In law, yes. I'm talking about what's morally right, though. Obviously under "normal" circumstances, when one borrows one is morally obliged to repay. However, in the event of the whole country's economy taking a massive hit, it is no use trying to proteect asset values (here I'm counting the mortgage as an "asset" for the bank or the 3rd party) if this results in some people being sent away with nothing. This is morally repugnant but even looked at without one's moral specs on, people who are sent away with nothing, are a menace to everybody else.

How does that square with the neighbor that paid off his mortgage in full and now owns a house that is worth much less then what he paid for it?

He paid a price he agreed to pay for the house, and now he owns the house. Nothing that happens to the price of the house after that is of any relevance at all, unless the fall in value has been caused by something somebody else has done in the locality (like build a sewage works...)

You should buy a house as somewhere to live, not as an investment.

[Little John]

The thing to remember is that under our current fraudulent system of FRB, the borrower has not actually borrowed any real money because the bank has not actually lent any real money. The bank has, in fact, magicked credit into existence when the mortgagee signs on the dotted line.

Since the money never actually existed in the first place, it is perfectly possible to argue that the mortgagee cannot owe something that does not exist.

Rubbish!! A willing seller accepted the check from the willing buyer and the check didn't bounce. It was real money or at least as real as any money other then LB's gold hoard. Even if you call it funny money those that owe will have to come up with enough funny money to pay the bill. And that part won't be funny.

Unless the sale is made for physical cash, the willing seller does not accept payment from a willing buyer, they accept payment (in the form of a set of numbers in a database) from a willing bank.

And those numbers are fraudulent (see the near collapse of the global banking system in 2008 plus the following bailouts for details)

[vtsnowedin]

In law, yes. I'm talking about what's morally right, though. Obviously under "normal" circumstances, when one borrows one is morally obliged to repay. However, in the event of the whole country's economy taking a massive hit, it is no use trying to proteect asset values (here I'm counting the mortgage as an "asset" for the bank or the 3rd party) if this results in some people being sent away with nothing. This is morally repugnant but even looked at without one's moral specs on, people who are sent away with nothing, are a menace to everybody else.

How does that square with the neighbor that paid off his mortgage in full and now owns a house that is worth much less then what he paid for it?

He paid a price he agreed to pay for the house, and now he owns the house. Nothing that happens to the price of the house after that is of any relevance at all, unless the fall in value has been caused by something somebody else has done in the locality (like build a sewage works...)

You should buy a house as somewhere to live, not as an investment.

But now you want to tax him to bail out his neighbor (or at least some do). If the government bails out the foreclosed then they have gained an unfair advantage over those that preservered and paid their bills and the cost of the bailout will sooner or later show up in the tax bills of those able to pay which will also be those that paid their bills.

[Little John]

In law, yes. I'm talking about what's morally right, though. Obviously under "normal" circumstances, when one borrows one is morally obliged to repay. However, in the event of the whole country's economy taking a massive hit, it is no use trying to proteect asset values (here I'm counting the mortgage as an "asset" for the bank or the 3rd party) if this results in some people being sent away with nothing. This is morally repugnant but even looked at without one's moral specs on, people who are sent away with nothing, are a menace to everybody else.

How does that square with the neighbor that paid off his mortgage in full and now owns a house that is worth much less then what he paid for it?

He paid a price he agreed to pay for the house, and now he owns the house. Nothing that happens to the price of the house after that is of any relevance at all, unless the fall in value has been caused by something somebody else has done in the locality (like build a sewage works...)

You should buy a house as somewhere to live, not as an investment.

Unfortunately, when you have to buy a house with magicked into existence credit fraudulently brought into existence by a bank and where the "value" of those magic numbers (and therefore the viability of the "debt" you have assigned to the object those numbers are supposed to represent the "value" of) regarding your house as merely somewhere to live is not possible unless you are a fool.

People must dance to the bullshit tune that has been composed for them. Even if they know the tune is bullshit, they must still dance because if they don't someone else will. Of course, as soon as the music stops, everyone rushes for a chair but there aren't enough to go round. But that's not the fault of the people dancing. They had no choice.