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	<title>Comments on: What&#8217;s driving mortgage defaults? Not just negative equity</title>
	<link>http://ftalphaville.ft.com/blog/2008/05/08/12854/whats-driving-the-defaults-its-not-just-negative-equity/</link>
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	<pubDate>Mon, 08 Sep 2008 05:59:16 +0000</pubDate>
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		<title>by: Anonymous</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/08/12854/whats-driving-the-defaults-its-not-just-negative-equity/#comment-20273</link>
		<pubDate>Fri, 09 May 2008 12:51:35 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/08/12854/whats-driving-the-defaults-its-not-just-negative-equity/#comment-20273</guid>
					<description><![CDATA[“defaults are a product of necessity, not of design.”  -  I guess the interviews I've seen with people who are making a conscious financial decision to walk away have been staged.  Why are these people being quoted as an accurate source?]]></description>
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		<title>by: Anonymous</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/08/12854/whats-driving-the-defaults-its-not-just-negative-equity/#comment-20158</link>
		<pubDate>Thu, 08 May 2008 16:13:01 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/08/12854/whats-driving-the-defaults-its-not-just-negative-equity/#comment-20158</guid>
					<description><![CDATA[Obviously, both explanations are contributory. Non-recourse loans do create an incentive to simply walk when negative equity gets too large. "Liar loans" will create a "disproportionate" number of blowups from a historical perspective upon reset. I'm sure they are reinforcing factors as well. 

Add in inflation, dollar depreciation, and a recession and you have additional factors for accelerating problems.]]></description>
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		<title>by: Knocker</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/08/12854/whats-driving-the-defaults-its-not-just-negative-equity/#comment-20156</link>
		<pubDate>Thu, 08 May 2008 15:27:07 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/08/12854/whats-driving-the-defaults-its-not-just-negative-equity/#comment-20156</guid>
					<description><![CDATA[Burntquant - often in the US mortgages are non-recourse loans, meaning that the loan owner can't pursue the home owner, whereas in the UK and Europe they can. Even where loans are recourse in the US, the costs and legal hold-ups, lack of clarity over who owns th eloan etc may make them de facto recourse anyway. 

The non-recourse element leads to so called 'jingle mail', sending the keys back to the loan owner and walking away from the debt and property.]]></description>
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		<title>by: burnt quant</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/08/12854/whats-driving-the-defaults-its-not-just-negative-equity/#comment-20050</link>
		<pubDate>Thu, 08 May 2008 05:41:58 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/08/12854/whats-driving-the-defaults-its-not-just-negative-equity/#comment-20050</guid>
					<description><![CDATA[The big difference between the UK and the US being that in the UK the bank can and will pursue you for the difference between the loan amount and the sale price in the event of foreclosure. In the US depending on the state it seems that banks are either unwilling or unable to do so. Also personal bankruptcy was tougher legally and more of a social stigma in 90's UK.

Hence I don't think CreditSights’ David Watts is correct in his assumption that “defaults are a product of necessity, not of design.”

If prices of homes in the US bounce back then people will keep paying their mortgages. But another 10%  decline and many with even good credit scores will surrender. The penalty in terms of credit score is irrelevant if you don't think you'll be needing any more credit any time soon (during a long period of House price declines for instance).

Finally many more homes are now 2nd homes and speculative ventures, it's one thing to say that peole will battle on when it's their principal residence quite another thing for the "spec" house.]]></description>
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