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Even if banks and courts did have the manpower to evict these people faster, the deeper problem, as you pointed out, is this backwards logic and gross rationali

by rjett 16y ago

Even if banks and courts did have the manpower to evict these people faster, the deeper problem, as you pointed out, is this backwards logic and gross rationalizing. To try to address this, I think a campaign of linking fiscal responsibility to patriotism might be helpful. I suspect that many of these people would identify with being patriotic. Each mortgage payment these people make or at least each step these people take to work with the bank is a step in the right direction for our country. The actions of these people will inevitably hurt the rest of us in the long run.

MichaelSalib 16y ago
I think a campaign of linking fiscal responsibility to patriotism might be helpful. Can you think of any cases where a campaign of linking something to patriotism has actually worked? I cannot. My sense is that many people would respond to such a campaign with rage: they'd point out that financial institutions and their shareholders made out like bandits with the various emergency programs and that no one ever said anything about BoA or GS being "unpatriotic". The double standard would appall many people I think. The actions of these people will inevitably hurt the rest of us in the long run. Are you certain that's true? Maybe the only way to convince banks that they should not completely abandon their own underwriting standards would be for them to suffer some more agony by having a few borrowers dick them around. Certainly, if they just moved out today, the homes they lived in as well as their neighbors would lose value, which would in turn hurt "the rest of us in the long run".
- ticktock 16y ago
  In both World Wars the US had nationwide "rationing" and volunteer recycling programs. This was all done in the name of patriotism. ~ Those unoccupied homes would simply burn down sooner rather than later and the neighborhood would be better off. Remove the blight and re-use the land for something else.
- yummyfajitas 16y ago
  Why does increasing the supply of available homes (and thereby lowering prices) hurt the rest of us?
  - MichaelSalib 16y ago
    If the former owners in question leave the houses they're occupying, then they'll go live somewhere else. Which wouldn't change the supply of available homes. It might lower prices, but I'm not sure why you would consider that a problem in and of itself: at the margin, that helps renters and hurts owners. Our society goes to great lengths to transfer cash from renters to owners, so a tiny change in the opposite direction doesn't strike me as a huge problem. Given current rent to own ratios, such reductions are needed to bring the system into balance anyway. And leaving the current home they're in vacant will reduce its value. Specifically, vacant foreclosed properties suffer all sorts of problems that reduce their value: animals infest the properties, thieves steal the wiring and plumbing (which destroys the walls), leaks spring and since no one notices, water damage accumulates quickly, etc. Plus, neighboring homes will lose value as well: no one wants to live next to a vacant structure that has sustained major water damage or is being used as a base of operations by criminals or vagrants. Keeping people in those homes prevents most of these value-destroying problems from happening. When good assets are trashed, our whole society is made poorer.
    - yummyfajitas 16y ago
      If the former owner downsizes, moving from a large home to a small one, the supply of housing goes up. And I don't consider lowering prices to be a problem. Leaving immediately would encourage the bank to sell the house as quickly as possible to a new owner. The new owners would be more likely engage in maintenance of the home (why fix the roof of a house you are going to be kicked out of) and the new owners will be people of better moral standing. Further, leaving immediately would force the bank to mark their assets to market, thereby making it more difficult for them to fool regulators and the public about the state of their balance sheet. It's possible that the downsides to leaving outweigh the upsides, but it's by no means certain. There are both upsides and downsides, and it's very far from obvious which way the balance goes.
      - MichaelSalib 16y ago
        Leaving immediately would encourage the bank to sell the house as quickly as possible to a new owner. In many parts of their country, there is a large excess of supply, so it is unlikely that a quick sale is possible. Which means that the house will likely sit on the market for 6-12 months. In some areas, banks are walking away from properties they foreclosed upon, legally abandoning them. The responsibility for maintaining or demolishing the property then reverts back to the original mortgage holder, who often gets no notice and believed that they had nothing to do with the property since it was foreclosed. Under such circumstances, I think it can make sense for people to refuse to move out: if the house will continue to be an open ended obligation for you, you might as well at least get a place to live out of it. See this article for more information: http://www.cleveland.com/news/index.ssf/2009/07/bank_walkaways_from_foreclosed.html http://www.cleveland.com/news/index.ssf/2009/07/bank_walkawa... why fix the roof of a house you are going to be kicked out of Two reasons. (1) Because you don't like rain water poring over your head while sleeping in bed. No one wants to live in a house where rain water is poring on them. No one wants to live in a house where mold and mildew have taken root from pooling water. And no one wants to share a house with raccoons. (2) Homeowners often develop irrational attachments to the home that they "own"; that is why many people buy homes when doing so makes no economic sense. These irrational attachments may incentivize people to maintain homes when rational calculation suggests they should not. Remember, being a "good" homeowner is a key concept of many people's self-image. Doing things like fixing leaks and tending the yard may continue to matter to them even after they've decided that they're not paying another cent. Further, leaving immediately would force the bank to mark their assets to market, thereby making it more difficult for them to fool regulators and the public about the state of their balance sheet. I don't believe this claim is true. Can you cite anything justifying it? In many areas, foreclosure takes a long time because servicers and courts are overwhelmed with volume; this state of affairs benefits banks who can postpone marking their assets properly. I don't consider lowering prices to be a problem. Sorry; I misread your comment. Given how little evidence we have that this phenomena affects a significant number of people, I don't find claims that this will materially change market prices to be credible.

by rjett 16y ago

MichaelSalib 16y ago

I think a campaign of linking fiscal responsibility to patriotism might be helpful. Can you think of any cases where a campaign of linking something to patriotism has actually worked? I cannot. My sense is that many people would respond to such a campaign with rage: they'd point out that financial institutions and their shareholders made out like bandits with the various emergency programs and that no one ever said anything about BoA or GS being "unpatriotic". The double standard would appall many people I think. The actions of these people will inevitably hurt the rest of us in the long run. Are you certain that's true? Maybe the only way to convince banks that they should not completely abandon their own underwriting standards would be for them to suffer some more agony by having a few borrowers dick them around. Certainly, if they just moved out today, the homes they lived in as well as their neighbors would lose value, which would in turn hurt "the rest of us in the long run".

ticktock 16y ago
In both World Wars the US had nationwide "rationing" and volunteer recycling programs. This was all done in the name of patriotism. ~ Those unoccupied homes would simply burn down sooner rather than later and the neighborhood would be better off. Remove the blight and re-use the land for something else.
yummyfajitas 16y ago
Why does increasing the supply of available homes (and thereby lowering prices) hurt the rest of us?
- MichaelSalib 16y ago
  If the former owners in question leave the houses they're occupying, then they'll go live somewhere else. Which wouldn't change the supply of available homes. It might lower prices, but I'm not sure why you would consider that a problem in and of itself: at the margin, that helps renters and hurts owners. Our society goes to great lengths to transfer cash from renters to owners, so a tiny change in the opposite direction doesn't strike me as a huge problem. Given current rent to own ratios, such reductions are needed to bring the system into balance anyway. And leaving the current home they're in vacant will reduce its value. Specifically, vacant foreclosed properties suffer all sorts of problems that reduce their value: animals infest the properties, thieves steal the wiring and plumbing (which destroys the walls), leaks spring and since no one notices, water damage accumulates quickly, etc. Plus, neighboring homes will lose value as well: no one wants to live next to a vacant structure that has sustained major water damage or is being used as a base of operations by criminals or vagrants. Keeping people in those homes prevents most of these value-destroying problems from happening. When good assets are trashed, our whole society is made poorer.
  - yummyfajitas 16y ago
    If the former owner downsizes, moving from a large home to a small one, the supply of housing goes up. And I don't consider lowering prices to be a problem. Leaving immediately would encourage the bank to sell the house as quickly as possible to a new owner. The new owners would be more likely engage in maintenance of the home (why fix the roof of a house you are going to be kicked out of) and the new owners will be people of better moral standing. Further, leaving immediately would force the bank to mark their assets to market, thereby making it more difficult for them to fool regulators and the public about the state of their balance sheet. It's possible that the downsides to leaving outweigh the upsides, but it's by no means certain. There are both upsides and downsides, and it's very far from obvious which way the balance goes.
    - MichaelSalib 16y ago
      Leaving immediately would encourage the bank to sell the house as quickly as possible to a new owner. In many parts of their country, there is a large excess of supply, so it is unlikely that a quick sale is possible. Which means that the house will likely sit on the market for 6-12 months. In some areas, banks are walking away from properties they foreclosed upon, legally abandoning them. The responsibility for maintaining or demolishing the property then reverts back to the original mortgage holder, who often gets no notice and believed that they had nothing to do with the property since it was foreclosed. Under such circumstances, I think it can make sense for people to refuse to move out: if the house will continue to be an open ended obligation for you, you might as well at least get a place to live out of it. See this article for more information: http://www.cleveland.com/news/index.ssf/2009/07/bank_walkaways_from_foreclosed.html http://www.cleveland.com/news/index.ssf/2009/07/bank_walkawa... why fix the roof of a house you are going to be kicked out of Two reasons. (1) Because you don't like rain water poring over your head while sleeping in bed. No one wants to live in a house where rain water is poring on them. No one wants to live in a house where mold and mildew have taken root from pooling water. And no one wants to share a house with raccoons. (2) Homeowners often develop irrational attachments to the home that they "own"; that is why many people buy homes when doing so makes no economic sense. These irrational attachments may incentivize people to maintain homes when rational calculation suggests they should not. Remember, being a "good" homeowner is a key concept of many people's self-image. Doing things like fixing leaks and tending the yard may continue to matter to them even after they've decided that they're not paying another cent. Further, leaving immediately would force the bank to mark their assets to market, thereby making it more difficult for them to fool regulators and the public about the state of their balance sheet. I don't believe this claim is true. Can you cite anything justifying it? In many areas, foreclosure takes a long time because servicers and courts are overwhelmed with volume; this state of affairs benefits banks who can postpone marking their assets properly. I don't consider lowering prices to be a problem. Sorry; I misread your comment. Given how little evidence we have that this phenomena affects a significant number of people, I don't find claims that this will materially change market prices to be credible.