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Huh?! AFAIK the majority of the mortgages just before the GFC were literally "no risk zero deposit" - if you couldn't repay, you could just move away and mail t
by tomp 8y ago
Huh?! AFAIK the majority of the mortgages just before the GFC were literally "no risk zero deposit" - if you couldn't repay, you could just move away and mail the keys to the bank, and you had no other obligations. Perfect (for the loan-taker) in case the housing market started crashing or just declining. You'd be stupid not to take such a loan!
- pas 8y agoCould you please share some sources about this?
- tomp 8y agoAh, took me a while to find the right Google term: "nonrecourse loan". I'm not sure anymore how big a cause for the crisis they were - there are articles arguing both directions. https://ftalphaville.ft.com/2017/03/03/2185420/fed-vs-fed-on-strategic-mortgage-default-during-the-financial-crisis/ https://ftalphaville.ft.com/2017/03/03/2185420/fed-vs-fed-on... http://webcache.googleusercontent.com/search?q=cache:Hsi8ZX88zzwJ:realestateresearch.frbatlanta.org/rer/2010/02/did-nonrecourse-mortgages-cause-the-mortgage-crisis.html+&cd=1&hl=en&ct=clnk&gl=uk http://webcache.googleusercontent.com/search?q=cache:Hsi8ZX8... Chapter Economic Incentives in the Housing and Mortgage Origination Markets in https://www.brookings.edu/wp-content/uploads/2016/06/11_origins_crisis_baily_litan.pdf https://www.brookings.edu/wp-content/uploads/2016/06/11_orig...