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Under the Danish system, it appears that seizing the collateral (in this case homes) is much easier and quicker when the borrower stops payment. Also, under th
by kqr2 18y ago
Under the Danish system, it appears that seizing the collateral (in this case homes) is much easier and quicker when the borrower stops payment. Also, under the Danish system, the home owner must have a minimum 20% downpayment which they would lose in case of a default.
I think if we just had the simple 20% downpayment rule in the US, we would have avoided a lot of these subprime issues.
- silvestrov 18y agoThe 20% is not a required downpayment in cash, but you have to finance it using normal bank loans. The (sellers) estate agent normally takes care of the complete loan taking, so the buyer just has to provide proof of income for the last 3 months and sign the papers. The rest is taken care of without the buyer needing to do anything himself. (There's no buyers agent in Denmark).
- silvestrov 18y agoAn important subject which wasn't touched in the article: In Denmark jingle mail doesn't exist: you cannot run away from your debt (they would just laugh and send the keys back to you), and if you seriously fail to pay your obligations, you're completely stopped from getting any kind of credit in any bank or shop. This means that banks in Denmark doesn't end up with the debt as easily as they do in USA. So the Danish banks have lost money primarily on business loans and not private mortgages.