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I would like to see the law changed so secured debt (eg. Mortgages) do not become regular debts after the security is sold off. Ie. You should be able to hand
by londons_explore 11mo ago
I would like to see the law changed so secured debt (eg. Mortgages) do not become regular debts after the security is sold off.
Ie. You should be able to hand the keys to a mortgage company and walk away debt free.
Likewise you should be able to return the car keys to a loan company and walk away debt free.
Sure, it would mean loans would have to have slightly higher fees to cover the increased risk, but as a nation I think it would be worth it for the productivity gains of not having so many of the population in court over debts.
- thaumasiotes 11mo ago> You should be able to hand the keys to a mortgage company and walk away debt free. That's already the case in the US for original mortgages. If you refinance your mortgage, you generally lose that benefit.
- thaumasiotes 11mo agoFollowup: I'm pretty sure I confused the concept of "recourse" (whether the originator can pursue you for any money they couldn't recover from the collateral) with the concept of a prepayment penalty. As best I can tell, mortgages are non-recourse in some US states, but recourse is available in others.
- wakawaka28 11mo agoIf you can't pay, there is already bankruptcy for that. Nothing else is needed really. You can't expect to walk away from a loan with zero hit to your credit. Also, it is really hard to sympathize with people walking away from huge loans for which they put down nearly nothing. The way things are today, you could severely overpay for a house with a loan that you put almost nothing down for, then walk away when the market crashes. That is not the kind of behavior that should be incentivized. As if that isn't bad enough, the very low down payments allow people to qualify for higher loan amounts, which drives up housing prices.