Comment by cocaclub
5 days ago
These are my feelings too, but in the interests of compassion, I would suggest a return of some proportion of equity to (human, non-LLC, non-corporate, primary resident) buyers in cash, up to bank failure. Hopefully they can then buy another house at the presumably much lower prevailing market rate. Someone has to lose, let it be in order of "he who should have known what he was doing in making this catastrophe possible."
I mean, there are a few things here. Like if the bank want the house sold on the loan because the house value goes down even though the person with the loan is willing to continue servicing it - then that seems like an own goal for the bank.
There are a variety of circumstances that can be dreamt up for either side of the equation. And I have no compassion for lenders either.
As you say, maybe the mortgage/loan should be seen as a partnership of some degree between the parties so that the lender is less likely to take advantage.
But ultimately "he who should have known" is the person asking for money to buy XYZ thing. A person should be responsible for their actions.
> But ultimately "he who should have known" is the person asking for money to buy XYZ thing. A person should be responsible for their actions.
I agree with this in principle, but the real world is messy, and many (most? all?) people end up having to make decisions in their lives where they maybe should know, but don't know everything they should. Perfect information is rarely a thing, and even if you have it, you need a certain level of education to exploit it that we can't expect anywhere near everyone to have.
I don't give even the smallest shit for lenders. I care about people. I care about people having housing security, food security, and a little extra so they don't have to live paycheck to paycheck. No, I don't think we should just be printing money and firing it off in a t-shirt cannon at people for the hell of it. But I think we need to be compassionate, and understand that a huge, unexpected change in housing policy that tanked their home value is not something they "should have known" might happen.
I feel like many of us here forget (or were, oof, too young for) the 2007/08 financial crisis. We bailed out a lot of banks, and left a lot of regular folks holding the bag. I don't want to see that happen ever again. And yes, I get that housing policy changes that create lots of new housing is different. But the outcome could be very similar.
If you want to make change but not make it scary - make it gradual. Which I suspect is going to be the outcome. I'm not sure what change in policy could suddenly produce a market surplus across a country in short order.
Fixing the housing crisis will be a generational task.