Comment by jjav
5 days ago
> So when a new home owner buys something and suddenly the value drops $100k and the bank wants the money
That's not how mortgages work (in the US, anyway). If the value drops, nothing happens, you still have the same house and same mortgage.
I've been underwater twice, in the same house, as prices go up and down over the years. As long as you still like the house and want to continue living there (I did), being underwater doesn't mean anything.
That's the catch, though. What if you wanted to move? That would have sucked. What if you had to move? That could have been disastrous to you. What if you had lost your job, and defaulted on the loan. Apparently most states in the US are non-recourse, so how would you feel when your next job's wages are garnished, or there's a lien on the next home you buy?
When you have to put an "If" in front of "being underwater doesn't mean anything", then that means sometimes it really does mean something.
Where do those ifs stop? What if you went blind in an accident? Some things are just disasters, you can't count that for optimising the majority of the system. Of course you can have support for poor people but that will obviously not match the 400k house lifestyle.