The financial calculus is pretty clear. But from a moral standpoint, the rationale should be just as obvious. The bank was not doing you a favor when it extended you a loan. It was trying to make money off of you. If that effort doesn’t work out for the bank, it’s not your fault. The [...]
[6 Jun 2010]
Eric Posner, a law professor, and Luigi Zingales, an economist, both from the University of Chicago, have made an interesting suggestion: Any homeowner whose mortgage is underwater and who lives in a ZIP code where home prices have fallen at least 20 percent should be eligible for a loan modification. The bank would be required [...]
[24 Jan 2010]
Yet there is an inherent imbalance in the borrower-lender relationship that makes this morality message unfair to consumers, White says: Banks set the rules during the housing boom, handing out home loans with no down payments, no income checks and inflated appraisals. Now that property values have dropped 20% to 50% in many areas, banks [...]
[19 Dec 2009]