Re:Richmond’s rules: Why one California town is keeping Wall...
by JumpCrisscross on Sunday October 06, 2013 @05:50AM
(#6503627)
"If a mortgage is underwater and the debtor cannot (or will not) pay, then it hardly matters to the investors whether the owner is foreclosed on, or the city forces principal reduction. Either way, the investor takes a loss."
Mortgage markets are not terribly liquid. The "market value" the City of Richmond picks may not be favorable to the investor. The extra-contractual origin of this market-value-by-fiat makes it doubly uncomfortable.
Further, collateral can improve in value. The housing market is presently appreciating. A defaulting debtor's prospects are less certain.
Mortgage markets are not terribly liquid. The "market value" the City of Richmond picks may not be favorable to the investor. The extra-contractual origin of this market-value-by-fiat makes it doubly uncomfortable.
Further, collateral can improve in value. The housing market is presently appreciating. A defaulting debtor's prospects are less certain.