Mortgage Defaults May Be Driving Consumer Spending

N

nutmeg

"Americans are now far more likely to pay their other bills first before their mortgage (which is a big turnaround historically speaking.)

That means they pay off their credit cards, cable bills, car loans in place of their home loans."
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"First he describes a case study of someone who applied for the government's Home Affordable Modification Program.

The person had an $1,880.00 monthly mortgage payment on which they'd defaulted, but said person's monthly bank statement showed payments to a tanning salon, nail spa, liquor stores, DirecTV bill with premium charges, and $1,700.00 in retail purchases from The Gap, Old Navy, Home Depot, Sears, etc."
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cont on link..

http://www.cnbc.com/id/36422316
 
This is why failure, bankruptcy, et al ... are so important. Once the debt is wiped away, it allows new growth to flourish.
 
Quote from ralph00:

This is why failure, bankruptcy, et al ... are so important. Once the debt is wiped away, it allows new growth to flourish.
More...

Say what? Every dollar a debtor keeps and spends is a dollar the creditor doesn't get and doesn't spend or lend to others. At best its a wash, and with fractional lending its more likely that dollar the creditor/lender doesn't get is 8 dollars they are not lending to others for them to spend.
 
On any random mortgage default, does anyone know who takes a direct hit?

If we had the bailout to the banks and the banks repaid the money, where'd the default go? woosh thin air?
 
why is the credit score based on the last 7 years? I mean if someone filed bankruptcy 8 years ago, this wouldn't be in their credit report. Why?

Why are people allowed to walk away from homes on which they owe money to the bank? If the home values rise and they sell and make a profit, they do not share with other people. Why should I share their loss when they lose money on the house?

why are so many states have a law restricting seizure of goods by the debtors when the bill is not paid?

I don't understand these
 
Quote from misterno:

...

Why are people allowed to walk away from homes on which they owe money to the bank? If the home values rise and they sell and make a profit, they do not share with other people. Why should I share their loss when they lose money on the house?

....
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because it is bank's fault that they used faulty risk models to lend money to those people. when bank makes money on the mortgages they don't share those profits with others, do they?
 
Quote from misterno:

why are so many states have a law restricting seizure of goods by the debtors when the bill is not paid?
More...

Otherwise the debtor would take literally everything you have, kick you to the curb, and still beat you down because it wouldn't be enough to cover the debt whether it was wrongly accrued or not...
 
You're wrong on both counts. It's not always the "bank's fault." That mindless mantra ignores all the other bad actors... millions of greedy sheeple who got in over their heads, bad monetary policy, pandering politicians who pushed home ownership and made laws that discourage personal responsibility, etc. Now too many are simply taking advantage of the collapse and gaming the system. And banks DO share their profits -- with shareholders, just like any other business does. And please spare me the crap about banks being bailed out by "taxpayers." First, the bailouts wouldn't have been necessary had millions of deadbeat "taxpayers" not crashed the system by defaulting. Second, not all banks needed to be bailed out and some were even forced to take bailout money anyway. Third, the government has profited from the bailouts. And fourth, there shouldn't have been any bailouts to begin with... of corporations or individuals.
Quote from shortie:

because it is bank's fault that they used faulty risk models to lend money to those people. when bank makes money on the mortgages they don't share those profits with others, do they?
More...
 
Quote from ralph00:

This is why failure, bankruptcy, et al ... are so important. Once the debt is wiped away, it allows new growth to flourish.
More...


They cant and will not allow that, all they did with this crisis is prolong it. The debt is so far from being wiped away. The only new growth in this economy is coming from liquidity injections and asset bubbles which will feed on itself once again causing another collapse in the economy moving forward.
 
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