How does it help you for your neighbor to be foreclosed? The house isn't going to sell for $250,000. It may not even sell for $200,000. And when it does sell, that house is going to be part of the neighborhood comps, which means that your house is now worth $200,000 or less. Nobody wins when the homeowner gets roughed up in this market;Hey, no problem. You can just pony up and help this guy make his mortgage payments--the one he can't afford on his own--so he won't get foreclosed on.This thread is a great example of the fallacy where man A sees that man B is having trouble and decides what man C should do for B.Markr33 has it right. As for "predatory lending"---how did that work? Did Countrywide lurk in a dark alley and accost people and put a gun to their head to force them to take out a mortgage?Best to not forget about unintended consequences. If you force lenders to eat the loss, then you've effectively changed mortgages to unsecured loans. And the interest rates will go accordingly--see your credit card statement to get an idea of what the interest rates will be.Or perhaps you'd like for mortgages to be like the good old days---20% down or you don't get the loan.
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