Government Is The Problem - Not The Solution
Do you know people still living in their homes after defaulting on their mortgage payments? I do, and I wonder what that must be like. Some have been doing this for two years or more, so why doesn’t the bank evict them and auction the house?
Because it’s afraid to. Because then the bank would have to sell the house for whatever it would bring on today’s real estate market - and that would be much less than what the bank pretends it’s worth. Because it’s likely the bank has several such properties - along with other banks - and all those houses are valued at what they were worth five years ago and would sell today only at far less than the amount owed on them. They’re counted as assets on the bank’s books at no-longer-realistic prices. If banks dumped all that on the market, it would further depress real estate prices and put more mortgages underwater.
How long can this go on? Not forever. The banks keep putting it off hoping the economy will turn around and real estate prices will bounce back. Soon-to-be-former mortgagees can’t live rent-free indefinitely and they know that sooner or later they’ll be evicted - but they ride it as long as they can. They keep heating the place, shoveling the snow and mowing the lawn. The bank allows this to prevent values from sinking even further should the occupants move out and nobody took care of anything.Consider the uncertainty these circumstances generate. What if the roof leaks? The occupant thinks: “I should fix the roof, but this isn’t my house anymore. I’m a squatter here.” Will he tell the bank or just put a bucket under the leak? Bank and occupant let it ride. They wait to see what happens.
That uncertainty is very similar to what most Americans feel about our country. We know we’ve dug ourselves into a deep, deep hole we may never climb out of, but we’re letting it ride to see what happens. Serious investors won’t make moves until they see what happens in November’s election while the “Hope and Change” guy presides over a country increasingly hoping for change in who occupies the White House.
The rest is here.