or, they thought if they got in trouble they could sell the house, but surprisingly their house is now actually worth less than when they bought it, something a lot of people didn't realize was possible.
The effective value of your house drops by 5% pretty much the instant you buy it - since Realtor commissions come out of the sale price, not out of the buyer. How much attention do you have to not be paying to miss something that basic?
I agree that your second group (bad thing happened) is much larger than your first group (people knowingly taking on bad risk), but I think my middle group is the largest.
What exactly is the difference? If the change in circumstances is "something bad happens" then they go in that second group. If they've got a payment they can't carry indefinitely, because they gambled on an ever-rising market... well, if they'd gambled on the stock market rising eternally too, would you bail out their 401K's?
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momijizukamori
Re: middle ground
Date: 2008-09-22 14:50 (UTC)The effective value of your house drops by 5% pretty much the instant you buy it - since Realtor commissions come out of the sale price, not out of the buyer. How much attention do you have to not be paying to miss something that basic?
I agree that your second group (bad thing happened) is much larger than your first group (people knowingly taking on bad risk), but I think my middle group is the largest.
What exactly is the difference? If the change in circumstances is "something bad happens" then they go in that second group. If they've got a payment they can't carry indefinitely, because they gambled on an ever-rising market... well, if they'd gambled on the stock market rising eternally too, would you bail out their 401K's?