Someone living in that house, however, who doesn't want to move, gets a lot more value out of it than the $20k it's worth to other people, and would therefore be willing to make payments to stay in that house that are higher than what you could get if you took the house from them and resold it. As long as they can make payments they can afford, to stay in the house.
In other words, there's a lot of value out there in the difference between what a house is worth on the market, and what it's worth to the people who have been living in it and don't want to move. There are probably a huge number of houses in that situation, and if you add up all of that value, it's probably a very very large number. Foreclosing on all of them makes all of that value simply disappear from the economy.
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momijizukamori
no subject
Date: 2008-09-22 19:13 (UTC)In other words, there's a lot of value out there in the difference between what a house is worth on the market, and what it's worth to the people who have been living in it and don't want to move. There are probably a huge number of houses in that situation, and if you add up all of that value, it's probably a very very large number. Foreclosing on all of them makes all of that value simply disappear from the economy.