[OT] Personal Finances: Was The perfect MP3 player

Shane Hathaway shane at hathawaymix.org
Mon Sep 19 11:38:43 MDT 2005


Grant Shipley wrote:
> On 9/18/05, Dave Smith <DavidSmith at byu.net> wrote:
> 
>>>If a disaster happened (read
>>>depression), the banks like to go after the homes that have a ton of
>>>equity in them versus someone who still have 20 years on their
>>>mortgage.
>>
>>Not if you don't have a loan. That doesn't make sense to me. Why would
>>the bank try to call the notes that are worth less to them?
> 
> 
> It makes perfect sense.  The bank would much rather take a home that
> is worth 300k but the home owner only owed 100k on that a home that is
> worth 300k but with a 295k mortgage.  The bank makes 200k by selling
> the first one and only 5k on selling the second one.

More likely, bankrupt home owner A (who owes $100k) could sell the home 
for $250k to a third party, paying off the loan and still having $150k 
to move into a smaller home with zero debt.  Bankrupt home owner B would 
have no way to buy a new house.

Shane



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