Comments on: I’m taking the fifth http://www.weblogtheworld.com/countries/northern-america/i%e2%80%99m-taking-the-fifth/ Bridging Travel, Culture & Ideas Tue, 07 Feb 2012 07:59:12 +0000 hourly 1 http://wordpress.org/?v=3.1.4 By: bonafidebob http://www.weblogtheworld.com/countries/northern-america/i%e2%80%99m-taking-the-fifth/comment-page-1/#comment-82 bonafidebob Fri, 12 Mar 2010 00:46:23 +0000 http://pontoniere.blogautore.espresso.repubblica.it/?p=231#comment-82 Bankruptcy scenario: homeowner loses home, credit ruined. Bank takes the house but is disinclined to sell at a loss because that would realize the loss. If they just keep the home they can maintain the fiction that it was worth the sale price. And the house isn't in the market. Short sale scenario: the homeowner loses the home, but credit is not destroyed, they can (perhaps) buy a properly valued home. The bank realizes the loss immediately, it goes on the books. And most important, the home is sold at a lower price, so the market gets adjusted. Seems like getting the market moving, that is actually enabling people to buy and sell homes at real world values, does nudge the housing market closer to correct. Bankruptcy scenario: homeowner loses home, credit ruined. Bank takes the house but is disinclined to sell at a loss because that would realize the loss. If they just keep the home they can maintain the fiction that it was worth the sale price. And the house isn’t in the market.

Short sale scenario: the homeowner loses the home, but credit is not destroyed, they can (perhaps) buy a properly valued home. The bank realizes the loss immediately, it goes on the books. And most important, the home is sold at a lower price, so the market gets adjusted.

Seems like getting the market moving, that is actually enabling people to buy and sell homes at real world values, does nudge the housing market closer to correct.

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