Thanks! The fear that I might be the liability in our upcoming home hunt was the final straw I needed to get my official FICO score. (And it was insanely good! Woot!)

I have spent some time in Canada of late and did some research because of my experience. I will say this from my limited but recent outlook for Canada. Housing CRASH! Specifically a huge condo crash.

Toronto and Vancouver are two of Canada’s emerging markets and they are going to get crushed. The holes in the damn are already starting to show and it is clearly obvious their are no fingers to plug them.

Now all of these lenders will be chomping at the bit to attach your checks through court orders like a credit card can do today. The difference is CC debt may be 10K, 20K or even 40K, but we are talking 400K here. What does someone do that gets foreclosed on and at auction it sells for 200K. Now they owe 200K and have no place to live. I would never enter into an agreement where that could happen… ever!! Now if you have 100K to put down on a 200K home that’s ok. How many have that? My point is recourse loans will not work in America right now because nobody has any money and the RE market is so volatile. That needs to be implemented when times are good not bad…

You have no control over industries or homes so why would you make that kind of gamble? You might as well bet in Vegas and hope for a big hit. I like to bet on things that have an outcome I can deal with and I steer away from bets where I can get wiped out overnight (see Toronto condo owners). I let others play in that rhelm… hey call me conservative.

That is exactly what I see happening is the government making all loans retroactively recourse or at least attempting to do so. They will likely run that up a flagpole to attempt to get public reaction first but indeed, executive order would seem likely. The other problems I see is that it is up to the bank to foreclose. If you stopped making payments, the banks can drag until an executive order is passed preventing you from walking.

Hey does anyone know that the Federal Reserve being a private corporation, if they can be sued for economic malpractice?

In Canada, mortgages are recourse, and shockingly enough, we do not have massive foreclosures collasping home values. It is far far to easy for people to just walk away in America, and you can be pretty sure if banks keep getting what they ask for, then non recourse loans will be gone.

The biggest problem I see is there are no ties that bind a home owner to the mortgage lender. When you are tied at the hip, the home owner is more responsible in choosing a mortgage he can afford, and the bank is more responsible in lending an amount they know can be paid back. None of this happened in bubble states.

If the situation continues to get worse, its not that hard to pass an executive order making all existing mortgages recourse, and any further defaults, the remaining balance would be garnished off your wages. I think its pretty evident that goverment is not looking out for the home owners best interests, and will cater first and foremost to the banks.

Continue to read daily and I thank you for your AAA rated analysis.

The questions I have right now are:

1. Considering .gov’s willingness to change the rules, how much farther and for how long will prices fall?

2. With reserve requirements low or zero?, will any “whopper” banks getting “TARP Pie” die? If so, who?

JAllen

How long do you think it is going to be before the banks are all wound up in a giant class action lawsuit? Not only for damages to home holders but for people who were otherwise damaged by stupid lending practices? I don’t think that it helps either that they own stock in their own regulator, the Federal Reserve. I wonder if Meridith Whitney is figuring this into any pricing forecasts?

Also, how long is it going to be before the state passes a law that if you were given a predatory or other unsound mortgage product or even if the bank failed to properly qualify a loan that any resultant foreclosure black mark on the borrowers credit file be expunged? Even if you walked away just because you were underwater and for no other reason, It was the banks that crashed your value due to their unsound practices. I think people who are worried about a foreclosure black mark are going to find that a state or federal law will be passed to protect consumers from the unsound practices of the banks and any resultant black marks on credit files. I am sure the California legislature will be all over it at some future point.

Im serious.