h a l f b a k e r yI think this would be a great thing to not do.
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Bill & Ted have done a fair amount of foolish things in their time, with that Libor based adjustable mortgage being perhaps the foolishest.
Now they and millions of others are underwater, taking down the world's economy with them.
And as many an expert has told us, the situation will not improve
until house values stop dropping. And yet solutions are frought with moral hazzard -- something Bill & Ted are pretty familiar with, with redefaults, people rumored to default just to get a better deal, etc.
Well, the time has come to apply some collective bargaining techniques to the process.
Using the web and neighborhood organization, people can organize across two axis -- their bank, and their location, location, location -- after all, even one foreclosure in a neighborhood accelerates the spiral down in home values.
Thus armed with colective power, Bill & Ted become a meaningful force to the bank, and can act to speed up the inevitable loan modification process but avoid the worst of its effects.
For example, while the bank might not return Bill & Ted's call and normally wouldn't allow them to qualify under a restructuring, would consider a petition from an entire town that might otherwise hold up payments.
The bank in turn gains a benefit from getting a clearer picture, and more certaintly, of the value of a larger portfolio of loans.
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I would like the idea (paraphrased, "local groups of mortgage-holders of the same bank should band together"), but need more detail about how the organizing and collective bargaining would actually work. |
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jutta, I added some exaples, I'll work on some additional ones. |
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And years later, when they retire, Bill and Ted can talk about this story, smiling, wearing their Excellent Dentures. |
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This is exactly the tool we need to start tearing down the
pillars. But don't give it to Bill & Ted, who presumably
have some banking sense and are thus doomed to fail. Give
it to a dyed-in-the-wool idiot like me and let Chaos Theory
work its wonderful magic. |
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Unionised Debtorhood, eh? There are parallels here, I with the trade union movement. It took general strikes (tanks in George Square!) to have the powers of unions recognised. Any less co-ordinated indsutrial action could be (and was) dealt with by the relevant plutocrat by deployment of goons and sacking everyone and hiring from the massive rump of unemployed. Getting banks to adopt this scheme would appear to me to be even more difficult: even if a whole neighbourhood was in hock to the one bank, getting the whole neighbourhood to intentionally default on their secured borrowings will be difficult and, given the size of banks these days, will be unlikely to result in a financial hit than wouldn't otherwise be lost in the roundings. The other disincentive for banks to adopt this scheme is that while they were happy enough to fly seat of the pants on CDOs that they pulled together themselves, they have of late, and for some reason that I can't quite put my finger on, become a touch twitchier about that sort of thing, meaning they're even less likely to accept an externally-generated agglomeration of debts that they already control. |
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However, if this idea were to fly, then we would have more work for lawyers, so yay! |
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Wait a moment - Libor is pretty low just now so, if their mortgage rates were really linked to it, they'd be pretty modest rates. Has someone been telling Libor lies to the innocents Bill and Ted? |
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At least in the US (and I presume elsewhere) the
problem is largely not the rate, but the fact that the
price of homes is falling, so lenders are reluctant to
refinance or lend. |
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