That Worked Well
June 11th, 2008 by 
reality
The WSJ has a piece this morning on “buy and bail,” where a borrower, underwater on his or her house, buys a new house, moves, and then allows the original house to fall into foreclosure. The borrowers can get away with this in the non-recourse states, notably California, where the original lender cannot pursue them for a deficiency judgement. As I’ve mentioned before, the delicious irony is that those non-recourse laws were generally enacted during or following the Great Depression, in order to restrain the behavior of the lenders by making them share the pain of foreclosures.
Next month, Michelle Augustine plans to walk away from her four-bedroom house in a Sacramento, Calif., subdivision and let the property fall into foreclosure. But before doing so, she hopes to lock in the purchase of another home nearby.
“I can find the same exact house as what I live in right now for half the price,” says Ms. Augustine, 44 years old, who runs a child-care service out of her home. She says she soon will be unable to afford her monthly payments, which will jump to $4,000 from $3,300 in August, and she doesn’t want to continue to own a home that is now worth $200,000 less than what she paid for it two years ago.
On top of that, I’m hearing about the enhanced variation - the double play, if you will. In which, as soon as the borrower moves, he actually rents out the old house. But he stops making the mortgage payments anyway, as soon as the tenant moves in. Then, given the delays inherent in the foreclosure process, he pockets 8-9 months rent at least, and probably much more. No mortgage payments, no tax payments, no insurance, no nothing. Ta-da!
As a libertarian, I just have to shake my head at the way nearly every government action, well-meaning or not, has the opposite effect to that intended. The religious faith in government as a panacea for social ills is ludicrous. Morality and civility come from within, from culture, education and social homogeneity, not because of threats of violence from “legislators” or “diversity.”
Posted in Debt, Fixed Income, Real Estate, Rogues and Rascals | 
June 12th, 2008 at 12:34 am
You say:
As a libertarian, I just have to shake my head at the way nearly every government action, well-meaning or not, has the opposite effect to that intended. The religious faith in government as a panacea for social ills is ludicrous. Morality and civility come from within, from culture, education and social homogeneity, not because of threats of violence from “legislators” or “diversity.”
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Reality, why not to treat yourself as an anarchist instead of a libertarian ?
Difference is almost insignificant - being anarchist you do not pledge yourself to participate in a process of official elections, and never are surprised by the “news” about political corruption, nor about lying officials.
Society progress not because of better politicians elected to power, or better administrators appointed, but because of (technologically) natural process of decentralization of political/economical influence.
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And I want to tell, what I’m generally thinking about the lie(s).
I believe, a lie is a very root instinct of humans and is essential part of human behavior (not only in communication). A person can made an effort to be honest with himself and not to lie to others, but that decision can be taken only on personal level, and shouldn’t be expected from others.
So, no need to be irritated, when somebody in power lies, thefts, counterfeits. It’s normal, it’s the very essence of a power.
And, if possible, it’s better not to be irritated, but just to be ignorant about any absurdity, if it’s outside your might to change it.
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I personally believe, absurd situations sometimes can be profitably exploited without direct involvement in them. Typical application of that in investment - contrarian speculation. For example short US dollar in a few days after all major officials express their concerns about currency and implicitly promises to support it.
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Vytas
a.k.a. anarchistas.lt
June 12th, 2008 at 4:55 am
In the U.S., libertarians are generally willing, as I am, to settle for a strict adherence to the U.S. constitution, with its minimal federal government. While having some sympathy to the anarchist view, the U.S. isn’t anywhere close to ready.
I’m not surprised by the lies. I just continue to be amazed that seemingly intelligent people believe them. In a historical note, in the 1930s the FBI was commissioned by President Hoover to find out why the stock market sold off every time a senior public official made positive statements about the economy. And prevent it, of course.