Repossessions

Was Listening to Liveline last week
A man who had his house repossessed has vowed to picket the house for the rest of his life, presumably unless he is reinstated into the property on reasonable terms.

Part of his reasoning is that he should never have been given the mortgage in the first place. Thats quite a true statement. I wonder if at the time, had he been turned down for a mortgage, would he have gone on Joe Duffy to bemoan the fact that he couldn't get financing.

Hearing the phrase, "they shouldn't have given me the money" hardly ignites sympathy in peoples minds, but it is nonetheless a correct statement; so why did they? Our personal solvency laws provide that the borrower remains liable for the full value of the mortgage, even if the house is sold.

In the US the borrower can hand back the keys which closes out the mortgage. This should mean that borrowers would be more discerning as they would stand to lose money as well.

Here the borrower is on the hook for the full amount, which means that the lender can do less due diligence and still make a reasonable assumption that they will get back the bulk of their money. In addition, they have an incentive to sell the house and realize the funds ASAP, rather than hold out for an offer that is a reasonable market price, which would reduce some of the outstanding debt of the borrower.

We are going to see more of this behavior as the number of repossessions rise, not less. There is a substantial danger that we will marginalize those people and their children and in doing so reduce society's respect for personal property.