Archive for May 14th, 2011

Another Perspective on Strategic Default

I get lots of good comments; here’s an interesting take on strategic default.  Let’s just say “I concur.” 

I’m no doubt a future “Strategic Defaulter”……..It seems to me that there is an aspect of the whole strategic default conversation that is conspicuously missing from the national discourse. It’s an analysis of how we ended up in the grossly over valued properties to begin with. In 2006 I bought my home in Florida (a modest condo) for $595,000 it’s now worth $300,000. When I bought my home I assumed the market value was legitimate and as a result was comfortable paying the price I did. Turns out the market value was not legitimate, in fact it was manufactured by the very same banks that lent me the $600,000. That’s right it was the years of phony and irresponsible lending practices of the these banks that drove up and created the false valuations to begin with. In essence my home was and has never been worth $600,000 my banks, Wells Fargo and their appraisers said it was. Said another way, by approving $500k loans for people who didnt have the financial wherewidthall or any business being approved for a second half million dollar vacation home in Florida the banks by definition controlled the market prices. My home which I love was $300,000 in 2001—–$600,000 2006—–$300,00 2011: The banks did this its like a shell game—–I trusted the valuation, I trusted the market, I trusted the appraiser

In short, I feel like I bought a diamond ring based on a trusted and certified appraisal only to find out 3yrs later that the appraiser, jeweler, and industry governing body where all in cahoots and in practice one big single entity that sold me a CZ! Strategic Default a moral issue, absolutely I agree the calculating immorality of the banking industry has brought the country to it’s knees…..damn right it’s a moral issue

Mark Stopa

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