"There are two effects that suggest [walk aways] won't happen so easily," he says. "The first is the endowment effect. People tend to value their own house above its market price. Owners don't want to sell at a loss. They have what we call a loss aversion."
The second is that people weigh the importance of immediate outcomes more heavily than long-term effects. Walking away involves upfront expenditures of time, money and effort, while the benefits of walking away are back-loaded.
What about the fact that these people committed to pay their mortgages regardless of the value of their home. If these people were not prepared to weather tough times they should have rented instead of buying homes they could not afford. The government should take foreclosure off the table for these people. They should have to stay in the homes they bought and pay for them. If they don't make their payments, their wages should be garnished.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment