More Scary. (additional thoughts)

Yesterday we talked about how all the foreclosures might change the market.

Thanks for all the great comments.

 One thought i had that i haven't heard talked about here much is why did this happen.  What was one of the causes of the problem.

It will take time to work through this market.  i think one of the hardest issues that isn't talked about much is "skin in the deal"  one thought behind these neg am loans was that it would work out fine because a year from now the house would be worth 20k more then it was the prior year and now the owner had skin to fight to keep.  when that didn't happen you got a lot of people saying.  i want to keep my truck and plasma tv so i will just let the house go (something has to give) move into an apartment for a year and get back in the ownership deal a few years from now. 

If the buyer has no skin in the game what does he really have to loss?  what does he have to fight to keep?  there is no equity in fact he may be upside down now that the loan is working against him.  He might be in a loan where walking away is the best choice he has to make.  Do these banks need to be working out some renegotiation's?