CrookedRiverGuy wrote:Paphitis wrote:The yanks did that for a period when they were handing out Home Loans on Cereal packets and they had the Sub prime Crisis.
Not that it matter much, but you make it sound like it was something next to an act of charity. It was nothing but a dirty fraud.
No it wasn't an act of charity. And Lehman Brothers (I think it was) went down because of it.
It was bad for the consumer because they couldn't handle the debt. It was also bad for the bank that engaged in this activity. Everyone believed they would come through but when the economy turned, everyone was handing back the keys to their home.
The thing however that the Americans do better is this. they allow customers the opportunity to take the keys to their home back to the Bank. If there is a collapse in Real Estate prices, the bank has no other recourse and has to cut its losses if there are any. In the EU and Australia, the bank will take you to court and Bankrupt you even.