Should Non-Recourse Mortgages Exist?

The blog, Credit Slips, recently featured a post by Adam Levitin about whether mortgages should ever be non-recourse.

I agree wholeheartedly with Mr. Levitin’s post. I’d also like to add that the current mess that we have found ourselves in is an anomaly. It wasn’t normal for housing prices to increase at such a high rate, and it’s not normal for housing prices to drop at the rates at which they have currently dropped. Exotic mortgages and zero-down loans, and the idea of starter homes and getting into the market before you were “priced out forever” all contributed to this mess. For the people who bought into those ideas and now find themselves in financial distress due to job loss or health problems or any other “life happens” reasons, I am thankful that some mortgages are non-recourse. When someone is worried about “hanging on” and just making it through one of the worst economic times our country has seen, I am glad that people who have non-recourse mortgages don’t have to worry about one more stress – the stress of a deficiency judgment.

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