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Strategic Default
A strategic default is the decision by a borrower to stop making payments (i.e., to default) on a debt, despite having the financial ability to make the payments. This is particularly associated with residential and commercial mortgages, in which case it usually occurs after a substantial drop in the house's price such that the debt owed is (considerably) greater than the value of the property — the property has negative equity or is ''underwater'' — and is expected to remain so for the foreseeable future, such as following the bursting of a real estate bubble. Such borrowers are called ''walkaways''. The process of strategically defaulting on a home mortgage has been colloquially called "jingle mail" — metaphorically, one mails the keys to the bank. Prevalence post-housing bubble Economists Paul Krugman and Hal Varian argued that strategic default would be an inevitable result of the collapse of the finance and property bubble of the era following 2006. They also noted ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Default (finance)
In finance, default is failure to meet the legal obligations (or conditions) of a loan, for example when a home buyer fails to make a mortgage payment, or when a corporation or government fails to pay a bond which has reached maturity. A national or sovereign default is the failure or refusal of a government to repay its national debt. The biggest private default in history is Lehman Brothers, with over $600 billion when it filed for bankruptcy in 2008. The biggest sovereign default is Greece, with $138 billion in March 2012. Distinction from insolvency, illiquidity and bankruptcy The term "default" should be distinguished from the terms "insolvency", illiquidity and " bankruptcy": * Default: Debtors have been passed behind the payment deadline on a debt whose payment was due. * Illiquidity: Debtors have insufficient cash (or other "liquefiable" assets) to pay debts. * Insolvency: A legal term meaning debtors are unable to pay their debts. * Bankruptcy: A legal finding tha ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mortgage Forgiveness Debt Relief Act Of 2007
The Mortgage Forgiveness Debt Relief Act of 2007 was introduced in the United States Congress on September 25, 2007, and signed into law by President George W. Bush on December 20, 2007. This act offers relief to homeowners who would have owed taxes on forgiven mortgage debt after facing foreclosure. The act extends such relief for three years, applying to debts discharged in calendar years 2007 through 2009. With the Emergency Economic Stabilization Act of 2008, this tax relief was extended another three years, covering debts discharged through calendar year 2012. The relief was further extended until January 1, 2014, at Section 202 of the American Taxpayer Relief Act of 2012. This tax relief has been renewed each year since. The Bipartisan Budget Act of 2018 renewed it for all of the tax year 2017 and offered a wide range of individual and business tax benefits that had expired at the end of 2016, including the "exclusion from gross income of discharge of qualified principal resid ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mortgage
A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged. The loan is " secured" on the borrower's property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property ("foreclosure" or " repossession") to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word ''mortgage'' is derived from a Law French term used in Britain in the Middle Ages meaning "death pledge" and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure. A mortgage can also be described as "a borrower giving consideration in the form ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Freddie Mac
The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons Corner, Virginia.Tysons Corner CDP, Virginia ". . Retrieved on May 7, 2009. The FHLMC was created in 1970 to expand the secondary market for in the US. Along with the Fe ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Strategic Bankruptcy
A strategic bankruptcy may occur when an otherwise solvent company makes use of the bankruptcy laws for some specific business purpose other than simple inability to pay debts. Introduction In the U.S., Chapter 11 bankruptcy made it possible for a business to declare bankruptcy without actually being insolvent. It is also strongly weighted toward retaining the existing management through the process of restructuring, on the basis that the existing management would be most familiar with the business and thus best equipped to preserve as much of its value as possible. These two conditions laid the foundations for modern strategic bankruptcy. Strategic bankruptcy occurs where bankruptcy is a strategic choice rather than an unavoidable condition. Such a choice might be made to avoid or reduce heavy legal judgements, to sidestep existing contracts, or even as a tool for manipulative debt reduction. Under bankruptcy law, debts are not avoided entirely, but may be significantly reduced ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bank Walkaway
A bank walkaway is a decision by a mortgage lender (a bank) to not foreclose on a defaulted mortgage (when the borrower has ceased to make the payments), or to not complete foreclosure proceedings (to "walk away" from the mortgage). These are sometimes referred to as abandoned foreclosures or stalled foreclosures, though this latter term is also used more broadly when the foreclosure process has stalled for other reasons. In addition to homes directly owned by a bank, the same phenomenon occurs when the home is part of a mortgage-backed security (MBS), in which case it is the mortgage servicer who has chosen to not foreclose or to cease foreclosure proceedings. In the United States, bank walkaways have increased in recent years in the wake of the United States housing bubble, and they are also known as red flag homes. Definition The Government Accountability Office (GAO) defines an abandoned foreclosure as a mortgage that: * has entered foreclosure, * the servicer decides to not ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Nonrecourse Debt
Nonrecourse debt or a nonrecourse loan (sometimes hyphenated as non-recourse) is a secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender can seize and sell the collateral, but if the collateral sells for less than the debt, the lender cannot seek that deficiency balance from the borrower—its recovery is limited only to the value of the collateral. Thus, nonrecourse debt is typically limited to 50% or 60% loan-to-value ratios, so that the property itself provides "overcollateralization" of the loan. The incentives for the parties are at an intermediate position between those of a full recourse secured loan and a totally unsecured loan. While the borrower is in first loss position, the lender also assumes significant risk, so the lender must underwrite the loan with much more care than in a full recourse loan. This typically requires that the lender have sign ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Amorality
Amorality is an absence of, indifference towards, disregard for, or incapacity for morality. Some simply refer to it as a case of not being moral or immoral. Amoral should not be confused with ''immoral'', which refers to an agent doing or thinking something they know or believe to be wrong. Morality and amorality in humans and other animals is a subject of dispute among scientists and philosophers. If morality is intrinsic to humanity, then amoral human beings either do not exist or are only deficiently human, a condition sometimes described as moral idiocy or anti-social behavior disorder. On the other hand, if morality is extrinsic to humanity, then amoral human beings can both exist and be fully human, and as such be amoral by default. Human capabilities may be thought of as amoral in that they can be used for either constructive or destructive purposes, i.e. for good or for ill. There is a position that claims that amorality is just another form of morality or a concept t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Morality
Morality () is the differentiation of intentions, decisions and actions between those that are distinguished as proper (right) and those that are improper (wrong). Morality can be a body of standards or principles derived from a code of conduct from a particular philosophy, religion or culture, or it can derive from a standard that a person believes should be universal. Morality may also be specifically synonymous with "goodness" or "rightness". Moral philosophy includes meta-ethics, which studies abstract issues such as moral ontology and moral epistemology, and normative ethics, which studies more concrete systems of moral decision-making such as deontological ethics and consequentialism. An example of normative ethical philosophy is the Golden Rule, which states: "One should treat others as one would like others to treat oneself." Immorality is the active opposition to morality (i.e. opposition to that which is good or right), while amorality is variously defined as an ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Profit (economics)
In economics, profit is the difference between the revenue that an economic entity has received from its outputs and the total cost of its inputs. It is equal to total revenue minus total cost, including both explicit and implicit costs. It is different from accounting profit, which only relates to the explicit costs that appear on a firm's financial statements. An accountant measures the firm's accounting profit as the firm's total revenue minus only the firm's explicit costs. An economist includes all costs, both explicit and implicit costs, when analyzing a firm. Therefore, economic profit is smaller than accounting profit. ''Normal profit'' is often viewed in conjunction with economic profit. Normal profits in business refer to a situation where a company generates revenue that is equal to the total costs incurred in its operation, thus allowing it to remain operational in a competitive industry. It is the minimum profit level that a company can achieve to justify its con ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Shame
Shame is an unpleasant self-conscious emotion often associated with negative self-evaluation; motivation to quit; and feelings of pain, exposure, distrust, powerlessness, and worthlessness. Definition Shame is a discrete, basic emotion, described as a moral or social emotion that drives people to hide or deny their wrongdoings.Shein, L. (2018). "The Evolution of Shame and Guilt". PLoSONE, 13(7), 1–11. Moral emotions are emotions that have an influence on a person's decision-making skills and monitors different social behaviors. The focus of shame is on the self or the individual with respect to a perceived audience. It can bring about profound feelings of deficiency, defeat, inferiority, unworthiness, or self-loathing. Our attention turns inward; we isolate from our surroundings and withdraw into closed-off self-absorption. Not only do we feel alienated from others but also from the healthy parts of ourselves. The alienation from the world is replaced with painful emoti ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Guilt (emotion)
Guilt is a moral emotion that occurs when a person believes or realizes—accurately or not—that they have compromised their own standards of conduct or have violated universal moral standards and bear significant responsibility for that violation. Guilt is closely related to the concept of remorse, regret, as well as shame. Guilt is an important factor in perpetuating obsessive–compulsive disorder symptoms. Etymology The etymology of the word is obscure, and developed its modern spelling from the O.E. form ''gylt'' "crime, sin, fault, fine, debt", which is possibly derived from O.E. ''gieldan'' "to pay for, debt". Because it was used in the Lord's Prayer as the translation for the Latin ''debitum'' and also in Matthew xviii. 27, and ''gyltiȝ'' is used to render ''debet'' in Matthew xxiii. 18, it has been inferred to have had the primary sense of ‘debt’, though there is no real evidence for this. Its development into a "sense of guilt" is first recorded in ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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