Contrary to popular belief–well, contrary to my kids’ belief, I do things other than just watch TV. I was catching up on my recorded Colbert Reports and found this from last Monday (July 30). In his threatdown, Stephen Colbert identifies bankrupts as the number four threat to America, noting that there was only one thing that could go wrong with the subprime lending business. To counter the threat, Colbert calls for the return of debtors’ prisons!
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One response to “Colbert’s Turn on the Subprime Crisis”
An article in the NYT this morning says that many subprime borrowers, as a practical matter, already are “in prison.” http://www.nytimes.com/2007/08/06/business/06home.html
Though I certainly can’t vouch for the accuracy of all the allegations made in the article, I can confirm that we see more than a few situations in which the borrower would like to work something out with the lender, but can’t find the lender — can’t find someone with authority to work something out. And we’ve seen a few situations in which, when questions are raised about whether payments have been properly credited, or charges are justified, no one seems able to find the paperwork, or to know who even actually holds the note. In a state like Texas, which has nonjudicial foreclosure, lots of people can’t work things out, or even find someone to talk to in order to work things out in time to forestall foreclosure. They simply lose their homes. The uptick in foreclosure rates in this state would tend to confirm what the story says — that the old days of lenders who knew their borrowers and so could gauge whether a workout made sense seem in many quarters to be gone.