RE:recovery
by sibby mathews on Feb 10, 2008 05:20 PM Permalink
Because such collateral is almost always the mortgaged home. And demand for homes in the US has collapsed leaving the sector in a big crisis. In other words, the collateral has become a dud asset for many of these institutions.
An interesting aside is that the NRI community, among the most credit worthy sections in the U.S, is also very badly affected by this crisis. This is because the outlook towards a house that this section has is different from that of the native American. Whereas the American sees the house has just another utility, much of the NRI community sees it as another 'investment'. This is a cultural trait and it has just left the NRIs in America with red faces and plunging 'net worth'.
RE:recovery
by Pradyumn Sharma on Feb 10, 2008 04:55 PM Permalink
They can. But the value of the properties has fallen below the outstanding loan amount, so even by taking over the property and selling it in the marketing, the lenders make a loss. In fact, the loss amount reported is after factoring for the recovering they are able to make by taking over the property and considering the saleable value of the same.
