Skip to main content

View Diary: Bank Run in Cyprus, Will it Spread to Southern Europe? (322 comments)

Comment Preferences

  •  Properties (6+ / 0-)

    Patricia , yes in germany not that many people own homes . My parents never did and I don't as well . And tbh its pretty dangerous to do it .
    There is difference in the laws for example.

    In the US if you cannot pay your mortgage you walk away - the bank forecloses and you have a bad credit rating but no further debt from that house - please correct me if I'm wrong .

    In Germany you can't get rid of the debt that way. If the bank takes the house - the sell it in an auction - the proceeds (minus fees) will be applied to your debt and you still owe the rest.

    On the other hand ourrecent welfare laws - once you get the so called "Hartz 4 " - they will force you to sell any property you have andlive from the proceeds before you get any help from the state - so even if you save and buy a home and you lose your job - you have no chance to keep it. Same in retirement - if your pension is to low and you live below the minimal standard which is not that uncommon and will just get worse with the current low wages - the states pays you the difference between your pension and the welfare level - once you own nothing of value anymore.

    The one thing i really abhore about my country is that we still do not have a minimum wage law on the books. It was introduced for certain branches of the economy but not generally. This is a big part of the issue - because the government subsidisies cheap companies - and then pays the difference what someone earns and the minimum existence level - once you do not own anything of value anymore.
    So we have several millions of people who are so called "Aufstocker" - people who receive welfare despite a full time job .
    I have to admit that we as a culture are way to compliant with this. We should take a little bit of France - they throw a general strike every few months (not always with good cause). I can't remember that there wa sone in germany in the last decades .

    "How many years since you found yourself staring at an endless sky? " VNV Nation - Endless Skies

    by Kavalor on Sun Mar 17, 2013 at 01:56:02 PM PDT

    [ Parent ]

    •  You can not "walk away" in the US (0+ / 0-)

      If the bank forecloses on you or even if you negotiate a short sale in which the lender agrees to let you sell the house for less then the outstanding mortgage the lender can still get a  deficiency judgment for the money owned. Unless the homeowner has zero assets and no income or files bankruptcy (something that is now hard to do) they can be pursued essentially forever for the money.

      The one big advantage the US has is that your Primary residence can not be seized for unpaid debt. So some homeowners have decided to buy another house and default on their underwater home because the bank can't go after their new home. Of course this doesn't stop the banks from going after every other asset and the "clever" defaulter might end up in a very bad financial situation with no ability to borrow any more money.

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site