Borrower Runs: Strategic Defaults on Mortgages Post author By Philip Lane Post date August 29, 2011 This VOXEU article looks at some behaviourial motives that influence ‘borrower runs’. Categories In Uncategorized 6 Comments on Borrower Runs: Strategic Defaults on Mortgages ← Bank losses and mortgage debt forgiveness → Light At the End of the Tunnel 6 replies on “Borrower Runs: Strategic Defaults on Mortgages” “Borrowers of Ireland, Unite!” eh? Seriously, I’m surprised that a campaign of mass non-payment of mortgages has not been organised yet. Would it actually be illegal to do so? If some form of debt forgiveness becomes established (be it a formal system or on a case-by-case basis), then of course there will be loads of strategic defaults by people who can pay but don’t want to. I assume that many are already laying the groundwork by deliberately hiding some of their income from the bank and missing the odd mortgage payment. A uniting behavioural event could be a mass emigration drive to say New Zealand or Australia…the temptation of ‘jingle mail’ would be high @Pete – didn’t one of the big unions in Ireland (I forget which one) recently propose just such a mass non-payment of mortgages campaign? In June or July I think. It met with the usual public apathy. As the late Lenny used to say, “they would be on the streets if this were France.” Useful ideas. They must terrify a few of the upper-echelon custodians … Hope The Governor has a few of the CB types checking this out …. & NAMA …. More grist for the mortgage arrears mill. All the more reason to provide people with a process they can trust in -which could take the form of a national debt management system that objectively and indepedently mediates binding agreements between borrowers and their banks by applying a menu of escalating resolution options and using a robust assessment process to exclude the can’t pays and free-riders. Of course the bigger borrowers would probably benefit from a decent banruptcy system that squeezes until the pips squeak. Could it be that current forebearance is amplfiying the risk of a borrowers run as everyone is captive of a dickensian collection system that no one can afford? @Desmond & PR Guy – You’re right of course, the people with enough energy, anger and desperation to take to the streets will take to the planes instead, like they always have. Sad, sad! Comments are closed.