Financial Innovation and Feudalism

Mike Konczal  posts on the unwind of the mortgages are awesome!  This posting on  Fake Ownership is particular thought provoking.  It suggests we are headed into a period when a new kind of thing, not owner, not renter will emerge; i might call it a caretaker.  This economic actor doesn’t pay much, maybe nothing, to live in the investor owned real estate, but at the same time he has none of the rights of a renter or an owner.  He’s kind of a squatter.  Some of these pop up because an investor bought a foreclosed property and he just needs somebody to sit in it until the market recovers.  Some pop up because they used be the owner, they stopped paying, so the bank owns the property now – but yeah the bank doesn’t want to let the loss play out and show up on their books.  The banks is caught in a kind of catch 22.  If they foreclose the value of the property sinks even further.  I’m reminded of an comment made early in the crisis about the banks have become incompetent landlords.

The two postings on predatory mortgage servicing are also great.  First on the  social trust aspect and then on the  predatory aspects of the servicing industry.
It is hard reading these for me not to think that deregulating the financial industry has lead directly toward the rediscovery of the social relationships last popular under feudalism.  I wonder if the  condo management companies are going move into this business.  Talk about gated communities!
Meanwhile, back on the walk away issue, this is a very good podcast.  There is a slice in the middle about the ethics and social contract issue.  If you get past the scenarios shown above start to come up.    There are people who have walked, and they can’t get the bank to  repossess  the house and they are stuck paying the taxes and condo fees until they do.  Such people want a pseudo-caretaker too.

3 thoughts on “Financial Innovation and Feudalism

  1. Barney

    Sounds a bit like ; we used such a service when we went on holiday and didn’t think it was fair to leave the cats to starve/couldn’t find a cheap cat-sitter. According to the people who stayed in our place for a couple of weeks, they knew some chaps who spend the whole year moving from property to property as caretakers…

  2. bhyde Post author

    Barney – That’s neat. I wonder if house sitters america is seeing any demand from banks or other investors? And I wonder how many of their gigs have indeterminate duration; i.e. how much anxiety the house sitter has that they will at any moment be out on the street.

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