JAFB

Below is a section from about the midpoint in of a Moody’s analyst walking the reporter through evaluating a security representing $430M in subprime mortgages to 2,393 homes in the Southern California area. 75% of the loans are ARMs and 43% lack any written proof of income.

from the article ‘Triple-A Failure’ in the New York Times
On the plus side, Moody’s noted, 94 percent of those borrowers with adjustable-rate loans said their mortgages were for primary residences. “That was a comfort feeling,” Robinson said. Historically, people have been slow to abandon their primary homes. When you get into a crunch, she added, “You’ll give up your ski chalet first.”

I know this was meant to be a little bit of hyperbole, but to some extent I have to think it reflects some of they psycho behavior that led up to this mess. A package of subprime loans… and we’re talking about choices regarding primary homes, as if any notable group of these people have other properties? Certainly there’s a factor at play when it comes to attachment - the credit card companies have been making a lot of credit available to unemployed college students for years based on their psychological profile and view of keeping a good credit score as a sign of success. But suggesting that there’s some other similarly sized investment in most of the above borrower’s lives that they could prioritize lower is just… stupid.