Re: how do forclosures impact the banks?
Depends on the market and how much they're in the house for. If they've been requiring 10-20% down and the home is in an upmarket, the bank might do okay on a repossess/resale.
If its the way things actually ARE in most markets now, they're eating a 100% financed house in a down market.
Very, very bad for the lenders.
Happening right now with the people who bought my wifes old house. Got 100% down on a variable rate interest-only mortgage, made about six payments and that was it.
Bank financed the 240k, they might get 180-200 tops for the house, and it'll take a long time to sell.
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.