Could hyperinflation pay off bad mortgages?

A lot of experts think the U.S and Europe could very well likely experience hyperinflation.

I am wondering if that could help people in bad mortgages?
If a dozen eggs cost one million dollars and you only owe $200.000 on your mortgage, could it be that simple to pay it off?

Or have they written inflation clauses in the fine print of most mortgages?

Or does the trust in the U.S. dollar run so deep they never considered it?

I was reading a book about the Weimar Republic in the 20s and they went thought hyperinflation it was very hard on a lot of things but all the poor people that were in debut easily pay off all debut with inflated monopoly money and owned homes and farms free and clear much to the horror of the bankers.

 

in theory yes but this is america,i dont see us getting that lucky..lol

for one thing,on every mortgage there is a clause saying the bank can call in your mortgage at any time.

as ruthless as bankers are i have a feeling mortgage calls would be made before inflation gets that out of control..

the other variable is that people would have to have jobs that were receiving pay raises fast enough to keep up with inflation..

your bank account isnt just going to magically multiply just because inflation is at 100%.

so yes in theory,but im skeptical at best that it will help very many..

 

I doubt the banks could call in all those mortgages. You can't get blood from a stone, and the system would be in such chaos that their cost/benefit analysis would argue against injecting more instability and acquiring massive amounts of property at the same time.

We would certainly see more collapse though, and we would probably resume living beyond our means at the first opportunity.

 

That would cause some havoc for bankers to start calling in millions and millions of loans.

No your bank account would be fucked..

I was reading stories of people in the Weimar republic that had 40-year pension funds that would probably buy a large farm before hyperinflation. When the retrieved them after the hyperinflation they had enough for 1 cup coffee.
Scraped and saved 40 years to buy 1 cup of coffee.

 

we? got a mouse in your pocket?

we live well within our means now and wouldnt change no matter what happened around us..

 

I am not sure how mortgage works there, but isn't it inflation adjusted?

 

Do you? Do you pay taxes? Do you use roads? Do you enjoy police protection, and protection from foreign invasion? Ever use the government weather service to find out about an approaching storm? Do you use government notes to facilitate transactions? Do you use the internet?Because your government is waging war at the expense of future generations.

None of us has any choice about this.

And by "we", as you already know, I was referring to you, me, the mouse in my pocket (I miss having pet rats), and the rest of this country collectively. It doesn't matter what your personal philosophy is. Your country is living beyond its means.

 

I'd love to know the answer to this from someone who knows. Anyone?

 

oh i dont care what the government does.. i just want to be left alone.. im fine with paying my little bitty share of taxes,what they do with it aint my problem..

i guess what it boils down to is that we have spent our entire adult life getting to the point that we no longer have to participate in society other than paying our property taxes and utilities as long as we CHOOSE to have them on..

ive long since gave up on changing what our government does. now i just want to be left alone..
so yes,that we excludes me..

 

no as long as your loan is a fixed rate loan the amount of the loan and interest paid does not change for the life of the loan...

 

I think if you get a “fixed rate’ loan then it can’t be changed. But I’m not sure.?

Fixed rate mortgages are usually more expensive than adjustable rate mortgages. Due to the inherent interest rate risk.
http://en.wikipedia.org/wiki/Fixed_rate_mortgage

Interest rate risk is the risk (variability in value) borne by an interest-bearing asset, such as a loan or a bond, due to variability of interest rates.
http://en.wikipedia.org/wiki/Interest_rate_risk

 

there is something called a PLAM , but i have never heard of such a thing till now..
im sure that it makes up a very small percentage of loans..
as i stated fixed rate mortgages and ARM's do not change based on inflation.

 

The mouse in my pocket says your life sounds pretty good...

 

i have no complaints.. took twenty plus years to get here and to be honest we still have a bit more work to go,but for the most part we are now free from the responsibilities and burdens of babylon..

 

Guess I can't complain either, since i support my family with about a week of work per month, and I've never had to take public assistance or a day job.

But I get pretty anxious when the bank account gets low or when i get sick.

 

Hyperinflation is just exactly what the banks and derivative/hedge fund markets were counting on to boost their figures. They were counting on the economy to be based on nothing. And expecting it to continue to escalate. It won't help the little guy, because now every one is asking show me the money. And they can't... their balance sheets were based on faulty projections.

 

hyperinflation never helps anyone. by the time a hyperinflation occurs the currency is rendered obsolete.

 

In my opinion, a lot of what people are talking about when they refer to "bad mortgages" echoes Republican talking points.

When the sub-prime mortgage fiasco was unfolding, there were a lot of right-wingers out there who were talking about all these stupid people out there in American who kept taking "bad mortgages".

I didn't realize this fully until the economy collapsed. But they started blaming it on all the people who accepted "bad mortgages", and they weren't even saying it like it was their opinion, they were saying it as if it were a fact.

If people didn't take those mortgages, they said, you wouldn't have this problem.

Blame the poor. Yeah, blame the hundreds of millions of people who can't afford to buy of their own home so they go crawling to the banks and beg for a loan. And I've seen that down the stretch. It wasn't a problem because people were taking out mortgages. In my view, the whole "bad mortgage" theory is the view of the rich people who wish to shrug off the blame.

 

right on, Ari.

Not to mention, those bad mortgages would not be a problem if they had not been bundled by financial institutions, and repackaged as AAA securities. Instead of hanging on to real capital, financial institutions just kept mortgage backed securities around, because the return was so high.

AAA means they are as safe as government bonds. Obviously this was a scam. Why was this done? Greed. Who did it? Hint: not the poor.

 

My definition of a “bad mortgage” is a mortgage that is not going to get paid off. For whatever reason can’t afford it, the price of the house drops too much don’t want it, not getting paid time to resell it.

I have mixed feelings about it I know a few people in homes they can’t afford and they will probably lose them, they probably knew they couldn’t afford them, some of them were just trying to survive, but they could of got rid of the dog and the trampoline had a yard sale and moved into an apartment.

I used to frame homes for a living and I only could afford to live in small apartments or in the woods (It is a strange feeling building homes so you can afford to be homeless) . So after all the years of in living cheap little places or in the woods because housing was inflated way over the livable cost I really don’t feel sorry for people who bought more then they could pay for.

I blame the government for the Overall Financial mess and the people for their own personal messes.