Ecuador law would forgive debt on defaulted mortgages of first-time buyers

[Judi Lynn]

Source: Associated Press

Ecuador law would forgive debt on defaulted mortgages of first-time buyers
By Associated Press, Updated: Wednesday, May 9, 1:33 PM

QUITO, Ecuador — Ecuador’s legislature has passed a law that would oblige banks to forgive any outstanding debt on mortgages to first-time home buyers of properties worth up to $146,000 if they default and forfeit the home.

The law would also apply to loans by banks to first-time purchasers of automobiles that cost up to $29,200.

President Rafael Correa praised the law after it passed 68-21 on Tuesday evening. He did not say whether he would sign it or possibly seek amendments.

The bill’s sponsor says that if Spain had passed a similar law a decade ago it could have avoided the housing bubble that has caused so many to lose homes.

Read more: http://www.washingtonpost.com/world/the_americas/ecuador-law-would-forgive-debt-on-defaulted-mortgages-of-first-time-buyers/2012/05/09/gIQAztlTDU_story.html

[truedelphi]

1. Meanwhile in our nation, we are sending people who have been bankrupted by Medical Emergencies

to jail for a bad debt they cannot afford any longer.

Vive La South American style of democracy. We don't have it here any more - guess it got outsourced along with our jobs.

[PSPS]

2. Who has been sent to jail for not paying a debt?

I know the country has gone to hell in a hand basket, but we're not back to debtor's prisons yet.

[truedelphi]

5. Circa Apr 20th, 2012, Both DU and Daily Kos,

Firedoglake and a score of other websites had the story.

Daily Mail, The Guardian, Reuters and AP also had the story.

This is coming to us - you are in trouble with money, it will be considered a felony and your ass will be grass.

http://www.dailymail.co.uk/news/article-2132973/Breast-cancer-survivor-handcuffed-thrown-jail-mistaken-280-medical-debtors-prisons-return-U-S.html

[PSPS]

6. Thanks.

Apparently, the trick is to file a collection action (civil - can never be jailed) and the summons is served by mail instead of in person. Then, if the debtor fails to appear, they are arrested for contempt of court (criminal - can be jailed.)

It's surprising that there are judges who will jail a person without proof of personal service. But many judges these days are merely "politicians in robes."

[YOHABLO]

3. I Country That Does The Right Thing

Do you think that they could do that for first home buyers in the U.S.? Oh hell no.

[fasttense]

4. How is this any different from our foreclosure laws?

"oblige banks to forgive any outstanding debt on mortgages to first-time home buyers of properties worth up to $146,000 if they default and forfeit the home."

You still lose the house but you don't owe the money. Most states wont allow a bank to collect a mortgage if the bank takes the home. And they are applying this to 1st time buyers only. Which is quite a racket for the banks.

Now cars are different. They have a little racket going. You can still owe the money even if the bank repossess your car. Which I think is immoral.