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Comment by hiram112 | Hacker News Reader

This is exactly what happened in 2009-2010. Not everyone lost their job. Not everyone had taken out an adjustable rate loan that reset at payments they couldn't afford.

Some people were perfectly able to continue paying their mortgage, but due to life circumstances and / or some sort of psychological refusal to continue to pay for a house hundreds of thousands of dollars worth less than the loan, they simply defaulted.

It was called jingle mail because they just sent the keys back to the bank and walked away (sometimes taking the appliances and copper on their way out the door).

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It should be noted that this "sending keys back to the bank" thing is a rather funny US-specific possibility.

In most of the remaining parts of the world (speaking for Germany myself, for example) you can't just drop a houses' keys into the banks' mailbox and be done with the entire mortgage. Instead, you are bound to a mortgage that's suddenly not backed by sufficient securities anymore and it's up to the bank to decide whether they just ignore this situation, attempt to somehow mitigate the additional risk by raising rates or requesting additional cash from you, or whether they try to liquidate the security in order to limit their losses and then come after you to cover the outstanding balance.

So if you want to do the bankruptcy play in case the bank requests your last shirt, you actually need to go on full personal default, with all the negative side effects that has on your credit rating everywhere else and all the subsequent obligations like the necessity to show good financial behavior for X years to have your debts be deleted eventually.

It looks like home mortgages are only non-recourse, meaning the lender can't go after your other assets besides the house if you refuse to pay, in 12 US States: Alaska, Arizona, California, Connecticut, Idaho, Minnesota, North Carolina, North Dakota, Oregon, Texas, Utah and Washington.

https://www.forbes.com/advisor/loans/recourse-loans-vs-non-r...

Not sure why this is down-voted, but it's generally true.

For example, only 2 provinces in Canada are "non-recourse". Default on a mortgage, they lender takes the home and absorbs any loss that remains. Most of the US is like this.

"Recourse" provinces mean the lender takes your home, recovers what they can, then comes after your other assets to make up the difference. Not sure the exact laws but usually primary homes and retirement funds are protected, but they can take other property and auction it off.

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