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Monday, November 15, 2010

Housing Bubble Villains: The Sellers

It is largely accepted that many underwater homeowners today are victims. The premise of that notion is that the homeowners would not be underwater if not for those dastardly, evil banks who forced these people to sign paperwork to borrow other people's money to buy homes...not coincidentally, at a time when house prices were increasing 15 percent a year on average.

The related concepts, that the homes were overvalued and that banks fed the pre-2007 bidding wars with easy money (OPM), involve a truism that is ignored. If the party on one side -- the homeowner-buyer -- is a victim, doesn't that make the party on the other side some sort of villain?

That other side party would be the home seller. Those people who sold their homes for perhaps double their "true value."

Ordinarily, if one side of a deal is entitled to relief, there is the implication that the other side did something to cause the damage to be relieved.

We aren't hearing this argument. Maybe, just maybe, that's because there's nothing to relieve. Maybe the underwater borrowers are not real victims. Just maybe.

Eric Dixon is a New York lawyer and provides strategic analysis, litigation stress management and consulting as president of Eric Dixon LLC. He is available for comment or consultation at 917-696-2442 and via email at

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