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"The other option is dump his bad investment on the rest of us and we can carry him."
Well, actually, no.
Actually, yes. To afford a default and the following write-offs, the potential for such write offs are written into everyone's mortgage. So, yes, other mortgage holders pay for it. Just like if you total your car or collect on your homeowners insurance, other insurance payees pay for it too because chances are you haven't paid that much in as an individual. Yes, it is calculated into the system, but companies don't have a magic pot of money that just gets there somehow- they figure a capital charge on every loan they put out. There's a level of foreclosures that are planned for (i.e. have been charged back for) and once it surpasses that level is when we get into problems like tightening credit, etc. If people didn't default, your origination and interest rates would be lower.
It's kind of like those "free" ketchup packets in fast food places. They do not charge you per packet, but the charge is spread out over all their customers. Some customers will use the ketchup and some won't. They even calculate the charge of if there are a few people who purposely take more than they need (hoard them) to have a "free" supply ketchup at home. However, there is a tipping point where if people are stuffing their pockets with ketchup packets that the company must do something- either start charging for ketchup directly, increase the hidden cost per customer, or start putting procedures in place to limit the amount of ketchup .
I am going to say that taking extra ketchup specifically for the purpose of taking it home with you is stealing as opposed to accidentally taking a packet or two that you don't use and then take home with you. I understand that some people are basically mixing it with hot water to make soup because they need to feed their families and I would say that while it is stealing, I understand that and would find that to be ok. But a huge portion of people who purposefully take way more ketchup than they need to take it home aren't going to make ketchup soup, they're just greedy because they don't want to spend $1 on a bottle of ketchup. A few cents ketchup packet doesn't seem like a big deal, but it is something that we all pay for as customers. It's an example of a hidden cost to consumers, just like mortgage fees and interest.
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