Thais Balk and Gawk As US Homeowners Walk

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It's the hot season in Thailand. The sun blazes, the air simmers and I'm covered in perspiration that simply has nowhere to go in this heat. It's like sex without air-conditioning on the hottest day in August in New York City. A slow, limp breeze blows across the Phuket beach off the Andaman Sea, providing only slight relief. Far more relief comes from gin and tonics--perhaps too much, I realize too late into my fifth cocktail.
"Even Jamie Dimon says it will get worse before it gets better," I find myself telling the Thai businessman who is buying me drinks in exchange for my ill-conceived ideas about US real-estate. I'm pretty sure he has no idea who Jamie Dimon is but I say the name with such gravity that I'm pretty sure the businessman, who either exports or imports (my Thai is still pretty bad) textile machinery, probably thinks this "Jamie Dimon" character is the Secretary of the Treasury, the Chairman of the Federal Reserve and JP Morgan himself, all rolled into one. And, in a sense, I guess he is.
Where was I? Oh, right. Gin and real estate. I'm telling Mr. Textile Importer/Exporter about how the rapid decline in home price has left many (so-called) homeowners owning more than there home is worth. And this prompts them to default and walk away from their homes, leaving the banks with the keys to declining assets. That's when Mr. TIE interrupts.
"In Thailand this is not possible. The bank would foreclose but the borrower would still be liable for any additional losses," he says.
In some states, I tell him, it's possible for banks to pursue other assets of defaulting borrowers but they rarely do. It's a costly pain in the neck, and many borrowers don't have much in the way of assets by the time they are giving up their home.
He explains that what's really wrong with the US is that we have no honor. Actually, that's not how he puts it. He says in Thailand the financial and legal consequences of defaulting would be secondary. A defaulting borrower would suffer a serious loss of face and incur negative religious points, or karma. Some real estate investors are still "making merit"--performing redemptive religious acts--for losses following the 1997 crash.
I down the rest of my gin and try to reassure him. Not everyone with overleveraged real estate will default, I say.
"In the US we may not worry about losing face," I say. "But we do worry about losing our FICO scores."
--John Carney, who has never owned a house, is "on assignment" in Thailand.

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