Failure to pay your mortgage

In the USA we have the Lien system which gives the bank part ownership in your house to the degree of the outstanding mortgage. When you fail to pay your mortgage for some months, the bank has a simple legal procedure, without having to go to court, to get you evicted so they can sell the house to recover the mortgage. If what they get for the sale of the house is not equal to the outstanding mortgage, the bank loses because the former owners/residents owe nothing. Hence, there were millions of families in this Great Recession that simply walked away from their mortgage. I have read that in France you can't walk away from a mortgage if the house sells for less than the outstanding mortgage. You still owe the bank the rest. That is a really tough situation for the former owners. Are there many cases of such evictions, house sales or auctions and the people still owing a big bill to the bank?

Which country has not allowed it to happen? Big bit of the global crisis is therein.

I really hope they've learnt their lessons because it seems to be that we're paying the price for their crazy lending policies!

Andrew, I agree with you. One should always pay his debts. I'm wondering how US banks let themselves get into this mess by having no contractual protection in their mortgage contracts so the borrowers could just walk away from the house leaving the bank with a major problem. There truly was "Irrational Exhurberance" in the mortgage industry with many accepting applications from people with no steady income or proof of income and with no money up front. I wonder further if they've learned their lessons or if there is some law that protects the debtor as opposed to the lender.

James, just wanted to back up what Ben and Brian have said - you borrowed the money, it's up to you to pay it back, all of it. I can't see it working any other way!

James, as Ben says, it is a debt until completely paid off. There are plenty of farmers hereabouts who got mortgages in better times but are now broke who have debts for life in their own words. Even those whose farms were possessed because of debts are paying and if they cannot face legal proceedings against them. So, to your last question, there is a growing number at present.

In France you owe to the bank what they've lent to you, period. If you fail to pay your mortgage there's even a fine on top of the sum due, but you still need to pay. They can force you to sell the house and the money raised will of course be deducted, but you keep paying your bill. You can even be declared bankrupt, but this still doesn't get you out of it.