Clearly, the U.S. taxpayer is entitled to a full assessment of the creditworthiness and spending practices of so significant a would-be borrower.
Ms Lamont wondered whether there was a Plan B to accompany the proposal that an independent Scotland would form a sterling zone with the remainder of the UK. She wanted details of the fiscal package which would enable Scotland to be neither a borrower nor a lender.
The key feature is that any borrower across the 27 EU member states would be refused a home loan if they failed a standard credit worthiness assessment.
For example, if a customer could potentially save 300 dollars a month while paying 250 dollars more into the principal by refinancing, why would this not be a benefit to both the lender and the borrower?
However, for any funds to be taken out via the tranche, the borrower would need to bring in commitments from lenders, and if considered too aggressive at the time, lenders would be unlikely to hand over their money, sources said.
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Contingent write-downs are one example: loans would be written down in increments over three years, but only if the borrower stayed current on payments.
This matters because loans from the EFSF rank pari passu with loans provided by private-sector investors to a buckling sovereign borrower such as Spain, but credit from the ESM would be senior to private sector loans.
However, it would yield a chronic deflation that would produce high unemployment and would likely make long-term debt financing too risky (for both lender and borrower) to be undertaken.
If a dodgy borrower defaulted, it didn't matter--the value of the house would always be higher.
If mortgages could be written down to a value above the likely foreclosure sale price, that would generate benefits for both creditor and borrower.
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