What determines if it would or would not lead to mass-evictions?Under the contracts of the rental-backed securities, if performance falls below a certain level, the entire portfolio goes into default, which may lead to evictions for thousands of renters. The more vacancy rates rise, the closer we get to those performance targets, and policymakers and regulators have not prepared for an uncertain aftermath.
Quite. Keep in mind - part of the catastro-fuck that was the mortgage crisis was a bunch of borrowers running the numbers and saying "you know, based on what I read here the only thing you can do to me if I walk away from $400k in debt is trash my credit rating. BRING IT BITCH". One of the deepest ironies in the banking sector is, in my opinion, the death of Washington Mutual. WaMu had pushed hard into crazy mortgages because they were selling derivatives like hotcakes. Meanwhile, at the other end of the building, WaMu was busily lobbying Congress to make credit card debt ever harder to disburse, to make it harder and harder to declare bankruptcy. So John Q, who has a WaMu debit card, a WaMu credit card and a WaMu mortgage, says "If I flop the debit card I get $39 per overdraft. If I flop the credit card I get a 39% interest rate and a debt I can never get rid of. If I skate on the mortgage, though, it doesn't much matter. And hey - WaMu wants to sell me a HELOC. So yeah - WaMu, I'll take a second mortgage on my house! And I'll use it to pay my credit cards. Thanks, WaMu!" It took WaMu about eight months to go from AAA to DEAD. And anyone with a grand overview of the process could have seen it a mile away. However, banks are exceptionally good at masking the grand overview. Had there been someone to ask "What happens when we make mortgages really easy to get and credit cards impossible to pay off?" WaMu would likely still be in business. So the answer to your question is "let's find out."