There's No Such Thing as Foreclosure Lite

Mark Gimein reckons that a foreclosure on a subprime mortgage isn't as bad as a foreclosure on a more traditional mortgage, because he's been reading about subprime borrowers going into foreclosure, and "almost without exception the borrowers the stories cite put zero down on their homes". He continues:

Losing your home sucks no matter what, but it sucks a lot less if you didn't need to put any cash down to buy it.
If you put down nothing on a house, that doesn't mean you're willing to lose it. But it's just not the same as losing both your house and your life's savings with it. Lose a house on which you've put zero down and you're back where you've started. It's "foreclosure lite."
I know some people will say, "But your credit record is ruined." And indeed, for some years it is. But these days having a bad credit record means you're just in pretty much the same boat as people with good credit records were two decades ago: instead of being able to get a house with 5 percent down or zero percent, you need to actually have a down payment of 20 percent.

Let me explain to Mark why he's wrong, and why it does not "suck a lot less" to lose a house on which you've put no money down.

1. Yes, you do lose your life savings along with the house. Most subprime mortgages are refis, which means that very few of them are non-recourse: just because you lose your house doesn't mean that you don't still owe money to the lender. When you go into foreclosure and/or bankruptcy, you will lose all your savings as the lender tries to recover as much of the value of the loan as possible. Remember that it's the homeowner, the individual, who owes the bank money: a mortgage is a personal debt.
2. In any event, it's dangerous to generalize from anecdotes. You might have heard of subprime foreclosures where the buyers put no money down; I can assure you that there are many others where life savings did get put into down payments.
3. And no, you're not back where you started after a foreclosure, even if you did put no money down. When people buy a house, they generally spend a large amount of money on lawyers' fees, brokers' fees, surveyors' fees, furnishings, movers, interior decorators, architects, contractors, appliances, and dozens of other "one-off" expenses. That's very real money down the drain if you lose the house entirely.
4. Yes, if you have ruined credit, it might still be possible to buy a house with 20% down. But you've lost your life savings, remember? Where are you going to find that down payment? And, more to the point, where are you going to live in the interim? Few landlords are going to want to rent to you with that credit rating. It's not uncommon for people thrown out of their houses to find themselves unable even to sleep in their cars, since the car, too, has been reposessed.

Mark is living in a fantasy world if he thinks that many people are going through some kind of "foreclosure lite". It's possible that some real-estate speculators might find themselves in that position, if they never moved in to the house they bought. But for real people with one home, foreclosure is a terrible thing, and it's just as terrible no matter what kind of mortgage they have.