mead107 Posted July 31, 2008 Share Posted July 31, 2008 If the people do not have enough INCOME to Pay a loan then the bank should NOT have given the people a loan . That is why the banking industry is in such bad shape . You and I pay for it in the long run with higher fees and Intrest . That is why the bank is STUPID . BANK people who loan the money to bad risk people should be shot . The bank is not going to make any money from this house . It cost tem lots of money to foreclose . news today they wanted the money to start a construction company . http://blogs.wsj.com/developments/2008/07/...in-foreclosure/ Link to comment Share on other sites More sharing options...
DC Tom Posted August 1, 2008 Share Posted August 1, 2008 I'm no expert, but it seems that its not the theory part of the equation that's the problem, it's the practice. IF the bank can recoup everything then everything is smooth. But if I'm a bank, I don't want to be holding the deed to a house in this shtty market anymore than anyone else. If you had the means to lend someone money for a house right now, would you lend it to someone who was a pay-back risk knowing that your security is an asset that is extremely difficult to recoup value on at the present time? I'm probably oversimplifying something that I don't know enough about, but that's how I look at it... If you're a bank, you want to be holding the deed LESS than anyone else. Banks are in the finance business, not the real estate business. Even in a hot market, a bank's in an immediate hole with a foreclosure because they replace a non-performing asset (a mortgage in default) with a negatively performing one (it costs money to acquire AND HOLD real estate - property taxes at least). It's also why banks have made questionable decisions about who to lend money to in the recent past. If it were a straight cash flow decision, most of those loans wouldn't have been made. Since they were acquiring an asset that could be bought and sold (the mortgage, not the house), the risk analysis was entirely different, along the lines of "We can sell the risk to someone else, so what do we care?" Link to comment Share on other sites More sharing options...
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