[quote=FlyerInHi]CAr, the borrowers were not victims.
They abided by the terms of their loans when they stopped making payments and the banks foreclosed on the collateral. Simple resolution to a business contract between 2 private parties.[/quote]Ok.. lets take it from this. The banks then realize that these particular people will then drop the property and payments when things get a little tight or it doesn’t look like they could immediately flip for a profit. Seeing that these people would do that, means that they are a poor credit risk. The banks then charge them a higher interest rate and insist on a larger down payment because of the greater risk that loaning money to these people entail. When a bank forecloses, it is getting the property back in lieu of having the loan paid back. Seems like it might be equitable unless you realize that sometimes the amount owed is more than that property is worth. That means that the bank ate the loss on this person, while this person gets to walk away without owing the deficit on the loan. — once burned twice shy.. and of course the FICO score takes a hit– which is how banks account for the risk.
[quote=CA renter]The lenders were stalling the foreclosure process because they were buying time in the hopes that one of the many foreclosure prevention programs and asset-price inflation schemes would work. At this point, it looks like it’s worked for many lenders who would have been taking huge losses by now if not for all of the manipulations.[/quote]The banks ‘delaying’ foreclosures were for two other reasons as well.
They were overloaded and were unprepared for this many.
Once the bank forecloses, they have to realize the mortgage/loan at the actual value that they can get from the property they have foreclosed upon, and therefore book the actual loss versus using the ‘paper’ value on the loan. Could make many more banks insolvent.
