Publicly Humiliate Non-Paying Debtors!

[scaredyclassic]

student loans. I’ve almost paid mine off after 15 painful years. but today, people are graduating med school, law school with 200-250k plus in loans. it’s tough to make a go of it for some. it could turn out to be a bad bet. what if tuition kept going up as everything deflated? What if people got out of school routinely with a million in debt? at some point, wouldn’t it just be rational to say fine, I’ll get the degree, society tells me i need it to get ahead, i know i’ll never be able to pay off the loan,I’ll default, then you can garnish my salary. there’s only so much they can take, 25% or so. if your monthly payment is $5,000 a month and you take home $5,000 a month, it’s not possible you can pay your loan. yeah, you took the debt on willingly, but doesn’t society have some obligation to have tuition vaguely match up with the economic value of the degree? or at least be forbidden from putting out any propaganda that the degree is worth something and is not a liability? should there be a disclaimer or warning on your tuition statement, something like “WARNING: this debt you are incurring is toxic. it is unlikely you will ever be able to pay it back based on current salaries.” Maybe this is where it’s all gone to. the debts become crazy, speculative, bear no relation to reality…and that makes people say what the heck, why not…

[patientrenter]

[quote=arraya]……Yeah a few poor people that were irresponsible took down the whole western worlds banking system. Get a grip man.

[/quote]

I realize irony is your intention, arraya, but the unfortunate truth is that your statement is correct, with the substitution of “many” for “a few”. All of the trillions being lost are indeed due to non-repayment by Joe Homeowner of the loan he chose to take. Add it up over tens of millions of borrowers, and you’ve got the entire financial world and economy in a tailspin.

Was Joe an idiot to take a loan he didn’t intend to repay out of his income? Absolutely. Was Mr Banker / Investor an idiot to make the loan? Absolutely. Do we move to a system where people who do idiotic things with vast amounts of money evade taking full responsibility for their actions? Our economy will suffer terribly in the long run if we allow that to happen.

[patientrenter]

[quote=arraya]……Yeah a few poor people that were irresponsible took down the whole western worlds banking system. Get a grip man.

[/quote]

I realize irony is your intention, arraya, but the unfortunate truth is that your statement is correct, with the substitution of “many” for “a few”. All of the trillions being lost are indeed due to non-repayment by Joe Homeowner of the loan he chose to take. Add it up over tens of millions of borrowers, and you’ve got the entire financial world and economy in a tailspin.

Was Joe an idiot to take a loan he didn’t intend to repay out of his income? Absolutely. Was Mr Banker / Investor an idiot to make the loan? Absolutely. Do we move to a system where people who do idiotic things with vast amounts of money evade taking full responsibility for their actions? Our economy will suffer terribly in the long run if we allow that to happen.

[patientrenter]

[quote=arraya]……Yeah a few poor people that were irresponsible took down the whole western worlds banking system. Get a grip man.

[/quote]

I realize irony is your intention, arraya, but the unfortunate truth is that your statement is correct, with the substitution of “many” for “a few”. All of the trillions being lost are indeed due to non-repayment by Joe Homeowner of the loan he chose to take. Add it up over tens of millions of borrowers, and you’ve got the entire financial world and economy in a tailspin.

Was Joe an idiot to take a loan he didn’t intend to repay out of his income? Absolutely. Was Mr Banker / Investor an idiot to make the loan? Absolutely. Do we move to a system where people who do idiotic things with vast amounts of money evade taking full responsibility for their actions? Our economy will suffer terribly in the long run if we allow that to happen.

[patientrenter]

[quote=arraya]……Yeah a few poor people that were irresponsible took down the whole western worlds banking system. Get a grip man.

[/quote]

I realize irony is your intention, arraya, but the unfortunate truth is that your statement is correct, with the substitution of “many” for “a few”. All of the trillions being lost are indeed due to non-repayment by Joe Homeowner of the loan he chose to take. Add it up over tens of millions of borrowers, and you’ve got the entire financial world and economy in a tailspin.

Was Joe an idiot to take a loan he didn’t intend to repay out of his income? Absolutely. Was Mr Banker / Investor an idiot to make the loan? Absolutely. Do we move to a system where people who do idiotic things with vast amounts of money evade taking full responsibility for their actions? Our economy will suffer terribly in the long run if we allow that to happen.

[patientrenter]

[quote=arraya]……Yeah a few poor people that were irresponsible took down the whole western worlds banking system. Get a grip man.

[/quote]

I realize irony is your intention, arraya, but the unfortunate truth is that your statement is correct, with the substitution of “many” for “a few”. All of the trillions being lost are indeed due to non-repayment by Joe Homeowner of the loan he chose to take. Add it up over tens of millions of borrowers, and you’ve got the entire financial world and economy in a tailspin.

Was Joe an idiot to take a loan he didn’t intend to repay out of his income? Absolutely. Was Mr Banker / Investor an idiot to make the loan? Absolutely. Do we move to a system where people who do idiotic things with vast amounts of money evade taking full responsibility for their actions? Our economy will suffer terribly in the long run if we allow that to happen.

[patientrenter]

[quote=scaredycat] student loans….. but today, people are graduating med school, law school with 200-250k plus in loans. it’s tough to make a go of it for some. it could turn out to be a bad bet. what if tuition kept going up as everything deflated? What if people got out of school routinely with a million in debt? at some point, wouldn’t it just be rational to say fine, I’ll get the degree, society tells me i need it to get ahead, i know i’ll never be able to pay off the loan,I’ll default, then you can garnish my salary. there’s only so much they can take, 25% or so. if your monthly payment is $5,000 a month and you take home $5,000 a month, it’s not possible you can pay your loan. yeah, you took the debt on willingly, but doesn’t society have some obligation to have tuition vaguely match up with the economic value of the degree? or at least be forbidden from putting out any propaganda that the degree is worth something and is not a liability? should there be a disclaimer or warning on your tuition statement, something like “WARNING: this debt you are incurring is toxic. it is unlikely you will ever be able to pay it back based on current salaries.” Maybe this is where it’s all gone to. the debts become crazy, speculative, bear no relation to reality…and that makes people say what the heck, why not…[/quote]

scaredycat, home prices went up much faster than incomes because of easier and easier lending that ended up being based on non-repayment from income. The easier money didn’t help, because it just led to higher prices. What you’re saying is that the same thing is happening with student loans. The obvious solution is to make student loans harder to get. If people had to have realistic limits on their student loans, then higher education costs would stop escalating, just as home prices stop escalating when easy money stops flowing. Price always follows demand. Unlimited money = unlimited inflation.

I agree that people should be educated about repayment of their student loan before they are allowed to take it. Maybe they should be shown a schedule that shows what a level 15-year repayment of their projected end-of-education loans would look like, and what income they would need in order to have that amount to less than 10% of their income. Then ask them to research careers that they can get with their planned education and the incomes to go with them. If they come back with a career plan that makes sense, make the loan. Otherwise, no loan.

[patientrenter]

[quote=scaredycat] student loans….. but today, people are graduating med school, law school with 200-250k plus in loans. it’s tough to make a go of it for some. it could turn out to be a bad bet. what if tuition kept going up as everything deflated? What if people got out of school routinely with a million in debt? at some point, wouldn’t it just be rational to say fine, I’ll get the degree, society tells me i need it to get ahead, i know i’ll never be able to pay off the loan,I’ll default, then you can garnish my salary. there’s only so much they can take, 25% or so. if your monthly payment is $5,000 a month and you take home $5,000 a month, it’s not possible you can pay your loan. yeah, you took the debt on willingly, but doesn’t society have some obligation to have tuition vaguely match up with the economic value of the degree? or at least be forbidden from putting out any propaganda that the degree is worth something and is not a liability? should there be a disclaimer or warning on your tuition statement, something like “WARNING: this debt you are incurring is toxic. it is unlikely you will ever be able to pay it back based on current salaries.” Maybe this is where it’s all gone to. the debts become crazy, speculative, bear no relation to reality…and that makes people say what the heck, why not…[/quote]

scaredycat, home prices went up much faster than incomes because of easier and easier lending that ended up being based on non-repayment from income. The easier money didn’t help, because it just led to higher prices. What you’re saying is that the same thing is happening with student loans. The obvious solution is to make student loans harder to get. If people had to have realistic limits on their student loans, then higher education costs would stop escalating, just as home prices stop escalating when easy money stops flowing. Price always follows demand. Unlimited money = unlimited inflation.

I agree that people should be educated about repayment of their student loan before they are allowed to take it. Maybe they should be shown a schedule that shows what a level 15-year repayment of their projected end-of-education loans would look like, and what income they would need in order to have that amount to less than 10% of their income. Then ask them to research careers that they can get with their planned education and the incomes to go with them. If they come back with a career plan that makes sense, make the loan. Otherwise, no loan.

[patientrenter]

[quote=scaredycat] student loans….. but today, people are graduating med school, law school with 200-250k plus in loans. it’s tough to make a go of it for some. it could turn out to be a bad bet. what if tuition kept going up as everything deflated? What if people got out of school routinely with a million in debt? at some point, wouldn’t it just be rational to say fine, I’ll get the degree, society tells me i need it to get ahead, i know i’ll never be able to pay off the loan,I’ll default, then you can garnish my salary. there’s only so much they can take, 25% or so. if your monthly payment is $5,000 a month and you take home $5,000 a month, it’s not possible you can pay your loan. yeah, you took the debt on willingly, but doesn’t society have some obligation to have tuition vaguely match up with the economic value of the degree? or at least be forbidden from putting out any propaganda that the degree is worth something and is not a liability? should there be a disclaimer or warning on your tuition statement, something like “WARNING: this debt you are incurring is toxic. it is unlikely you will ever be able to pay it back based on current salaries.” Maybe this is where it’s all gone to. the debts become crazy, speculative, bear no relation to reality…and that makes people say what the heck, why not…[/quote]

scaredycat, home prices went up much faster than incomes because of easier and easier lending that ended up being based on non-repayment from income. The easier money didn’t help, because it just led to higher prices. What you’re saying is that the same thing is happening with student loans. The obvious solution is to make student loans harder to get. If people had to have realistic limits on their student loans, then higher education costs would stop escalating, just as home prices stop escalating when easy money stops flowing. Price always follows demand. Unlimited money = unlimited inflation.

I agree that people should be educated about repayment of their student loan before they are allowed to take it. Maybe they should be shown a schedule that shows what a level 15-year repayment of their projected end-of-education loans would look like, and what income they would need in order to have that amount to less than 10% of their income. Then ask them to research careers that they can get with their planned education and the incomes to go with them. If they come back with a career plan that makes sense, make the loan. Otherwise, no loan.

[patientrenter]

[quote=scaredycat] student loans….. but today, people are graduating med school, law school with 200-250k plus in loans. it’s tough to make a go of it for some. it could turn out to be a bad bet. what if tuition kept going up as everything deflated? What if people got out of school routinely with a million in debt? at some point, wouldn’t it just be rational to say fine, I’ll get the degree, society tells me i need it to get ahead, i know i’ll never be able to pay off the loan,I’ll default, then you can garnish my salary. there’s only so much they can take, 25% or so. if your monthly payment is $5,000 a month and you take home $5,000 a month, it’s not possible you can pay your loan. yeah, you took the debt on willingly, but doesn’t society have some obligation to have tuition vaguely match up with the economic value of the degree? or at least be forbidden from putting out any propaganda that the degree is worth something and is not a liability? should there be a disclaimer or warning on your tuition statement, something like “WARNING: this debt you are incurring is toxic. it is unlikely you will ever be able to pay it back based on current salaries.” Maybe this is where it’s all gone to. the debts become crazy, speculative, bear no relation to reality…and that makes people say what the heck, why not…[/quote]

scaredycat, home prices went up much faster than incomes because of easier and easier lending that ended up being based on non-repayment from income. The easier money didn’t help, because it just led to higher prices. What you’re saying is that the same thing is happening with student loans. The obvious solution is to make student loans harder to get. If people had to have realistic limits on their student loans, then higher education costs would stop escalating, just as home prices stop escalating when easy money stops flowing. Price always follows demand. Unlimited money = unlimited inflation.

I agree that people should be educated about repayment of their student loan before they are allowed to take it. Maybe they should be shown a schedule that shows what a level 15-year repayment of their projected end-of-education loans would look like, and what income they would need in order to have that amount to less than 10% of their income. Then ask them to research careers that they can get with their planned education and the incomes to go with them. If they come back with a career plan that makes sense, make the loan. Otherwise, no loan.

[patientrenter]

[quote=scaredycat] student loans….. but today, people are graduating med school, law school with 200-250k plus in loans. it’s tough to make a go of it for some. it could turn out to be a bad bet. what if tuition kept going up as everything deflated? What if people got out of school routinely with a million in debt? at some point, wouldn’t it just be rational to say fine, I’ll get the degree, society tells me i need it to get ahead, i know i’ll never be able to pay off the loan,I’ll default, then you can garnish my salary. there’s only so much they can take, 25% or so. if your monthly payment is $5,000 a month and you take home $5,000 a month, it’s not possible you can pay your loan. yeah, you took the debt on willingly, but doesn’t society have some obligation to have tuition vaguely match up with the economic value of the degree? or at least be forbidden from putting out any propaganda that the degree is worth something and is not a liability? should there be a disclaimer or warning on your tuition statement, something like “WARNING: this debt you are incurring is toxic. it is unlikely you will ever be able to pay it back based on current salaries.” Maybe this is where it’s all gone to. the debts become crazy, speculative, bear no relation to reality…and that makes people say what the heck, why not…[/quote]

scaredycat, home prices went up much faster than incomes because of easier and easier lending that ended up being based on non-repayment from income. The easier money didn’t help, because it just led to higher prices. What you’re saying is that the same thing is happening with student loans. The obvious solution is to make student loans harder to get. If people had to have realistic limits on their student loans, then higher education costs would stop escalating, just as home prices stop escalating when easy money stops flowing. Price always follows demand. Unlimited money = unlimited inflation.

I agree that people should be educated about repayment of their student loan before they are allowed to take it. Maybe they should be shown a schedule that shows what a level 15-year repayment of their projected end-of-education loans would look like, and what income they would need in order to have that amount to less than 10% of their income. Then ask them to research careers that they can get with their planned education and the incomes to go with them. If they come back with a career plan that makes sense, make the loan. Otherwise, no loan.

[TheBreeze]

[quote=patientrenter]

Was Joe an idiot to take a loan he didn’t intend to repay out of his income? Absolutely. Was Mr Banker / Investor an idiot to make the loan? Absolutely. [/quote]

Actually, you are dead wrong. The home “buyers” who made out best over the last 8 years were those who didn’t put anything down and got either an Interest-Only mortgage or a Pay Option mortgage. Because mortgages are non-recourse, not putting anything down and paying only the interest (or less) allows the “buyer” to take any appreciation upside while sticking any depreciation downside to the bank (by defaulting). Home buyers who got screwed the worst over the last 8 years were those who made down payments as that down payment has now evaporated with home price depreciation.

Likewise, once bankers were able to sell mortgages instead of keeping them on their books, they only focussed on the up-front fee associated with making the mortgage and didn’t worry about the quality of the mortgage as it didn’t affect them in the slightest.

So unfortunately, bankers and buyers were mostly behaving rationally in the environment that existed over the past 8 years. It’ll be up to Obama to change the effed-up incentives that George Bush put in place over the last 8 years.

[TheBreeze]

[quote=patientrenter]

Was Joe an idiot to take a loan he didn’t intend to repay out of his income? Absolutely. Was Mr Banker / Investor an idiot to make the loan? Absolutely. [/quote]

Actually, you are dead wrong. The home “buyers” who made out best over the last 8 years were those who didn’t put anything down and got either an Interest-Only mortgage or a Pay Option mortgage. Because mortgages are non-recourse, not putting anything down and paying only the interest (or less) allows the “buyer” to take any appreciation upside while sticking any depreciation downside to the bank (by defaulting). Home buyers who got screwed the worst over the last 8 years were those who made down payments as that down payment has now evaporated with home price depreciation.

Likewise, once bankers were able to sell mortgages instead of keeping them on their books, they only focussed on the up-front fee associated with making the mortgage and didn’t worry about the quality of the mortgage as it didn’t affect them in the slightest.

So unfortunately, bankers and buyers were mostly behaving rationally in the environment that existed over the past 8 years. It’ll be up to Obama to change the effed-up incentives that George Bush put in place over the last 8 years.

[TheBreeze]

[quote=patientrenter]

Was Joe an idiot to take a loan he didn’t intend to repay out of his income? Absolutely. Was Mr Banker / Investor an idiot to make the loan? Absolutely. [/quote]

Actually, you are dead wrong. The home “buyers” who made out best over the last 8 years were those who didn’t put anything down and got either an Interest-Only mortgage or a Pay Option mortgage. Because mortgages are non-recourse, not putting anything down and paying only the interest (or less) allows the “buyer” to take any appreciation upside while sticking any depreciation downside to the bank (by defaulting). Home buyers who got screwed the worst over the last 8 years were those who made down payments as that down payment has now evaporated with home price depreciation.

Likewise, once bankers were able to sell mortgages instead of keeping them on their books, they only focussed on the up-front fee associated with making the mortgage and didn’t worry about the quality of the mortgage as it didn’t affect them in the slightest.

So unfortunately, bankers and buyers were mostly behaving rationally in the environment that existed over the past 8 years. It’ll be up to Obama to change the effed-up incentives that George Bush put in place over the last 8 years.

[TheBreeze]

[quote=patientrenter]

Was Joe an idiot to take a loan he didn’t intend to repay out of his income? Absolutely. Was Mr Banker / Investor an idiot to make the loan? Absolutely. [/quote]

Actually, you are dead wrong. The home “buyers” who made out best over the last 8 years were those who didn’t put anything down and got either an Interest-Only mortgage or a Pay Option mortgage. Because mortgages are non-recourse, not putting anything down and paying only the interest (or less) allows the “buyer” to take any appreciation upside while sticking any depreciation downside to the bank (by defaulting). Home buyers who got screwed the worst over the last 8 years were those who made down payments as that down payment has now evaporated with home price depreciation.

Likewise, once bankers were able to sell mortgages instead of keeping them on their books, they only focussed on the up-front fee associated with making the mortgage and didn’t worry about the quality of the mortgage as it didn’t affect them in the slightest.

So unfortunately, bankers and buyers were mostly behaving rationally in the environment that existed over the past 8 years. It’ll be up to Obama to change the effed-up incentives that George Bush put in place over the last 8 years.

[Author]

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