Publicly Humiliate Non-Paying Debtors!

[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.

[larrylujack]

I think the breeze got it right: If banks/lender/brokers qualified buyers of homes and were willing to lend money accordingly than that in fact means the buyers were qualified. If there was a default to occur, the bank/lender can hardly be blameless since they were willing to provide the purchase money.
Thus, if am the banker and have money that I am lending I would be far more careful in making sure I get the money paid back than the borrower, who can simply walk from the home.
However, what skewed this arrangement was that the banker could easily resell the loan to the financial wizards of Wall Street. Thus, there were enormous incentives for the bankers to sell or refi loans with little consequence they were playing with their own money or be stuck with the bad loans and would lose since they could repackage the loans to other buyers.

[larrylujack]

I think the breeze got it right: If banks/lender/brokers qualified buyers of homes and were willing to lend money accordingly than that in fact means the buyers were qualified. If there was a default to occur, the bank/lender can hardly be blameless since they were willing to provide the purchase money.
Thus, if am the banker and have money that I am lending I would be far more careful in making sure I get the money paid back than the borrower, who can simply walk from the home.
However, what skewed this arrangement was that the banker could easily resell the loan to the financial wizards of Wall Street. Thus, there were enormous incentives for the bankers to sell or refi loans with little consequence they were playing with their own money or be stuck with the bad loans and would lose since they could repackage the loans to other buyers.

[larrylujack]

I think the breeze got it right: If banks/lender/brokers qualified buyers of homes and were willing to lend money accordingly than that in fact means the buyers were qualified. If there was a default to occur, the bank/lender can hardly be blameless since they were willing to provide the purchase money.
Thus, if am the banker and have money that I am lending I would be far more careful in making sure I get the money paid back than the borrower, who can simply walk from the home.
However, what skewed this arrangement was that the banker could easily resell the loan to the financial wizards of Wall Street. Thus, there were enormous incentives for the bankers to sell or refi loans with little consequence they were playing with their own money or be stuck with the bad loans and would lose since they could repackage the loans to other buyers.

[larrylujack]

I think the breeze got it right: If banks/lender/brokers qualified buyers of homes and were willing to lend money accordingly than that in fact means the buyers were qualified. If there was a default to occur, the bank/lender can hardly be blameless since they were willing to provide the purchase money.
Thus, if am the banker and have money that I am lending I would be far more careful in making sure I get the money paid back than the borrower, who can simply walk from the home.
However, what skewed this arrangement was that the banker could easily resell the loan to the financial wizards of Wall Street. Thus, there were enormous incentives for the bankers to sell or refi loans with little consequence they were playing with their own money or be stuck with the bad loans and would lose since they could repackage the loans to other buyers.

[larrylujack]

I think the breeze got it right: If banks/lender/brokers qualified buyers of homes and were willing to lend money accordingly than that in fact means the buyers were qualified. If there was a default to occur, the bank/lender can hardly be blameless since they were willing to provide the purchase money.
Thus, if am the banker and have money that I am lending I would be far more careful in making sure I get the money paid back than the borrower, who can simply walk from the home.
However, what skewed this arrangement was that the banker could easily resell the loan to the financial wizards of Wall Street. Thus, there were enormous incentives for the bankers to sell or refi loans with little consequence they were playing with their own money or be stuck with the bad loans and would lose since they could repackage the loans to other buyers.

[michael]

If it’s acceptable for the state to publicly humiliate people why shouldn’t private companies be able to do the same…

http://www.10news.com/news/14571887/detail.html

SAN DIEGO — The California Franchise Tax Board hopes to humiliate debtors into coughing up large amounts of unpaid tax dollars, it was reported Monday.
The board publishes an annual list of the top 250 taxpayers with liened income tax debts that exceed $100,000, including individuals and companies, according to The San Diego Union-Tribune. The list went online last month and included San Diegans among those at the top.
Tax collectors have tried different tactics, from sending letters to garnishing wages and seizing vehicles, stocks, bonds, bank accounts and even safe deposit boxes.
These tactics typically net a tiny fraction of what is owed — $10.8 million this year out of the total $249 million as of October — so state lawmakers decided public humiliation might work.

[michael]

If it’s acceptable for the state to publicly humiliate people why shouldn’t private companies be able to do the same…

http://www.10news.com/news/14571887/detail.html

SAN DIEGO — The California Franchise Tax Board hopes to humiliate debtors into coughing up large amounts of unpaid tax dollars, it was reported Monday.
The board publishes an annual list of the top 250 taxpayers with liened income tax debts that exceed $100,000, including individuals and companies, according to The San Diego Union-Tribune. The list went online last month and included San Diegans among those at the top.
Tax collectors have tried different tactics, from sending letters to garnishing wages and seizing vehicles, stocks, bonds, bank accounts and even safe deposit boxes.
These tactics typically net a tiny fraction of what is owed — $10.8 million this year out of the total $249 million as of October — so state lawmakers decided public humiliation might work.

[michael]

If it’s acceptable for the state to publicly humiliate people why shouldn’t private companies be able to do the same…

http://www.10news.com/news/14571887/detail.html

SAN DIEGO — The California Franchise Tax Board hopes to humiliate debtors into coughing up large amounts of unpaid tax dollars, it was reported Monday.
The board publishes an annual list of the top 250 taxpayers with liened income tax debts that exceed $100,000, including individuals and companies, according to The San Diego Union-Tribune. The list went online last month and included San Diegans among those at the top.
Tax collectors have tried different tactics, from sending letters to garnishing wages and seizing vehicles, stocks, bonds, bank accounts and even safe deposit boxes.
These tactics typically net a tiny fraction of what is owed — $10.8 million this year out of the total $249 million as of October — so state lawmakers decided public humiliation might work.

[michael]

If it’s acceptable for the state to publicly humiliate people why shouldn’t private companies be able to do the same…

http://www.10news.com/news/14571887/detail.html

SAN DIEGO — The California Franchise Tax Board hopes to humiliate debtors into coughing up large amounts of unpaid tax dollars, it was reported Monday.
The board publishes an annual list of the top 250 taxpayers with liened income tax debts that exceed $100,000, including individuals and companies, according to The San Diego Union-Tribune. The list went online last month and included San Diegans among those at the top.
Tax collectors have tried different tactics, from sending letters to garnishing wages and seizing vehicles, stocks, bonds, bank accounts and even safe deposit boxes.
These tactics typically net a tiny fraction of what is owed — $10.8 million this year out of the total $249 million as of October — so state lawmakers decided public humiliation might work.

[michael]

If it’s acceptable for the state to publicly humiliate people why shouldn’t private companies be able to do the same…

http://www.10news.com/news/14571887/detail.html

SAN DIEGO — The California Franchise Tax Board hopes to humiliate debtors into coughing up large amounts of unpaid tax dollars, it was reported Monday.
The board publishes an annual list of the top 250 taxpayers with liened income tax debts that exceed $100,000, including individuals and companies, according to The San Diego Union-Tribune. The list went online last month and included San Diegans among those at the top.
Tax collectors have tried different tactics, from sending letters to garnishing wages and seizing vehicles, stocks, bonds, bank accounts and even safe deposit boxes.
These tactics typically net a tiny fraction of what is owed — $10.8 million this year out of the total $249 million as of October — so state lawmakers decided public humiliation might work.

[patientrenter]

TheBreeze wrote: “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.”

You are correct. It was smart of the no-downpayment buyers to take advantage of cheap call options on home prices being offered by lenders. It was idiotic of the taxpayers and lenders to permit this to happen. Financial losses now are providing an effective incentive for private investors to require 20% or higher downpayments in the future. But govt schemes are still allowing homes to be bought with less than 20% of the buyer’s personal savings at risk. And Barney Frank and Chris Dodd are the prime movers behind this part of the screwed-up system. They won’t let go of this lunacy until Democrats like you call them on it.

[patientrenter]

TheBreeze wrote: “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.”

You are correct. It was smart of the no-downpayment buyers to take advantage of cheap call options on home prices being offered by lenders. It was idiotic of the taxpayers and lenders to permit this to happen. Financial losses now are providing an effective incentive for private investors to require 20% or higher downpayments in the future. But govt schemes are still allowing homes to be bought with less than 20% of the buyer’s personal savings at risk. And Barney Frank and Chris Dodd are the prime movers behind this part of the screwed-up system. They won’t let go of this lunacy until Democrats like you call them on it.

[patientrenter]

TheBreeze wrote: “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.”

You are correct. It was smart of the no-downpayment buyers to take advantage of cheap call options on home prices being offered by lenders. It was idiotic of the taxpayers and lenders to permit this to happen. Financial losses now are providing an effective incentive for private investors to require 20% or higher downpayments in the future. But govt schemes are still allowing homes to be bought with less than 20% of the buyer’s personal savings at risk. And Barney Frank and Chris Dodd are the prime movers behind this part of the screwed-up system. They won’t let go of this lunacy until Democrats like you call them on it.

[patientrenter]

TheBreeze wrote: “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.”

You are correct. It was smart of the no-downpayment buyers to take advantage of cheap call options on home prices being offered by lenders. It was idiotic of the taxpayers and lenders to permit this to happen. Financial losses now are providing an effective incentive for private investors to require 20% or higher downpayments in the future. But govt schemes are still allowing homes to be bought with less than 20% of the buyer’s personal savings at risk. And Barney Frank and Chris Dodd are the prime movers behind this part of the screwed-up system. They won’t let go of this lunacy until Democrats like you call them on it.

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