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May 10, 2010 at 8:53 PM #550016May 10, 2010 at 9:19 PM #549057
davelj
Participant[quote=zk]
First of all, most loans are paid back regardless of any moral component. They’re paid back because the consequences of not paying outweigh the consequences of paying. I’d say precious few loans are made where the lender is counting on the moral standards of the borrower.
[/quote]I agree with your first and second sentences above. Your last sentence is clearly written from the perspective of someone who has never sat on the loan committee of a bank. Yes, you require collateral and cashflow as the fundamental basis for the loan. But if you think that the “character” of the borrower (as explained in court by JP Morgan back in the 1930s) isn’t a big issue, you’re mistaken. (Although, admittedly, the character issue is much more important at the community bank level than at the national bank level.)
[quote=zk]
What changed over the last 7 years
wasn’t moral standards, it was lending standards. If you have adequate lending standards, there will be plenty of loans made and enough of them will be paid back that we won’t end up in a mess like the one we’re in.[/quote]I will agree with you that it was lending standards that changed MORE than moral standards (among the pool of total borrowers). Lending standards really went into the shitter and I agree that that is indeed the crux of the problem. But it’s pretty clear to me that moral standards have changed too. Although, one could argue that the lax lending standards allowed a large group of folks into the borrowing pool that never should have been there in the first place and gave them every incentive to act in an immoral manner.
Having said all that, I’m clearly biased about this “character” issue because I deal with it all the time. Bank of America, et al, however, probably don’t give it much thought as a result of how their business is run.
May 10, 2010 at 9:19 PM #549168Participant[quote=zk]
First of all, most loans are paid back regardless of any moral component. They’re paid back because the consequences of not paying outweigh the consequences of paying. I’d say precious few loans are made where the lender is counting on the moral standards of the borrower.
[/quote]I agree with your first and second sentences above. Your last sentence is clearly written from the perspective of someone who has never sat on the loan committee of a bank. Yes, you require collateral and cashflow as the fundamental basis for the loan. But if you think that the “character” of the borrower (as explained in court by JP Morgan back in the 1930s) isn’t a big issue, you’re mistaken. (Although, admittedly, the character issue is much more important at the community bank level than at the national bank level.)
[quote=zk]
What changed over the last 7 years
wasn’t moral standards, it was lending standards. If you have adequate lending standards, there will be plenty of loans made and enough of them will be paid back that we won’t end up in a mess like the one we’re in.[/quote]I will agree with you that it was lending standards that changed MORE than moral standards (among the pool of total borrowers). Lending standards really went into the shitter and I agree that that is indeed the crux of the problem. But it’s pretty clear to me that moral standards have changed too. Although, one could argue that the lax lending standards allowed a large group of folks into the borrowing pool that never should have been there in the first place and gave them every incentive to act in an immoral manner.
Having said all that, I’m clearly biased about this “character” issue because I deal with it all the time. Bank of America, et al, however, probably don’t give it much thought as a result of how their business is run.
May 10, 2010 at 9:19 PM #549658Participant[quote=zk]
First of all, most loans are paid back regardless of any moral component. They’re paid back because the consequences of not paying outweigh the consequences of paying. I’d say precious few loans are made where the lender is counting on the moral standards of the borrower.
[/quote]I agree with your first and second sentences above. Your last sentence is clearly written from the perspective of someone who has never sat on the loan committee of a bank. Yes, you require collateral and cashflow as the fundamental basis for the loan. But if you think that the “character” of the borrower (as explained in court by JP Morgan back in the 1930s) isn’t a big issue, you’re mistaken. (Although, admittedly, the character issue is much more important at the community bank level than at the national bank level.)
[quote=zk]
What changed over the last 7 years
wasn’t moral standards, it was lending standards. If you have adequate lending standards, there will be plenty of loans made and enough of them will be paid back that we won’t end up in a mess like the one we’re in.[/quote]I will agree with you that it was lending standards that changed MORE than moral standards (among the pool of total borrowers). Lending standards really went into the shitter and I agree that that is indeed the crux of the problem. But it’s pretty clear to me that moral standards have changed too. Although, one could argue that the lax lending standards allowed a large group of folks into the borrowing pool that never should have been there in the first place and gave them every incentive to act in an immoral manner.
Having said all that, I’m clearly biased about this “character” issue because I deal with it all the time. Bank of America, et al, however, probably don’t give it much thought as a result of how their business is run.
May 10, 2010 at 9:19 PM #549759Participant[quote=zk]
First of all, most loans are paid back regardless of any moral component. They’re paid back because the consequences of not paying outweigh the consequences of paying. I’d say precious few loans are made where the lender is counting on the moral standards of the borrower.
[/quote]I agree with your first and second sentences above. Your last sentence is clearly written from the perspective of someone who has never sat on the loan committee of a bank. Yes, you require collateral and cashflow as the fundamental basis for the loan. But if you think that the “character” of the borrower (as explained in court by JP Morgan back in the 1930s) isn’t a big issue, you’re mistaken. (Although, admittedly, the character issue is much more important at the community bank level than at the national bank level.)
[quote=zk]
What changed over the last 7 years
wasn’t moral standards, it was lending standards. If you have adequate lending standards, there will be plenty of loans made and enough of them will be paid back that we won’t end up in a mess like the one we’re in.[/quote]I will agree with you that it was lending standards that changed MORE than moral standards (among the pool of total borrowers). Lending standards really went into the shitter and I agree that that is indeed the crux of the problem. But it’s pretty clear to me that moral standards have changed too. Although, one could argue that the lax lending standards allowed a large group of folks into the borrowing pool that never should have been there in the first place and gave them every incentive to act in an immoral manner.
Having said all that, I’m clearly biased about this “character” issue because I deal with it all the time. Bank of America, et al, however, probably don’t give it much thought as a result of how their business is run.
May 10, 2010 at 9:19 PM #550036Participant[quote=zk]
First of all, most loans are paid back regardless of any moral component. They’re paid back because the consequences of not paying outweigh the consequences of paying. I’d say precious few loans are made where the lender is counting on the moral standards of the borrower.
[/quote]I agree with your first and second sentences above. Your last sentence is clearly written from the perspective of someone who has never sat on the loan committee of a bank. Yes, you require collateral and cashflow as the fundamental basis for the loan. But if you think that the “character” of the borrower (as explained in court by JP Morgan back in the 1930s) isn’t a big issue, you’re mistaken. (Although, admittedly, the character issue is much more important at the community bank level than at the national bank level.)
[quote=zk]
What changed over the last 7 years
wasn’t moral standards, it was lending standards. If you have adequate lending standards, there will be plenty of loans made and enough of them will be paid back that we won’t end up in a mess like the one we’re in.[/quote]I will agree with you that it was lending standards that changed MORE than moral standards (among the pool of total borrowers). Lending standards really went into the shitter and I agree that that is indeed the crux of the problem. But it’s pretty clear to me that moral standards have changed too. Although, one could argue that the lax lending standards allowed a large group of folks into the borrowing pool that never should have been there in the first place and gave them every incentive to act in an immoral manner.
Having said all that, I’m clearly biased about this “character” issue because I deal with it all the time. Bank of America, et al, however, probably don’t give it much thought as a result of how their business is run.
May 10, 2010 at 9:26 PM #549062bearishgurl
Participant[quote=davelj] . . . Likewise, when you sign a lease agreement, legally you only have to pay rent, and you get evicted if you don’t. But the eviction process generally takes at least a few months. And many people take advantage of this reality. . . [/quote]
davelj, I hope you’re not forgetting that these defaulting renters have a UD on their public record, which is extremely easy to find in SD County (as well as many other counties).
See: http://www.sdcourt.ca.gov/portal/page?_pageid=55,1056871&_dad=portal&_schema=PORTAL
No local landlord in his right mind (who has done his due diligence on prospective tenants) would rent to a prospect with a UD history without at least a $5K up-front deposit PLUS damage deposit, depending on the monthly rent level, of course.
I believe in Karma. What goes around comes around.
I’m in total agreement with you that it is ultimately the borrower who is responsible for loss of his own property and also the foreclosure debacle. These borrowers were obviously “asleep at the switch” when signing docs for a “toxic” loan or were so focused on the cash and what they were going to buy with it that they didn’t care.
May 10, 2010 at 9:26 PM #549173Participant[quote=davelj] . . . Likewise, when you sign a lease agreement, legally you only have to pay rent, and you get evicted if you don’t. But the eviction process generally takes at least a few months. And many people take advantage of this reality. . . [/quote]
davelj, I hope you’re not forgetting that these defaulting renters have a UD on their public record, which is extremely easy to find in SD County (as well as many other counties).
See: http://www.sdcourt.ca.gov/portal/page?_pageid=55,1056871&_dad=portal&_schema=PORTAL
No local landlord in his right mind (who has done his due diligence on prospective tenants) would rent to a prospect with a UD history without at least a $5K up-front deposit PLUS damage deposit, depending on the monthly rent level, of course.
I believe in Karma. What goes around comes around.
I’m in total agreement with you that it is ultimately the borrower who is responsible for loss of his own property and also the foreclosure debacle. These borrowers were obviously “asleep at the switch” when signing docs for a “toxic” loan or were so focused on the cash and what they were going to buy with it that they didn’t care.
May 10, 2010 at 9:26 PM #549663Participant[quote=davelj] . . . Likewise, when you sign a lease agreement, legally you only have to pay rent, and you get evicted if you don’t. But the eviction process generally takes at least a few months. And many people take advantage of this reality. . . [/quote]
davelj, I hope you’re not forgetting that these defaulting renters have a UD on their public record, which is extremely easy to find in SD County (as well as many other counties).
See: http://www.sdcourt.ca.gov/portal/page?_pageid=55,1056871&_dad=portal&_schema=PORTAL
No local landlord in his right mind (who has done his due diligence on prospective tenants) would rent to a prospect with a UD history without at least a $5K up-front deposit PLUS damage deposit, depending on the monthly rent level, of course.
I believe in Karma. What goes around comes around.
I’m in total agreement with you that it is ultimately the borrower who is responsible for loss of his own property and also the foreclosure debacle. These borrowers were obviously “asleep at the switch” when signing docs for a “toxic” loan or were so focused on the cash and what they were going to buy with it that they didn’t care.
May 10, 2010 at 9:26 PM #549764Participant[quote=davelj] . . . Likewise, when you sign a lease agreement, legally you only have to pay rent, and you get evicted if you don’t. But the eviction process generally takes at least a few months. And many people take advantage of this reality. . . [/quote]
davelj, I hope you’re not forgetting that these defaulting renters have a UD on their public record, which is extremely easy to find in SD County (as well as many other counties).
See: http://www.sdcourt.ca.gov/portal/page?_pageid=55,1056871&_dad=portal&_schema=PORTAL
No local landlord in his right mind (who has done his due diligence on prospective tenants) would rent to a prospect with a UD history without at least a $5K up-front deposit PLUS damage deposit, depending on the monthly rent level, of course.
I believe in Karma. What goes around comes around.
I’m in total agreement with you that it is ultimately the borrower who is responsible for loss of his own property and also the foreclosure debacle. These borrowers were obviously “asleep at the switch” when signing docs for a “toxic” loan or were so focused on the cash and what they were going to buy with it that they didn’t care.
May 10, 2010 at 9:26 PM #550041Participant[quote=davelj] . . . Likewise, when you sign a lease agreement, legally you only have to pay rent, and you get evicted if you don’t. But the eviction process generally takes at least a few months. And many people take advantage of this reality. . . [/quote]
davelj, I hope you’re not forgetting that these defaulting renters have a UD on their public record, which is extremely easy to find in SD County (as well as many other counties).
See: http://www.sdcourt.ca.gov/portal/page?_pageid=55,1056871&_dad=portal&_schema=PORTAL
No local landlord in his right mind (who has done his due diligence on prospective tenants) would rent to a prospect with a UD history without at least a $5K up-front deposit PLUS damage deposit, depending on the monthly rent level, of course.
I believe in Karma. What goes around comes around.
I’m in total agreement with you that it is ultimately the borrower who is responsible for loss of his own property and also the foreclosure debacle. These borrowers were obviously “asleep at the switch” when signing docs for a “toxic” loan or were so focused on the cash and what they were going to buy with it that they didn’t care.
May 10, 2010 at 9:49 PM #549072briansd1
GuestI think that consumers are more stupid than we give them credit for.
There is so much abuse in the lending industry that it’s unbelievable. That’s why I support a strong consumer protection agency.
Nobody in their right minds would borrow $500 to buy a TV or a washer. They should save for that.
All consumers hear are the come-ons such as “no payments for 1 year” and “$16 per month”.
Abusive loans should be banned. Period. If that means less credit, all the better. People should drive old cars and watch 20 inch TVs if they don’t have the discipline to save.
And they should rent, not buy.
May 10, 2010 at 9:49 PM #549183GuestI think that consumers are more stupid than we give them credit for.
There is so much abuse in the lending industry that it’s unbelievable. That’s why I support a strong consumer protection agency.
Nobody in their right minds would borrow $500 to buy a TV or a washer. They should save for that.
All consumers hear are the come-ons such as “no payments for 1 year” and “$16 per month”.
Abusive loans should be banned. Period. If that means less credit, all the better. People should drive old cars and watch 20 inch TVs if they don’t have the discipline to save.
And they should rent, not buy.
May 10, 2010 at 9:49 PM #549673GuestI think that consumers are more stupid than we give them credit for.
There is so much abuse in the lending industry that it’s unbelievable. That’s why I support a strong consumer protection agency.
Nobody in their right minds would borrow $500 to buy a TV or a washer. They should save for that.
All consumers hear are the come-ons such as “no payments for 1 year” and “$16 per month”.
Abusive loans should be banned. Period. If that means less credit, all the better. People should drive old cars and watch 20 inch TVs if they don’t have the discipline to save.
And they should rent, not buy.
May 10, 2010 at 9:49 PM #549774GuestI think that consumers are more stupid than we give them credit for.
There is so much abuse in the lending industry that it’s unbelievable. That’s why I support a strong consumer protection agency.
Nobody in their right minds would borrow $500 to buy a TV or a washer. They should save for that.
All consumers hear are the come-ons such as “no payments for 1 year” and “$16 per month”.
Abusive loans should be banned. Period. If that means less credit, all the better. People should drive old cars and watch 20 inch TVs if they don’t have the discipline to save.
And they should rent, not buy.
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