[ucodegen]

@LuckyInOC

3. Major banks can borrow money from the Fed at 0% or use TARP money to cover these warrants.

The TARP money does not cost 0%. Last quarter, BofA paid over $400Mil on interest alone (per quarter) on the TARP money they borrowed. Its in their 10Q. ($400M * 4Q)/$45B = 3.555% interest. Banks don’t want to risk it because of the risk of default. It is not money-good.

[ucodegen]

@LuckyInOC

3. Major banks can borrow money from the Fed at 0% or use TARP money to cover these warrants.

The TARP money does not cost 0%. Last quarter, BofA paid over $400Mil on interest alone (per quarter) on the TARP money they borrowed. Its in their 10Q. ($400M * 4Q)/$45B = 3.555% interest. Banks don’t want to risk it because of the risk of default. It is not money-good.

[ucodegen]

@LuckyInOC

3. Major banks can borrow money from the Fed at 0% or use TARP money to cover these warrants.

The TARP money does not cost 0%. Last quarter, BofA paid over $400Mil on interest alone (per quarter) on the TARP money they borrowed. Its in their 10Q. ($400M * 4Q)/$45B = 3.555% interest. Banks don’t want to risk it because of the risk of default. It is not money-good.

[ucodegen]

@XboxBoy

You missed one of the choices of the bank in dealing with the delinquent home ‘owner’.. the forth is to take the property in foreclosure and then lease/rent it back to the previous ‘owner’ they foreclosed on. The bank then takes the lease payments and applies them to the banks cost of capital for the money the bank borrowed to finance the mortgage in the first place. This gives the banks time for/to:

1) find a better tenant.
2) sell the property when real estate prices have stabilized.

Admittedly, #2 has risks, but it may be better to the bank instead of flooding the market with foreclosed properties. All they time that the banks are waiting for the prices to stabilize/inventory to decrease, they are getting ‘rental’ payments on the property.

[ucodegen]

@XboxBoy

You missed one of the choices of the bank in dealing with the delinquent home ‘owner’.. the forth is to take the property in foreclosure and then lease/rent it back to the previous ‘owner’ they foreclosed on. The bank then takes the lease payments and applies them to the banks cost of capital for the money the bank borrowed to finance the mortgage in the first place. This gives the banks time for/to:

1) find a better tenant.
2) sell the property when real estate prices have stabilized.

Admittedly, #2 has risks, but it may be better to the bank instead of flooding the market with foreclosed properties. All they time that the banks are waiting for the prices to stabilize/inventory to decrease, they are getting ‘rental’ payments on the property.

[ucodegen]

@XboxBoy

You missed one of the choices of the bank in dealing with the delinquent home ‘owner’.. the forth is to take the property in foreclosure and then lease/rent it back to the previous ‘owner’ they foreclosed on. The bank then takes the lease payments and applies them to the banks cost of capital for the money the bank borrowed to finance the mortgage in the first place. This gives the banks time for/to:

1) find a better tenant.
2) sell the property when real estate prices have stabilized.

Admittedly, #2 has risks, but it may be better to the bank instead of flooding the market with foreclosed properties. All they time that the banks are waiting for the prices to stabilize/inventory to decrease, they are getting ‘rental’ payments on the property.

[ucodegen]

@XboxBoy

You missed one of the choices of the bank in dealing with the delinquent home ‘owner’.. the forth is to take the property in foreclosure and then lease/rent it back to the previous ‘owner’ they foreclosed on. The bank then takes the lease payments and applies them to the banks cost of capital for the money the bank borrowed to finance the mortgage in the first place. This gives the banks time for/to:

1) find a better tenant.
2) sell the property when real estate prices have stabilized.

Admittedly, #2 has risks, but it may be better to the bank instead of flooding the market with foreclosed properties. All they time that the banks are waiting for the prices to stabilize/inventory to decrease, they are getting ‘rental’ payments on the property.

[ucodegen]

@XboxBoy

You missed one of the choices of the bank in dealing with the delinquent home ‘owner’.. the forth is to take the property in foreclosure and then lease/rent it back to the previous ‘owner’ they foreclosed on. The bank then takes the lease payments and applies them to the banks cost of capital for the money the bank borrowed to finance the mortgage in the first place. This gives the banks time for/to:

1) find a better tenant.
2) sell the property when real estate prices have stabilized.

Admittedly, #2 has risks, but it may be better to the bank instead of flooding the market with foreclosed properties. All they time that the banks are waiting for the prices to stabilize/inventory to decrease, they are getting ‘rental’ payments on the property.

[ucodegen]

Don’t borrow money then. 🙂
Don’t like a CC card, cut up the card and say no thank you.

First, it is not a credit card debt… read the article. It is $400k in student loans & fees/penalties against the student loans. The actual amount that was student loan debt was $230k. The jump went from $270k to $435k in 4 years.. without any additional loans.. just fees. This is where the problem is. It also violates the law because the amount that is fees is in excess of statutory limit of 36%.

It is fine to be able to enter into an agreement with all eyes open.. but the student loan lenders abuse the system and the students taking out the loans. They violate the terms of the law and of the loan. Students have a hard time defending against this type of practice, they are forced to make a decision to pursue legal action or complete their degree.

[ucodegen]

Don’t borrow money then. 🙂
Don’t like a CC card, cut up the card and say no thank you.

First, it is not a credit card debt… read the article. It is $400k in student loans & fees/penalties against the student loans. The actual amount that was student loan debt was $230k. The jump went from $270k to $435k in 4 years.. without any additional loans.. just fees. This is where the problem is. It also violates the law because the amount that is fees is in excess of statutory limit of 36%.

It is fine to be able to enter into an agreement with all eyes open.. but the student loan lenders abuse the system and the students taking out the loans. They violate the terms of the law and of the loan. Students have a hard time defending against this type of practice, they are forced to make a decision to pursue legal action or complete their degree.

[ucodegen]

Don’t borrow money then. 🙂
Don’t like a CC card, cut up the card and say no thank you.

First, it is not a credit card debt… read the article. It is $400k in student loans & fees/penalties against the student loans. The actual amount that was student loan debt was $230k. The jump went from $270k to $435k in 4 years.. without any additional loans.. just fees. This is where the problem is. It also violates the law because the amount that is fees is in excess of statutory limit of 36%.

It is fine to be able to enter into an agreement with all eyes open.. but the student loan lenders abuse the system and the students taking out the loans. They violate the terms of the law and of the loan. Students have a hard time defending against this type of practice, they are forced to make a decision to pursue legal action or complete their degree.

[ucodegen]

Don’t borrow money then. 🙂
Don’t like a CC card, cut up the card and say no thank you.

First, it is not a credit card debt… read the article. It is $400k in student loans & fees/penalties against the student loans. The actual amount that was student loan debt was $230k. The jump went from $270k to $435k in 4 years.. without any additional loans.. just fees. This is where the problem is. It also violates the law because the amount that is fees is in excess of statutory limit of 36%.

It is fine to be able to enter into an agreement with all eyes open.. but the student loan lenders abuse the system and the students taking out the loans. They violate the terms of the law and of the loan. Students have a hard time defending against this type of practice, they are forced to make a decision to pursue legal action or complete their degree.

[ucodegen]

Don’t borrow money then. 🙂
Don’t like a CC card, cut up the card and say no thank you.

First, it is not a credit card debt… read the article. It is $400k in student loans & fees/penalties against the student loans. The actual amount that was student loan debt was $230k. The jump went from $270k to $435k in 4 years.. without any additional loans.. just fees. This is where the problem is. It also violates the law because the amount that is fees is in excess of statutory limit of 36%.

It is fine to be able to enter into an agreement with all eyes open.. but the student loan lenders abuse the system and the students taking out the loans. They violate the terms of the law and of the loan. Students have a hard time defending against this type of practice, they are forced to make a decision to pursue legal action or complete their degree.

[ucodegen]

FYI, flu, Zeitgeist, did you really read the article?

I have dealt with student loan organizations. They are a real sleazy group. There is a limit on total percentage of a balance that they can charge as fees. The percentage is 36%. They routinely violate this. Any payments made are immediately applied to the fee portion of the balance before the principal. This way they can then immediately add more to the fees. If you want to pay the balance of an overdue in full, they will drag their heels.. claiming that the account is not ‘active’ on their system and they need time to get it ‘back on their system’. They then wait over 9 months, charging interest in the meantime, until they contact you. If you are out of contact (my case, on business travel out of the U.S.), they immediately forward it to a collection agency.. yet more fees.

This type of behavior started when the student loan companies lobbied congress and got a waiver around normal collection agency limitations. Normally, before garnishing taxes or attaching accounts, the claim has to go before a judge. The waiver is that student loan collection agencies no longer have to go before a judge to prove that the money is owed. If they collect improperly, you have to chase them down and sue them.. and they make that hard.

[ucodegen]

FYI, flu, Zeitgeist, did you really read the article?

I have dealt with student loan organizations. They are a real sleazy group. There is a limit on total percentage of a balance that they can charge as fees. The percentage is 36%. They routinely violate this. Any payments made are immediately applied to the fee portion of the balance before the principal. This way they can then immediately add more to the fees. If you want to pay the balance of an overdue in full, they will drag their heels.. claiming that the account is not ‘active’ on their system and they need time to get it ‘back on their system’. They then wait over 9 months, charging interest in the meantime, until they contact you. If you are out of contact (my case, on business travel out of the U.S.), they immediately forward it to a collection agency.. yet more fees.

This type of behavior started when the student loan companies lobbied congress and got a waiver around normal collection agency limitations. Normally, before garnishing taxes or attaching accounts, the claim has to go before a judge. The waiver is that student loan collection agencies no longer have to go before a judge to prove that the money is owed. If they collect improperly, you have to chase them down and sue them.. and they make that hard.

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