[ucodegen]

[quote=SD Realtor]That is kind of a bizarre statement. The homeowner is paying the rate specified on the note. Nothing more and nothing less regardless of how many times the note changes hands.[/quote]
It makes perfect sense if you understand the financing that the bank does.

Banks will sell off the loan if they can make more money by selling it off than holding (remember – they are really all about money, and try to make decisions based upon what is profitable for them). There are two ways this can occur.

[ucodegen]

[quote=SD Realtor]That is kind of a bizarre statement. The homeowner is paying the rate specified on the note. Nothing more and nothing less regardless of how many times the note changes hands.[/quote]
It makes perfect sense if you understand the financing that the bank does.

Banks will sell off the loan if they can make more money by selling it off than holding (remember – they are really all about money, and try to make decisions based upon what is profitable for them). There are two ways this can occur.

If they need to free up capital because they are hitting the Fed’s margin ratio between liquid capital at hand and outstanding loans – remember, we are a fractional reserve system.

They can find someone to pick up the loan and cover the transaction costs in the transfer plus an additional amount over the loan value.
The transaction also has one additional contingent that they could make more money without the loan. The problem with that contingent is that any purchaser of the loan will be considering the same things.

First off, it is very hard to get a loan at exactly cost_of_capital + risk_premium. It is impossible, unless you are a congressman getting something under the table, to get it less than the cost_of_capital + risk_premium. Generally the minimum rate will look something like:
cost_of_capital + risk_premium + fed_treasury_rate + additional_profit. If the bank could sell the loan at an effective rate of cost_of_capital + risk_premium + fed_treasury_rate + lower_additional_profit, then they will and keep the weighted difference between their “additional_profit” and the other lenders “lower_additional_profit”. The price calculation looks much like how you weight the value of long term bonds with respect to treasury rate (Why the face value of the bond is not really what the price it goes for).

The rates for cost_of_capital, risk_premium and fed_treasury_rates are pretty consistent between points in time for a bank. The last part: “additional_profit” is the one that changes between banks.

To make it even more simple: It is the mere fact that one bank would purchase the note from the original bank, allowing the original bank to make a quick profit and eliminate their risk, that shows that the interest rate was not as low as possible.

[ucodegen]

[quote=SD Realtor]That is kind of a bizarre statement. The homeowner is paying the rate specified on the note. Nothing more and nothing less regardless of how many times the note changes hands.[/quote]
It makes perfect sense if you understand the financing that the bank does.

Banks will sell off the loan if they can make more money by selling it off than holding (remember – they are really all about money, and try to make decisions based upon what is profitable for them). There are two ways this can occur.

If they need to free up capital because they are hitting the Fed’s margin ratio between liquid capital at hand and outstanding loans – remember, we are a fractional reserve system.

They can find someone to pick up the loan and cover the transaction costs in the transfer plus an additional amount over the loan value.
The transaction also has one additional contingent that they could make more money without the loan. The problem with that contingent is that any purchaser of the loan will be considering the same things.

First off, it is very hard to get a loan at exactly cost_of_capital + risk_premium. It is impossible, unless you are a congressman getting something under the table, to get it less than the cost_of_capital + risk_premium. Generally the minimum rate will look something like:
cost_of_capital + risk_premium + fed_treasury_rate + additional_profit. If the bank could sell the loan at an effective rate of cost_of_capital + risk_premium + fed_treasury_rate + lower_additional_profit, then they will and keep the weighted difference between their “additional_profit” and the other lenders “lower_additional_profit”. The price calculation looks much like how you weight the value of long term bonds with respect to treasury rate (Why the face value of the bond is not really what the price it goes for).

The rates for cost_of_capital, risk_premium and fed_treasury_rates are pretty consistent between points in time for a bank. The last part: “additional_profit” is the one that changes between banks.

To make it even more simple: It is the mere fact that one bank would purchase the note from the original bank, allowing the original bank to make a quick profit and eliminate their risk, that shows that the interest rate was not as low as possible.

[ucodegen]

Well it guess it had to happen.
Someone ran into my 4 month old 550 while parked in a parking lot AND DIDNT FVCKING LEAVE A NOTE….

That is why I am driving a big @ss chebby these days. Two big incidents come to note:

Parked over at UTC, upper lot near Sport Chalet. Drove home from lot and noticed that the rear bumper was bent (It was made from 3/16 and 1/4 inch steel). Looked under the truck, frame showed no bending but I saw blue and brown paint marks on frame members going almost 3 feet under the truck. Went back to UTC and looked around where I parked. I saw a few pieces of taillight lens and some metal pieces, some over 20 feet away from where I was parked – one looking like a spiral made from 1/8 inch wide sheet steel that when straightened, was almost 1 foot long (something blue got can-opened). It did look like the people who hit me picked up most of the pieces of their car that got scattered when they ran into the back of my parked truck. I suspect they were ‘showboating’. I was real curious as to what their vehicle looked like.

Parallel parking in La Jolla; as I was backing in, an old man too impatient to wait decided to go around the truck.. but he didn’t make sure he pulled around the truck. The result was a gouge from making contact with my front bumper down the side of his new, black car and some damage from hitting my front tire (BFG MT 35×12.5). Idiot tried to claim that it was my fault, but since I took a LOT of photos of the scene.. insurance corrected him.

That beater is kind of like an armored vehicle, though I do miss the better gas mileage and smaller size of a car. I guess I am going to have to cave to getting another car sometime.

[ucodegen]

Well it guess it had to happen.
Someone ran into my 4 month old 550 while parked in a parking lot AND DIDNT FVCKING LEAVE A NOTE….

That is why I am driving a big @ss chebby these days. Two big incidents come to note:

Parked over at UTC, upper lot near Sport Chalet. Drove home from lot and noticed that the rear bumper was bent (It was made from 3/16 and 1/4 inch steel). Looked under the truck, frame showed no bending but I saw blue and brown paint marks on frame members going almost 3 feet under the truck. Went back to UTC and looked around where I parked. I saw a few pieces of taillight lens and some metal pieces, some over 20 feet away from where I was parked – one looking like a spiral made from 1/8 inch wide sheet steel that when straightened, was almost 1 foot long (something blue got can-opened). It did look like the people who hit me picked up most of the pieces of their car that got scattered when they ran into the back of my parked truck. I suspect they were ‘showboating’. I was real curious as to what their vehicle looked like.

Parallel parking in La Jolla; as I was backing in, an old man too impatient to wait decided to go around the truck.. but he didn’t make sure he pulled around the truck. The result was a gouge from making contact with my front bumper down the side of his new, black car and some damage from hitting my front tire (BFG MT 35×12.5). Idiot tried to claim that it was my fault, but since I took a LOT of photos of the scene.. insurance corrected him.

That beater is kind of like an armored vehicle, though I do miss the better gas mileage and smaller size of a car. I guess I am going to have to cave to getting another car sometime.

[ucodegen]

Well it guess it had to happen.
Someone ran into my 4 month old 550 while parked in a parking lot AND DIDNT FVCKING LEAVE A NOTE….

That is why I am driving a big @ss chebby these days. Two big incidents come to note:

Parked over at UTC, upper lot near Sport Chalet. Drove home from lot and noticed that the rear bumper was bent (It was made from 3/16 and 1/4 inch steel). Looked under the truck, frame showed no bending but I saw blue and brown paint marks on frame members going almost 3 feet under the truck. Went back to UTC and looked around where I parked. I saw a few pieces of taillight lens and some metal pieces, some over 20 feet away from where I was parked – one looking like a spiral made from 1/8 inch wide sheet steel that when straightened, was almost 1 foot long (something blue got can-opened). It did look like the people who hit me picked up most of the pieces of their car that got scattered when they ran into the back of my parked truck. I suspect they were ‘showboating’. I was real curious as to what their vehicle looked like.

Parallel parking in La Jolla; as I was backing in, an old man too impatient to wait decided to go around the truck.. but he didn’t make sure he pulled around the truck. The result was a gouge from making contact with my front bumper down the side of his new, black car and some damage from hitting my front tire (BFG MT 35×12.5). Idiot tried to claim that it was my fault, but since I took a LOT of photos of the scene.. insurance corrected him.

That beater is kind of like an armored vehicle, though I do miss the better gas mileage and smaller size of a car. I guess I am going to have to cave to getting another car sometime.

[ucodegen]

Well it guess it had to happen.
Someone ran into my 4 month old 550 while parked in a parking lot AND DIDNT FVCKING LEAVE A NOTE….

That is why I am driving a big @ss chebby these days. Two big incidents come to note:

Parked over at UTC, upper lot near Sport Chalet. Drove home from lot and noticed that the rear bumper was bent (It was made from 3/16 and 1/4 inch steel). Looked under the truck, frame showed no bending but I saw blue and brown paint marks on frame members going almost 3 feet under the truck. Went back to UTC and looked around where I parked. I saw a few pieces of taillight lens and some metal pieces, some over 20 feet away from where I was parked – one looking like a spiral made from 1/8 inch wide sheet steel that when straightened, was almost 1 foot long (something blue got can-opened). It did look like the people who hit me picked up most of the pieces of their car that got scattered when they ran into the back of my parked truck. I suspect they were ‘showboating’. I was real curious as to what their vehicle looked like.

Parallel parking in La Jolla; as I was backing in, an old man too impatient to wait decided to go around the truck.. but he didn’t make sure he pulled around the truck. The result was a gouge from making contact with my front bumper down the side of his new, black car and some damage from hitting my front tire (BFG MT 35×12.5). Idiot tried to claim that it was my fault, but since I took a LOT of photos of the scene.. insurance corrected him.

That beater is kind of like an armored vehicle, though I do miss the better gas mileage and smaller size of a car. I guess I am going to have to cave to getting another car sometime.

[ucodegen]

Well it guess it had to happen.
Someone ran into my 4 month old 550 while parked in a parking lot AND DIDNT FVCKING LEAVE A NOTE….

That is why I am driving a big @ss chebby these days. Two big incidents come to note:

Parked over at UTC, upper lot near Sport Chalet. Drove home from lot and noticed that the rear bumper was bent (It was made from 3/16 and 1/4 inch steel). Looked under the truck, frame showed no bending but I saw blue and brown paint marks on frame members going almost 3 feet under the truck. Went back to UTC and looked around where I parked. I saw a few pieces of taillight lens and some metal pieces, some over 20 feet away from where I was parked – one looking like a spiral made from 1/8 inch wide sheet steel that when straightened, was almost 1 foot long (something blue got can-opened). It did look like the people who hit me picked up most of the pieces of their car that got scattered when they ran into the back of my parked truck. I suspect they were ‘showboating’. I was real curious as to what their vehicle looked like.

Parallel parking in La Jolla; as I was backing in, an old man too impatient to wait decided to go around the truck.. but he didn’t make sure he pulled around the truck. The result was a gouge from making contact with my front bumper down the side of his new, black car and some damage from hitting my front tire (BFG MT 35×12.5). Idiot tried to claim that it was my fault, but since I took a LOT of photos of the scene.. insurance corrected him.

That beater is kind of like an armored vehicle, though I do miss the better gas mileage and smaller size of a car. I guess I am going to have to cave to getting another car sometime.

[ucodegen]

Did anyone ask:
Who is financing these Canadian purchases? Canadian banks restrict the amount of leverage, but US banks are more ‘generous’ on their leverage.

If the properties are being purchased by Canadians, using US Banks, we could be looking at R.E. collapse #2. Foreigners have a greater incentive to just walk away if the deal goes bad, particularly if they are highly leveraged. Now who makes the US Banks whole? Will they be expecting bailout #n+1?

[ucodegen]

Did anyone ask:
Who is financing these Canadian purchases? Canadian banks restrict the amount of leverage, but US banks are more ‘generous’ on their leverage.

If the properties are being purchased by Canadians, using US Banks, we could be looking at R.E. collapse #2. Foreigners have a greater incentive to just walk away if the deal goes bad, particularly if they are highly leveraged. Now who makes the US Banks whole? Will they be expecting bailout #n+1?

[ucodegen]

Did anyone ask:
Who is financing these Canadian purchases? Canadian banks restrict the amount of leverage, but US banks are more ‘generous’ on their leverage.

If the properties are being purchased by Canadians, using US Banks, we could be looking at R.E. collapse #2. Foreigners have a greater incentive to just walk away if the deal goes bad, particularly if they are highly leveraged. Now who makes the US Banks whole? Will they be expecting bailout #n+1?

[ucodegen]

Did anyone ask:
Who is financing these Canadian purchases? Canadian banks restrict the amount of leverage, but US banks are more ‘generous’ on their leverage.

If the properties are being purchased by Canadians, using US Banks, we could be looking at R.E. collapse #2. Foreigners have a greater incentive to just walk away if the deal goes bad, particularly if they are highly leveraged. Now who makes the US Banks whole? Will they be expecting bailout #n+1?

[ucodegen]

Did anyone ask:
Who is financing these Canadian purchases? Canadian banks restrict the amount of leverage, but US banks are more ‘generous’ on their leverage.

If the properties are being purchased by Canadians, using US Banks, we could be looking at R.E. collapse #2. Foreigners have a greater incentive to just walk away if the deal goes bad, particularly if they are highly leveraged. Now who makes the US Banks whole? Will they be expecting bailout #n+1?

[ucodegen]

[quote=jpinpb]I admire your principle. I ended up caving and went w/their lender, but they paid for all the closing costs and then some. I think it just makes it easier for them to finally get rid of the place.

Since closing, my loan has changed hands twice already.[/quote]
The fact that the loan has changed hands twice could indicate that you may be paying more on the loan than the real interest rate you qualified at. At every change of hands, someone takes a slice of the pie…

[ucodegen]

[quote=jpinpb]I admire your principle. I ended up caving and went w/their lender, but they paid for all the closing costs and then some. I think it just makes it easier for them to finally get rid of the place.

Since closing, my loan has changed hands twice already.[/quote]
The fact that the loan has changed hands twice could indicate that you may be paying more on the loan than the real interest rate you qualified at. At every change of hands, someone takes a slice of the pie…

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