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landmark
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Dannydoyle
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My two favorite quotes so far.


“End the wars, tax the rich, how we fix the deficit," they chanted.

“The banks are sitting on trillions of dollars of our money and we’re going to stay here till we get it,” said activist Tony Murphy.

Somehow someone please explain to me how anyone is entitled to the banks money?

Do they fully comprehend that even if you took ALL the money from the "rich" it would not help?

I think it is pretty clear after 2 1/2 years of redistributionist policy that it just simply does not work. It is the equivilant of taking water from the deep end and trying to put it in the shallow end of a pool. It might work for a small period of time but it is hardly a solution. Do you fully comprehend why redistribution does not work? Let me help. THERE IS NO GROWTH with redistribution! Yea you can move things about and shift money from one pocket to another but nothing grows, and there is no incentive to grow. It is really that simple.
Danny Doyle
<BR>Semper Occultus
<BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell
EsnRedshirt
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You wanna know why they say they're entitled to the bank's money? Because it's theirs.

Those trillions the banks are sitting on is, in part, tax dollars given to the banks for the purpose of making loans and refinancing homes. Except the banks aren't making loans, and they're foreclosing instead of refinancing, because loopholes made it more profitable. And due to the interest rates, those trillions are making millions just sitting and doing nothing, with zero risk. If they actually loaned it to people and businesses, there'd be risk, and why take that chance?
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Avrakdavra
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Were the home buyers under the impression that their failure to pay their mortgage would result in refinancing rather than foreclosure?

Maybe if the banks had not been essentially forced by various government geniuses (always ready to spend or risk someone else's money)to lend to lots of people who had no reasonable expectation of meeting their mortgage obligations, there would not be so many foreclosures, nor would the banks be so leery about lending more money.

I have no great love for banks, but this expectation that the government should redistribute wealth according to someone's "progressive" vision of equity is pretty jarring.
EsnRedshirt
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Things happen- people get sick and have medical bills, lose their jobs, etc.

Refinancing should be happening a lot more than it does- reduce payments, extend the period. The bank makes more money in the long term, the home owner gets to keep a roof over their head. Banks are supposed to hate foreclosure, because they would eat the loss.

Except the system's now managed to make it more profitable to foreclose than to refinance. In fact, with credit default swaps, certain companies were standing to make obscene profits from foreclosures. Not a lot of incentive to work with the guy who's down and out in that case, is there?
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Dannydoyle
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Pretty much shows how little you know of banking and econ bacics. How much money in reserve does a bank have to have for every dollar in foreclosure?
Danny Doyle
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<BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell
NicholasD
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Quote:
On 2011-06-17 12:43, EsnRedshirt wrote:
You wanna know why they say they're entitled to the bank's money? Because it's theirs.

Those trillions the banks are sitting on is, in part, tax dollars given to the banks for the purpose of making loans and refinancing homes. Except the banks aren't making loans, and they're foreclosing instead of refinancing, because loopholes made it more profitable. And due to the interest rates, those trillions are making millions just sitting and doing nothing, with zero risk. If they actually loaned it to people and businesses, there'd be risk, and why take that chance?


Banks have paid back much of the stimulus money. Banks are lending, but only to those who qualify for the loan applied for( which is what they should have been doing all along, or we might not be in this mess now). I'm guessing that many businesses aren't applying for loans to grow their business because they're unsure about how taxes and the stagnant economy will affect them. But, to say that anyone is "entitled" to a bank's money is like saying someone is is entitled to my money, if I make too much. Oh, wait a minute. Isn't that what Obama wants to do?
EsnRedshirt
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On 2011-06-17 19:06, Dannydoyle wrote:
Pretty much shows how little you know of banking and econ bacics. How much money in reserve does a bank have to have for every dollar in foreclosure?

It should be dollar for dollar. But the situation isn't so simple, depending on who you ask:
http://www.paulpastore.com/Why-Loan-Modi......-Working
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Dannydoyle
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Quote:
On 2011-06-17 20:30, EsnRedshirt wrote:
Quote:
On 2011-06-17 19:06, Dannydoyle wrote:
Pretty much shows how little you know of banking and econ bacics. How much money in reserve does a bank have to have for every dollar in foreclosure?

It should be dollar for dollar. But the situation isn't so simple, depending on who you ask:
http://www.paulpastore.com/Why-Loan-Modi......-Working


Not even bothering to read your biased article. BUT you claim that it should be "dollar for dollar" the amount of money that a bank has to have in reserve as opposed to what they have in foreclosure. So if a bank forecloses on a property now worth 1/2 of what they loaned exactly how is it they are making money? If they have to sit on the house because nobody is buying how do they make money exactly?

Later we can get to reserves vs how much is in foreclosure. You are outraged and you think automatically people need to be in homes. It is that exact thought process that put us in the situation we are in.
Danny Doyle
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<BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell
balducci
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Quote:
On 2011-06-18 09:39, Dannydoyle wrote:
Quote:
On 2011-06-17 20:30, EsnRedshirt wrote:
Quote:
On 2011-06-17 19:06, Dannydoyle wrote:
Pretty much shows how little you know of banking and econ bacics. How much money in reserve does a bank have to have for every dollar in foreclosure?

It should be dollar for dollar. But the situation isn't so simple, depending on who you ask:
http://www.paulpastore.com/Why-Loan-Modi......-Working


Not even bothering to read your biased article. BUT you claim that it should be "dollar for dollar" the amount of money that a bank has to have in reserve as opposed to what they have in foreclosure. So if a bank forecloses on a property now worth 1/2 of what they loaned exactly how is it they are making money? If they have to sit on the house because nobody is buying how do they make money exactly?

Well, it's not dollar for dollar is it? With fractional reserve lending operating as it does in the U.S., don't your banks loan out $10 for every $1 they hold in reserve? So I guess as long as the house retains about 1/10th of its value, the banks should still be ahead (or at least break even).

Or is that your point?

The numbers above are approximate. Maybe your banks lend $9 for every $1 in reserve. But the main point is the same. And I do believe the correct ratio is in that ballpark.

Offhand I don't have the statistics for what the reserve requirement is in other countries but, as I recall, the U.S. banks have some of the worst policies. That might have changed somewhat since the start of the financial crisis. Someone else can do the research on that.
Make America Great Again! - Trump in 2020 ... "We're a capitalistic society. I go into business, I don't make it, I go bankrupt. They're not going to bail me out. I've been on welfare and food stamps. Did anyone help me? No." - Craig T. Nelson, actor.
Dannydoyle
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I think you are way off, but yea someone else can do that research if they desire to find out the truth. But libs have never been that interested in a truth they can't rhyme and put on a bumper sticker or cheer.
Danny Doyle
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<BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell
balducci
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Seems I'm correct so far as the reserve requirements go (at least circa 2008) ... a U.S. bank with more than $43.9 million in liabilities has to keep an amount equal to 10% of the liabilities in reserve:

http://www.federalreserve.gov/pubs/suppl......1_15.htm

I must admit I am not so sure about how this translates into the mortgage business. My earlier analysis was probably wrong; at the same time, I think it is more complicated than just looking at what a house is worth versus what the mortgage amount was for. Banks make money off mortgages in a variety of ways, e.g., by repackaging and selling them to others. In some cases, I think it can be that a bank will end up locking in a profit no matter what a foreclosed house is worth or sells for.
Make America Great Again! - Trump in 2020 ... "We're a capitalistic society. I go into business, I don't make it, I go bankrupt. They're not going to bail me out. I've been on welfare and food stamps. Did anyone help me? No." - Craig T. Nelson, actor.
Dannydoyle
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Yea the "repackaging" was really the trouble. Nothing but a large scale ponsi scheme.

I can see you do not know much about the process. Let me ask you this. Whoever gets the house after foreclosure, if it can't be sold at ANY price then how exactly do they make money? There are MILLIONS of houses in the ranks to be sold just sitting. Who is making all the money when that happens?
Danny Doyle
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<BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell
balducci
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Quote:
On 2011-06-18 14:21, Dannydoyle wrote:

I can see you do not know much about the process. Let me ask you this. Whoever gets the house after foreclosure, if it can't be sold at ANY price then how exactly do they make money? There are MILLIONS of houses in the ranks to be sold just sitting. Who is making all the money when that happens?

I can see that you do not know much about the process either. Smile

I've never heard of a home that cannot be sold at ANY price. I mean, at least any home that has not been declared unsafe to inhabit (forgive me ... I'm having a senior moment here and I cannot think of the technical word for what that is called).

You ask, how do they make money off a foreclosure? See this: http://www.nclc.org/images/pdf/pr-report......dify.pdf

A summary is below:

Mortgage companies are more likely to foreclose on homeowners than modify their loans because they make more money off foreclosures.

While homeowners, lenders and investors typically lose money on a foreclosure, mortgage servicers do not, says report author Diane E. Thompson, of counsel at the National Consumer Law Center. Servicers are the companies that manage the mortgages and collect payments.

"Servicers may even make money on a foreclosure," she writes. "And, usually, a loan modification will cost the servicer something. A servicer deciding between a foreclosure and a loan modification faces the prospect of near certain loss if the loan is modified and no penalty, but potential profit, if the home is foreclosed."

Thompson attributes this to a system of perverse incentives created by lawmakers and rulemakers in the market, like credit rating agencies and bond issuers. The private rulemakers typically dictate how a servicer can account for potential losses and profits. They hold enormous sway over securitized mortgages, which are owned by investors. More than two-thirds of mortgages issued since 2005 have been securitized, notes the report, using data from the industry publication Inside Mortgage Finance.

In those cases, the servicer is empowered to handle virtually all aspects of the mortgage, from collecting the monthly payments to initiating foreclosure proceedings. While they're obligated to do what's best for the ultimate owners of the mortgage -- the investors -- servicers have some latitude in deciding what course of action to pursue, be it a foreclosure or loan modification.

When a homeowner is delinquent on a mortgage that's been securitized, the servicer must front the late payment to the investors. When a home is foreclosed, the servicer is typically first in line to recoup losses. But if a mortgage is modified, the servicer typically loses money that isn't necessarily recoverable.

"Servicers lose no money from foreclosures because they recover all of their expenses when a loan is foreclosed, before any of the investors get paid. The rules for recovery of expenses in a modification are much less clear and somewhat less generous," she said.

That's part of the reason why the Obama administration created a $75 billion program to limit foreclosures. The money is to be distributed to servicers who successfully modify home loans, with the hope that the incentives to modify outweigh the incentives to foreclose.

Thompson's report outlines eight specific steps to reverse this trend. They include mandating that servicers attempt to modify a loan before initiating foreclosure proceedings and reforming bankruptcy laws so judges can modify distressed mortgages.
Make America Great Again! - Trump in 2020 ... "We're a capitalistic society. I go into business, I don't make it, I go bankrupt. They're not going to bail me out. I've been on welfare and food stamps. Did anyone help me? No." - Craig T. Nelson, actor.
Dannydoyle
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See the words WITH THE HOPE in your post?

Servicers MAY EVEN MAKE MONEY.

So you say there is no such thing as a home that won't sell? Yea I made the mistake of saying ANY price and we both know you will cling to that single word to make it so you are right. (The word you may be looking for is condemned.) But you don't seem to admit there is a very serious backlog of homes to work through, plus a tough time getting money in the first place.

Incidently I am asking questions, I do know quite a bit about the process. But I refuse to get into a discussion when others only have feelings and not facts.
Danny Doyle
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balducci
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Danny, I so wish you would stop putting words in my mouth.

For instance, I've NEVER denied or failed to admit there is a huge backlog of homes to work through. There certainly is.

Danny, YOU specifically HIGHLIGHTED the word ANY in your earlier post. As you were the one who specifically highlighted it, I assumed you meant it. Besides which, I didn't make anything much out of it did I? I merely pointed out that most homes will sell at SOME price. It seems you even may agree with me that most homes will sell at some price, so what is your problem? Seems you are arguing here just to argue.

I was going to delete those sentences about the Obama plan you now commented on because somehow I knew you would focus on them and completely miss the point of the article and the report.

The point of both is that mortgage servicers CAN and DO make money by foreclosing (sometimes if not always). The report describes how they can do it. Even if they don't always make money, they can still come out ahead by foreclosing.

You said you are just asking questions. ALL I did was answer your question, with facts and NOT feelings, about "how do they make money off a foreclosure". Now you know. You're welcome. Smile
Make America Great Again! - Trump in 2020 ... "We're a capitalistic society. I go into business, I don't make it, I go bankrupt. They're not going to bail me out. I've been on welfare and food stamps. Did anyone help me? No." - Craig T. Nelson, actor.
Dannydoyle
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That is how you can in a perfect world.

DO you think banks make more money in foreclosures or in just letting the loan go to term?
Danny Doyle
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balducci
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Quote:
On 2011-06-18 16:36, Dannydoyle wrote:

That is how you can in a perfect world.

DO you think banks make more money in foreclosures or in just letting the loan go to term?

What I described is in the actual / real world that we live in.

In a perfect world, with the homeowner making the regular mortgage payments, I imagine the banks would generally make more money by letting the loan "go to term" as you say. That is what you mean by "go to term", isn't it? That the regular mortgage payments are being made until the end of the term? If I misunderstand what you mean, please do clarify it for me.

In the real world, as we've seen, that is not always the case. For a number of possible different reasons. If people stop making mortgage payments, there are situations in which the mortgage service provider is better off foreclosing.
Make America Great Again! - Trump in 2020 ... "We're a capitalistic society. I go into business, I don't make it, I go bankrupt. They're not going to bail me out. I've been on welfare and food stamps. Did anyone help me? No." - Craig T. Nelson, actor.
Payne
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On 2011-06-17 16:18, Avrakdavra wrote:

Maybe if the banks had not been essentially forced by various government geniuses (always ready to spend or risk someone else's money)to lend to lots of people who had no reasonable expectation of meeting their mortgage obligations, there would not be so many foreclosures, nor would the banks be so leery about lending more money.



I keep hearing this said a lot but I have yet to have anyone back up this statement with any kind of evidence. I think it's one of those things someone heard someone say, or thought they heard someone say and then they told someone else without ever checking to see if the statement was true. So if someone could find actual evidence that the Government actually forced banker to make bad loans I'd be very interested in seeing it. Until that time I'm going to have to go with the fact that the Banks voluntarily made questionable loaned as they were just making too much money doing so by not only bundling them and selling them to other financial institutions but also make bets against them.

http://www.nytimes.com/2009/12/24/business/24trading.html

It was the private banks that trashed the economy, not the Government nor the poor. Deregulation and the abolishment of the Glass-Stiegal act allowed banks and other financial institutions to make some very questionable and dangerous investments.
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Dannydoyle
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Quote:
On 2011-06-18 16:59, balducci wrote:
Quote:
On 2011-06-18 16:36, Dannydoyle wrote:

That is how you can in a perfect world.

DO you think banks make more money in foreclosures or in just letting the loan go to term?

What I described is in the actual / real world that we live in.

In a perfect world, with the homeowner making the regular mortgage payments, I imagine the banks would generally make more money by letting the loan "go to term" as you say. That is what you mean by "go to term", isn't it? That the regular mortgage payments are being made until the end of the term? If I misunderstand what you mean, please do clarify it for me.

In the real world, as we've seen, that is not always the case. For a number of possible different reasons. If people stop making mortgage payments, there are situations in which the mortgage service provider is better off foreclosing.


They "can" be better off foreclosing, than getting 0 yes. But not better than the loan being paid off.
Danny Doyle
<BR>Semper Occultus
<BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell
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