If someone buys a house with a bank loan for lets say $500,000 regardless of his salary or financial position?
does not pay the loan for a year. Should the government decide whether to foreclose on the house or the bank?
- SpookLv 710 years agoBest Answer
This scenario was what got us into the financial mess in the first place. The government through HUD bullied the banks to allow loans like this and then Fannie and Freddie bundled them with good securities and sold them to banks and financial investment companies. The government then went to bailout the borrowers with tax money along with the financial system.
The banks should be left alone to decide who is capable of paying the mortgage and decide when foreclosure is necessary. Nothing that comes under government control ever works as it should and always gets skewed in the process.
- Mujer AltaLv 710 years ago
1. Any bank that would make this loan is guilty of shoddy business practices.
2. A lot of banks made these loans so that the large inventory of new, expensive homes could be sold instead of letting the market do it's thing. Developers would have lost money and the prices of the unsellable homes would have dropped.
3. When people couldn't make their balloon payments or their ARM payments or even pay their 30 year because of job loss, etc., flow of cash to the banks slowed to a trickle and banks couldn't make their regular loans to business. Businesses began making claims on AIG, etc. Boom! the economy begins to crash.
4. In steps the gov't. and bails out the banks (instead of the home owners) thinking that the banks will use their new liquidity to make loans.... but, no. We were also told in the Fall of 2008 that the gov't would be buying the toxic assets (good mortgages bundled with bad ones) but that never happened so the banks still hold all of them.
5. So the bottom line is that the banks and investment houses made some business decisions that a 5 year old wouldn't make, practically went insolvent, got $$$billions from the gov't (i.e. us) and because they still hold the mortgages, when they foreclose on the properties, they'll own the homes, too. It's been a win-win for the banks and a big LOOSE for the taxpayers and homeowners.
- Anonymous10 years ago
The house is bought with a contract between a lender and a home buyer. If the buyer doesn't fulfill his contractual obligations, the contract and the law determine, what ways the lender has to get his money back.
We pay taxes, for such disputes being orderly followed in a court by the law, our taxes paying for courts, judges, police, etc.
So, the lender applies his rights and the government authorizes them, executes them and we pay more taxes, because we are all to greedy and dumb, to live in a society based on moral rights, without a wasteful government and corrupt politicians.
- megLv 710 years ago
The bank should decide if they are taking the loss. However when the government is making up the bank loses then they should since it is their money that is being lost.
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- MichaelLv 610 years ago
Obviously the taxpayers should be forced to bail this person out. After all if anyone objects they are just heartless , mean , tea baggers according to the left.
- Anonymous10 years ago
No one can pay back a loan of $500 000 in a year pal.
- 10 years ago
The loan should go back to the idiots that originated it. They can be found on the beach in Rio laughing their asses off.
- 3 years ago
undesirable human beings did no longer crash the worldwide economic equipment, they are not the only ones who borrowed greater suitable than they could locate the money for, they have been in basic terms an exceptionally small part of the subject of the housing bubble.
- 10 years ago
since the bank loan is probably financed by freddie or fannie who in the hell knows.