Saturday, Aug 14, 2010
Why the banks are bust
New York Times: Borrowers Refuse to Pay Billions in Home Equity Loans
Struggling borrowers are unable or unwilling to pay back their loans. The default rate on home equity loans is higher than all other types of consumer loans, including car loans and credit cards. The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up. Even when a lender forces a borrower to settle through legal action, it can rarely extract more than 10 cents on the dollar. "People got 90 cents for free. It rewards immorality, to some extent." "I am not going to be a slave to the bank." "I was taught in real estate that you use your leverage to grow. I never dreamed the properties would go from $265,000 to $65,000." The amount of bad home equity loan business during the boom is incalculable and in retrospect inexplicable.
2 Comments
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1. Crunchy said...
That's one way to get their bail out money back.
The other way for Americans is to stop paying illegal income taxes to the criminals that now run everything.
Audit the Fed and Pentagon and see how far down the rabbit hole goes. NO?
2. nathan said...
“No one had ever seen a national real estate bubble,” said Keith Leggett, a senior economist with the American Bankers Association. “We would love to change history so more conservative underwriting practices were put in place.” -- This has to be in the running for quote of the year.