Quote:
Originally Posted by classicman
re: glatt - It is extremely rare for any salesperson to not try and upsell the customer.
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Once upon a time, the bank got stuck equally if they provided a mortgage the consumer could not afford. The salesmen, once upon a time, also was at risk. In the past decade, a bank no longer had to be responsible. The bank no longer had to consider risk. Lack of regulation enforcement only encouraged that new attitude. Consumers had no idea that the bank was no longer operating responsibly.
That is the only thing that changed.
Now a solution. Difficult is to separate the rare speculator (who was flipping a $750K house) from others who were sold an ‘excessive risk’ mortgage. Many homeowners owe more on a house than the house is worth. And many banks are simply not foreclosing due to no better option. Other banks have massive profits because they sold off bad loans using money games or simply do not foreclose – do not yet admit to the losses. Too many foreclosures would mean admitting that reality on spread sheets. Many banks just cannot afford to do that.
How does someone refinance when a loan is for more than the house is worth? We still do not have an answer other than bankruptcy. Instead, money lenders are hoping that with time this problem will go away. Some programs have been introduced that only chip away at the problem.
Anybody have a better solution?