Banks double dipping and nobody cares?

After replying to a question in another thread I started, I felt it deserved it's own forum. I was asked why I had issue with our current system of bank credit? The questioners position was that credit is a good thing and provides entrepreneurs with many opportunities that would not exist without it. This question arose from my failure to express my actual point clearly and is my position as well. What my credit beef is about goes slightly deeper into the system and is unfair to say the least.

With all the foreclosures sweeping the U.S. these days Washington decided that lenders needed further compensation in order to rectify the situation? This to me makes zero sense and anyone that has ever taken out a secure loan from the bank will know what I'm talking about. When a bank provides you a loan on, say a house, it only does so after extensive due diligence to make sure their investment is secure. This security is never equal to their investment and unless the borrower can provide more than even collateral, approval is denied.

Further profiting from this agreement comes from many costs and fees most of them being excessive as well as incomprehensible to the borrower. Finally, the ever misunderstood interest rate is calculated, usually causing the loan amount to at least double, and closing can now take place. This is a painstaking process and all mandatory conditions for approval. The reason for all this is to protect the lenders securities in the event of a default. Should a borrower be faced with an inability to maintain the installments, the lender has the contractually agreed upon rights to repossess all the original collateral securing their investment. Which is the fair and agreed upon conditions originally negotiated in the contract.

This is a contract that was agreed by both parties. When you default on your mortgage you have to leave your home. You have only defaulted the remaining balance and any excess in value is to be given to you. This happening at point in time when home values drop is unfortunate and current value is determined as the banks collateral. The contractual obligation is supposed to be over once this process is finished. The bank has been compensated according to their terms and now has real property that's of equal value. These were the lenders terms. Anyone that has ever applied for a mortgage knows that there is no negotiating. We accept the lopsided terms due to us being the ones in need and basically consider it the price of doing business.

If that is the case, why are we obligated to adhere to our governments agreement to further compensate these banks? Those that defaulted have already fulfilled their obligations while those that haven't are still at risk? What about the fact that mortgage contracts are constructed on the lenders terms? We had no negotiating power or say in those terms at all. We were completely at the mercy of the lenders set of obligations that provide a take it or leave it choice, nothing more. Then again with the bailout taxation? No say at all, just take it or leave it?

Didn't the banks, on their terms alone, receive their compensation already? Aren't they being paid twice and then some? Is Washington promoting those contracts to not be relevant? Are these laws written only for us to follow? Keep in mind these banks that Washington are so eager to service are also mostly foreign businesses. Has Washington been taken over by foreign interests? Why are Americans accepting this? I'm starting to think so. Maybe Obama is playing out his mysterious stimulus package as a distraction to this? Is this same tactic going to be used again when the commercial loan bubble bursts soon?

I, as well as some other members, keep writing threads similar to this and they never seem to get much attention? I hope many ATS members find this thread and seriously consider it's context. Any and all input welcome! Thanks to everyone that reads this regardless of opinion!

In short. Are some banks receiving bailout money even though they have collected collateral from defaults? Shouldn't those defaulted properties be returned after excepting bailouts?

Does any of this make sense to anyone? This is only one of the many problems created from tampering in a so called "free market". Also one of the proofs that no such thing exists.

I think I do sense where you are going with this and I also find a form of double dipping.

A house default so it goes back to the bank. They sell it and get some money and then try to hold the original buyer for the excess that is still due. At the same time they are getting bail out money.

Even though, supposedly, this money has to be repaid, the banks still get to get it. They can use this money to make other investments that will make them money and still come out the winner in the long run.

What amazes me is that if you or i can see that this is happening, how could 535 plus 0ne not see the same thing.

This has got to be one of the biggest con games in history.

reply to post by Zerbst

I am in no way trying to defend the banks here, but I think there is a piece missing in your OP. Many of these now foreclosed homes are worth a fraction of what the banks loaned out for people to purchase them with. Example. I bought my house in the U.S. for 95k in 1998. At the height of the real estate "bubble" it was worth around 400k. Now it is worth 150k. Luckily, I did not max out my mortgage when it was valued at more or I would owe more on my house than it is worth. Unfortunately, many people got mortgages during the height of the "bubble" and now have a house that is worth much less than they owe. My neighbor in the U.S, has a house that is smaller than mine and he paid 385k for it. He also got a loan from the bank for this amount. I imagine his house is worth about 130k now. My point here is that in many cases, the bank forecloses on a home now and they cannot sell it for anywhere near what they loaned out. Maybe that is where the discrepancy comes from.

yes it makes 100% sense they got their collateral ( the house)from the defaulted loan
so they should not receive any money for that particular defaulted loan

if i get hit in a car wreck and need medical help for injuries

its the same thing as a doctor charging your insurance company and getting paid for services done to you

and then charges the other persons insurance company for the same services

reply to post by jam321



Exactly! These loans were on the banks terms, not ours? Why the double standard? Most of all, why does no one seem to care? It's quite obvious what's going on here.

People that have defaulted have lost their property and the necessary credit needed to purchase again. Their chances of even renting have been effected and even insurance coverage is now gauged by credit ratings? If they can somehow manage all these things and start again from nothing, they will pay yet further from bailout taxation?

This is far beyond BS and I for one will not tolerate this unfairness! People cannot sit silently and believe this to be fair, can they? Are we so far gone that this is acceptable? I saw this months ago when property values plummeted while tax assessments remained high. I was stunned that this was tolerated and shrugged off as if there's nothing we can do about it? Now this is happening and there is even less resistance? Come on people! It's okay to demand equal treatment. Enough is enough!

Originally posted by tamusan
reply to post by Zerbst

 

I am in no way trying to defend the banks here, but I think there is a piece missing in your OP. Many of these now foreclosed homes are worth a fraction of what the banks loaned out for people to purchase them with. Example. I bought my house in the U.S. for 95k in 1998. At the height of the real estate "bubble" it was worth around 400k. Now it is worth 150k. Luckily, I did not max out my mortgage when it was valued at more or I would owe more on my house than it is worth. Unfortunately, many people got mortgages during the height of the "bubble" and now have a house that is worth much less than they owe. My neighbor in the U.S, has a house that is smaller than mine and he paid 385k for it. He also got a loan from the bank for this amount. I imagine his house is worth about 130k now. My point here is that in many cases, the bank forecloses on a home now and they cannot sell it for anywhere near what they loaned out. Maybe that is where the discrepancy comes from.

I completely understand what you're saying, but that was the banks decision to make. Those were their terms and their decisions to risk for a chance to profit just like everyone else. Those like your neighbor are actually in the majority as many people opted to liquidate property assets at low rates. Now that they are faced with mortgages valued higher than property, who's bailing them out?

Nobody was immune to what has happened in real estate and all owners have taken losses from it. But unlike everyone else, banks are the only ones afforded relief? You must see the double standard here? Banks took on these investments at their own risk, as well as everyone else. Many businesses are effected from these conditions due to choices they have made. Why should the banking business be treated any different?

I completely agree that there is a double standard. Like I said, I am in no way trying to defend the banks. They should not be treated any differently. I had a thriving business from the time I got out of the military until just this past year. I recently had to close it down. I was not getting any customers, because no one had the money to spend on what I was selling. It is just one of those things that people do not need, but have to have if they have a little extra money. I didn't get a bailout. I do not want one. I don't want anyone to get a bailout. But it is happening and there is nothing I can do about it.

The government should've done their jobs properly and made sure the banks were doing their jobs properly, thanks to them both the whole world is suffering.

The banks needs propping up because they are your countries financial institutions, they hold your country together and if they fail, well you don't want that to happen.

Once everybody realizes they have lived beyond their needs, then the crisis will be understandable.

Double dipping ?

Try quadruple dipping ....

They were selling collateralised debts (CDOs) and collateralised mortgage orders (CMOs) as bundled securities to get those debts off the bank's books so that they could restore their debt to equity levels and issue fresh credit.

Not only that, but the money they gained from the sale of securities went back into the bank's kitties too increasing the level of funds on deposit that credit could be written against.

Banks were writing credit up to 200 times in excess of the funds they actually held.

That is what went wrong and what needs fixing.

These banks quadruple, quintuple, sextupile dipped etc and as you say are now being bailed out by the same taxpayers crippled by these banks. At the very least taxpayers should be taking scalps.

It should be a minimum pre-requisite for bailout money that banks conform to new security regulations.

its not the people living beyond there means its the banksters that are living outside there means and they screwed up and get a free ride
a pass go and collect 7 trillion dollars
if they bailed the people out this could have been prevented


banksters just took that money and invested it over seas and get rich quick schemes it will help out nothing that money they gave them will goto nothing

our children will pay that debt off to the banksters just like we all have for the last 300 years same old same old

now there balls have got so big they just steal it right in front of us because they know there are no prepricutions they own the whole system every aspect every cent and the politicians are just there puppets

the government never listens what the people have to say and voting is a joke how do you choose between a turd sandwich and a doucebag

Check out this thread:
www.abovetopsecret.com...

Info on what may have actually caused the bank bailout plan to unfold.