Front Loaded Interest is Criminal - Modern Feudalism & the Banksters, page 2

posted on Oct, 24 2011 @ 10:03 PM

link

Gagirl I think your missing something. I have friends from other countries, romania, latvia, etc, where generally loans are not available as a standard form of house buying. Do you think homes are just not bought in such places? one of the main reasons that you can't save up enough to buy a home is BECAUSE of our banking system. It has allowed people to afford so much more for homes that the cost of homecoming has skyrocketed astronomically. A home is no longer the cost of labor and materials as it was in our grandfathers grandfathers time here, its the cost if a market system, where a house that should cost a person just about 80k in labor and materials goes for the sale price of 240k, and winds up costing just over 1.2 million in the life of a loan.this is absolutely ridiculous, as mobsters used to go to jail for usury for charging 30%, and you say you are grateful? May as well be grateful to be a chinese child working in a sweatshop for pennies a day, or a starving haitian paying for clay to eat because we destroyed their food industry.

Just wondering, in your mind, when exactly does it become immoral to charge you an extremely disproportionate portion of your labor for a product worth a fraction of its value? Or is there even a limit?

Mijamija

posted on Oct, 25 2011 @ 07:23 AM

link

Originally posted by Spruk

Originally posted by Mijamija
USURY

www.thefreedictionary.com...

Back in the days when religion/morals mattered Usury was illegal. It was considered immoral to profit off other's misfortune......
I agree with the concept of usury and wish the modern world did not abandon usury laws.

I was once told that Islamic banks do not charge interest for similar reasons....If anyone knows, I'd be interested in hearing more about how Islamic banks work.

In Sharia (sp), it is immoral to enter into slavery. They consider interest as slavery.

i know its a wikipedia article, but it might be a start: Islamic Banking

Edit:

tgidkp - I'm unsure where you got that idea that money is 'printed out of thing air' from, i'm not completely sure how it works in the US, i can only base my comments on how the loan sector is run here. So here goes.

Pretty much i can sum this up in these simple steps:
1. Bank aquires currency from an outside source, with some from the Aust. Federal Reserve Bank (i'll try to explain where it gets its cash from)
2. Bank bases interest rates on the Federal Reserve plus its outside source, plus some for profit
3. Funds are distributed to the loaner (obviously if its all approved).

Now point 1, if the AU Federal Reserve kept printing currency, we'd suffer hyper-inflation (see South Africa's hyper-inflation as an example), the federal reserve sources its cash from outside sources (governments usually), and the Australian Tax Payers (and there for from the stock market, and buying and selling other currencies, thus making a profit).

How other Reserves work i do not know for fact, i havn't had the time to get into the economy as much as i'd like, but i just dont have the mental 'wiring' to handle economics, thats my partners line of work.

Pretty much Governments cannot mass produce "money" because it would de-value the currency, so it isnt cut and dry as you are putting it out to be
edit on 24-10-2011 by Spruk because: Added comments for tgidkp

Thanks for the info, I spent some time with it last night and so far, I still agree that something is just flat out wrong with charging interest, especially the way it is done in the present day. So, far I'm pretty impressed with the Islamic banking, and I wonder why more Americans do not try a banking system like this???

Here is some more info, for anyone interested....I am not so good with finance but it seems pretty straight forward. If anyone knows about finance and can give me further info, or point out perhaps why this system could Not work on a larger scale in the USA, I'd love to hear more.

www.usatoday.com...

edit on 25-10-2011 by Mijamija because: Link correction

GeorgiaGirl

posted on Oct, 25 2011 @ 07:46 AM

link

Originally posted by pexx421
Gagirl I think your missing something. I have friends from other countries, romania, latvia, etc, where generally loans are not available as a standard form of house buying. Do you think homes are just not bought in such places? one of the main reasons that you can't save up enough to buy a home is BECAUSE of our banking system. It has allowed people to afford so much more for homes that the cost of homecoming has skyrocketed astronomically. A home is no longer the cost of labor and materials as it was in our grandfathers grandfathers time here, its the cost if a market system, where a house that should cost a person just about 80k in labor and materials goes for the sale price of 240k, and winds up costing just over 1.2 million in the life of a loan.this is absolutely ridiculous, as mobsters used to go to jail for usury for charging 30%, and you say you are grateful? May as well be grateful to be a chinese child working in a sweatshop for pennies a day, or a starving haitian paying for clay to eat because we destroyed their food industry.

Just wondering, in your mind, when exactly does it become immoral to charge you an extremely disproportionate portion of your labor for a product worth a fraction of its value? Or is there even a limit?

I really don't see how morality of the financial institution plays into my financial transactions. I am free to NOT purchase a home, and to rent. I am free to save my money, and purchase a home when I can afford one. I am free to shop around for the best rate and the best terms I can find, and when I was offered an adjustable interest-only loan tied to the LIBOR, I rejected it as too risky, even though my rate was going to be higher with a conventional mortgage. I do not have to live in a $350,000 home...I could purchase one for much less. When I purchased my home, I entered into a contractual agreement with the mortgage company, and I will continue to pay back the mortgage, with interest, until my obligation is complete.

FYI-we regularly make higher than required payments to "pay down" our principal. We expect to pay off the mortgage in less than 30 years, and will also pay less interest over that time because interest is calculated against the amount of principal you still owe. I don't consider myself to be a "slave" of the mortgage company at all, and think it is ridiculous that anyone would feel that way. I could WALK AWAY from my mortgage obligation at ANY TIME and I wouldn't have to go to jail...I'd lose the house, and my credit would be ruined, but I could do it. I NEVER would, though, because to me, THAT would be morally wrong. I like to honor my obligations.

When we bought our first house in the early 90s, the interest rate was over 9%. In the 70s, when I was a child, the interest rates were in the upper teens. THERE'S a rate I'm glad I didn't have to pay to buy a house!!! Now, rates are extremely low...we have a rate in the 4% range. Of course, I also see that low rates helped lead to the housing bubble. When rates were lowered, people could "afford more house", and now people like me have low rates and plenty of mortgage left to pay off. Did I complain for all of those years when my property values rose, and rose, and rose, and I could sell and make a killing? NO. So now we have had a correction. My house is worth less than I have invested in it. Yet I still don't consider myself to be a victim.

Yes to everyone...I see that our system has flaws. There have been some shady practices, that many people were hoodwinked by. Again, I don't think everyone would be complaining if they still had all of the housing "wealth" (on paper). We should see the positives in this housing correction...now housing is more affordable. Too bad for me--we bought our house at the height of the market. But my misfortune is someone else's gain, because they could purchase my house for less. That's the way it goes. I refuse to buy into the victim mentality that seems to be the mood of the day.

However---all that being said--in America we have one of the highest standards of living in the world. Is our system perfect? No. But I am grateful to live in America, warts and all. I am glad I don't live in Romania, Latvia, etc. You see people coming to America illegally because of the promise of America. Anyone who thinks America is broken beyond repair...feel free to emigrate to one of those countries that you feel has a "better" system and more opportunity.

I can see that I am not going to change anyone's mind, nor will you change mine. I remain grateful for the standard of living I enjoy in America.

CoherentlyConfused

posted on Oct, 25 2011 @ 07:56 AM

link

I don't have an issue with a bank charging interest for an amount they loan you. My husband just bought a truck and it has a simple-interest loan. The interest is about $1800 total, no matter if he pays it off today or pays through the entire term of the loan. That seems all right to me.

I have a really big issue about the way mortgage loans are issued. If you pay your mortgage over its life, you end up paying back 2 or 3 times more than you borrowed. How is that fair? The purchase price for our home and with the closing fees and all that, the loan amount came to about $121,000. If you look our the truth in lending statement, the total amount owed if paid through the life of the loan is over $300,000.

I would absolutely love to be able to save and build my own house. My ex's father did that. Lived in a dilapidated, crappy house for 5 years while building it in a lot across the street he paid cash for. He paid cash for all materials and built it over the 5 years. He only hired a contractor to do the plumbing and electrical work. Very nice house. But he's also skilled that way and a contractor, so he had the knowledge and skills to do it.

My ex's mother and step father also built their own house by hand out of logs they made from the trees on their land. Everything inside their home was handmade from the resources on their land. Their staircase inside was made from a huge tree. They paid $5,000 for a lot of land in Main and did everything themselves, even the kids got involved. They didn't hire contractors for anything.

Unfortunately, the brains from his mother and father did not make it into my ex, so that's why he's my ex....

But obviously cash is the way to go, if you can but not everyone has the means of doing it which makes loans okay for their intended purpose. The wrongdoing of the banks is from the outrageous interest charges that really suck the life out of people. Loaning money created out of thin air doesn't take a bead of sweat to do yet the money they make back from it will take 30 years of hard work and your sweat. The American dream.

edit on 25-10-2011 by CoherentlyConfused because: typo

GeorgiaGirl

posted on Oct, 25 2011 @ 07:59 AM

link

Thanks for the info, I spent some time with it last night and so far, I still agree that something is just flat out wrong with charging interest, especially the way it is done in the present day. So, far I'm pretty impressed with the Islamic banking, and I wonder why more Americans do not try a banking system like this???

Here is some more info, for anyone interested....I am not so good with finance but it seems pretty straight forward. If anyone knows about finance and can give me further info, or point out perhaps why this system could Not work on a larger scale in the USA, I'd love to hear more.

www.usatoday.com...

edit on 25-10-2011 by Mijamija because: Link correction

I just read your article, and it was interesting. Here's a part that I'd like to analyze:

Islamic banks get around the prohibition on interest by treating loans more like leases or profit-sharing arrangements. An Islamic mortgage, for instance, looks like a lease-to-own deal. The bank, not the borrower, buys the house. The borrower makes installment payments to the bank for a period of years, at the end of which he or she gets the title to the house.

The bank's profit technically comes from renting the house, not lending the money. Loundy notes that Islamic mortgages are more costly than traditional mortgages because they involve paperwork for two home sales: the first by the bank, the second by the borrower after the installment payments are finished.

In business loans, the bank essentially shares profits with the borrower, making Islamic financing more like an equity investment than a loan. Even depositors at Islamic banks are supposed to share profits and losses with the bank, instead of receiving interest payments — an arrangement that U.S. banking regulators have so far balked at approving. "The FDIC is not anxious to see any bank agreeing in advance to share a loss," Devon Bank's Loundy says.

It sounds to me like the bank still makes money from you, albeit differently than in an American-style mortgage. You are "renting" the home from the bank, and I'm sure that the money you pay each month includes a similar amount compared to what you would pay in traditional interest. It sounds like you are paying interest, but they aren't CALLING it interest.

Here's one drawback I see with this plan here in America. The way our tax system is set up, we can deduct mortgage interest. If you have one of these "rent-to-own" plans, you are technically not paying interest (even though you ARE paying an additional amount to the bank over and above the actual cost of the home...it is technically not considered to be interest), so you could not deduct it from your income for tax purposes. [NOTE: I hate the current tax system...but this is not the place for THAT particular argument.]

Notice the last part of the quote, that talks about depositors sharing any loss with the bank. I would NEVER deposit my money in such a bank...if they lost money, I'd lose money, too, as a depositor.

No, I'll stay far away from these types of banks. It does not sound like a better system to me. It actually sounds much more risky. And they can call it "interest free" all they want...the bank is still making a profit from the transaction.

GeorgiaGirl

posted on Oct, 25 2011 @ 08:04 AM
link

Originally posted by CoherentlyConfused
I don't have an issue with a bank charging interest for an amount they loan you. My husband just bought a truck and it has a simple-interest loan. The interest is about $1800 total, no matter if he pays it off today or pays through the entire term of the loan. That seems all right to me.

I have a really big issue about the way mortgage loans are issued. If you pay your mortgage over its life, you end up paying back 2 or 3 times more than you borrowed. How is that fair? The purchase price for our home and with the closing fees and all that, the loan amount came to about $121,000. If you look our the truth in lending statement, the total amount owed if paid through the life of the loan is over $300,000.

Pay your mortgage back faster. Every month, pay as much as you can afford to, and the amount over and above your required payment amount goes toward paying down the principal. You will pay it back in a much shorter time period, and you will pay SIGNIFICANTLY less in interest over the life of the loan.

pexx421

posted on Oct, 25 2011 @ 08:44 AM
link

Of course. We have a high"standard of living" here in the us. We can afford a lot of "stuff". What we do not have is high quality of life. Our nation does not value morality or joy, it only values being able to "own"stuff, even though you never really do. Another thing about those other countries.....many of them you only pay a moderate tax one time on your house and thats it. You own it forever, and it can't be taken away. That is ownership. Over here, even if you paid full, if you don't pay the yearly tax, the whole house is taken away. Thats not ownership, its rent.

At any rate, our society has gone from an overall ethical value of 7 during the 50s, where people generally did the right thing because its the right thing to do, to todays rating of 2, where people only do the right thing because they might get caught otherwise. As such, I doubt you have done any reading or studies on ethics (no, the bible does not qualify), and as such dont expect you to grasp the finer points of ethical business vs predatory banking.

Just an fyi to the islam points.....the usgovernment also offers interest free loans to muslim americans out of respect for their religion.

CoherentlyConfused

posted on Oct, 25 2011 @ 10:33 AM
link

reply to post by GeorgiaGirl

You're preaching to the choir. I'm acutely aware of how mortgages work and we do pay more when we can. Currently, about $100 a month more but before my husband's 9-year-old truck kicked the bucket, we had no car payment and were paying more. The only loans we have right now are the 1st and 2nd mortgage (which we took in lieu of private mortgage insurance--big rip off-- because we didn't have 25% to put down) and one car payment. 2nd mortgage has 2 years left on it, it was a 15 year loan.

It is always 100% in your best interest to pay your mortgage (or any loans) off as soon as you can. It doesn't excuse the banks' legal loan sharking practices for those who can't, though. Then there are those "early payoff fees" you face from some lenders when you attempt to do that. We stay clear of those.

GeorgiaGirl

posted on Oct, 25 2011 @ 10:42 AM
link

Originally posted by pexx421
Of course. We have a high"standard of living" here in the us. We can afford a lot of "stuff". What we do not have is high quality of life.

I consider myself to have a very high quality of life. It's not the "stuff", it's family and friends. I feel sorry for anyone who thinks that the stuff is what is needed to make them happy.

That being said, I do also enjoy the high standard of living in America, and this is what I mean by that: I enjoy having a dishwasher, a washer/dryer, a vacuum cleaner, running water, consistent electric power, gasoline for my car, food in the pantry. That is what I am talking about. There are many places on this Earth that can't boast the same.

It's not the iPhone, the big TV, the "toys" that give us the high quality of life. I work outside the home, but then I come home and have leisure time with my family (after the housework is done.)

I don't consider myself to be a "slave" to the banks, the government, or anyone else. Of course I don't love the current taxation system, and would like to see certain changes in place in the tax system and the government, but I know we must have some form of taxation to provide the necessary services.

Mijamija

posted on Oct, 25 2011 @ 01:28 PM
link

reply to post by GeorgiaGirl

Wow alot of interesting thoughts since I last checked in.....

Thanks Georgia girl, that really helped me. Finance is not my strong point. I still think that both systems are unethical/immoral. I base that on my religious beliefs so no point in arguing that topic, that is one I will not debate.

I agree that the USA has a high standard of living. I have traveled a bit and by far the USA has much more to offer than many countries.

I do not have central ac throughout my home, even though i live in the south, I do not own a dishwasher and probably never will. I planned on fixing the 40 year old plumbing in my house but I have to pay 5000 for my kids braces, but you will never hear me complain about it.

If I really was so miserable with my life I would go back to school and major in a in demand subject like medical, but if I worked a medical job I'd be miserable. I faint at the sight of blood--for real.

Better to be happy and poor than wealthy and doing a job you don't really like.

I think of myself as well off because my husband has a job, and he pays the mortgage and utilites. That allows me the luxury of not working a miserable job. I am able to sit here and practice my writing skills on ats, i would sooner hand wash dishes then force myself to work at a convenience store which I did and hated it. I am lucky, but would I love to be the next JFK Rowling? Of course, i do have ambition to succeed financially, but not at the expense of my sanity/happiness/ soul.

so until I write that best seller, I will keep eating noodles and teaching my kids to be kind, compassionate, giving, open, grateful, honest, polite, fair, and pure of heart, because at the end of my life, I can't take the house or the iPad, but I can leave the world knowing I raised kids with good hearts and minds and I maybe wrote a few things that may have helped a person.

You gotta find a way to work with what you got, but when you don't got alot in a country like the USA it would probably make many people feel like a slave. I think maybe that was the op point?????

Spruk

posted on Oct, 25 2011 @ 05:26 PM
link

Originally posted by Mijamija

Thanks for the info, I spent some time with it last night and so far, I still agree that something is just flat out wrong with charging interest, especially the way it is done in the present day. So, far I'm pretty impressed with the Islamic banking, and I wonder why more Americans do not try a banking system like this???

Here is some more info, for anyone interested....I am not so good with finance but it seems pretty straight forward. If anyone knows about finance and can give me further info, or point out perhaps why this system could Not work on a larger scale in the USA, I'd love to hear more.

www.usatoday.com...

edit on 25-10-2011 by Mijamija because: Link correction

You are more than welcome!

In a way both systems work, the capitolist (or western) version just sees most of the proverbial profit come first, and the actual property (or original loan amount) paid off last. Yes it seems a little backwards, but its to "save the bank if the loan goes wrong".

The Sharia version of a loan system also works, under the same principals, its just worded differently to ensure their religious beliefs are kept in tact. I must admit i do not know the full ins and outs (regarding defaults etc), but as far as i can see (From the knowledge i have) its the same, just 'interest' would be marked as 'administration fees' if you will

Romanian

posted on Oct, 25 2011 @ 05:56 PM
link

reply to post by pexx421

You got it right. In Eastern Europe people are more likely to own the place where they live, compared to Western Europe:

The level of home ownership in Romania is very high, almost unparalleled at 95%.

Source:www.expediaproperty.eu...

I know the houses are not perfect but imagine the people also paying 30 years for a mortgage! In regards to where the limit is for the banking system, you will be surprised - the limit is determined by the average life-spam in your country. You are expected to pay mortgage as long as you can work .Good we do not live 200 years haha!

Mijamija

posted on Oct, 26 2011 @ 07:31 AM
link

reply to post by Romanian

That is absolutely wonderful!!! My dream country is Romania!!! I have always wanted to travel there. I lived in Germany for many years and never made it to Romania and it is something I deeply regret! Everything I have studied about the history, culture, language, the beauty of the land is amazing! I could go on forever!

But to get to the point, I think that it is wonderful that the Romanian people are able to own their property and build houses. I used to look at real estate in Romania and it was incredibly cheap by European standards, when I thought I was staying in Germany, I was seriously thinking of having a vacation home in Romania.

My dad inherited land and he built a house using the wood and stones from the land, he had all my uncles and cousins help him built it, we have a electrician and a couple carpenters in our family so it was pretty cheap for him, but he INHERITED the land......

Not everyone is lucky enough to inherit land, and buying land in the USA is crazy expensive unless you buy it in a rural/ countryside area.

No one wants land out in the country because there are not very many jobs in the country, all the jobs are in the cities, so people are stuck. They need a job, so they live near/in a city, but they often do not make enough to buy land and build a house in or around a city.

There is no easy solution to this problem I am afraid.

Romanian

posted on Oct, 26 2011 @ 01:27 PM
link

Thank you so much for your positive feed-back in regards to Romania. After 2008 the price of flats went down for about 40% however the price of land appears to be unchanged. As you mention, it can be expensive in the city , also the planning permission can be harder to get. My choice for the future ( maximum of 2 years I hope) will be country-side and off the grid. The closest town to my chosen location :about 18 miles . I realised cities are not necessary due to the development of the Internet. Luckily Romania is in the Top 5 wold's best Internet broadband, so getting a 8 mb a second on the top of the mountains should not be a great challenge
. I plan to be self-sufficient food wise, also build a passive house (incredibility cheap when you do the research), be my own electricity provider and so on. Still there are quite some businesses you can start regardless of the location, i have about 20 ideas that could work on my fav location. Aquaponics will be one of them. O, not moving alone there
, we have a small group of interested people . Also being rural, permission to build is granted with no trouble .

Underground Houses

Mijamija

posted on Oct, 26 2011 @ 05:15 PM
link

reply to post by Romanian

I love all of Romania I have learned about but my fave so far is the maramures region, I found this great vacation home near vadu izei I wanted to use but never got to. I would love to see the painted cemetery and all the beautiful old churches with all the hand carved wood, it is real craftsmanship!

I think what you are doing shows alot of talent, innovation and hard work, I wish you and your friends the best of luck with it!

Maybe one day I will make over there, and please do not let go of traditional Romanian culture, because if I ever do make it over there I want to see the old stuff and the new stuff....the old stuff is amazing!!!

Brother Stormhammer

posted on Oct, 26 2011 @ 08:06 PM
link

Front-loaded interest isn't criminal. There's nothing in the legal system that says banks can't charge front-loaded interest. I think "unethical" is the word the OP was actually looking for, or perhaps "immoral". Unfortunately, front-loaded interest isn't either of those, either.

We can argue all day about how smart it is...but it's not illegal, immoral, or unethical.

The first thing to remember when you go into a bank (or credit union) for a loan, whether it be a few hundred dollars for a new gadget, or a few hundred thousand for a house, is that the loan officer on the other side of that desk is not your friend. I don't care how big his smile is, or how much free coffee he offers you, he (or she) is not your friend. Go back and bold-face that, underline it, and put big flashing lights around it. That loan officer's job is to make the best possible deal for the bank that he possibly can. Your job is to get the best possible deal for yourself.

The second thing to remember is to read and understand everything on that piece of paper you're signing. I don't care if the print is 2 point Times New Microscopic...get a magnifying glass, or ask them to reprint the document in a larger font. I don't care if what first looked like English turns out to be the High and Ancient Speech of Legalese...if you have to go get a lawyer to 'translate', then do it, or ask the loan officer what it all means in English. Ask questions...after all, the money you save could be your own.

The third thing to remember is that disclosure is mandatory. The bank has a legal obligation to spell out just how much your payments, fees, and penalties are, and what the triggers are for said fees and penalties. If that information isn't provided, do not sign anything until it is.

Two things to draw from the above...one of which is on-topic, so I'll hit it first. Banks love front-loaded interest, simply because under a front-loaded loan, they get all of 'their' money...the interest...even if you pay the loan off ahead of schedule. Over the full term of the loan, you won't pay any more interest (you might actually pay less...the bank might give you a lower rate in return for front-loading)...so if you you have no intention at all, under any circumstances, of paying off a note early, front-loading the interest might be a smart way to play things. On the other hand, if you even think you might pay off the note ahead of time, don't be afraid to tell your loan officer that you don't want a front-loaded note. Remember point one above? The loan officer wants to make the best deal he can for the bank. If you give him the choice of "no deal, I'm leaving" or "simple interest loan", it's in his (and the bank's) best interest to make the simple interest loan. Your leverage is that you can *always* walk out of his office without a note.

The last thing...I get very tired of people saying that banks "steal" from them. See point three, above. Bank loan documents are legally obligated to disclose every fee and cost. If you sign the note, having read and understood the payments and fees, don't complain to the world at large if you find yourself in over your head. It's not the world's fault that you're bad at math. If you signed a note without reading and understanding the disclosure statements, don't complain to the world at large...it's not the world's fault that you're impetuous/reckless/foolish (pick one or more, as applicable). Nobody holds a gun to your head and forces you into a loan agreement. I don't like the banking system that much, but it's not the "banksters" fault if their customers don't look out for themselves.

Prepare yourself, do your homework, and don't be afraid to walk out...the three great commandments of getting a loan.