I made a bad loan on my house..

[jch364]

Its yet another attempt at redistribution of wealth. No different than earned income credit tax returns. How does some one get more money back in a tax return than they pay in? Were does that money come from? The rest of us. Thats called redistribution of wealth. A socialist idea. An idea embraced by the liberals in this country.

 

[runeight]

But you don't understand. We really wanted this house and the payments were really low. We thought we could afford it but the interest tacked on the back has put us in a terrible bind. I guess I "should of read" the fine print before "I signed" the dotted line.

We might have to foreclose on the house and you don't want the bank to have it do you? The bank has enough problems. Let the Goverment bail us out so we can keep a roof over our head.

Phooey!

r8

 

[Aquaman]

What about all the money the banks make on interest? You pay back like 3 times the amout of the loan. WTF?

 

[runeight]

What about all the money the banks make on interest? You pay back like 3 times the amout of the loan. WTF?

But if the House sits vacant we lose revenue. You understand. We can't sell the Home at a loss you know.

We need the Government to help us. We have thousands of these loans. Look what happened to Countrywide.

You don't want your "full service" bank to take the hit do you?

r8

 

[cosmo]

What about all the money the banks make on interest? You pay back like 3 times the amout of the loan. WTF?

What about it? If you want the power to determine what others earn than you must be willing to have the same determination made about YOU. See the Karl Marx quote above.

And I'll say it again....did someone hold a gun to your head at the closing or was it a VOLUNTARY choice?

 

[skoti]

100% vote for 2) The bank made the loan let them suffer.

I find it amusing that the banks want to be bailed out for a situation in a system they created. Money in most developed countries are backed by debt. By adding intrest to that, there simply isn't enough money in circulation to match the amount of debt that exists.

Because of this, some people HAVE to file bankrupcy or default on there loans.

 

[darth frosty]

I breifly had a side gig as a loan officer. The place I worked for had a procedure to explain ARM's(ajustible rate mortgages) to people. We emphasized the need for them to guard there credit, for when the arm ran out. When it appeared that things were getting tight we stopped pushing ARM's and encouraged folks to go with the traditional fixed rate.

Sadly you had a lot of pop up mortgage firms that just focused on volume and got people to sign for loans they knew they couldn't afford.

 

[pbghost]

the thing I hate about the banks, insurance, etc is thier "kick you while your down" mentality. a few years ago I went from 17.50/ hr 60 hours a week to 9/hr 40 hours/ week due to layoff. on our loans with good interest, we made sure those payments were made BEFORE time. they still jacked our rates and minimum payments making it where we had negative income. mind that before they did this, we were able to make ALL payments, just not on time. insurance increased due to credit scores falling, not because of claims. the he!! with them. one more year left on consolidation, thier greed resulted in thier loss.

 

[ibified]

Hey, I lost some money on the stock market last year. Any chance that the general population can reimburse me for that, too?

 

[PocketRocket]

Think about this ( Its unbelieveable) BUT Banks and Credit card companies Do This" Example " If You put 10K in the bank, The bank or Credits card co's can then loan up to 100K on your money" So lets say The 10K you put in the bank is loaned out to 10 people and each person barrows 10K =100K they collect interest on each 10 loaned out X 10m, 15 or 30% interest = 90% to 300% interest the credit card or banker loans, Then they pay you 2-3% and then tax it!! So there you go they collect 90% -300% on money they dont even have..Its all tied to the federal reserve.. its mind blowing and info the banks dont want you to know about!

 

[suzuki4life]

well there is a bigger picture that involves the government loans that are being foreclosed on also and its easier to make the loans affordable and bail out the people then to eat them all.

 

[cosmo]

Think about this ( Its unbelieveable)  BUT Banks and Credit card companies  Do This" Example " If You put 10K in the bank, The bank or Credits card co's can then loan up to 100K on your money" So lets say The 10K you put in the bank is loaned out to 10 people and each person barrows 10K =100K  they collect interest on  each 10 loaned out X 10m, 15 or 30% interest  = 90% to 300% interest the credit card or banker loans, Then they pay you 2-3%  and then tax it!! So there you go they collect 90% -300%  on money they dont even have..Its all tied to the federal reserve.. its mind blowing and info the banks dont want you to know about!

Uhhhhh.....I'll go out on a limb here and guess you weren't a math major.

 

[kml]

Think about this ( Its unbelieveable)  BUT Banks and Credit card companies  Do This" Example " If You put 10K in the bank, The bank or Credits card co's can then loan up to 100K on your money" So lets say The 10K you put in the bank is loaned out to 10 people and each person barrows 10K =100K  they collect interest on  each 10 loaned out X 10m, 15 or 30% interest  = 90% to 300% interest the credit card or banker loans, Then they pay you 2-3%  and then tax it!! So there you go they collect 90% -300%  on money they dont even have..Its all tied to the federal reserve.. its mind blowing and info the banks dont want you to know about!

Uhhhhh.....I'll go out on a limb here and guess you weren't a math major.

no, he is correct.

cheers
ken

 

[cosmo]

Think about this ( Its unbelieveable)  BUT Banks and Credit card companies  Do This" Example " If You put 10K in the bank, The bank or Credits card co's can then loan up to 100K on your money" So lets say The 10K you put in the bank is loaned out to 10 people and each person barrows 10K =100K  they collect interest on  each 10 loaned out X 10m, 15 or 30% interest  = 90% to 300% interest the credit card or banker loans, Then they pay you 2-3%  and then tax it!! So there you go they collect 90% -300%  on money they dont even have..Its all tied to the federal reserve.. its mind blowing and info the banks dont want you to know about!

Uhhhhh.....I'll go out on a limb here and guess you weren't a math major.

no, he is correct.

cheers
ken

All those concussions may be catching up with me but, I didn't see any math in that cartoon. What am I missing?

Any accountants in here?

 

[shortcut]

and NOW people are suing the govt (fema) for asbestos contaminated trailers they got for free from katrina. how bout dem apples?

 

[Wag]

It is true that banks can loan out more than they have on deposit. They borrow the excess from the Fed and then loan it out to people.

What I don't know is what the ratios are. What I do know is that the numbers above are only taking into consideration the savings interest they pay you and ignoring the amount of interest they pay out to the Fed. Soooo, even assuming that the 90-300% figure on the collected interest is correct, the payout is still 80 to 290% no matter what!

The important piece is the spread between the interest they pay out to you and to the Fed vs. the interest they are collecting on various loan products in their portfolios. The bottom line is, the scenario above is not completely accurate and it certainly isn't as dire as it makes things out to be. I didn't watch the entire video either but I've seen plenty of conspiracy theory vids like that to last me a lifetime. Credibility for such things is nil with me.

You can do the same thing in the stock and futures market. In fact, if you've bought a house, you may have done it already. In the stock and futures markets, it's called buying on margin or buying on contract. In real estate, it's called a mortgage!

Look at your mortgage. Especially 10 years ago. You put down $20,000 to buy a $200,000 house and in the coming years, you pay interest on the $180,000. At the end of five years, the house might be worth $300,000 (if you lived in California!) You will have added an additional $14,000 to your equity with your payments and you would have spent $58,000 in interest. Sooo, you take the $20,000 initial investment plus the $14,000 in additional principal paid gives you a total of $34,000 invested. Take the $100,000 increase in value less the $58,000 in interest you paid and you have a net increase of $78,000. $78,000 divided by $34,000 gives you a return rate of 229%. Yup. That's two HUNDRED and twenty-nine percent or, slightly more than double your money in five years. Divided by 5 gives you an annual return rate of about 45%. Not bad.

My mind is wandering. Damn ADD.

Edit: Oh, damn. Forgot the original point! THAT, is what leveraging your money is all about. You put out 20,000 but you get to use 180,000 that belongs to someone else.

--Wag--

 

[runeight]

Sadly you had a lot of pop up mortgage firms that just focused on volume and got people to sign for loans they knew they couldn't afford.

Exactly.

r8

 

[cosmo]

And just to add to Wag's excellent explanation  

.............

The cost of running a bank, like owning a home, must be subtracted from the gross profit. And don't forget those pesky tax collectors....Fed, State and local  

.

Edit: And we could go on & on about simple vs. compound interest, payment in arrears, loan insurance.........