Quote:
Originally Posted by goof2
If the lender believes they have the legal right to have the house foreclosed and they want the home foreclosed they operate in good faith up to that point. Good faith doesn't require them to accept less than what they feel they are entitled to under the law.
The main contributing forces behind the housing foreclosure issue are stupid people borrowing and stupid bankers lending way more money than the borrowers could hope to afford to pay back.
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Good faith isn't demanding double the current debt amount. If the term of the loan is cut short by the lender, then said lender has no claim to 20+ years worth of interest.
Given what I've absorbed regarding the North American banking system by osmosis over the years that my parents worked in banks, in various capacities, this particular bank has some agenda other than simply maintaining their profit on this loan. The amount of money that they would lose on a property that has been devalued, by foreclosing on it, could approach the amount that they were legally entitled to. Something else is going on here.
The best interests of the bank's stock holders are served by extending the loan and reducing the interest rate, in order to either minimize or eliminate losses. The judge recognized that the bank's representative wasn't dealing in good faith and apparently had more than a little to hide, so he slapped the bank down. This seems to be a completely appropriate approach in this situation.
Here's the real issue: Banks were making loans to people who probably never should have qualified for them. They used predatory lending practises in order to do so. The loans were upside-down from day one. It doesn't take a stupid person to fail to understand finance. I've run into loan officers who don't.
The banks were using these essentially worthless loans in order to create profit in other arenas. If a regular business rather than a lending institution cooked the books the way that they did, the board of directors would be out on the street and the stock holders would be storming the gates. The stupid people were the excessively greedy ones who didn't think that this massive Ponzi Scheme would ever come crashing down on their heads.