Thread: Theives Revealed Mortgage Industry

Thursday, November 8, 2007

Bankruptcy Law Backfires On Banks



Banks tried to stick it to consumers by changing credit card laws, instead borrowers are sticking banks with depreciating houses.

In 2005, banks pushed agressively for a revised bankruptcy code that no longer allows people to walk away from credit card bills. The result: the new bankruptcy laws are helping drive foreclosures to a record as homeowners default on mortgages, rather than stop paying their credit cards.

Richard Fairbank, chief executive officer of Capital One Financial Corp, tells Bloomberg that "Of customers who are at least three months late on their mortgage payments, 70 percent are current on their credit cards."

"What we conclude is that people are saying, `Honey, let the house go,'' ' but keep the cards, Fairbank said Nov. 5 at a conference in New York sponsored by Lehman Brothers Holdings Inc, according to Bloomberg.

"The law had an unintended consequence of taking away a relief valve that mortgage borrowers used to have,'' says Rod Dubitsky, head of asset-backed research for Credit Suisse Holdings USA Inc. "It's bad for the mortgage borrowers and bad for subprime investors because it means more losses.''
Article Here

I just bumped into this article, it tells me that people are forced to make a tough choice. I remember when they past this law,the first thing that I asked my wife is " can you imagine having to declare bankruptcy, loose your home and yet carry a huge credit card debt?" My next words were "Hell you wont even be able to rent."

I will stick with my conclusion that this sub-prim is just a way to point the finger of blame, throw up some smoke and mirrors and hope the problem goes away when the truth is, our economy is in bad shape, inflation is all but out of control.

Originally Posted by Crestwood33

.....................yep, didn't happen till fairly recently, when the interest rates went down and you couldn't make any money in the markets these greedy jerks preyed on the poor folks, not all though some greedy folks were in it for the home appreciation they were told was the best way to increase your net worth. Used to be a hassle to get a mortgage, recently the money guys were tackeling folks on the street begging them to borrow.

I can't really blame the low income families that took the loans, for the most part they haven't the experience to spot a shyster when they see one. They thought they were getting a great deal and these unprincipled thieves made every assurance in the world to them. Not only did they take thier money they also destroyed thier dreams. And that just pisses me right the F*&k off.

Is this the business that John Edwards invested in?
Kinda reminds me of the S&Ls of the 80's, like the one that the Clintons were mixed up in & one that Neal Bush sat on the board of.

This thread deserves more attention.