Quote:
Originally Posted by US27inKS
While it's not the banks job to absorb the loss directly, it was the banks job to do their due on the people they loaned money to. They didn't do that, so now their obligation is to execute the contract as it is written. If that means foreclosing the property and taking half the money for it on the auction block, so be it.
The borrower has an obligation to no over extend themselves, and the banks have an obligation to loan money to credit worthy people only in an amount that their credit and income will sustain. Neither group has been very good about that in the last 10 years. The problem that we have now is that the borrower is being made to uphold his end of the contract (for now) and the banks are getting the difference between the sale of foreclosed property and the amount of the note made up by Uncle Sam. I was going to say it's a bad precedent, but that ship sailed long ago.
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I'll wager that we'll look back and see that, had we let the market take it's course; bankruptcies, foreclosures, and bank failures and all; we'd have been far better off. All we've done since, is to allow the pig to rot.