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Silly??

This may be a silly question, but I honestly don't know the answer. It concerns an earlier post about the economy and replies stating that the house repo's were a big factor.



"Why would the Banks raise people's payments so high they couldn't afford them, repossess the house, then cry about all the empty houses they are sitting on, or sell them at auction for a lot less? Wouldn't it have been better to lower the interest rate back down to a manageable amount and let people (who WERE making their payments until the hike) keep paying full price for those homes, and then they wouldn't be sitting empty?"



It sounds, to me, like the Bank's intention was to make the payment so high the person couldn't afford it, take the house back and pocket all the money already paid, and re-sell the house again for full price ( like people who owner-finance homes do) But that plan backfired.



Am I wrong?

Answer Question
 
Sharon7772

Asked by Sharon7772 at 3:02 AM on Jan. 27, 2009 in Politics & Current Events

Level 4 (36 Credits)
Answers (16)
  • Yes. The interest rates fluxuated. They weren't fixed. The banks went with the current rates. People got behind because they couldn't make the payments. The banks could have prevented this by doing fixed mortgages. And people could have been smarter by not doing the fluxuating ones. :-( We all live and learn.
    SusieD250

    Answer by SusieD250 at 3:15 AM on Jan. 27, 2009

  • But did the Banks HAVE to keep charging the higher rate? Or could they have dropped it when they saw it was going to be a problem?

    Sharon7772

    Answer by Sharon7772 at 3:22 AM on Jan. 27, 2009

  • Well, think of it this way, if you noticed the tub was filling. It was getting full. If it doesn't get turned off it will overflow. Well you just walk over and turn it off right?
    It isn't so easy with big business. They can't just do something. They have to have committees an lawyers to make sure it is all legal. They have to do a report on potential losses and debate the earnings. Well, guess what. It doesn't happen quick enough.
    So what happens? After the "flood" things are finally stopped and now we are stuck mopping up the mess, literally.
    SusieD250

    Answer by SusieD250 at 3:32 AM on Jan. 27, 2009

  • Sharon, this post is an honest and thoughtful one. I agree with you. I can see Susies side with the initial months of this happening, but once it was obvious there was a severe problem, somebody in the economics panels, like the Treasury or FDIC should have considered the source and fixed it before the snowball worsened. I think this is whats wrong with our SOCIETY. Though it does seem to be Bush' lack of interest, think Katrina. We don't care about others, bottom line. So where is the Christian way, when we are predominantly "christian". Well it doesn't exist. Christ doesn't hate, nor would he allow mass suffering, GRACE.
    Anonymous

    Answer by Anonymous at 3:54 AM on Jan. 27, 2009

  • There was a way as you hint, and no one wanted to worry about it. Think Nimby (not in my backyard) but NMP (NOT MY PROB). This is sooo why Obama is diff. He doesn't want to see families/children destroyed and he WOULD have directed the FEDERALLY insured banks to FIX the problem. HOW? Take losses (which were inflated gains anyway and spread across the board) and readjust the inflated mortgages of those who had not exceeded their equity w/refinancing and lower/fix rates.
    Anonymous

    Answer by Anonymous at 3:55 AM on Jan. 27, 2009

  • Because the buyer bought a house with the deal, that they would have low interest rates for 5 years, and then it would rise after that.. the people buying these houses are at fault as well, they knew that it would do this. This is why if you are going to buy a house, you should get a fixed mortgage. The banks thought they would get more money this way, and in reality probably could of if it had only been to a few select people.
    xxhazeldovexx

    Answer by xxhazeldovexx at 4:00 AM on Jan. 27, 2009

  • It is a complex problem. If the government had stepped in sooner, people would be complaining about excess governemental control. My theory is that Bush allowed this to happen so we would stop looking at other things he was doing wrong. Just a thought.
    SusieD250

    Answer by SusieD250 at 4:25 AM on Jan. 27, 2009

  • The banks get most of their money back because they end up with the property and they insured the loans so they will get some of the money from insurance companies and they will get the rest from the Federal Government. They are stealing from the American public and the gov't.
    Anonymous

    Answer by Anonymous at 5:42 AM on Jan. 27, 2009

  • SWEETIE,
    THAN THAT WOULD MAKE SENCE! :) THERE IDIOTS




    Why would the Banks raise people's payments so high they couldn't afford them, repossess the house, then cry about all the empty houses they are sitting on, or sell them at auction for a lot less? Wouldn't it have been better to lower the interest rate back down to a manageable amount and let people (who WERE making their payments until the hike) keep paying full price for those homes, and then they wouldn't be sitting empty?"

    greed is a mighty thing
    tntornado45

    Answer by tntornado45 at 6:59 AM on Jan. 27, 2009


  • Could be.

    We have seen, and will continue to see, things happen that will shock and confuse us.
    mustbeGRACE

    Answer by mustbeGRACE at 7:51 AM on Jan. 27, 2009

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