Bottom Line: The Banks never stopped the lucrative practice of using other people’s money and diverting those investments into their own pockets without any risk of loss. All stable managed funds and other managed portfolios are at risk.
Get a consult! 202-838-6345
Just use your common sense. Why would businesses spend hundreds of millions of dollars advertising and promoting loan products that are (a) unprofitable on their face and (b) increasingly unlikely to perform. Who can make money on loans that have interest rates of less than 3%? When inflation kicks back in, that return will be eaten up in one gulp leaving the supposed lender with a losing proposition. So why are they so excited about doing it anyway?
The industry index for predictive defaults on home loans is up again and climbing. And nobody cares.
The borrowers don’t care because they are still believing what is being told to them by those who sell loan products. And the practice of using a lawyer at the biggest deal in anyone’s life has become “quaint.” So to avoid being told something they don’t want to hear — “you cannot afford this loan” — they go ahead and sign on the dotted line. Later when both wages and collateral performance declines (i.e., when their home goes underwater), they will regret their decision, and complain about the servicers and banks who are playing with modifications instead of doing them.
The pretender lenders don’t care because they have no risk of loss.
The pretenders who are not banks especially don’t care because they are just performing an illegal service for a fee. They know they will never be prosecuted and they have no risk of loss for nonperformance on the the alleged loans.
The pretender lenders who are banks don’t care because (a) they have no risk of loss if the loan goes bad and (b) their business model is based upon enticing managers of stable managed funds to put up money for bogus investments. The banks appear as “underwriters” who then select a “seller” to sell certificates issued by a wholly owned and controlled empty Trust or other special purpose vehicle.
After robbing pension funds and other managed funds of their money the banks chalk up “trading profits” on nonexistent transactions creating the illusion and cover for stealing investor money in the form of “trading profits.” Their claim of “securitization” of the loans appears to be real but is a lie — a cover for theft of investor money and theft of the borrower’s financial identity.
Filed under: foreclosure |