those banks don't want to sell the foreclosed houses and take a loss on it--it's their problem for making those bad risky loans with no downpayment. normally if the borrower doesn't pay interest on loan, the bank keeps the downpayment. and sells the house at liquidate price to repay the loan.
that is the only way the price of homes would fall. maybe it's just the free market working....price needs to go lower.. these sellers of homes won't even take a 10% discount offer to buy their homes.
So if you rent and prices go up you get the extra $$$ from appreciation? Also, you can use your rental as collateral? Wow, I learned something on ET today!
banks also have something call Loan-loss reserve(LLR) to cover defaults. The LLR is priced into every new loan a bank issues.
You know, I got that one too. I'm used to banks bending over backwards for my business, so I was surprised to see that. Probably will close my account as a result, since I really don't need that credit line at all, and the change seemed so draconian that it made me wonder if someone over at risk management in BOA credit cards had been reading Agora publishing too much and gotten a little bit caught up in the moment. I think the maximum default credit rate was placed at 33% or something ridiculous. And you actually expect me to use your product? No thanks - I prefer my toxic waste in a different flavor. But it definitely shows someone is VERY worried. Probably a bit too much, I would imagine. But again, what do they know that I don't know....
What they know that you don't comes from highly sophisticated software that tells them who's gonna default on what at what rate and at what amount of debt. Fortunately, Discover is still offering me low rates and 5% cash back. Must not have gotten their software revved up yet.
Yeah, I know - I almost worked for citi's credit card division making those models many many moons ago when I was a young whelp. But I just retired a SERIOUS amount of debt over the last year, and carry next to nothing on my credit cards (except that lifetime 2.9% APR loan which I make the float on - thanks Citi). And this comes out? Outrageous.