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Why Mortgage Companies And Banks Want Empty Homes

It just dawned on me.

Banks (not people necessarily, but banks themselves) actually WANT foreclosed homes.

Why did this just dawn on me?

I've been asking myself how a bank could want foreclosed homes.

How could it be good to have entire neighborhoods of homes that are sitting empty?

And in order to finally understand this, I had to get into the mind of someone who's not me.

I tend to think that people are good.

I tend to think that most people want to do what's right by their fellow man.

I tend to think that most people will take care of one another.

However, when it comes to the bottom line, it's not as black and white as that.

It should be...

It can be.

But only for people really willing to stick their necks out and find creative solutions to very big issues.

If you're a person at the head of the mortgage department at a large bank, you are responsible for making sure that:
- investors get paid on the loans they have put their money into
- the bank generates larger than average returns.

What's better than collecting really high interest from someone who probably can't afford it?

What's better than locking someone in legally to a binding agreement that you know they will sign without having an understanding of what they are signing?

What's better than charging usurious rates of interest that adjust upwards and upwards, every 3-6 months?

Here's what's better: Having someone up and walk from their home.

When someone walks, as the bank you can foreclose.

You now have an asset that you
1. Sold to someone for $200,000 (maybe more, or maybe less)
2. Collected $15,000 in interest for (in two years or less)
3. Adjusted their rate upward, collecting an additional $3,000-$5,000 in interest (in maybe just the next 6 months)
4. Had them walk away from the house because they could no longer afford the payments
5. Foreclosed on their property
6. Sold the property again (to someone else) for $150,000

You figured out a way to earn $370,000.00 on a $150,000 house in less than 3 years.

If the house is more expensive than this pretty basic and average example, your profits are significantly greater.

I'm painting bank execs. in a less than positive light here.

And that's the necessary mindset I had to get in, in order to understand how this could have happened...

I had to suspend my basic belief in the goodness of people, in order to understand what happened in the mortgage crisis.

Looking at it more pragmatically, I see that the banks are responsible to the investors, who are the bank's true customers, not the people who rent the money of the investors in order to buy properties.

But the people who have made these decisions have done some quite self-serving things (since modern slavery isn't allowed in America).

They have locked people into a role, and a wheel, of complete financial subservience.

Worse, they have used the legal structures of our day to do it legally, to people who don't understand what's going on around them.

It's just crazy to me that it took getting into an inherently harmful mindset in order to understand the reasons why banks aren't willing to negotiate with those who can stay in their homes.

Many thousands of people want to stay in their homes. They want to live where they are, if the banks will simply lock in rates for them.

Many people would probably be willing to refinance to a new rate, even if that rate was exceptionally high, say 6.7% (which is high compared to the rest of the market for now).

The reason banks aren't willing to do this?

Some people within the banking system actually WANT people to default on their loans, because the banks generate significantly more profit that way.

Banks are in business to make money. That's not a surprise. Everyone knows that.

What surprises me is that this profit making is still, in January 2011 (after 4 years of people going through the personal and emotional trauma caused by all of this - not to mention what's happened to the American economy in general), being intentionally done at the expense of people's welfare.

What saddens me is that I've had to suspend some very basic beliefs in order to see that the issues aren't black and white.

At the root though, there are some who (rather than finding solutions that will include and contribute to the betterment of everyone) actually want foreclosed homes and empty neighborhoods.

What those people are forgetting is that the phrase "I am my brother's keeper, and he is mine" has never been truer than it is in the connected society we are living in today.

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