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View Diary: Can a Small California City Take on Wall Street - And Survive? (298 comments)

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  •  You mean on banks rather than investors and (7+ / 0-)

    homeowners.

    If a home gets foreclosed on and then sold for half the mortgage amount the investors take a bath as well as the homeowner.  It's just the bank/servicer who already got bailed out once who ends up happy.

     

    •  jpm - you are right also the investors (1+ / 0-)
      Recommended by:
      jpmassar

      but the overwhelming majority of mortgages are structured to be syndicated or sold, even if the primary lending institution keeps the loan. Having a portfolio properly structured provides liquidity. If the FHA, or major lenders, stop lending in Hayward it could be very problematic for the residents.

      "let's talk about that"

      by VClib on Sun Sep 15, 2013 at 11:05:41 AM PDT

      [ Parent ]

      •  If banks won't sell mortgages in Richmond (5+ / 0-)

        would it be out of spite?
        That sounds funny, but the problem that caused the mortgage meltdown to begin with is that the bank or broker who wrote the mortgage took none of the risk and therefore had no incentive to make sure the borrower could afford the mortgage. (This is really bad policy, the mortgage broker should have some skin in the game!)

        So, if banks didn't care about the likelihood that the mortgage would be paid off when they sold to an individual, isn't it curious that they may now get particular if the loan is at risk of seizure by the locality in the event of extreme economic circumstances? This situation is only different because of the political/ideological dimension.

        I think that it is ridiculous that these huge financial institutions get away with pushing all risk onto the party least able to absorb it: the homeowner. When mortgages were held by local banks, the bank would work with the homeowner to keep the property out of foreclosure if possible, and the bank would also advocate for the economic health of the local community and the preservation of neighborhoods where they had other properties. The incentives in the current system are sick and destructive.

        I think that a realistic solution to evil Wall Street banks is to undercut them with local, and possibly government owned banks such as the Bank of North Dakota. Who cares if Wall Street won't write mortgages in your community if you have other financial institutions who will?  Why is our 401K money going to these evil monsters? I want to keep my money out of their reach!

      •  The local credit unions and small banks (2+ / 0-)
        Recommended by:
        jpmassar, UnaSpenser

        Will be very happy to take up the slack.

        Visit http://theuptake.org/ for Minnesota news as it happens.

        by Phoenix Woman on Sun Sep 15, 2013 at 12:28:22 PM PDT

        [ Parent ]

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