Oops, that went out before I finished ...
On 2/1/2015 12:48 PM, Moose wrote:
On 2/1/2015 11:32 AM, John Hudson wrote:
This very sad story illustrates one very important issue.
More than one, I think.
Acting as a guarantor for a mortgagee exposes one to a significant risk.
Yes
If the debtor defaults expect the mortgage holder / creditor to call the
guarantee.
Yes. This is why, when my older son and his wife got pregnant, I gave them the down payment and closing costs. I
signed to say any money I had given them was a gift, not a loan, but would certainly not have co-signed the loan.
Why should the bank not have called and enforced the guarantee ?
No reason. they may be obligated to do so as part if their fiduciary
responsibility to their shareholders.
Why should this be labelled "predatory" ?
I believe the predatory part may be in requiring co-signers for borrowers making a good down payment (which we don't
know here) and with income to make the payments. We also don't know if requiring a co-signer is common there, or
applied the these borrowers' specific situation. Without knowledge of local law and practices, and the specifics of
the case, it's really not right to make any judgments about either side, other than to feel badly about the way it's
playing out so far.
In many US cases, I believe the requirement would have been for the borrowers to pay an additional monthly fee for
mortgage insurance. But I don't know if such a thing is available in Spain, or if they would have qualified. It
certainly would have taken care of this problem, leaving them free and clear, financially. But again, we don't know
the specifics. Were these folks, when they applied for the loan, marginal applicants, for whatever reason, who simply
wouldn't have qualified without co-signers?
In my son's case, above, although his wife is expert at managing money in her work, they turn out to be terrible
managers of their personal finances. Refinancing regularly to pull out cash as the market moved up, they also kept
raising their payments. When the bubble burst, even though she makes darn good money, through a long period of
renegotiation, BS (probably on both parts), and so, on, they lost the house. The bank resold it quickly, and ate the
loss.
Whatever the petitioners are asking for in legal changes, they are probably not aware of the Law of Unintended
Consequences. If, as is entirely possible, these, and many other loan applicants, were marginal in qualifications, thus
requiring co-signers, and the law is changed to let them off the hook, banks may stop extending loans to such people,
which may, or may not, have undesirable consequences for the economy.
I think we may be sure that, if these people actually were a shaky credit risk, and may have done things to precipitate
their personal crisis or make it worse, they are not telling that part of their story while camped outside the bank.
Yes, I know Spain already had its crash, and yes, they may be entirely upstanding people brought down by a foolish
choice or choices and/or unforeseeable events beyond their control. I'm only trying to point out that we, and most
likely most signers of the petition, don't know the whole story - and that it's likely not as simple as presented.
Both Sides Moose
--
What if the Hokey Pokey *IS* what it's all about?
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