Dec
20
Laissez-Faire Guy asked:
Supposedly we are being told the bailout is to unclog the system that is clogged up with bad debt.
Supposedly we are being told the bailout is to unclog the system that is clogged up with bad debt.
So my question to you is, if I came before you asking for a home or car loan, and I can prove I have necessary income and my credit history is good, can you write me a loan at reasonable terms?
Because if you can, then why do we need a bailout? The money is obviously still there to lend.
WILFREDO
Comments
4 Responses to “Lenders: Are you still lending for home mortgages, cars, etc?”
Leave a Reply
The “clog” isn’t only or (to date) primarily consumer lending. It’s interbank lending.
The money is borrowed. Always has been. If everyone walked into the bank and closed all their accounts the same day, the bank wouldn’t be able to cover it. The banks are losing Billions due to foreclosures and short sales. This is why we need the bail out.
Yes they are still lending money. the requirements for getting a loan are more restricted now but there is money to loan out.
Now for the bailout, that is for loans which has already happened. People are defaulting on their loans that they made on properties with a lot less value than for the loan amount. So if the bank is going to repo a home loan for 400K but can only sell it for 200K, the bank will have a 200K loss. Do that a few thousand time and the loss is really big, which will cause the lender to go out of business.
Hope that helps a little, it is a big mess and hard to understand. Just ask President Bush, he is confused as much as you are.
Private student loans are drying up. Some students are having to hussle to find replacement loans.
If you want to refi, they are putting you thru the wringer even if you have excellent credit, good employment history and debt to income, and 50% real equity in the home.
In other words, the wheels are grinding to a halt. The more bank meltdown, the worse it will get.