Lending money is the business of the banks. However, they have all the TARP money to spend, so it is very beneficial to them to keep taking homes in order to gather the TARP money. Until Congress stops the great Taxation give away of our future taxes to the banks, we will continue in this recession. Here is why:
Your house is less than value of 2007. The bank has a loan on it in 2007 value. So, when you sell it, the bank takes the loss, but is compensated by the TARP money for the loss of the value. If the bank forecloses on you, it can take all the TARP loss and keep the house. It is a better deal for the bank, but not for us.
A friend is loan officer. He had a house that was going into forclosure because he was losing money as a loan officer and couldn’t keep up his payments. He was working with his loan company. Then, his loan company sold his loan to a loan company that didn’t take any TARP money, so my friend lost his home to the new lender. The bank bought it for less than market value, and the previous lender gets paid with TARP money. Both of them did very well. You see, it is the great home land grab by the banks.
My other friend bought a house from the Bank of America, who was representing Veterans Administration. She bought the house for $155,000 and it was worth $214,000 in 2007. So the bank was paid $59,000 in TARP money. The VA sold the house to my friend for $10. and was paid the rest in TARP money. She paid cash for her house.
So, they doubled their money and were paid twice for the same house.
Congress could reduce our countries’ debts by canceling the TARP money and let the banks go back to work making loans.