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Loan deferments are already a common practice. Even if you came up with a different accommodation, the point is that mortgages are significantly simpler to addr

by pfranz 7y ago

Loan deferments are already a common practice. Even if you came up with a different accommodation, the point is that mortgages are significantly simpler to address compared to rent.

TheSpiceIsLife 7y ago
I keep seeing people claim that loans should keep accruing interest when people have had their livelihoods evaporate by government degree. My point is: why ya’ll keep saying that? Just freeze the loans. Should be a simple as fuck to implement.
- pfranz 7y ago
  I appreciate what you're trying to say. I believe a deferment balances the interests of the lender and lendee. If loans were frozen, why wouldn't everyone take advantage? You now need an approval process (an application, paperwork, etc) to prove a hardship or the banks are no longer solvent. I would assume a deferment would be open to anyone and in exchange you would pay an extra few months 15 years from now--or pay it off early if you're able to sooner. At least in the U.S. I'm not sure if the government could mandate any of this...although they often find creative ways to implement things after they decide they'll act.
  - grecy 7y ago
    > or the banks are no longer solvent. Why not? If they're not paying interest to the Fed to borrow the money, it doesn't cost them anything to just leave the loans sit and not collect interest.
    - pfranz 7y ago
      > it doesn't cost them anything to just leave the loans sit and not collect interest. The insolvency case would be if everyone stopped paying their mortgage for a few months because there's no penalty or filtering process. They'd borrow money, but there's no "making it back up" because now they're servicing the loan for a longer period of time and have to pay salaries, rent, etc. If they deferred, they'd still need to float that money for ~15 years until those deferred payments were made. Any extra interest would go towards paying the costs of servicing the loan for longer. I'm not opposed to freezing, but it does cost the bank something.

by pfranz 7y ago

Loan deferments are already a common practice. Even if you came up with a different accommodation, the point is that mortgages are significantly simpler to address compared to rent.

TheSpiceIsLife 7y ago

I keep seeing people claim that loans should keep accruing interest when people have had their livelihoods evaporate by government degree. My point is: why ya’ll keep saying that? Just freeze the loans. Should be a simple as fuck to implement.

pfranz 7y ago
I appreciate what you're trying to say. I believe a deferment balances the interests of the lender and lendee. If loans were frozen, why wouldn't everyone take advantage? You now need an approval process (an application, paperwork, etc) to prove a hardship or the banks are no longer solvent. I would assume a deferment would be open to anyone and in exchange you would pay an extra few months 15 years from now--or pay it off early if you're able to sooner. At least in the U.S. I'm not sure if the government could mandate any of this...although they often find creative ways to implement things after they decide they'll act.
- grecy 7y ago
  > or the banks are no longer solvent. Why not? If they're not paying interest to the Fed to borrow the money, it doesn't cost them anything to just leave the loans sit and not collect interest.
  - pfranz 7y ago
    > it doesn't cost them anything to just leave the loans sit and not collect interest. The insolvency case would be if everyone stopped paying their mortgage for a few months because there's no penalty or filtering process. They'd borrow money, but there's no "making it back up" because now they're servicing the loan for a longer period of time and have to pay salaries, rent, etc. If they deferred, they'd still need to float that money for ~15 years until those deferred payments were made. Any extra interest would go towards paying the costs of servicing the loan for longer. I'm not opposed to freezing, but it does cost the bank something.