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Would you like to explain that to all of the American banks who lost billions of dollars when housing prices crashed? Also, when a customer defaults on a mortg
by URSpider94 12y ago
Would you like to explain that to all of the American banks who lost billions of dollars when housing prices crashed?
Also, when a customer defaults on a mortgage, the bank gets "one house", not the cash value of the house. The bank then has to care for the house, list it with a broker who takes a sales commission, pay property taxes on the house, fix any damages that the prior owner may have left, and sell the house (which in the US housing crash meant competing against dozens of other foreclosures on the market in the same neighborhood).
- fennecfoxen 12y agoThe fact that banks were so competitive going after mortgage business that they ended up losing money on houses is actually a very good illustration of the grandparent poster's description of pressure on margins. "We'll give everyone a rate so low we'll lose money!" -- that's some killer competition right there.
- dagw 12y agowhen a customer defaults on a mortgage, the bank gets "one house", not the cash value of the house. In the US. We're talking about Europe here and the laws are different. But in most parts of Europe you can't just hand over the keys to your house and be clear of your loan.