[extropy-chat] Redistribution of wealth

[Matthew Gingell]

Kevin Freels writes:

 > Contrary to popular belief, banks are simply not in the business of taking
 > properties. It serves them no purpose. Most of the time, they lose money on
 > a foreclosure. The rest of the time, they get the balance of their loan, any
 > costs it took to get their money, and the remaining portion of the proceeds
 > go to the former owner. They make their money off interest and they make
 > interest by making loans, not the other way around.

 That isn't always true. Imagine you're a bank: You issue a 30 year
 fixed mortgage at 6% and rates subsequently go up to 7%. You would
 very much like to foreclose, get your principal back on the 6% loan,
 and lend it out again at the higher rate. Otherwise your money is
 stuck in a less that market rate investment for 30 years.

 -Matt