Re:U.S. Secretly Halted JPMorgan’s Growth for Years
by perfunctory on Monday October 29, 2018 @04:43AM
(#18325887)
> a bank can be quite happy to give you a loan you don't have a high chance of paying back
This is only true under assumption that house prices won't decline.
Re:U.S. Secretly Halted JPMorgan’s Growth for Years
by expressquest on Monday October 29, 2018 @07:44AM
(#18326647)
They sell the loan much earlier, so they do not care as long as all check boxes can be checked.
It's not credit card debt, even if you go bankrupt the bank can still collect the debt by evicting you. So it's not the same as loaning someone money for consumables.
Banks price foreclosure and delinquency rates into their interest rates. In 2007/2008 this didn't work because the banks themselves were over-leveraged.
But it doesn't change the fundamental aspect of this that a bank can be quite happy to give you a loan you don't have a high chance of paying back. If they charge you high enough interest rates it's free money for them.