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Originally Posted by Lowexpectations
The "manipulation" only occurs in cases where you have spent more money than you have. While the clearing process was unfair it has been corrected and only occurred to folks who mismanaged their finances
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Point being: it occurred, it was intentionally done to screw people over, and it took legal intervention to end. Quite recently, at that.
And an adequate punishment for overspending by what all means could have been one nickel is a rearranging of all transactions that could result in tens or hundreds or even thousands of dollars in fees? That's third world country accounting in my opinion.
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Your article states that computed interest loans over 5 years were banned in 92, banned in 17 states all together and a rarity in practice today.
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"Computed interest" literally means calculating the interest, so no, that is not correct. If that was the case there would be no interest calculations.
365/360 has very recently and in some areas is still being litigated:
365/360 Interest Calculation: Latest Developments in Ohio Case Law Provide Guidance in Interest Calculation Methods: Vorys, Sater, Seymour and Pease LLP
and ultimately, whether found legal or not, is deliberately overcharging interest to pad profits. Period.
Per the link - from January 2014 - "1 Courts have noted that 82% of commercial banks use 365/360 for at least some of their loans, large banks use the method at an even higher rate, and 365/360 was most frequently used for commercial loans."
As far as the Rule of 78s, that's a bizarre takeaway - it's ok with you for lenders to screw over consumers so long as the loan is 61 months or less?
Common or not, it again is deliberate manipulation of interest to pad profits at the expense of the consumer. And again, I point out: the only reason it is capped at 61 months is because of legal intervention.
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Your foreclosure article is 5 years old the banks have been getting the losses put back on them by Fannie Freddie so it's not working like it was in 09.
One reason I'd opt out of modifying a loan if I were a processor was most of the modified loans ended up back in foreclosure again
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Ok, here's one from last year instead:
http://www.propublica.org/article/ba...d-foreclosures
You're missing the point. The processor gets paid regardless of the scenario, and they do not care how many times a property rolls through modification or foreclosure. The only question was which was paid more. They are paid by service. Whether or not it is ultimately foreclosed upon or is modified 14 times is irrelevant to them as they don't hold the loan and will not be stuck holding the property.
And that is the point. They drive towards whatever path leads to the most revenue for the processor (generally banks). And again, legal or regulatory changes were necessary to get to the point they are now, which is still debatable as far as where the financial incentive lies (foreclosure or modification).
Which leads back to the reason for my original post: while I don't advocate going out of one's way to get over on a bank, it is quite clear that the industry as a whole has no hesitation in deliberately manipulating any service they can and will do so until they are forced, legally, to stop doing so. Your counterpoints, if you notice, point directly to outside forces being the only reason for any change to any of those procedures. So to hold up some sort of moral obligation on a consumer's part to go out of their way to accommodate institutions that will gladly not do the same and in fact deliberately structure their processes to screw people over (as opposed to people going into foreclosure through a later inability to pay) is ludicrous. It's just short of feeling a moral obligation to fulfill a promise when borrowing from the Mafia.
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