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The Truth About The Lending Institutions

titleThe Truth About The Lending Institutions

As Rare as the Truth in Lending

Everyone is feeling the effects of the economy, nobody seems to be immune and I think it is high time that we talk about what is going on.

Let’s go back and look at how the government has done its Q.E. or Quantitative Easing. The government has a bright idea not to let the banks fail so they bail the banks out and the banks promptly quit lending to the American Public.

How do we know this? Because we experienced it first hand. At the time we were in the building business and we got a call from several of our lenders that they were shutting down their construction loan departments.

Good thing that we were planning on retiring because with that type of call coming in it shut the door on our business. We were in a position that we had to let all of our employees go and finished building our last houses on our own.

In the mean time we had some commercial buildings that we owned with a group of people, these are big properties with loans that need to be re-negotiated every 5 years. What do you suppose happens when the bank decides not to negotiate the loan, ever thought about that? The loan expires and the bank decides to auction off the property.

All the talk about Q.E. getting the economy jump started sure hasn’t worked and in fact it has harmed many business owners around the country. Every thing was looking pretty dim when we got the call several months ago that we had just lost a major part of our retirement all because of a lack of willingness on the banks part to negotiate and in the end the bank lost as well because they auctioned off the building for a fraction of what was owed on it.

We have to wonder why the bank was willing to take that type of loss but they weren’t willing to work with their current clients.

So now for the fun part, I realize that these really big deals don’t really affect a broad swath of investors so let’s look at what happens on the home front.

The Banks announces about a month and a half ago that they are stopping all foreclosures and everyone sigh’s with relief thinking that their house is safe even if they are a little behind in the payments.

We can give you some insight into what they are doing instead. We were left with 9 houses that didn’t sell so with The Bank’s blessings we rented them out and kept current with the loans. On Friday night September 22nd we get a call at 6 pm from a person we have never heard of before and he tells us that he has just bought all 9 loans and he is demanding payment in full. Do you see where I am going here? This could be you and your personal residence. What would you do?

We did some checking and found out that The Bank wasn’t trying to help the economy by stopping the foreclosures; they are actually saving themselves the $30,000 it costs to foreclose on a house. They have a “pool of sharks” that they offer these loans to at pennies on the dollar.

Now we have heard from the tenants that they are kicking everyone out only 6 weeks before Christmas.

The Company that bought the loans were less than pleasant to deal with as I am sure you can imagine. The first clue was the late call on a Friday night and the threats that we received until we eventually signed over all 9 units. We thought it was interesting that Kevin with The Bank sold them in the first place and Kevin was the one that bought them, gets a little confusing.

There is so much that goes on behind the scenes and the doors are closed and locked as much as possible so how can we know what is the right way? Everyone has advice about this or that but really does anyone really know?

It is pretty obvious that the Big banks and the extremely wealthy, well named people are running the country and the politicians are just there to take the fall for them. That is why the politician turned into a career, it used to be a voluntary position and I believe that is the way it is written in the original constitution.

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