Banks Won't Stop Foreclosing Until Profits Are Removed.

Banks have no incentive to re-negotiate loans. They lose all service fees and income that the loan would have otherwise paid off had it remained solvent.The banks stand to incur even more loss if they rework the loan for less.
It is profitable for them to foreclose on the home and the biggest reason that it is profitable to foreclose is the FDIC in the event of foreclosure, would cover from 80%-95% of losses, using the original loan amount, and not the current balance. The FDIC does not cover losses in a re-negotiated loan.

Here is an example from I AM Facing Foreclosure.com.

How does this translate to the “Real World”?Let us take a hypothetical situation. A homeowner has just lost his home in default. One West sells the property. Here are the details of the transaction:

• The original loan amount was $500,000. Missed payments and other foreclosure costs bring the amount up to $550,000. At 70%, OneWest bought the loan for $385,000


• The home is located in Stockton, CA, so its current value is likely about $185,000 and OneWest sells the home for that amount. Total loss for OneWest is $200,000. But this is not how FDIC determines the loss.


• ‘FDIC takes the $500,000 and subtracts the $185,000 Purchase Price. Total loss according to the FDIC is $315,000. If the FDIC is covering “ONLY” 80% of the loss, then the FDIC would reimburse OneWest to the tune of $252,000.


• Add the $252,000 to the Purchase Price of $185,000, and you have One West recovering $437,000 for an “investment” of $385,000. Therefore, OneWest makes $52,000 in additional income above the actual Purchase Price loan amount after the FDIC reimbursement.

At this point, it becomes readily apparent why OneWest Bank has no intention of conducting loan modifications. Any modification means that OneWestwould lose out on all this additional profit.

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So here we are after bailing out the banks.The taxpayers via the FDIC are actually paying the banks to take their houseaway from them. The way I see it the FDIC needs change some rules in order to cover the loses the bank would incur by renegotiating the loans to keep familiesin homes and only cover the incurred losses in a foreclosure. Either way it isthe taxpayer that is footing the bill. Until it is less profitable for the banks to proceed with foreclosures over renegotiating they will continue to foreclose and the economy and neighborhoods will continue to decline with boarded up houses. Itis capitalism. make it more profitable for the banks to help people stay intheir homes and I bet the foreclosures rates would immediately begin to falloff. But right now the banks have no incentive. Ultimately it is the taxpayerthat is footing it one way or another and as a taxpayer I would like to see theFDIC able to cover losses the bank incurs to keep someone in the house instead of it being used by the banks to profitoff the misfortunes of the homeowner by foreclosures. I would think that the FDIC would also be paying out less to the banks by only covering the actual losses be it from foreclosure or from renegotiated loans.

A Physical Exam Story

My cholesterol prescription would not be renewed without the annual lab work so I went ahead and set up my annual Physical exam. It was a typical non eventful exam. We discussed my lab results. We discussed my meds, should we change them or adjust the dosage. We discussed diet and exercise. He asked if I wanted to discuss smoking cessation and I said No, We had discussed those options enough in past visits and I know the discussion and my options by heart.
He asked me about my Hernia and how has it healed, I said fine considering I never had a Hernia, you must have someone else records mixed in with mine. My prescriptions were renewed for another year and I went home. Happy and feeling healthy.

Here it is a month later and a bill has arrived. $32.00 for a 3 - 10 minute Smoking Cessation consultation. A consultation that was about 10 seconds consisting of him asking me do you want to discuss the smoking and I said NO. I was furious!! I felt betrayed! Used! My past exams were with another insurance provider. If these discussions were charged for in the past I never saw the billings for them and were covered by the Health care provider.

I thought now I have to be careful on what I discuss with my doctor. Will I be billed for discussing my meds another $32.00, my diet $32.00, blood pressure $32.00 , Medical history $32.00. Do I have to ask is this a billable question before I ask my doctor something now? Will I be afraid to ask the questions I need to ask about health concerns because I might be billed for discussing it? It really Pisses me off to be billed for a doctor patient discussion that is part of an annual examination. It has in a very significant manner destroyed the patient doctor trust I had with the doctors.

Oh and that Hernia -- is that a really a mix-up in patient records or is that billed on my insurance also?

I have to wonder. Actually this made me start to wonder about a few things.
Will I be declined coverage for future health concerns if this discussion was declined the fifth time?Do they have a check list they just check off that just automatically trigger billing that they are required to ask and do like they do at the oil change centers or car warranty shops?

But here is the real bummer about this charge. I am just going to use some hypothetical numbers out of my head. Say 100 of the patients that visited that 1 clinic that day were also billed for that same $32.00 consultation, that's $3200. Say there are another 1000 clinics throughout the state that also does this 100 number per day. That comes to $3,200,000 per day. If each of the states does the same, that's $160,000,000 per day or $8,000,000,000 a week, $41,600,000,000 per year being billed or covered by our medical system just for asking if you need help to quit smoking. Just how many bogus charges like this are we getting hit up with that do little for health care except increase health care costs?