If principle plus interest payments equal or exceed the original loan amount, should foreclosure be illegal?

Similar questions: principle interest payments equal exceed original loan amount foreclosure illegal.

Dunno quite what you mean. When you sign up for the mortgage, most localities require the loan papers to show in big letters:LOAN AMOUNT: $200,000APR: 8%LOAN DURATION: 30 yearsINTEREST PAID: $328,310.49At around 5.5% is where on a 30-year loan, you end up paying double. Below that rate, you pay less interest than principal, above that, much more.

Making foreclosure "illegal" means that you can breach your mortgage contract by not making payments, and you still get to live in the house. Then why would anybody ever lend money if they have no guarantee of being paid or getting their property back? Making foreclosure "illegal" would totally dry up the supply of mortgages.

Short of that step, the parties to a mortgage are completely free to write into the mortgage whatever terms they both can agree to. The buyer can ask for a special clause stating "if loan payments are more than X months behind, then ..... ( whatever steps both parties can agree to ).( Not that this ever happens... at loan closing time, you're presented with a bunch of standard forms, which nobody ever reads, and the loan company officials have no authority to make any modifications to, it's a case of take it or leave it, unless you pay big bucks ahead of time to get a custom mortgage drawn up ).

The bank makes $128k for its risk to loan the money. However, if you home is auction rather than sold retain the profits could be larger. GoldenLion 10 months ago .

Change makes to "makes a potential" of, amortize accruals, up to the point of foreclosure. GoldenLion 10 months ago .

Of courseMoney is the root of all evil GoldenLion 10 months ago .

Money is a tool. Love of money can be evil.

Banks have made money evilMoney has become slipperyMoney is slowly dying. GoldenLion 10 months ago .

None are more faithful than those who believe in money.

For example, on a $100 loan, at any interest rate, there is a point where the debtor has paid the loan holder $100, but is still making payments to pay off the interest. I've never run into your suggestion before, but it sounds like a good idea to me.At the very least, payments should be applied equally against both principle and interest, so if things go drastically wrong for the home owner, she would at least have more equity in her home.

Genius ideaBanks hedge for maximum profits. The market can only tolerate 4% foreclosures GoldenLion 10 months ago .

While I think Schelli is a tad extreme, she isn't entirely wrong. I am not saying the homeowner should be absolved of all responsibility to repay the entire loan amount, just that a lending institution which has already got their original investment back shouldn't have the right to seize the home. They should be required to negotiate a repayment schedule the homeowner can meet.

Obviously, there would have to be regulations and watchdogs for anything like this, to prevent owners from taking advantage and trying to get out from under the debt. Something that would be easily implemented would be to outlaw adjustable rate mortgages, or at least cap the percentage rate the lender is allowed to raise at a very low figure.

I am not absolving the total debt, only block the foreclosure of the home since the risk of original amount has been capitalized. Foreclosure should not be a greedy process. Auction prices are much lower than retail price.

After breaking even, a Bank should not be allowed to jeopardize the ownership of a home for profit margins. You could have a $300k home and have paid $300k in principle and interest, lose your job, and not be able to make any payments. The bank can auction your home for $150k and require that you pay the difference between the $300k less $150k less remaining debt.

Where is the fairplay in the deal? GoldenLion 10 months ago .

Not enough detail. Why are they foreclosing? Did you refinance?

All costs have to be revealed at closing, and you remain liable for any unpaid amount.

Until the entire amount is paid off, if a person goes into foreclosure, they should lose the home.

Because that's the way life is. They have made a commitment to pay for the house in full, plus interest. Banks and mortgage companies do not lend money for free; they get their vig in interest.As is noted below, your initial payments are more interest than principal, so even though you have paid "the price of the home" you really own less than half of it.

I think I asked this before - I need an equation to determine equal payments over the length of a loan when interest is.

None are more faithful than those who believe in money. Gary4books 59 months ago.

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