Guest article by Karen Finley of NPL Executives:
Does anyone recall the big bank executives going before the U.S. Senate in 2008 to explain why they needed a bailout from the American taxpayers? The headlines read: “The big banks are too big to fail,” resulting in the U.S Treasury paying over 100 billion dollars to hundreds of banks with just a fraction of them having paid the loan in full.
Did anyone ever question why the US bailed out the banks and not other industries? What made them so susceptible to the moving economic factors of 2008? After all, would they have really failed without the bailout, or was it an opportunity to maximize a storm?
If we hearken to those days, banks claimed they needed help because homeowners were no longer paying their mortgages due to massive layoffs nationwide. Therefore, banks reported deep losses…or were they really losses?
PMI may give us a clue. Private mortgage insurance is forced in play when buyers can’t afford a 20% down payment. Should the buyer foreclose on the mortgage, the lender will activate the private mortgage insurance to pay the balance of the debt owed.
So where was the loss?
The banks received the private mortgage insurance AND the US Treasury bailout. So again, where is the loss? Upon reflection, they made a mint, and most people aren’t asking any questions, or at least not the right questions.
So here’s another question, “Are you asking the right questions?” It was real estate, not the stock market that positioned the banks to receive a massive wealth transfer in 2008. Has their game plan changed? How will your wealth transfer happen? Will you rely on stocks or take a page from the bank’s playbook?
NPL Executives is a brokerage of secured, first lien positioned mortgages available for purchase by investors who wish to establish the interest rates and repayment terms. Contact NPL via email at npl@nplexecutives.com or by phone at 682-202-4459.
