Upcoming Foreclosures

How do banks make money off of lending and then foreclosures?

and which do they make the most from and how? please explain. btw, what is your opinion on the acts past by governments that give "aid" somehow..how has this benefited banks or people who are in trouble of foreclosures? has this always been the case? also, please explain. btw, which area of world are you and how is situation there now regarding this issue? and how do you think it will improve or not? why and how so? thanks for your answers!

Public Comments

1. Banks make money lending by borrowing at rates lower than they lend. A most profitable example would be credit cards, they borrow at 4% and charge you 15%. Assuming they can keep their cost down, they profit every time you rollover your balance. Banks do not generally make money in foreclosure. In the past it has, in general, been a break even game. At the moment the volume is so heavily that they are loosing money hand over fist. For example, if the bank loans you $150,000 to buy a house and you default, they have to sell the house for an amount that is greater than the loan balance and the realtors commission plus all the fees associated with the foreclosure process to break even...lets call it $160,000. (because they have to pay all the costs out of pocket before they can get their money back) In today's market, that is impossible. They are being force to liquidate the house for $125,000, $100,000...or worse...taking losses of more than 50% of the loans value. I have a marginally negative view of the governments "aid." For one, they are a significant part of the cause of the crisis. For another, so far, it does not appear that anyone is getting direct government aid for mortgages...it looks like the free market is mostly working out the details while the government talks and talks and talks...
2. They don't, it called a bad loan they lose money on them and regret lending to the person/firm/institution they may try and reposses what the load was secured on property, vehicle etc which theyll then sell to recoupe some of their losses Recent events in the UK, Europe and the States with governments partly privatising bank building societys etc is unprecedented on this scale. If a bank the size of Barclays went under which 10s of million of people use here in the UK it would have a terrible affect on consumer confidence and result in other banks having a "run on them" where everybody withdraws their savings which we be a disaster. This is going to be a depression which will out do the one of the 1930's. This is the beginning of the end as life as we know it. If you consider what happening with the environment and population levels as well. The economy will soon be backed up by war which is always a money maker. The war, the Holy War Christians & Jews verus Islam & the Russians