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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (1609)	3/17/2001 9:26:32 PM
From: GraceZ	Read Replies (1) \| Respond to of 24758

It seems to me that the bank is just as encumbered by the borrower in this situation as the home buyer is encumbered by the banks interest, they are married at the house. The reason I tend to separate them out in my mind is that the bank has no right to compel you to do anything with your house as long as you comply with the terms of the loan. Make payments on time and maintain adequate replacement insurance. Meanwhile you could let the place fall to ruin if you were so inclined. This is strikingly different from loans I've gotten for my business which allow the bank to call the loan if they feel as though my financial situation has changed. I think this was true in the old days with home mortgages. I remember stories of banks wanting immediate and full payment in the advent of a pending divorce. I do remember filling out a financial form not long ago that had three check boxes: 1. rent your home 2. own your home 3. buying your home It reminded me that I was something of a share cropper for the bank. I guess my point was that the bank still expects full payment on the loan even though the underlying asset is worth less than the loan value, that they don't share the risk with you, just as they aren't entitled to a share of appreciation. They only own an interest up to the remaining principle amount of the loan. In this way, the underlying asset can lose value but as long as you pay off the loan on a regular basis the loan is still worth what it was to the bank, that the values are only peripherally connected unless they are forced to forclose on you. There is a reason they force people to carry mortgage insurance until the loan value is less than 80% of the appraised value. I don't think of the bank as owning the house because what they can't do is compel you to sell the asset if the value drops. In contrast, a co-owner could compel a sale for any reason.