why are the banks and financial institutions still selling their toxic accounts to debt

  • Thread starter Thread starter thorpythorpe56
  • Start date Start date
T

thorpythorpe56

Guest
collectors? In this economic climate whereas the government has bailed the banks and finance institutions out. The money from we the tax payers.
have given,so does anyone know as to why the banks are still selling their toxic debts to debt collection agencies? Is this legal now that they have been paid with our money.? i was under the impression that once the government bailed out the banks and financial firms they would close the toxic debts.I may be a little naive, but as well as the bail out they are also covered by their in house insurance too. The reason i am asking is that a neighbour of mine has incurred a lot of debts, and owing to no fault of his own was struck down - now disabled wheras he cannot pay these debts and is being bombarded with debt collection agencies who state they have purchased his said debts from banks/credit card companies etc.
 
This is a tough question.

So borrowers go to the bank to request money from them in order to purchase something, such as a house we'll go with. The bank accepts their request and delivers $150,000 to the borrowers. So the bank is out $150,000 and is looking for a way to recover that quickly. They can sell that loan to companies such as Fannie Mae and Freddie Mac. So now the bank has an extra $150,000 to distribute to new borrowers.

Hope this helps a little... you have to think of it as a pipeline. In order to keep the pipeline moving, you have to get rid of the old or bad material.
 
Back
Top