Whenever a lender and a borrower agree to do business, the lender lends money usually according to terms set by the lender but agreed to by the borrower.
Many times my debt has been "bought" by another lender, either because another company bought out my lender outright or bought the accounts of that lender. My debt obligation was transferred to the new lender. I don't believe there are laws that the new lender must keep the same terms as the old lender. I feel like with several private student loans and credit cards, that the terms changed.
I wonder if there is a possibility that debtors could gain the right to approve or not approve their debt being transferred to a new lender. That a proxy vote could be held regarding this debt transfer. Conceivably, borrowers enter into an arrangement with a lender based on all sorts of conditions: interest rate, penalties, customer service, etc. Since new lenders can impose new conditions that can change all of the original terms, I think that debtors should have a voice in who "holds" their debt.
I recently ran into a bank employee whose own mortgage was sold out from under him. His mortgage, which he arranged at the bank he worked for, was sold to another business without his consent. I understand this helps provide liquidity for home sales (which are fairly illiquid), by introducing them in the financial markets, but it also can help create other problems because when these are combined with other mortgages and placed into financial instruments, the ability for the market to assess its risk seems weaker: hence the recent sub-prime mess that has affected the stock market.
Has anyone heard anything about debtors having a voice in their debt being sold?
Many times my debt has been "bought" by another lender, either because another company bought out my lender outright or bought the accounts of that lender. My debt obligation was transferred to the new lender. I don't believe there are laws that the new lender must keep the same terms as the old lender. I feel like with several private student loans and credit cards, that the terms changed.
I wonder if there is a possibility that debtors could gain the right to approve or not approve their debt being transferred to a new lender. That a proxy vote could be held regarding this debt transfer. Conceivably, borrowers enter into an arrangement with a lender based on all sorts of conditions: interest rate, penalties, customer service, etc. Since new lenders can impose new conditions that can change all of the original terms, I think that debtors should have a voice in who "holds" their debt.
I recently ran into a bank employee whose own mortgage was sold out from under him. His mortgage, which he arranged at the bank he worked for, was sold to another business without his consent. I understand this helps provide liquidity for home sales (which are fairly illiquid), by introducing them in the financial markets, but it also can help create other problems because when these are combined with other mortgages and placed into financial instruments, the ability for the market to assess its risk seems weaker: hence the recent sub-prime mess that has affected the stock market.
Has anyone heard anything about debtors having a voice in their debt being sold?
1 comment:
i heard about this on npr the other day. some group is trying legislate rules to regulate it, but its a real problem for homeowners of late. this very thing is happening, causing people to lose their home! yikes.
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