Mortgage "crisis" USA TODAY OPINION

[Detector]

For the same reason that the Hospital charges people with no insurance more than they charge people with insurance.

HUH?

The hospital has a set rate for any procedure no matter who you are. These prices are hard coded into the system and cannot be changed by anyone but those authorized to do so.

You can, to some degree, thank the illegals for the $5 aspirin.

[Army_of_One]

Originally Posted by Detector

Allow me to play the Devil's Advocate

First let me say I agree with whats been posted so far.

Yes we should be responsible for our own decisions, but we are also responsible for our own eating habits, drinking habits, gambling habits, smoking habits, school fees, food to feed our families and the list goes on and on. Yet we don't have a problem bailing these people out because of a lack of frugal'ness.

We have these companies that are more than happy to hand out credit to those they know will struggle and more than likely fail to pay back. These money lender types come to mind. Car dealers at times will drop their qualification standards for the sake of a sales increase. Even though they know chances are the loan will not be payed back.

These people pray on those who don't have the willpower to say "no I can't afford that." It's no different than a person offering a drink to a person they know is an alcoholic for the sake of selling booze. Or offering a drug addict drugs they know they won't refuse.

Hold the dealers responsible as well as the users

One of the things about "bad credit" I've never understood is why those with bad credit pay a higher interest rate than those with good credit. I understand the "higher risk" and "reward for good financial practice" but doesn't this seem a bit like taking advantage of an alcoholic? They should of course limit the amount of credit based on credit rating, but to tack on more interest making it harder to pay back seems a bit whacked.

In a way they are being taken advantage of but it's "buyer beware". The gov't can't regulate stupidity. I would say that most of us have made a dumb financial decision or two in our lives...some of us learn from them and some of us don't. The great thing about having a capitalist society (one of greed as Wordy would say) is that people have the freedom (wonderful word) to succeed or fail. It IS unfortunate that there are institutes out there that "take advantage" of the situation but the person can also not patronize the business. EXAMPLE: Rent A Center, It's a place that sucks off of people but they still go into the place and do business. People think they can't do without that new tv or couch so they go there. Is the business wrong or is it the responsibility of the person to make decisions?

[Detector]

No I don't necessarily think it's wrong. See a need, fill a need - Robots

What I don't agree with is paying more because you have less.

While I agree people can do without a television, and people can do without a car, is it ethical to expect people with poor financial standing to pay more for the same luxury? I know I know, you worked hard and saved long to be able to pay cash for that new big screen, but not everyone shares the ability to go without that extra meal so they can save up for a big screen. For those people it's off to ColorTyme and high interest rates because they don't have money.

As someone that has "been there, done that and got the scars" I can say digging your way out of the cellar is a lot harder because of these businesses that feel because you have less, you should pay more.

I also know excuses are a dime a dozen when it comes to "why I suk at saving money" and "I've had a lot of bad situations" but the fact is shit happens, and sometimes you have no control over it. So should you be expected to pay more?

I'm all for a limit as to what you can buy based on your worth, and thats pretty much the way it is, but to be charged more for the same item based on how much you make just doesn't seem right.

Example: Person #1 goes out to purchase a 2005 Buick with credit rating in the 700's. Not necessarily because they earned it but because they could have just been born into money.

person #2 goes out to buy the same 2005 Buick with a credit rating in the 600's and they get raped by interest rates.

I'm not saying there shouldn't be rewards for thrifty money management, and no punishment for living beyond your means. What I'm saying is the system is designed to keep the rich rich, and the poor poor. Poverty is high not just from people living beyond their means.

In most cases that poor person could well afford that 2005 Buick if they only had to pay the same interest rates as the anyone else.

I've worked hard, and gotten lucky, to get to a place where I don't live from pay check to pay check. With only 10 years to retirement down the road I've got a lot to make up, and I'm managing to put a few thousand a year away, but not everyone will be a lucky as I have been.

It's not about asking for a handout, it's about not being kicked when you're down.

[Army_of_One]

Originally Posted by Detector

but not everyone will be a lucky as I have been.

Have you been lucky or was it from your hard work and deciding what you want? I think very few of us have any of what we have because of luck. We have what we have through hard work and learning from our bad decisions.

[Detector]

True.

It has been due to our(wife and I) hard work and determination, but it wouldn't have been possible without help from a good friend. Thats the lucky part. Not everyone is lucky enough to have a good friend with the means, and the want, to help.

We had the will and determination, but that wasn't enough. Because of past bad choices, and a few misfortunes, I still had to pay twice what someone else might pay for my vehicle, and a house was out of the question. Not that I couldn't afford it, but now using better judgment, I couldn't bring myself to pay the 17% interest and still sleep at night.

For me I only saw one way out. No matter how much I despised the idea, bankruptcy seemed the only way to crawl out of that hole. I'm not proud of it by any means, but it was my ticket out, and it worked. Sometimes you've got to swallow your pride and do what needs to be done for the sake of the family. My good friend then helped us to avoid the mistakes we made before, and gave us the chance to prove our worth.

Another lucky break was on our house. We had been paying $625 a month rent just helping our rich landlord be richer. Money necessarily thrown away because we had to have a place to live. Once our credit started clearing up, so did our outlook. We qualified for a house which not only saved us $467 a month, but the money was going toward our own net worth.

Before we couldn't get credit to buy a television, today we receive "pre-approved" platinum cards almost daily, which go straight to the shredder.

Point is the breaks are there for those who don't need them, and out of reach of those who do.

[Tee]

Originally Posted by Detector

I'm all for a limit as to what you can buy based on your worth, and thats pretty much the way it is, but to be charged more for the same item based on how much you make just doesn't seem right.

I don't think anyone is charged more for the item.

I think they are charged more for financing the item if the risk of defaulting is higher based upon past credit.

It's really all market driven.

EXAMPLE:
Enron borrowed money to stay afloat in it's final days. The companies who loan them money sell "High yield" bonds to back the loan, also known as "junk" bonds. Enron pays the finance company an interest rate of around 18%-30% because that is the best rate they can get in order to get the money they need to "turn things around". The likely-hood that they would actually "turn things around" was slim, thus an "increased risk". Obviously, they defaulted on the loan, leaving the creditor and those who bought the high yield bonds holding the bag. But they had little choice, because no lender would loan them money at prime rates based upon their balance sheet and their low probability of repayment.

Now, every now and then, those situations work out, and the company actually turns things around. Those holding the bonds make out great. But more times than not, past behavior dictates future behavior and to break even, the lender must get a higher return on loans made with higher risk. A higher percentage of these loans default than say, loans to GE or AT&T, or other companies with good credit. For prime loans (loans to companies/individuals with good credit) less return (interest) is needed to compensate for defaults. Defaults cost money. Believe it or not the bank does not want your house. It costs them big bucks to repossess a home, fix it up and resell it.

It's not done to punish or keep a person in debt. Its not done to reward those with good credit- its a natural effect of market dynamics...economics.

Also, people with bad credit drive the interest rate up by continuing to borrow at extravagant rates. If they wouldn't borrow at those rates, the rates would fall, also based upon market dynamics.

[Bubba]

Originally Posted by Detector

HUH?

The hospital has a set rate for any procedure no matter who you are. These prices are hard coded into the system and cannot be changed by anyone but those authorized to do so.

You can, to some degree, thank the illegals for the $5 aspirin.

But we all know and have seen it on our insurance statements that the hospitals write off part of that charge because the insurance company knows that is not the REAL price and they are only going to pay "X" amount of money for a procedure. But those with no insurance don't get the advantage of the write off portion of the bill and have to pay the FULL inflated price.

[Made in the USA]

Originally Posted by Detector

HUH?

The hospital has a set rate for any procedure no matter who you are. These prices are hard coded into the system and cannot be changed by anyone but those authorized to do so.

You can, to some degree, thank the illegals for the $5 aspirin.

Don't believe whatever they tell you Detector.
Example:

Patient A without insurance: MRI of back---$3200

Patient B with insurance: MRI of back---$3200--less Hospital write off of $2700--leaving a cost of $500.

So Patient A pays $3200, and Patient B pays $500 for the same procedure.

[Detector]

Well I don't claim to know much about billing other than my experience both with and without insurance. I either paid the bill out of my pocket or the insurance paid the bill. I never saw anything about "write offs" on my bill.

[Highwayman]

Originally Posted by Detector

Well I don't claim to know much about billing other than my experience both with and without insurance. I either paid the bill out of my pocket or the insurance paid the bill. I never saw anything about "write offs"

I’ve never heard them called write offs, but insurance companies have lower “negotiated” prices that the provider agrees to accept. The providers agree in order to get the block of folks that use that insurance knowing that payments will normally be assured.