Differences Between US and European (Continental) Retail Banking

[KrazyHorse]

I would say the opposite:

It's probably not a huge issue overall, provided that the homeowners have an UNrealistic view of how much their useless **** is worth.

That way under the current system they will deplete other resources before allowing their homes to be foreclosed on, even when they would be better off having allowed foreclosure from the start.

[Kuciwalker]

You're actually agreeing with Dan. Reread what he's saying.

[KrazyHorse]

I did. Don't see how he's saying that.

[OneFootInTheGrave]

UK banking - since I have a foot in both (continental and UK) - UK is great... actually banking is probably the only type of service in UK which is world class.

Direct debit - everything, internet banking, everywhere - I only write a check for my daughter's school once in three months and that is about it... UK could easily move to cashless if it really wanted to. It used to be even better before they closed a lot of branches a few years ago, but after 6 months of extra traffic it seems that they have sorted volumes out in the existing branches as well, telephone services top notch whenever you call... all in all impressive, one could only wish other sectors in UK worked at the same level.

From what I have seen Croatian banking services are quite good as well, but not at the same level, ie too much paper still around - all the (don't know what they are called even in English) "uplatnice", little pieces of paper you take from one "entity" to the bank to pay some money into the account for example when dealing with the state/local bureaucracy... credit card taking is not totally wide spread, all the retail/restaurants have them, but not every other type of service, so you still have to carry cash.

btw... just remembered, in UK the one place you had to have cash until recently (perhaps you still do) is when you go to Wales - the bridge toll has to be paid by cash, and if you don't have any you have to go 5 miles+ to nearby city to take some from the cash machine... bizarre as most of the parking lot pay machines accept credit cards... but not yet on that bridge...

[notyoueither]

I am a fan of maximum financial flexibility. If a consumer wants to buy a put option on his house then I think he should be allowed to. But I don't see the benefit of forcing him to do so (or the bank to sell him one).

It is easier and probably more economical to require lenders to bear the risk.

That way the lowest possible cost should be delivered to the market.

[KrazyHorse]

Wow. That makes absolutely no sense whatsoever.

[KrazyHorse]

It is easier and probably more economical to require borrowers to bear the risk. That way puppies will appear whenever you want them.

[notyoueither]

It makes perfect sense if you look at it as insurance.

A larger pool should yield more certain results and lower premiums.

[KrazyHorse]

I don't even understand what you're saying right now. A larger pool of what? What two situations are you comparing?

[KrazyHorse]

I'd like to hear you explain how the gov't forcing you to buy insurance from the same company you get your car from would lead inevitably to a better deal for everybody.

[notyoueither]

A larger pool of risk of loss in the mortgage market.

Banks in a no-recourse jurisdiction should be expected to price in the risk of loss. The difference in interest rates charged compared to a recourse jurisdiction should amount to far less than the cost of another product that may or may not be purchased by home buyers to protect themselves from a mortgage gone bad in the recourse jurisdiction.

[Kuciwalker]

I did. Don't see how he's saying that.

He's saying "the law wouldn't have much effect as long as homeowners know that their **** is worthless", i.e. behavior will change only for those who unrealistically value their stuff.

[KrazyHorse]

That's exactly the opposite of what I'm saying.

[KrazyHorse]

A larger pool of risk of loss in the mortgage market.

???

I still don't understand what this means. A larger pool relative to what? What pools are you talking about?

Banks in a no-recourse jurisdiction should be expected to price in the risk of loss.

Banks in recourse jurisdictions do that too. The thing is that the risk of loss to banks is more severe in a no-recourse jurisdiction because of the embedded put option. For many people this doesn't make a difference because their put option would just be bankruptcy (they have no other meaningful assets than their house...outside of retirement accounts, which are exempt in most jurisdictions)

The difference in interest rates charged compared to a recourse jurisdiction should amount to far less than the cost of another product that may or may not be purchased by home buyers to protect themselves from a mortgage gone bad in the recourse jurisdiction.

Why is this spread smaller in a no-recourse jurisdiction? Stating it as fact does not make it so.

[chequita guevara]

My landlord won't accept credit cards, so it's checks, cash, or money orders with him. Everything else I pay electronically from my bank website or with a debit or credit card. Before this landlord, I paid rent online through my bank also.