Thats easy... if we allow our government to be involved, and the public should vote on this part... and we hold them accoutnable, same as they want us to be accountable. Then it would go something like this:
I get a loan... say 5 years later I default... (the way it is set up today, I can claim chapter 7 bankruptcy) If they pass the legislation; and this is the tricky part, even by your own words previously... interest rates would drop (regulated by some formula the government would install), more money would be avaialable to more people, more middle class would be able to get loans... buying power would go up.. we would have MORE people IN the middle class... the ONLY thing I can see as an issue in this debate... is how or more to the point, WHEN would the government get involved when the person(s) were actually trying to pay off the debt and couldn't?
I am very aware, that the way I descrbied it is solely when and if the business would accept things status quo, and lower rates accordingly. It probably wouldnt happen in the way we hope. However, the same thing could easily happen (get repealed) if the rates didnt go down and the financial institutions just kept making money hand over fist.
Dont misunderstand me, Im not saying the banking Institutions are going out of business because of this, Im just saying that Im sure in some instances, outstanding debt to income ratios had a part in this.
Also, as for your friends, they made 6000 each?? Im asking because if they make around the same standard as any mortgage broker they are looking at 1/2 to 1% of the total amount being mortgaged. So, on a $100,000 loan they would only make $500 to $1000 on the loan.
If you think about it that is nothing compares to large companies making tons of cash. The difference between them and corporations, is that corporations that don't make it hurt the economy if they fail, so the government tries to step in and help.
Lets not forget, the way Loan companies make their money is simple math...
Like Albert Einstien said:
"The most powerful force in the universe is compound interest"
