Thursday, September 01, 2011

Another dumb business practice

Maybe its time I made a category for this topic.

My example for today came from a headline in our local newspaper which stated that home loans could not be restructured when the payments had been regularly paid.  Implied, of course, was that loans for which payments had not been regularly paid could and would be restructured!  Talk about an incentive to do the wrong thing.  Certainly the timeliness and reliability of your payments is one measure of your financial standing but it is only  one measure and a poor one at that.  Can you imagine a loan officer saying to an applicant, "You've skipped on 3 loans and are behind on your car payment with a total delinquency ratio of 50%.  So we have approved a $100,000 loan for you of which we expect you to pay back $50,000 when you feel like it.  Here's your check.  Have a good day."

Let's reward those who pay on time not those who don't.

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