Re: Loan modifications (was Re: Starting Engineer's Salaries)

Again, the problem of perspective:
That the bank factors in a rate that amounts to insurance (for the bank) is not the same thing as the borrower's loan being insured. It is calculated based on what might never be recovered from  loans.
The borrower can consider his payments insured if he, separately, buys insurance to make sure it is paid. Then he can take the attitude that his debt is covered.
Insurance is one-sided; it isn't about covering both sides of an agreement. The bank's insurance against default does not benefit the borrower.

Mitch
[from mePad]

On Oct 21, 2010, at 4:32 PM, John Williams <[email protected]> wrote:

>> If I am paying for insurance for the lender in case I don't pay it back, why
>> is it immoral to accept the penalty for not paying it back, knowing that I
>> prepaid insurance for the lender.
> 
> I answered this in another post, but I'll explain a little bit
> differently here. I see the mortgage insurance as insurance against
> the borrower being UNABLE to pay back the money, not just choosing to
> default. If your insurance agreement makes it clear that it is
> factoring in the chance that you choose to default