Debt collection crybabies

[flintlock]

http://www.nytimes.com/2009/04/17/bu...tml?ref=global


“Trash-eating rat,” is how Robert Shoulders, the club’s owner for the last 13 years, described Mr. Williamson. “What he does is reprehensible. I am not sure how he can sleep at night.”
Mr. Williamson sees it differently. And the government agrees.
As he points out, it isn’t his fault that Mr. Shoulders overextended himself by borrowing $10 million to add the spa, a preschool, tennis courts and other amenities to his once-modest health club. And by moving aggressively to collect on loans like these, Mr. Williamson says, he is playing a crucial role in helping clean up the bad debts that are clogging the economy."


Amazing how many thought they had a God given right to overextend themselves financially.

[Munger]

Re: Debt collection crybabies

http://www.nytimes.com/2009/04/17/bu...tml?ref=global


“Trash-eating rat,” is how Robert Shoulders, the club’s owner for the last 13 years, described Mr. Williamson. “What he does is reprehensible. I am not sure how he can sleep at night.”
Mr. Williamson sees it differently. And the government agrees.
As he points out, it isn’t his fault that Mr. Shoulders overextended himself by borrowing $10 million to add the spa, a preschool, tennis courts and other amenities to his once-modest health club. And by moving aggressively to collect on loans like these, Mr. Williamson says, he is playing a crucial role in helping clean up the bad debts that are clogging the economy."


Amazing how many thought they had a God given right to overextend themselves financially.

But if what he says happened is true, I would be pretty pissed as well. Specifically, he claims that he offered the FDIC 60 cents on the dollar to pay off his debt, that they would not accept this, and that instead the FDIC had a private auction and sold his debt for 35 cents on the dollar to a random debt collector - who of course proceeded to demand payment in full within 10 days before filing foreclosure proceedings.

[Rantly McTirade]

Re: Debt collection crybabies

If you read the article, one sees that the borrowers offered to pay the FDIC More than what they(FDIC) ended up selling the loan to Williamson for. Settling with the debtors would have been the best outcome for all,
including the taxpayers.
Guys like Williamson seem to think they have a god-given right to make high rates of return by buying debts for a fraction-in some cases, a VERY small fraction(like 10 cents or less on the dollar)-and trying to get the full amount paid to them. Rat is too nice; vampire or leech seems better. It is a very scummy business.Whatever they are, they should learn to be careful-there are just a amazing number of lampposts sitting around sans even a solitary dangling corpse.
And, somewhat more analytically, what we hear as a key theme around itulip, is the need for debt elimination/writeoff/erasure/jubilee/whatever.
Williamson & those like him are preventing the full realization of that need, and siphoning off vig while at it.

[don]

Re: Debt collection crybabies

Does anyone know why the Feds refuse to deal with the debt holder and instead go with the debt collectors, despite the loss?

Inertia :rolleyes:

Campaign contributions ;)

Moral hazard :p

[Munger]

Re: Debt collection crybabies

Does anyone know why the Feds refuse to deal with the debt holder and instead go with the debt collectors, despite the loss?

Inertia :rolleyes:

Campaign contributions ;)

Moral hazard :p

The debt holder probably has the unfortunate circumstance to not work for Goldman Sachs or the like.

[ricket]

Re: Debt collection crybabies

The debt holder probably has the unfortunate circumstance to not work for Goldman Sachs or the like.

The most anyone should make on a transaction such as this should be 20%. Other than that it's usury and immorally wrong. If anyone claimed to make more than a 20% profit off of a technicality and not more than what they *actually* paid for it (ie requiring 100cents on the dollar after only paying 35cents on the dollar) then they better come at me with full guns drawn, because they better be ready to die for that 185% interest rate because it's against the law and I don't negotiate with criminals.

[Quincy K]

Re: Debt collection crybabies

The most anyone should make on a transaction such as this should be 20%. Other than that it's usury and immorally wrong. If anyone claimed to make more than a 20% profit off of a technicality and not more than what they *actually* paid for it (ie requiring 100cents on the dollar after only paying 35cents on the dollar) then they better come at me with full guns drawn, because they better be ready to die for that 185% interest rate because it's against the law and I don't negotiate with criminals.

Obviously, you have absolutely no experience with a BK proceeding, which will be the inevitable outcome for the Shoulders and the Williamsons, something that Williamson has already factored in on his cost basis. A very long, costly, emotional and drawn-out proceeding. There is a tremedous amount of risk for Willamson and the likes as insurance for said properties are very hard to secure for these scenarios(distressed titles). Williamson may eventually recover a corpse of a health club(after two years+ of litigation) since the Shoulders have nothing to lose here as their whole life is at stake. They will literally fight tooth and nail regardless of ryhme or reason. I read somewhere today(do not have the link) that currently 30 percent of all RRE foreclosed properties are vindictively damaged with some exceeding the value of said property.

In the future, you may want to think before you post. Otherwise, you just look foolish to the wise.

20% profit? You are so clueless.

[santafe2]

Re: Debt collection crybabies

Amazing how many thought they had a God given right to overextend themselves financially.

I was surprised to see follow-on posts obliquely defending these debtors and/or downplaying the right of the current owner of the lien to collect the full amount of the debt. In what crazy world is it OK to borrow $10MM and think it's OK to repay $6MM?

It's business. When you borrow, you pay. If you don't pay, there is a serious downside. The bank was the primary owner of the debt and they obviously were not treating these dead beat debtors as they should have. Had they pursued their defaulting loans more aggressively, the FDIC would never have been involved.

The FDIC has fixed rules. There was an acceptable number. It was obviously more than 60%. There are no do-overs once this process moves forward. Enter the buyer of the debt. Game over.

[kingzog]

Re: Debt collection crybabies

I was surprised to see follow-on posts obliquely defending these debtors and/or downplaying the right of the current owner of the lien to collect the full amount of the debt. In what crazy world is it OK to borrow $10MM and think it's OK to repay $6MM?

It's business. When you borrow, you pay. If you don't pay, there is a serious downside. The bank was the primary owner of the debt and they obviously were not treating these dead beat debtors as they should have. Had they pursued their defaulting loans more aggressively, the FDIC would never have been involved.

The FDIC has fixed rules. There was an acceptable number. It was obviously more than 60%. There are no do-overs once this process moves forward. Enter the buyer of the debt. Game over.

I was suprised to see a follow on post obliquely defending the rights of criminally minded debt collectors.

[santafe2]

Re: Debt collection crybabies

I was suprised to see a follow on post obliquely defending the rights of criminally minded debt collectors.

Not oblique, I'm firmly in the camp of the debt collectors. Your cute post affirms your support for non-payment of loans. Let's walk through the process. Try working from the top down and not from the bottom up. That is, navigate down from the trigger and not up the consequence. Instead of attacking the collectors, use your intellect to support the right of the debtors to not make their payments to the bank. As the thread title stated, please explain to us why these people are not 'debt collection crybabies'.

[Supercilious]

Re: Debt collection crybabies

I was surprised to see follow-on posts obliquely defending these debtors and/or downplaying the right of the current owner of the lien to collect the full amount of the debt. In what crazy world is it OK to borrow $10MM and think it's OK to repay $6MM?

It takes two to tango. The responsibility for every loan (or actually transaction) lies with both party. In what crazy world is it OK to lend $10 mil with insufficient collateral? In what crazy world is it ok to lend to j6p $500k for a NINA mortgage?

A lender who gave $10 mil for shit and now cannot help to recover more than $6 mil is stupid, corrupt or irresponsible. This is actually akin for being a Madoff investor ;) Greed and stupidity is a bad mix.

Things like these cannot happen without both the lender and the creditor being irresponsible. Weren't the bankruptcy laws (before they were modified) supposed to prevent the irresponsible behaviour of lenders?

Once shit happened with a loan, the best solution is negotiation in order to minimize the losses on both sides. Sometimes loan modification is in the best interest of the lender (if it is correctly done).

[santafe2]

Re: Debt collection crybabies

It takes two to tango. The responsibility for every loan (or actually transaction) lies with both party. In what crazy world is it OK to lend $10 mil with insufficient collateral? In what crazy world is it ok to lend to j6p $500k for a NINA mortgage?

A lender who gave $10 mil for shit and now cannot help to recover more than $6 mil is stupid, corrupt or irresponsible. This is actually akin for being a Madoff investor ;) Greed and stupidity is a bad mix.

Things like these cannot happen without both the lender and the creditor being irresponsible. Weren't the bankruptcy laws (before they were modified) supposed to prevent the irresponsible behaviour of lenders?

Once shit happened with a loan, the best solution is negotiation in order to minimize the losses on both sides. Sometimes loan modification is in the best interest of the lender (if it is correctly done).

Symbols, you're making very wide ranging points. Let's dial this back down to the thread discussion. I acknowledged in my first post on this thread that the bank did not do their job - they were poor business people and lost their business. Crushed, dead, gone. That is obvious from the outcome, the FDIC took them over. This discussion has much more to do with the other party. As flintlock characterized them, the 'crybabies'. As you say, it takes two to tango, why should the 'crybabies' keep dancing after their partner has died? Is it the responsibility of a 3rd party to carry the dead body around and pretend it has life?

[vanvaley1]

Re: Debt collection crybabies

Anybody see the movie "Maxed Out..." ? Probably won't change any positions regarding creditors and debtors, but it presents an interesting insight into the 'mind set' of some creditors and the ineffectiveness of government 'protection' for debtors.

Saw it tonight on TV. As the receipent of a 'washout' walk away debtor on an unsecured loan once given as the folks were having some difficulties, I'm not immune to the 'feelings' of a creditor position. But not sure that corporate and business gamblers policies of raking ignorant, trusting, unsuspecting people over the coals of 'profit at all cost' don't deserve to get their family jewels put in a vice.

Predator lending practices need to be looked at and laws enforced when they're breaching an intent of 'fair play'. The game is almost like a fix roulette wheel or using a deck of marked cards. I'm sure there's a legal name for that that better summarizes the term 'fair play'. Wonder what it is? Wonder if the legal system can adequately handle it with the 'resources' available for those too poor to afford a 'gun for hire'?

[flintlock]

Re: Debt collection crybabies

I was surprised to see follow-on posts obliquely defending these debtors and/or downplaying the right of the current owner of the lien to collect the full amount of the debt. In what crazy world is it OK to borrow $10MM and think it's OK to repay $6MM?

It's business. When you borrow, you pay. If you don't pay, there is a serious downside. The bank was the primary owner of the debt and they obviously were not treating these dead beat debtors as they should have. Had they pursued their defaulting loans more aggressively, the FDIC would never have been involved.

The FDIC has fixed rules. There was an acceptable number. It was obviously more than 60%. There are no do-overs once this process moves forward. Enter the buyer of the debt. Game over.

My thoughts exactly. This isn't a case of Joe six pack being swindled. This is millionaires borrowing more money than was prudent. I know people like this. Making $300,000-500,0000 year and still bought everything on credit. Spent their earnings on fancy homes, boats, cars, and other lifestyle expenses instead of reinvesting the business profits. These types have delusions of grandeur and can't be satisfied unless they are the biggest and have it all. Only they aren't willing to do it the hard way, through hard work and slowly building on success. No, they wanted it all right now, so they borrowed themselves into bankruptcy.

If it was so easy, everybody would just borrow 10 million dollars and get rich. My father was a home builder for 30 years. He always stayed small, building 5 or 6 homes a year, but was able to survive every recession, while most high flying builders repeatedly went bankrupt. He didn't buy boats, fancy cars, and even his personal home was fairly modest. He saved his windfalls. When a recession hit around 1990, and he had three homes sitting over a year, he was able to use his own money to owner finance( at 11%!) and ended up actually making good money instead of giving the homes back to the bank which is what most builders were doing. Take away the negative consequences of over-borrowing and the whole system falls apart. Bailouts and second chances will only lead to more of this crap.

We have become a nation of children masquerading as adults. I want, I want, I want. And when the gamble fails, instead of being an adult about it, they call names and expect another chance. Sounds like my kids. Where have all the grownups gone?

Some people just don't get it. Without guys like this buying up the bad debt, we'd be in even a worse situation.

[sishya]

Re: Debt collection crybabies

This is an unfortunate situation. But everyone's hands are tied here. If FDIC or Bank had negotiated with the debtor to modify debt to 60 cents on the dollar, it will create problem for the other Good loans which are functioning.

Assume 90% of the loans are healthy and only 10% of the loans are delinquent. If FDIC modifies the bad 10% of the loans, then the other 90% on hearing this Mod will also apply for the same goodies citing economic reasons. So then the Creditor will loose big. I guess that is why Modification won't work anywhere and creditor will have to show the pain experienced by the 10% loans to everyone by auctioning those loans at 60 cents to the dollar.