Foreclosure on Collateral and the Protection of Distressed Borrowers

Banks face more and more obstacles when they try to foreclose on collateral in order to protect distressed borrowers. As a result, loans become less accessible for ordinary borrowers, and rates rise. Banks build their losses on problem borrowers into the interest rate, so rates for everyone else go up. The tighter the screws on foreclosure, the more expensive credit becomes for other borrowers. Banks cannot operate at a loss, and they also work with depositors' money: they must pay depositors interest and be able to give them their money back. A sole residence cannot be seized. Banks cannot buy back property at auction. Evictions are not allowed during the heating season, nor foreclosures during periods of crisis. Banks cannot carry out their own property valuations, and there is much else they cannot do. All these losses are then passed on to ordinary borrowers through the interest rate.