What is a Non-Performing Loan?

@JessicaLynn - Banks are a business, not a charity. It isn't their responsibility to "help" people who can't pay back their non-performing loans.

A lot of states now have programs to help people who are in danger of having their house foreclosed on. And there are some charities that can help too! These days, people really just need to look around and explore their options, and they can get some help.

I think this makes a lot more sense than expecting the banks to lose money just because people can't pay back the loans they committed to.

I really think banks need to try a little bit harder to work with people who possess the non-performing loan. As the article says, it's cheaper in the long run than trying to foreclose the house and sell it someone else.

If banks would work with people by lowering interest rate or deferring a few payments, I bet the rate of foreclosure would go down by a lot. With the way the economy is, a lot of people could uses extra help.

@Bhutan - Most of the banks have a lot of non performing assets in terms of real estate and are looking to auctions to liquidate their inventory. I bought a foreclosure this way and the bank really has nothing to lose because the bank has a reserve price for the property so if the bid is too low the bank can reject it.

They also have a chance to offer financing to investors that qualify and have the money to buy the properties in the first place so the bank can make money on that loan as well.

The banks have to be careful not to flood the market with all of the foreclosures at once because it will severely depress the real estate market even more. I know that banks have learned their lesson and are now offering loans to people that can actually afford the loan. Many of these non performing assests have destroyed many regional banks in my area.

I think that the banks have a lot of nonperforming loans on their books because of the high rates of foreclosures all over the country. I know here is South Florida we were severely affected and had one of the highest foreclosure rates in the country.

I remember during the real estate boom banks were offer no doc loans which were essentially no documentation loans which meant that the borrower agreed to a higher interest rate, but did not have to prove their income in order to get approved for a loan.

This was crazy. I read in an article that there was a lady that had a real salary of $40,000 a year that had multiple mortgages on several properties and had mortgages totaling $900,000. How can a person earning only $40,000 a year possibly be able to owe $900,000 in mortgages?

I think that the banks also wanted to make money during the real estate boom and anyone with a pulse could basically get a loan. This is why banks have come full circle and are now requiring standards like a good to excellent credit rating and fair down payment of at least 20% before they would consider giving out a loan.