Exactly. In a market driven society, there is an incentive for an investor to "buy"the loan from the holder at a sharp discount to value and work out a "reasonable" payment scheme with the debtor. The loser is the idiot who made the loan in the first place and collected all fees for doing so.
Except when government guarantees are invovled anyone putting together loans does due diligence and estiamtes default risk, potential losses and recovery and has to demonstrate that the package of loans will return fair market value. 'cept when government loan guarantees are invovled.
No relief in bankruptcy does not mean these are zero risk loans. You cannot collect from a guy out on the streets or living in someone's basement.
Correct, bankruptcy does not mean there’s no risk, but it can be mitigated easier.
The US Government is a predatory loan maker. There’s plenty of this in the private sector. There are plenty of no rates that buy sports cars off a dealer’s lot outside the front gate of the base who fail on their loans. The car is repoed, sold at a closed auction at a ridiculously low rate, and the dealer goes to court and gets a deficiency judgement against the LCpl and attaches to his wages. The car purchased at closed auction by a puppet corporation of the dealer resells the car on another unwitting nonrate, rinse and repeat.