What’s on a bank’s mind?

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What’s there so peculiar about a bank’s response when your mortgage payment is late? A bank’s behavior facing a late payment from a borrower – i.e. the debtor – can’t be any different from any other creditor’s behavior: totally oriented at maximizing credit recovery. A bank, as a financial intermediary, has sizable skills and expertise coupled with considerable information assets – integrally enhanced by their very private nature – that place it in a strength condition, both in terms of bargaining power and moral suasion, capable of exerting not only a coordination but even a control on both the defaulter and the other creditors. This applies only in case the outstanding debt is minimal. Turn the argument upside down when outstanding debt is large.

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