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(MSNBC)   All aboard ... the subprime loan roller coaster is leaving again on track 2012   ( msnbc.msn.com) divider line
    More: Asinine, Equifax, Capital One, securitization, Comptroller of the Currency, low-end market, Dodd-Frank Wall Street Reform and Consumer Protection Act  
•       •       •

4133 clicks; posted to Business » on 13 Apr 2012 at 12:15 PM (5 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-04-13 11:07:23 AM  
You give me that funny feeling in my tummy.
 
2012-04-13 11:12:46 AM  
They've learned their lesson. It will be better THIS time around.
 
2012-04-13 11:28:39 AM  

Lando Lincoln: They've learned their lesson. It will be better THIS time around.


Don't we all wish.

In theory, with the right regulatory oversight and prudent self-governance, institutions can be very successful lending to folks with less than perfect credit in a way that works for the consumer and reduces risk to the institution.

Also, at the end of the day, lenders have to lend to these people. Even in a much healthier market, there are simply too many folks with "less than perfect" credit for lenders to completely ignore them as potential customers.
 
2012-04-13 12:05:21 PM  
Because after bankruptcy, you can't discharge new debt if you default. Bankruptcy is your ONE shot to re-organize, and the lenders know it.
 
2012-04-13 12:19:01 PM  

Snarcoleptic_Hoosier: Because after bankruptcy, you can't discharge new debt if you default. Bankruptcy is your ONE shot to re-organize, and the lenders know it.


Hasn't Trump's hairpiece filed for personal bankruptcy at least a few times though?
 
2012-04-13 12:19:37 PM  
Sure, take the blue pill, then the subprime loan.
 
2012-04-13 12:21:04 PM  

Snarcoleptic_Hoosier: Because after bankruptcy, you can't discharge new debt if you default. Bankruptcy is your ONE shot to re-organize, and the lenders know it.


I think there's a waiting period of around seven years to avoid people abusing the system, but I'm fairly sure I've read of people going bankrupt twice.
 
2012-04-13 12:22:57 PM  
Why not? They didn't pay the price last time.
 
2012-04-13 12:37:52 PM  

Grand_Moff_Joseph: Lando Lincoln: They've learned their lesson. It will be better THIS time around.

Don't we all wish.

In theory, with the right regulatory oversight and prudent self-governance, institutions can be very successful lending to folks with less than perfect credit in a way that works for the consumer and reduces risk to the institution.

Also, at the end of the day, lenders have to lend to these people. Even in a much healthier market, there are simply too many folks with "less than perfect" credit for lenders to completely ignore them as potential customers.


Oversight and prudence? That's not the American way. let those banks do what they want with no recourse, we'll just bail 'em out...
 
2012-04-13 12:43:50 PM  
SS Failboat II now boarding
 
2012-04-13 12:44:50 PM  

Brontes: Why not? They didn't pay the price last time.


Hell, the laws haven't even been changed. They still have the option of taking all their garbage paper, sticking it in blind "instruments" and stamping "AAA" on it and selling it - just like they did last time.
 
2012-04-13 12:46:57 PM  
i've got a friend in banking, he says he's been seeing 100% LTV coming through on his pre-quals (that's basically no money down loans).

We never learn...we'll have another crash in a few years...rinse, repeat...
 
2012-04-13 12:49:31 PM  
Not this shiat again. why hasn't this predatory lending practice been made illegal? ah yes politics as usual and the Republicans would never do anything to harm their banker buddies bottom line.
 
2012-04-13 12:57:09 PM  
If this comes back around to bite the banks in the ass again, no more bailouts.

They can farking sink this time.
 
2012-04-13 01:02:37 PM  
They are even back to advertising negative equity car loans again.

Lets take something whose value is going to drop 25% in the next few minutes and write a loan for 1.25x its value.
 
2012-04-13 01:03:55 PM  

Dog Welder: If this comes back around to bite the banks in the ass again, no more bailouts.

They can farking sink this time.


People throw around this phrase a lot, but I sincerely believe if Congress were to try and bailout the banks again they would have a revolt on their hands.

Just keep giving them all the rope they want.
 
2012-04-13 01:05:28 PM  
Everyone deserves to live in a 5000sqft house, it's a basic human right.
 
2012-04-13 01:09:38 PM  
Sweet.... I see this as good news for my wife and I. Not because we want one of these pre-broken loans, but because we've been 'just' on the edge for the last year, so close we could taste it, and the banks might start to be a little less stabby on loans...
 
2012-04-13 01:15:24 PM  

grimlock1972: Not this shiat again. why hasn't this predatory lending practice been made illegal? ah yes politics as usual and the Republicans would never do anything to harm their banker buddies bottom line.


It's a perfect storm of bipartisan corruption. Republicans with their banker buddies getting rich while the democrats getting to buy votes by giving the poor homes they can't afford. The only people who lose are hard working people in the middle, who don't have a political party to represent them.
 
2012-04-13 01:16:25 PM  
FTFA: The push for subprime borrowers has not extended to the mortgage market, which remains closed to all but the most creditworthy.

Pretty much the meat of the story there. Unsecured short term loans like credit cards have high enough interest and fees for the banks to show a profit. But it was the whole subprime mortgage business which did us in. It THAT starts up again, watch out.
 
2012-04-13 01:17:58 PM  
We are going to be seeing a lot of this kind of thing. It stems from the first two years of the Obama administration and his fetish for "bi-partisan" legislation that ultimately resulted in toothless "reform" like the Dodd-Frank bill.

It's too bad it took him that long to learn you don't negotiate with terrorists.
 
2012-04-13 01:20:05 PM  

grimlock1972: Not this shiat again. why hasn't this predatory lending practice been made illegal? ah yes politics as usual and the Republicans would never do anything to harm their banker buddies bottom line.


In this instance, the whole "both sides are bad" thing is actually true. The Democrats are slaves to the banks just as much as the GOP.

Corporate whores be whorin'...
 
2012-04-13 01:23:44 PM  

TheGreatGazoo: They are even back to advertising negative equity car loans again.

Lets take something whose value is going to drop 25% in the next few minutes and write a loan for 1.25x its value.


Seriously? I can't imagine someone with even a junior-high grasp of economics signing for something so moumentally stupid.
 
2012-04-13 01:28:30 PM  
There are still people who believe sub-prime mortgages caused the market crash?
 
2012-04-13 01:36:08 PM  
The credit system is just completely farked. All anyone has to do to completely fark your credit rating is trump up some paperwork and send it off to the reporting agencies who will accept it no questions asked and leave it to you to sort out the mess the next time you need a loan. I have had numerous car loans that have always been paid off and never gone delinquent, but anytime I need to apply for a new one I have to bend over backwards and accept a shiat rate from some third tier lender because of a scumbag rental company that broke the terms of my lease and is claiming I owe them twice what was stated in my rental contract. I've disputed it multiple times and provided copies of my lease that show that the amounts they are reporting are fraudulent, but it doesn't matter because they're all in it together. There is no accountability, no protections at all for the consumer. It's a racket designed to extort you out of money because we have become a society where it is virtually impossible to survive without relying on some form of credit.
 
2012-04-13 01:38:44 PM  

Comic Book Guy: TheGreatGazoo: They are even back to advertising negative equity car loans again.

Lets take something whose value is going to drop 25% in the next few minutes and write a loan for 1.25x its value.

Seriously? I can't imagine someone with even a junior-high grasp of economics signing for something so moumentally stupid.


And yet I personally know people who did this very thing...

/Oh, you mean I can roll over my upside down car's loan into this new car loan
//Well sign me up! Hooray, I'm super-upside-down!
 
2012-04-13 01:52:34 PM  

EighthDay: Comic Book Guy: TheGreatGazoo: They are even back to advertising negative equity car loans again.

Lets take something whose value is going to drop 25% in the next few minutes and write a loan for 1.25x its value.

Seriously? I can't imagine someone with even a junior-high grasp of economics signing for something so moumentally stupid.

And yet I personally know people who did this very thing...

/Oh, you mean I can roll over my upside down car's loan into this new car loan
//Well sign me up! Hooray, I'm super-upside-down!


Buy now or be walking forever!
 
2012-04-13 01:54:26 PM  
Change I can believe in.
 
2012-04-13 02:00:59 PM  
Idk what everyone's biatching about. Subprime anything are fundamentally sound
 
2012-04-13 02:02:58 PM  
Here in Arizona, banks have been holding back properties to inflate prices. Speculators are coming in again and buying up other homes left and right. Home prices are rising, but Average Joe and Jane can't hope to qualify to purchase any of these homes- not when banks aren't lending.

stappawho: Change I can believe in.


Oh I wish we'd return to Glass Steagal and regulate the sh*t out of Wall Street (with teeth this time). I don't see the GOP wanting this. What else you got?
 
2012-04-13 02:11:27 PM  

ihatedumbpeople: i've got a friend in banking, he says he's been seeing 100% LTV coming through on his pre-quals (that's basically no money down loans).

We never learn...we'll have another crash in a few years...rinse, repeat...


I'll agree that 0 down home loans are probably a bad idea for conventional loans. Restrict that to FHA loans, which are meant for first time buyers with good-great credit but little to bring to the table (like I was).

That said, the down payment minimum is going to have to settle at a lower level, like 3-5%. With wages stagnated and cost of living inflating continually, a lot of people will never hit 15-20%, even with good jobs and sound finances.
 
2012-04-13 02:16:17 PM  

Rent Party: We are going to be seeing a lot of this kind of thing. It stems from the first two years of the Obama administration and his fetish for "bi-partisan" legislation that ultimately resulted in toothless "reform" like the Dodd-Frank bill.

It's too bad it took him that long to learn you don't negotiate with terrorists.


The thing is no amount of reform is going to do anything to fix the problem as long as you have people willing to accept unbalanced loan terms. All that will happen if you try to impose penalties on banks for shady business practices is that they will have increased incentive to hide those practices further and further away from scruteny. Until the general population educates itself to understand what is and is not a good or responsible financial decision nothing is going to change. And since THAT is not likely to happen anytime soon, all this grandstanding and finger pointing is largely pointless.
 
2012-04-13 02:19:25 PM  

Nadie_AZ: Here in Arizona, banks have been holding back properties to inflate prices. Speculators are coming in again and buying up other homes left and right. Home prices are rising, but Average Joe and Jane can't hope to qualify to purchase any of these homes- not when banks aren't lending.


So the banks are lending too much or too little? TFA says too much and everyone else in the thread agrees. You disagree and think TFA is positive news?

stappawho: Change I can believe in.

Oh I wish we'd return to Glass Steagal and regulate the sh*t out of Wall Street (with teeth this time). I don't see the GOP wanting this. What else you got?


We have Dodd Frank, which is a total disaster that will only create expenses and increase the cost of borrowing. It's even worse than Sarbanes Oxley.

And Glass Steagall wouldn't have prevented the financial crisis or the recession.

Link (new window)

Although that's not to say it shouldn't be reintroduced, as it could potentially prevent future problems.
 
2012-04-13 02:23:40 PM  

StrangeQ: Rent Party: We are going to be seeing a lot of this kind of thing. It stems from the first two years of the Obama administration and his fetish for "bi-partisan" legislation that ultimately resulted in toothless "reform" like the Dodd-Frank bill.

It's too bad it took him that long to learn you don't negotiate with terrorists.

The thing is no amount of reform is going to do anything to fix the problem as long as you have people willing to accept unbalanced loan terms. All that will happen if you try to impose penalties on banks for shady business practices is that they will have increased incentive to hide those practices further and further away from scruteny. Until the general population educates itself to understand what is and is not a good or responsible financial decision nothing is going to change. And since THAT is not likely to happen anytime soon, all this grandstanding and finger pointing is largely pointless.


Your position seems to be "People (or banks) that commit crimes are going to hide those crimes, so we shouldn't bother with law at all."

Make these types of mortgages illegal. If banks "hide them further from scrutiny" then you crucify the bank. Regulate the banks to the degree where they can offer fixed term fixed rate, and fixed term ARMs and that's it. They can compete on interest rate and other ancillary services for the loans. When the banks that depend on the kinds of scam loans we are discussing here all die off, then we can take the leash off. The industry clearly isn't going to police itself, so the government should do it for them.

That's how laws work.
 
2012-04-13 02:29:48 PM  

StrangeQ: Rent Party: We are going to be seeing a lot of this kind of thing. It stems from the first two years of the Obama administration and his fetish for "bi-partisan" legislation that ultimately resulted in toothless "reform" like the Dodd-Frank bill.

It's too bad it took him that long to learn you don't negotiate with terrorists.

The thing is no amount of reform is going to do anything to fix the problem as long as you have people willing to accept unbalanced loan terms. All that will happen if you try to impose penalties on banks for shady business practices is that they will have increased incentive to hide those practices further and further away from scruteny. Until the general population educates itself to understand what is and is not a good or responsible financial decision nothing is going to change. And since THAT is not likely to happen anytime soon, all this grandstanding and finger pointing is largely pointless.


are you saying that the government isn't the answer to this problem? HERESY!
 
2012-04-13 02:32:31 PM  

Rent Party: Make these types of mortgages illegal. If banks "hide them further from scrutiny" then you crucify the bank.


Which will make them hide even more, or at least make them more reluctant to bring forth any findings of misdeeds. What we need to do is find a way of rewarding them for providing fair and beneficial deals. But since we are a culture of punishment and vengeance and any sort of outside support or influence is communist and evil, that will never happen either.
 
2012-04-13 02:57:12 PM  

StrangeQ: Rent Party: Make these types of mortgages illegal. If banks "hide them further from scrutiny" then you crucify the bank.

Which will make them hide even more, or at least make them more reluctant to bring forth any findings of misdeeds. What we need to do is find a way of rewarding them for providing fair and beneficial deals. But since we are a culture of punishment and vengeance and any sort of outside support or influence is communist and evil, that will never happen either.


So your position is that law is pointless because criminals will hide their deeds. Got it. Have you checked out the paradise of Somalia?

You know that the reason they have these deals is because "unfair" deals make them a whole lot more money than "fair and beneficial" deals? The only benefit a bank cares about is their own. That's what the law is for. To protect the other guy.
 
2012-04-13 02:57:19 PM  

ElizaDoolittle: Snarcoleptic_Hoosier: Because after bankruptcy, you can't discharge new debt if you default. Bankruptcy is your ONE shot to re-organize, and the lenders know it.

I think there's a waiting period of around seven years to avoid people abusing the system, but I'm fairly sure I've read of people going bankrupt twice.


Yep. I work with two guys who have both filed bankruptcy twice. One blew a $50,000 home loan, the other spent beyond his means.
 
2012-04-13 03:00:25 PM  

Rent Party: StrangeQ: Rent Party: Make these types of mortgages illegal. If banks "hide them further from scrutiny" then you crucify the bank.

Which will make them hide even more, or at least make them more reluctant to bring forth any findings of misdeeds. What we need to do is find a way of rewarding them for providing fair and beneficial deals. But since we are a culture of punishment and vengeance and any sort of outside support or influence is communist and evil, that will never happen either.

So your position is that law is pointless because criminals will hide their deeds. Got it. Have you checked out the paradise of Somalia?

You know that the reason they have these deals is because "unfair" deals make them a whole lot more money than "fair and beneficial" deals? The only benefit a bank cares about is their own. That's what the law is for. To protect the other guy.


Yes, that is exacty what I am saying. We should become Somalia.
 
2012-04-13 03:17:10 PM  

Rent Party: The only benefit a bank cares about is their own. That's what the law is for. To protect the other guy.


The only benefit anybody cares about in any transaction is their own.

Whenever a transaction is made both parties feel like they benefited or a transaction does not occur.
 
2012-04-13 03:22:16 PM  

StrangeQ: Rent Party: StrangeQ: Rent Party: Make these types of mortgages illegal. If banks "hide them further from scrutiny" then you crucify the bank.

Which will make them hide even more, or at least make them more reluctant to bring forth any findings of misdeeds. What we need to do is find a way of rewarding them for providing fair and beneficial deals. But since we are a culture of punishment and vengeance and any sort of outside support or influence is communist and evil, that will never happen either.

So your position is that law is pointless because criminals will hide their deeds. Got it. Have you checked out the paradise of Somalia?

You know that the reason they have these deals is because "unfair" deals make them a whole lot more money than "fair and beneficial" deals? The only benefit a bank cares about is their own. That's what the law is for. To protect the other guy.

Yes, that is exacty what I am saying. We should become Somalia.


That is precisely what you're saying. "Law is pointless because bad guys hide their crimes."
 
SMX
2012-04-13 03:28:50 PM  

Sybarite: You give me that funny feeling in my tummy.


www.davenavarro.de

Took me a few seconds to process the lyrics, but I got it!
 
2012-04-13 03:34:49 PM  
"Lenders again willing to extend credit to risky clients. But is that good or bad? "

Hint, it's bad.
 
2012-04-13 04:00:58 PM  

KarmicDisaster: "Lenders again willing to extend credit to risky clients. But is that good or bad? "

Hint, it's bad.


Pffft whatever you know giving a $300k loan for a house to a person making $10 an hour is a good thing!
 
2012-04-13 04:16:14 PM  

Lost Thought 00: Everyone deserves to live in a 5000sqft house, it's a basic human right.


austinzoning.typepad.com

You work for the DMV and your spouse is a supervisor for the post office. You've both worked hard and now it's time for the good life.
 
2012-04-13 04:33:42 PM  
with the right regulatory oversight

Letting them fail is the only oversight needed.

/Well, fraud regulation, but that wasnt a major part last time around
//The mound of paperwork the current regulations require clearly stated everything they needed to know
 
2012-04-13 04:36:07 PM  
The banking is bipartison.

Both R and D are loaded with banking buddies. Have you not seen all the people from Goldman Sachs this administration is using?
 
2012-04-13 05:20:35 PM  

neaorin: FTFA: The push for subprime borrowers has not extended to the mortgage market, which remains closed to all but the most creditworthy.

Pretty much the meat of the story there. Unsecured short term loans like credit cards have high enough interest and fees for the banks to show a profit. But it was the whole subprime mortgage business which did us in. It THAT starts up again, watch out.


This.
 
2012-04-13 05:49:01 PM  
So long as no one takes out any credit default swaps against the mortgages, there's no reason not to.

After all, if you owe the bank $1 million, that's your problem. If you owe the bank $1 billion, that's the bank's problem.

Usury is a risky practice. Go ahead, issue low credit loans. But understand that if those loans turn sour, the bank and only the bank has to eat the loss.
 
2012-04-13 07:00:01 PM  

Ishkur: So long as no one takes out any credit default swaps against the mortgages, there's no reason not to.

After all, if you owe the bank $1 million, that's your problem. If you owe the bank $1 billion, that's the bank's problem.

Usury is a risky practice. Go ahead, issue low credit loans. But understand that if those loans turn sour, the bank and only the bank has to eat the loss.


I am pretty sure the problem the last time was the banks going "OMFG WE HAVE NO MONEY! Maybe you should take all these terrible loans that will destroy us off our hands. Oh by the way if you don't the economy is finished forever."

Maybe we should split up banks into savings banks and banks that deal only in loans?
 
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