By the Lending Lies Team
While the subprime mortgage bubble is simmering, the subprime auto loan meltdown has begun. Over the past decade, auto lenders have been willing to lend money to people who are poor credit risks, can’t provide proof of steady income, and purchase vehicles beyond their means. This strategy was profitable and worked in the beginning- but now the economic reality is setting in. Delinquency rates have doubled and major auto lenders are preparing for millions in losses.
Many auto loans, like mortgage loans, are securitized and the risk is passed down the road while the manufacturer services the loan. Over the past year the auto loan bubble exceeded one trillion dollars in debt on new and used vehicles. Both 30 and 60-day delinquency rates rose in the second quarter according to the nation’s credit bureau reports.
The total outstanding loan balance exceeded 1 trillion dollars between April 1st and June 30th, 2016 reports Experian Automotive, while the average auto loan is just under $30,000. This is a high number for a worker living right at the poverty line, with rent, food, fuel and healthcare costs escalating.
In order to help these borrowers afford these payments, lenders are now extending loans out for six or seven years. Even with extending the amount of years to pay, the average auto loan payment is around $499 a month. There is no way the average American can service both inflated mortgage and auto payments- and also credit card debt as well. Something is going to have to give.
The average payment just under $500 a month, comes to around $6,000 per year and does not include insurance, maintenance and fuel costs that can easily run another $3,000 a year. Only the wealthy can really afford an auto loan of this amount. The average middle class American clears around $3,500 per month before taxes. After Taxes they net around $2,700. Sound economic practices don’t support having an auto payment of this amount, but the auto industry is more than willing to give high risk borrowers an auto loan.
The lenders don’t care, and they know that people will default on their auto loan- but since the loan was securitized and passed down to an unknown investor- the auto manufacturer isn’t concerned about the borrower making the payment. There is something incredibly predatory about this strategy to both borrowers and investors.
Already, auto loan delinquencies are defaulting at high levels. In July, 60 day subprime loan delinquencies were up 13 percent on a month-over-month basis and were up 17 percent compared to the same month last year.
Prime delinquencies were up 12 percent on a month-over-month basis and were up 21 percent compared to the same month last year.
USA Today is reporting that auto lenders are setting aside cash stockpiles to cover any losses but since the majority of major auto loans are securitized and even sold to foreign investors- the major auto lenders can’t be too concerned.
In a quarterly filing with the Securities and Exchange Commission, Ford reported in the first half of this year it allowed $449 million for credit losses, a 34% increase from the first half of 2015.
General Motors reported in a similar filing that it set aside $864 million for credit losses in that same period of 2016, up 14% from a year earlier.
The mainstream media is reporting that the economy is getting better, the jobs reports are up and the market is in full recovery, however, the average American consumer that exists on the lower levels of the economic scale is not doing better. Rent and housing costs are escalating at unprecedented levels, and the cost of living indexes show huge increases. In fact, almost half of the United States population receives some type of state or federal subsidy like food-stamps, energy assistance or free healthcare. The economic factors are not sustainable for the lower and middle classes.
Things look a lot like they did in 2008 including large corporations shutting down completely (ITT Technical Institute schools) or laying off massive numbers of workers (Caterpillar). The signs of a major economic crisis are becoming apparent and will likely exceed those of 2008. The national debt has doubled, corporate debt has skyrocketed, and total household debt is now over 12 trillion dollars. Student debt is now over a trillion dollars and shows no end in sight as the federal government provides grants and loans to practically any student naive enough to go into debt.
Fasten your seat belts.
Filed under: foreclosure |
The discussion was good because it allowed to focus on derivatives, casino economy instead of partisan type discussions that lead no wh err.
I posted MK’s post on FB and it got a good discussion going.
That’s a good breakdown MK. We may need to add another sub group to account for false claims after settlements or including settlements as investor Schneider case shows. The data’s there from Independent Foreclosure Review and supposedly were supposed to have access to it if in lawsuit per Sen Warren. Every agency and AGs have to have evidence of fraud. Now Rep from NJ is asking for FBI files on criminal activity investigations related to crisis. It’s getting interesting again. The thing is when you look at MERS get any info it seems from servicer it’s pretty ridiculous how messed up the info is. As Dayan said in recent post.
Does this make sense why so many were and are driving BMWs and Mercedes cars during and after recession.
Ian, the FDIC is a private insurer with an implicit guarantee from the US Treasury. That is not the problem… In 2008 the banks quietly slipped the Deposits.. i.e. our money in front of the swap exposure.
Why do you think Citi and BAC, which are both still insolvent were saved. They let the government know that our deposits are debt on their balance sheet, and as such, so goeth the bank, so goeth the people.
As an aside, within the “Pooling and Servicing Agreements-PSAs”, written to keep honesty among thieves, these criminals explained a violation of the “90-day rule”, voids the mortgage).
LOL, honor among thieves.
How do we all sleep at night knowing of these crooked ways? Thanks to Neil for again trying to educate us all!
@ Hammertime,
Yes, by all means please repost.
TYVM, btw.
David Belanger uncovered “Residential Capital= RESCAP”.
The lawyers describe assets (homeowner titles, within pools of “loans”) found within “REMIC Trusts”, as “RES”.
David, I find is correct. Not only does my “loan” (never a “loan”, in the first place) first show in the MERS. It also shows in “Residential Capital”, or, “RESCAP”.
Judge Sweeny now knows F&F were kidnapped and she is releasing some of the 11,000 documents Matt Taibbi wrote about:
http://www.rollingstone.com/politics/news/why-is-the-obama-administration-trying-to-keep-11,000-documents-sealed-20160418
It is all fraud. Visit the “Fairholme Action”. Tim Howard has a blog about it:
https://timhoward717.com/2016/04/12/truth-unleashed-governments-scheme-exposed-full-unsealeddocument-release-enclosed/
I have said it to the point of exhaustion: “There are 1200 Trillion owed to these criminal behaviors”.
These 1200 Trillion hinge upon “Naked Short Sale Bets” the banks can take your home using phony “Trusts” (the REMICS), counterfeit title (the MERS) and forgery (robo-signing).
http://stopforeclosurefraud.com/2013/08/31/michael-keane-i-personally-destroyed-thousands-of-mortgage-documents-through-the-same-process-using-a-desk-top-scanner/
The banks “end-game” is to re-capitalize using American Property and phony titles to that property, while employing the courts as their strong-arm to complete and compel the extortion.
I believe Justice Scalia was killed, not because of Tila and Jesinoski, but, because he and his court reduced retention times between
Servicing Banks” claiming “ownership rights” to American Mortgages…
This essentially allowed more criminal bankers to log phony “ownership” and thereby pile on after a “Market was made” through dual tracking, even as that is how they identified which properties to log a phony interest in.
I believe the MERS tracks their bets, through phony PSAs and I believe the only way we will ever learn the number of Trillions lodged against forged and counterfeit titles is the day we compel the criminals to expose derivatives listed on the DTC and DTCC.
Reblogged this on California Freelance Paralegal.
If we “reverse engineer” the totals such as $15 trillion going to bank bailouts conservatively speaking for the “sub prime crisis” it’s ridiculous when the total sub prime market was $1 trillion. That is EVERY sub prime property would have been free and clear with $1 trillion. This is what Sen Dornan from a banking state I recall warned us about in the 90s when derivatives were at $100 trillion level.
Meant Damn MK brilliant post!
Danny MK brilliant post! I was going to ask to repost before I got to the end. Plenty of blame without playing the blame game; that’s what we need more of.
Michael Keane- I believe the FDIC is a private insurer. Or similar to the GSE’s, Fannie, Freddie, etc. Not much info about it.
While generally true this article contributes to the deadbeat bias. Just like the myth of low income and minority homeowners buying McMansions while working at McDonald’s it is the higher income groups manipulating the financial system for their Kardashian lifestyle.
Neil, using the numbers in this article, each million$ of auto loans would represent 30 new vehicles. Each billion $ of auto loans would then represent 30,000 new vehicles. And in turn, the trillion dollars in auto loans would represent 30,000,000 new vehicles. I thought auto sales were around 13 million per annum?
These numbers seem fishy- any additional insight here?
Every single bank is involved in fraud, forgery and counterfeiting American Mortgages.
In the 90s, Neil Bush, yes, those Bushes, was robbing American Taxpayers, using the FDIC.
In Michael Lewis’s book, “The Big Short”, a lot of people missed the fact that Lewis credits HFC-Household Finance Company as the template for later, predatory behaviors, in sub-prime lending.
(Lewis’s book is great, but it doesn’t tell the whole story. Read: the article called: “Securitization Fail”, by Adam Levitin, economics professor from Harvard, if I recall correctly).
(An attorney from Nantucket also has written an easy to digest, one-page article, called “Foreclosure, securitization don’t mix”, by Rockwell P. Ludden).
It is also true, George Senior was a one-time president because of the Long Term Capital Management, Keating Savings and Loan scandals…
Most people never realized, until Snowden, that George Senior and his banker pals also attacked and intentionally destabilized the Russian Ruble.
Anyway, Neil Bush was opening S&Ls; giving his friends loans and then bankrupting the bank. The net result was: his friends paid pennies on the dollar for their loans and the Taxpayers picked up their tab.
In part, to thwart criminals like the Bush Family, “REMIC Trusts” were created- more to the point: banks were encouraged to use “REMIC Trusts” to avoid tax consequences that were considered “burdensome”.
A “loan” was granted 90 days for a bank to enter that “loan” into lawful, REMIC Trust- the bank was then given “Tax-Deferred Pass-Through Certificates”…
Most often, the terms, “Pass-Through series” is part of the name on the phony “Trust” that claims the ability to collect on your “loan”.
Of course, if the bank didn’t enter the “loan” into lawful Trust, but said it did, within 90 days, the “loan” becomes “Null and Void” according to some.
(Others, myself included agree the “mortgage” was never intended as a “loan” for property in the first place, while, instead, a fraud of conversion, where money was stolen from 3rd parties- “tertiary funding”, illegal, in-and-of-itself- and identities (homeowner’s names and social security numbers) and collateral (American Homes) were stolen to place bets on Wall Street.
Supreme Court, 1872: Carpenter v Longan, explains: when a note and lien (contract and papers that show the amounts etc, pertainig to that contract) are “bifurcated (separated)”, the “mortgage” ceases to exist.
When Wall Street Criminals separated the paper contract (the Note) and put it in their own pocket and then passed the lien any multitude of times among themselves, in order to put phony bets on its performance, the “loan” became, “Null-and-void”.
(As an aside, within the “Pooling and Servicing Agreements-PSAs”, written to keep honesty among thieves, these criminals explained a violation of the “90-day rule”, voids the mortgage).
Every person in America has heard stories banks encouraged homeowners to “go behind” on their payments for at least 90 days, in order to qualify for Obama’s “Hamp” NONSENSE.
Once the homeowner went behind, the “loan” became “null-and-void” and triggered payoffs to the phony “Trusts” according to the PSAs that governed those “Trusts”.
THE BANKERS WERE HEDGING THEIR “NAKED SHORT SALE BETS” BY “MAKING A MARKET” (in foreclosures) FOR THE “DERIVATIVES” THEY WERE BETTING ON, AFTER “DUAL-TRACKING” THE “LOANS” THEY WERE CLAIMING THEY OWNED, USING FORGERY, FRAUD AND COUNTERFEITING.
Using American Mortgages to launder terror and drug cartel money is bad enough and voids any claim to solvency any bank within the central banking system may presently put forward…
Read an analysis of these behaviors, that exists as written by Federal Court Judge Gleeson and the “Deferred Prosecution Agreement-PDA”, written by the DOJ of the Obama Administration and used by AG Holder and AG Lynch, to conceal the banks are using American Mortgages to launder money for criminal cartels that have killed American GIs.
The banks, as we now know, stripped Pension Plans to pay the “loans”, in – full, on the front – end and then the banks counterfeited their interest in those “loans”, claiming they, the banks, gave the money… They didn’t; the Pension Plans of the Police, firemen, teachers and municipal workers were used to pay the “loans”, in-full.
The criminals then claimed “ownership” to the “loans” they then stole, for themselves, in order to collect interest and principal payments on “loans” the Pension Plans already satisfied, in-full.
A 100,000.00 “mortgage”, in this SCAM might return some $500,000.00 to the banks that stole the title, over the course of the “loan” (20, maybe 30 years).
BUT…
THAT ISN’T THE WORST OF IT…
http://www.marketwatch.com/story/this-is-how-much-money-exists-in-the-entire-world-in-one-chart-2015-12-18
THE BANKS CREATED 1200 TRILLION IN “NOTIONAL DERIVATIVES, NAKED SHORT SALE BETS”, THAT ARE SIMPLY, INTER-BANK, CRIMINAL WAGERS, THE BANKS CAN ROB PEOPLE’S HOMES, USING PHONY REMIC TRUSTS.
WHEN THE TIME COMES, NOT FAR OFF, THE BANKS CLAIM THE AMERICAN PEOPLE ARE ON THE HOOK FOR THE BANKS’ DEBTS AND CRIMINAL BEHAVIORS- REMEMBER: THERE IS NO MECHANISM WITHIN ARTICLE 1, SECTION 8, THAT EXPLAINS WE THE PEOPLE MUST PAY FOR THEIR CROOKED LIES AND DECEIT.
THEY HAVE RUINED THEMSELVES- NOT US.
It is up to the American People to Nationalize the banks and prosecute the bankers. The “Derivatives” damage, to this very day, is not known, in its entirety: the banks refuse to report through the DTC and DTCC- the regulatory agencies designed to track and report on their phony, “Naked Short Sale Bets”, That Americans will lose their homes to counterfeit, forgery and fraud, aka: “Derivatives”.
~Michael Keane, all rights reserved, 8/19/16
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https://livinglies.wordpress.com/2016/08/24/new-york-judge-orders-release-of-hidden-documents/#comment-451045