RECENT NEWS
New York Times  Apr 10  Comment 
Navient is accused of making billions of dollars in risky, subprime student loans to borrowers who have little hope of repaying them. Here are some of those borrowers’ stories.
MarketWatch  Apr 6  Comment 
U.S. auto credit will deteriorate even more in 2017, leaving particularly vulnerable the specialized debt known as asset-backed securities created from subprime, or the lowest-credit-rated, loans, Fitch Ratings said in a Thursday report that...
MarketWatch  Apr 6  Comment 
Elevate Inc. said it expects a $6.50 issue price Thursday morning and increased the number of shares it would offer, after previously setting a range of $12 to $14.
MarketWatch  Apr 3  Comment 
Elevate Credit Inc. is back to test the public markets again in a climate that may be more welcoming to financial lenders.
Benzinga  Apr 2  Comment 
Everyone is worried about the subprime auto market, including Neuberger Berman Group Fund Manager Steve Eisman. “Banks make mistakes on credit quality, and we are in an environment where credit quality has never been this good in anyone’s...
MarketWatch  Apr 1  Comment 
Steve Eisman of 'Big Short' is watching the growing risk in subprime auto loans
Forbes  Mar 31  Comment 
President Donald Trump is praising the U.S. auto boom, but he doesn't realize it's an unsustainable bubble driven by subprime debt.
MarketWatch  Mar 30  Comment 
It’s a data point that investors shouldn’t overlook, say UBS analysts and others.
Financial Times  Mar 30  Comment 
US subprime lender aims to cash in on boost to sentiment since Trump victory
MarketWatch  Mar 29  Comment 
Santander Consumer USA Wednesday agreed to pay $26 million to settle allegations with officials from two states over alleged violation of consumer protection laws.




 

What happened blaicasly was because of assuming that a trend was permanent. In the financial world, this is a form of mental disorder. Trends are why anyone could be a day-trader and make money, for a while. Their impermanence is why anyone that didn't get out of that in time lost their shirts. The subprime loans were designed to churn the loans. You had loans that were fixed for usually two years, then would become variable. The whole intent was for the borrower to refinance in two years, again generating all of the bank's new-loan fees. The trend for real estate to appreciate rapidly was counted on to continue to keep this attractive for the borrower. Borrow 100 with 5k in costs to pay off a loan of 95, wait two years, borrow 105k with 5k in costs to pay off a loan of 100, wait two years, borrow 110k with 5k in costs to pay off a loan of 105 but then the trend didn't cooperate by giving a home value of 110k, and the balloon broke. People still had the same house they did, but now a loan for more than they originally paid for it, and they can't get refinancing, and can't sell it for what they owe. Trends are temporary. People that think otherwise will eventually lose money. Now, how do you know when a trend is coming to an end? There's a story about the Crash of '29 about a broker who was getting a shoe shine, and the shoe shiner gave him a hot tip on a stock. He realized that when shoe shine boys were giving stock tips, the market was about to crash and he got out. During the day-trader era, there were stories about bus drivers and janitors making huge money in day-trading, just before that went south. How many times have YOU seen people offering to help people get loans in their answers right here on Yahoo, offers totally unconnected to the question being asked? It was a trend. Now it's not.

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