RECENT NEWS
Clusterstock  Mar 27  Comment 
Wall Street is starting to worry about the auto loan market.  Fitch, Moody's, Morgan Stanley, Mizuho and Evercore ISI have all published research on the market in the past few days, and there's a recurring theme: It's not looking good. There...
newratings.com  Mar 27  Comment 
LONDON (dpa-AFX) - The credit-card issuer Barclaycard, a unit of British bank Barclays PLC (BARC.L, BCS), sold $1.6 billion of credit-card balances owed by mostly near-prime and subprime borrowers to privately held personal-loan firm Credit Shop...
MarketWatch  Mar 23  Comment 
The Federal Reserve on Thursday ordered Banco Santander’s U.S. division to improve oversight of its subprime auto-lending unit.
Benzinga  Mar 23  Comment 
Auto lender Ally Financial Inc (NYSE: ALLY) on Tuesday let out a hint that exposure to subprime loans could be hurting it, as used car prices continue southward. Toned Down Adjusted EPS Expectation For 2017 In its financial outlook update...
Clusterstock  Mar 22  Comment 
The auto loan market is showing signs of stress. US auto loan and lease credit loss rates weakened in the second half of 2016, according to a new report from Fitch Ratings, which said they will continue to deteriorate. "Subprime credit losses...
Benzinga  Mar 22  Comment 
The latest numbers from Black Book (BB) seem to confirm that the U.S. auto market has peaked. BB just launched its brand new BB Used Vehicle Retention Index (UVRI), which indicates that used car prices declined by 6.0 percent in 2016. So far in...
Clusterstock  Mar 15  Comment 
Losses on subprime auto loans have spiked in the last few months, according to Mizuho. That could spell bad news for US carmakers, consumers, and the economy. The number of Americans who have stopped paying their car loans appears to be...
Forbes  Feb 23  Comment 
Could the type of risk that triggered the sub-prime mortgage crash and the global financial crisis be missed again? A new report suggests it could, not because of unpredictable 'black swan' scenarios but because of short, even blinkered, time...
Benzinga  Feb 17  Comment 
Credit Acceptance Corp. (NASDAQ: CACC) shares are down more than 5.1 percent on Friday after Bloomberg reported that the Federal Trade Commission has requested information from the company regarding its use of ignition kill switches and GPS...
guardian.co.uk  Feb 10  Comment 
Analysts fear the boom in personal contract plans are mirroring the sub-prime mortgage scandal and are fuelling a colossal build-up of debt in UK and US A huge increase in the amounts borrowed by already indebted households in Britain and the US...




 

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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