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Subprime lending

RECENT NEWS
Springleaf Talks With Bank About IPO
Wall Street Journal  Jun 10  Comment 
Subprime lender Springleaf Finance Corp. is in discussions with banks about a possible initial public offering, as roaring markets and a budding U.S. economic turnaround give new life to some companies once on the brink.
A Subprime Lender Wants To IPO
Clusterstock  Jun 10  Comment 
Mortgage Investors Get Blindsided
Wall Street Journal  Jun 3  Comment 
Some mortgage investors got an unexpected refresher course on the risks of subprime debt when they received notice of $1 billion of previously undisclosed losses.
BofA and AIG line up in subprime battle
Financial Times  Jun 2  Comment 
New York court to hear arguments on whether to approve an $8.5bn settlement between investors in mortgage bonds and their originator Countrywide
The Subprime Mortgage Market Is Heating Up Again
Clusterstock  Jun 2  Comment 
America's sub-prime mortgage market is beginning to reheat, leading investors to warn of the possibility of a renewed financial crisis. Demand for sub-prime mortgage bonds, which are not backed by US government-controlled mortgage lenders...
Subprime Auto Loans Were First Out, Last In, In The Recovery
Forbes  Jun 1  Comment 
Auto loans for borrowers with subprime credit have been a long time recovering, but that recovery is well under way.
Ally to pay $2.1 billion to settle claims tied to ResCap
Reuters  May 23  Comment 
Ally Financial Inc agreed on Thursday to pay $2.1 billion to settle legal claims tied to its bankrupt Residential Capital LLC unit, nearly triple the amount it initially offered to creditors of the subprime mortgage business.
Fitch Shines Light On the Real Subprime Boom
TheStreet.com  May 15  Comment 
NEW YORK (TheStreet) - Prior to the financial crisis, ratings agencies such as Moody's Investors Service, McGraw-Hill-owned Standard & Poor's and Fitch Ratings looked the other way when it came to giving risky subprime mortgage securities top...
Lenders venturing back into subprime market
Bankstocks.com  Apr 29  Comment 
Michele and Russell Poland's credit was shot, but they managed to buy their suburban dream home
Rating agencies settle subprime lawsuits
Financial Times  Apr 27  Comment 
The trial would have tested much of the same evidence that the US government is using in its $5bn fraud suit against S&P




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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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