Housing Needs Hired Goons
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A pretty fascinating take though, “A Green Light for Car Loans” tells us about how banks are boosting lending for cars of all things. Even better, those car loans are of course being securitized and sold off as investments. I mean what can go wrong?
There was $725 billion outstanding in auto loans at the end of 2Q2012, almost 6% higher than a year ago and the highest since early 2009. One quote from Jim Lentz with Toyota, "We are seeing more 'subprime,' which is good." Oh really Jim? Good for whom?
Well, this may shed a bit more light on what he means. When prioritizing, it appears that borrowers will miss the house payment before the car payment. At first glance anyone can be forgiven for saying, “What the hell did you just say?” But it’s true and the reason is quite simple (though astonishingly absurd). What’s easier to repo, a car or a house? Beep! Time’s up. The answer is car of course. All it takes is a repo crew to sneak up on the car at the crack of dawn or middle of the night and take it. A house though can’t be driven away. And as we’ve now come to find, apparently one can skip out on paying their mortgage and live in the house for a year or even longer.
The proof is all over the place on that one; there are examples as far as the eye can see. And before you even think of muttering “Foreclosuregate” let’s all agree that a missed payment is a missed payment no matter what. I’m not asking for reasons. Missed is missed whether it’s mortgage or rent. It’s like the sun coming up, you damn-well know that payment is due. No matter what, you need a place to live. So whether it’s rent or a mortgage payment, you in theory need to be forking over something every month unless you’re living with your parents or own your place outright.
“The availability of financing has helped drive up auto sales. Year-over-year, total sales rose 8.9% to 1.15 million new cars and light trucks in July, maintaining an annual pace of 14.1 million vehicles, according to industry researcher Autodata Corp. Annual sales could hit 15 million, said Paul Edelstein, economist at IHS Global Insight, who says consumers are more willing to borrow money to buy cars than other items.”
Well of course it has. And you know what’s made the financing more available? It’s not jobs and it’s not higher wages either. It’s longer loans. We’re talking 5, 6 and even 7 year loans on freaking cars! Yeah, I love where this is headed.
But I digress; back to the whole defaulting on houses first, cars second. It’s total BS that this happens and I wonder if the solution isn’t so simple as to basically make the repo process the same for the house as it is for the car? You’re 60 days behind, 90 maybe on your mortgage payment. You get a knock on the door. Who is it? Hired goons. LEGAL hired goons. It’s hired goons here to take your house. You can leave peacefully or it can get ugly. Either way hit the bricks because it’s obvious you either aren’t interested in paying or can’t. It sure would hasten the process and I bet that given the fact that you get the “homeowners” out so early in the process you probably save a lot of damage that the house would otherwise incur when “homeowners” become nothing more than really squatters. Then the house might not require so much repair just to get back on the market again. Sounds like it could save a lot of time and money. Betcha it would make someone think twice about which to default on first. Hell, it might even make them think twice before making the purchase in the first place.
Sure, this is partly in jest. But it’s also partly not. That someone can rationalize missing house payments before car payments thanks to the repo process means the repo process is broken and in dire need of repair. But then I guess we all (at least most of us) already know that.