Earlier quoted context omitted.
AMP version worked for me through the 'web' link.
Didn't work for me.
Changed within the last hour.
America’s Fastest-Growing Loan Category Has Eerie Echoes of Subprime Crisis
21–30 of 194 posts
Re: America’s Fastest-Growing Loan Category Has Eerie Echoes of Subprime Crisis
#22OK - The 'web' search/link isn't working for me anymore. Maybe it's time to start rethinking WSJ submissions. Based on the first paragraph, this is the exact same article: http://www.msn.com/en-us/money/realestate/loan-boom-echoes-s...
It should work if you use the "web" link in an incognito window. WSJ remembers if you visited it directly and then shows the paywall even with a Google referer, but incognito mode defeats that. I agree it's getting to be something of a pain. Thankfully this article seems to be republished in many places.
Didn't work for me.
Re: America’s Fastest-Growing Loan Category Has Eerie Echoes of Subprime Crisis
#23The title made me think that this was going to be about subprime auto loans, which are definitely in "crisis" territory. This whole mess (subprime auto, renovation, and home loans) comes from the increasingly rent seeking nature of Wall Street. It used to be that fortunes were both made and lost on Wall Street. Now, for large investors ("whales"), it's 3.5% or I take my money to another fund. If I don't have a consis…
> We're going to keep going from crisis to crisis because banks can't say no, and the government(s) deems them too big to fail
Consumers can say no, and if they had better financial education and/or financial prospects, maybe they would.
The elderly woman in the article initially refused the $50k renovation to her 5 bedroom home, but then agreed because she thought the government was going to subsidize it for her.
The contractor was able to sell her the loan because she needed to reduce heating/utilities/energy costs in her massive (for one or two people living on SS presumably) home, and she thought the savings from the PACE program would pay for the solar panels, smart lightbulbs, etc.
I don't know the exact details of her situation, but it seems like perhaps the correct decision would have been to sell the house and move to a smaller, more efficient house if the current house is too expensive to maintain given the number of occupants and their age/level of income. I'm 24 and currently rent half a large house in the suburbs from a single guy in his 60s who needs the extra income to maintain the house which he bought when he had a larger family.
Unfortunately it seems like the loan was misrepresented to her by the contractor when she agreed to go into debt, and obviously many will do anything to avoid moving out of homes/communities they've been in for a long time. Others have no family to rely on or go to even if they do want to move.
I'm not a huge fan of Wall St. and big bank loan & derivative making and selling culture, but it's not entirely to blame, nor was it entirely to blame during the financial crisis of 2007-08 as many consumers took on home loans they had no intention of ever making good on (maybe there was some fraud/misrepresentation on the part of the contractor in this case, maybe not). People have always been greedy since the beginning of time - we are just struggling overall at the moment to raise financial literacy and strengthen altruism: family/community/country-wide ties (patriotism) due to poor economic conditions for the majority of Americans.
Re: America’s Fastest-Growing Loan Category Has Eerie Echoes of Subprime Crisis
#24The title made me think that this was going to be about subprime auto loans, which are definitely in "crisis" territory. This whole mess (subprime auto, renovation, and home loans) comes from the increasingly rent seeking nature of Wall Street. It used to be that fortunes were both made and lost on Wall Street. Now, for large investors ("whales"), it's 3.5% or I take my money to another fund. If I don't have a consis…
Making the tax agency also the debt collector for this type of loan is quite ingenious, but also evil. If I'm reading it right, defaulting is basically equivalent to being behind on your taxes. Does anyone know if this bundling to property tax payments also gives these loans repayment priority in a foreclosure? If it does, such loans could poison otherwise sound mortgages by superseding them to the remaining equity.
The line that struck me most powerfully was just tossed in offhand: Riverside's government collects 15% of its annual budget from PACE loans.
The headline here was overhyped. The total volume of PACE loans isn't anything like the mortgage crisis, and total volume shapes secondary effects like bank failures and property value crashes.
But if PACE is becoming a large portion of local government budgets, that causes its own problems. We've already seen the kind of abusive practices which arise when towns get their funding from speed traps. No one likes taxes, but tax revenue is generally a shared burden, and positively correlated with growth and population. When the incentives for financing are to operate against a smaller group of people, things go to hell really fast.
Re: America’s Fastest-Growing Loan Category Has Eerie Echoes of Subprime Crisis
#25Earlier quoted context omitted.
It should work if you use the "web" link in an incognito window. WSJ remembers if you visited it directly and then shows the paywall even with a Google referer, but incognito mode defeats that. I agree it's getting to be something of a pain. Thankfully this article seems to be republished in many places.
Didn't work for me.
Huh. I just tried it on this article and it failed for me as well. It worked recently but they must have closed off that loophole.
Re: America’s Fastest-Growing Loan Category Has Eerie Echoes of Subprime Crisis
#26Re: America’s Fastest-Growing Loan Category Has Eerie Echoes of Subprime Crisis
#27Re: America’s Fastest-Growing Loan Category Has Eerie Echoes of Subprime Crisis
#28As a real estate investor, I lick my chops when I see news like this. But as a human being it's so terrible to see happen over and over again. Watch "The Big Short" if you haven't - everything will crash again.
Re: America’s Fastest-Growing Loan Category Has Eerie Echoes of Subprime Crisis
#29The title made me think that this was going to be about subprime auto loans, which are definitely in "crisis" territory. This whole mess (subprime auto, renovation, and home loans) comes from the increasingly rent seeking nature of Wall Street. It used to be that fortunes were both made and lost on Wall Street. Now, for large investors ("whales"), it's 3.5% or I take my money to another fund. If I don't have a consis…
> We're going to keep going from crisis to crisis because banks can't say no, and the government(s) deems them too big to fail Consumers can say no, and if they had better financial education and/or financial prospects, maybe they would. The elderly woman in the article initially refused the $50k renovation to her 5 bedroom home, but then agreed because she thought the government was going to subsidize it for her. Th…
> Consumers can say no, and if they had better financial education and/or financial prospects, maybe they would.
I think that is blaming the victim. As the article says, you have repair people describing the terms of the loan to people. If they don't understand what they're selling (and I'm sure they don't) then how can you expect the average person to? Not to mention the pressure selling that is probably being used on targeted groups (I'm looking at the elderly, minorities and groups that are generally less financially sophisticated).
Most people generally aren't in a position to "vote with their wallet". This is because most people are leveraged to their eyeballs with rents. This is a problem with Wall Street that trickles down, not a problem with the consumer that worked it's way up.
> many consumers took on home loans they had no intention of ever making good on
I disagree with this as well. People generally are not scam artist. On the contrary, most people like paying off their debts. Were people probably overly confident in their ability to repay, sure. Saying that people intended to default however, is not true.
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Wall Street (and it's derivatives... I'm looking at you, ad funded Silicon Valley) is full of fraud. The fraud stems from the fact that the only people who can realistically perform checks and balances on this group(s) are the groups themselves. You may be able to blame the consumer when they have full and clear knowledge of how the system works, but that's not the case. Wall Street is full of so many obscurities and 40k ft descriptions that the average consumer really has no chance.
A good example of how the average person thinks financially... how many homeowners do you know that consider their home an "investment". Probably most, if not all.