The 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…
Could just leverage up on some 30 year treasury bills for at least 9% annually.
As 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.
So when are you and your fellow investors gonna stick to being human beings? This game has gone on long enough. We're talking about peoples' lives. We're talking about an entire generation of people who can't afford to buy houses because the generation before them gave in to bad credit. We're talking about entire generations of people who are going into a personal debt based economy of fear and coercion. Is that the…
The 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…
Could just leverage up on some 30 year treasury bills for at least 9% annually. 3-4x leverage will get you that.
So borrow money to lend money? What if the interest rate changes in those 30 years?
OK - 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...
Seems like an example of how it's easy to be "fastest growing" when something is really small. These loans started about five years ago and the cumulative amount loaned is about $3.4 billion. Most of the activity has been in the past year, so of course the rate of growth is over 100%. But the absolute numbers are utterly tiny. For perspective, subprime loans peaked at over $600 billion per year, and total mortgages o…
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.
> Making the tax agency also the debt collector for this type of loan is quite ingenious, but also evil Also, because "PACE financing is structured as a tax assessment instead of a loan, the PACE programs do not have to provide to homeowners the same disclosures about the financing costs that traditional lenders must provide" [1]. > defaulting is basically equivalent to being behind on your taxes Beyond being collect…
Wow, thank you for sharing this!
The ability to sabotage mortgage underwriting is basically a timebomb. Apart from being potentially very bad for the financial health of the homeowner (which is subjective in case by case - Inglewood homeowner is definitely in trouble, but the Woodland Hills example seems to be fine with it), I can't see how this is at all fair to the few banks doing proper due diligence, like the local credit unions that hold many of their mortgages.
The 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…
Could just leverage up on some 30 year treasury bills for at least 9% annually. 3-4x leverage will get you that.
And tie up at least $1k for 30 years... most people can't afford to do that.
The current rate is 2.9 and the long term average is 7. If you can get a 9 return right now, it's illegal.
The 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…
I am incentivized via the tax code to put money into a 401k, which I can take out early only as a down payment to purchase a home, and rent costs more than monthly mortgage payments, especially with the tax breaks for having one. How am I not being pushed to put my money in investment banks or a home?
Okay, it's fastest-growing, but is energy-conscious lending anywhere near the size of subprime mortgages? Even if it is, it doesn't seem like as big a tragedy if the bank seizes your solar array as of they seize your home.
The article states PACE loans go in front of homeowner mortgages, so they can take your home as collateral if you can't pay your PACE loan payments.