KeNo's Housing and Economic Portal: Thursday May 25 2017 Housing and Economic stories

Wednesday, May 24, 2017

Thursday May 25 2017 Housing and Economic stories

TOP STORIES:

Subprime Liar Loans Dog Auto-Loan-Backed Securities - (www.wolfstreet.com) Santander, top subprime auto lender, verified income on only 8% of loans: Moody’s. “Liar loans” were a factor in the housing bust during the Financial Crisis that brought down the banks. Bank regulators now require lenders to verify income and employment of mortgage applicants and take other steps to make sure buyers can afford the mortgage payment. But in auto loans, no such requirement exists. So here we go again… Moody’s Investors Service analyzed $1 billion of Asset Backed Securities (ABS) backed by subprime auto loans that Santander Consumer USA Holdings, one of the largest subprime auto lenders, had issued. “Subprime” means the borrower has a credit score of 620 or below. Turns out, Santander had verified the income of the borrowers on only 8% of the subprime loans.

A Quarter Of American Adults Can't Pay All Their Monthly Bills; 44% Have Less Than $400 In Cash - (www.zerohedge.com) Not surprisingly, the highest percentage, or 92%, of those who responded they were "living comfortably" was among the group with more than $100,000 in family income. For Americans making less than $40,000 the breakdown was almost evenly split with 49% saying they are "just getting by." According to the same study, 28% of respondents said that their income in the last 12 months was less than $25,000, and 40% report that their income was less than the key $40,000 cutoff, which suggests that roughly 4 in 10 Americans are "finding it difficult to get by." ... Nearly eight years into an economic recovery, nearly half of Americans didn't have enough cash available to cover a $400 emergency. Specifically, the survey found that, in line with what the Fed had disclosed in previous years, 44% of respondents said they wouldn't be able to cover an unexpected $400 expense like a car repair or medical bill, or would have to borrow money or sell something to meet it.

Car loans, low rates, second mortgages: all the ingredients for a new credit crunch - (www.theguardian.com) A credit crunch is brewing and when it happens, the UK is going to get hurt. That is the message emerging from senior executives in the financial services industry, who do not think Britain has changed that much since the 2008 credit disaster and the devastating crash that followed. Three developments lie at the heart of this disturbing analysis: spectacular growth in the sale of second mortgages, car loans and credit cards. ... Officials at the Bank have a growing list of concerns. Not only is there the second mortgage problem and the number of car loans: figures show consumer spending on unsecured credit has also rocketed in the last year. In March alone, the amount UK consumers owed on loans and cards grew by £1.9bn, the highest figure in 11 years.

Commodities Bust Hits Farm Lenders, Delinquencies Surge 225% - (www.wolfstreet.com) When it comes to agricultural debt, the numbers aren’t huge enough to take down the global financial system. But this shows how much pain the commodities rout is producing in the farm belt just when the farmland asset bubble that took three decades to create is deflating, and what specialized lenders and the agricultural enterprises they serve – some of them quite large – are currently struggling with in terms of delinquencies. This is what delinquencies on loans for agricultural production – not including loans for farmland, which we’ll get to in a moment – look like: From Q4 2014 to Q1 2017, delinquencies have soared by 225% to $1.4 billion, according to the Board of Governors of the Federal Reserve, which just released its report on delinquencies and charge-offs at all banks. This is the highest amount since Q1 2011, as delinquencies were falling after the Financial Crisis. That amount was first breached in Q4 2009.

American Small Business Owner Rages At Politicians: "Quit Your Job And Try The Real World" - (www.zerohedge.com) This morning I read a stinging open letter written by a small business owner in the Land of the Free named Don Chernoff. Chernoff imports and sells luggage, and he pulled no punches in voicing his disgust for the phony support and failed policies that constantly make his life more difficult. I’ve edited his letter for length below; the full version is available here. You all love to talk about how much you support small business; the reality is the opposite. The economy is changing rapidly and is vastly different than just a few years ago. Many of the factory jobs in this country have gone and will not return. Computer technology and automation will soon eliminate thousands more jobs (think truck drivers, taxi drivers, office workers, etc…). Because there will be fewer middle-class jobs, many people who never considered working for themselves will be forced to become sole proprietors or open a small business. It is therefore critically important that you make it easier for these people to do so.

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