Dealerships Package Billions Of Dollars Worth Of Subprime Auto Loans Into Securities

[meow2u3]

Auto loan financiers are beginning to adopt a practice from the housing industry that many say played a significant role in the meltdown of the housing market.

Buy Here Pay Here dealerships -- which issue loans to borrowers that often can't qualify for a traditional car loan and in many cases require the borrower to return to their lot to pay them off -- are packaging the loans and selling them to investors, the Los Angeles Times reports. The practice of packaging shoddy auto loans into securities and selling them to investors -- $15 billion worth in the last two years -- is reminiscent of a craze popular among mortgage lenders in the lead up to the housing and financial crisis.

The practice may become more prevalent as potential car buyers with poor credit find it easier to get loans. New car loans for buyers with credit below prime rating rose more than 20 percent in the second quarter of 2011 compared with the same period last year, according to the Automotive Credit Trends Report cited by Fox Business. The proliferation of easy access loans pushed the average credit score for new car loans down 10 points, the survey found.

http://www.huffingtonpost.com/2011/11/01/auto-subprime-securities_n_1070328.html?ref=business

[DJ13]

1. My wife works for a company Altamont (from the LA Times article) bought a few years back

They suck the life out of every business they buy.

They're truly a vampire on our economy.

They not only have refused raises for over three straight years (on employees making not much over minimum) while continuously raising prices on customers, they also modified the vacation plan for the employees (reducing vacation days in the process) without any notification, verbal or written, what so ever.

They are a pump and dump operation, they just happened to buy my wife's employer just before the economy tanked, and they are squeezing it (and the employees, many over 20 years) for every penny.

[CoffeeCat]

2. Geez...when will the next 2008-like collapse happen?

Seriously. The housing market is STILL giving out subprime mortgages. Not as many, but they're
still selling subprime. Derivatives still exist. So do credit-default swaps. It's as if the
financial markets don't even care if it all implodes.

Do the big movers and shakers have some other financial system waiting in the wings? Cuz they're
all acting as if they're going to suck every last penny out until it's a damaged bag of nothing--and
move onto some other system.

Seriously. They're destroying this country.

Doesn't surprise me that auto finance companies are doing the same thing. Why not? This is the age
of greed and corruption, right?

Sick.

[DCKit]

5. The failure of MF proves that they're still doing exactly what they were doing prior to 2008.

A huge number of those fuckers need to go to prison before I'll be complacent with the markets.

[Prometheus Bound]

13. I believe the 2008-like collapse is happening now. We're in it.

[CoffeeCat]

14. Yes, I agree...

...the house of cards is falling.

And the clincher is--the banks know that it's all a house of cards. They've made their billions--running their banks
like criminals. Now they're going to crash it all.

Look at the PR news bits on Bank of America. The hints are steadily dripped out, indicating that BofA is experiencing
challenges. I'm betting that it fails--and they blame it on OWS, in an effort to position OWS as a nefarious group out
to destroy the banks and this country.

All along, BofA has been a rotten mess. How could they have recovered? Their books were infested with bad mortgages
and mortgage-backed securities that were worthless. Yet, the supposedly paid back the TARP funds within several weeks.
Bullshit.

Those in the know understand that it will crash. Like locusts--they've swooped down and hollowed out everything.

Can't wait to see what happens with Greece. I hope they don't take the bailout--and decide to do it on their own--and
tell the EU to suck it. That's what the corporatocracy fears the most. That, like Iceland, countries will opt out of this
madness and make it on their own. Countries don't need to participate in this revolting, disgusting system that is
enriching a bunch of psychopaths and destroying our financial infrastructure. These hideous banks need to fail.

What an f'n mess.

[nc4bo]

3. Oh no, not this shit again...mortgage loans, education loans now car loans..

It seems are entire economy is based on schemes and scams. We're nothing but prey to them.

[RB TexLa]

4. People with not so good credit being able to buy new cars! How horrible. They need to

know and accept their place!!!

How dare people find a way to provide financing to them! How dare them!

[Laluchacontinua]

7. What does that have to do with the securitization of said loans, which is the topic of this thread?

[RB TexLa]

8. By securitizating them it allows them to be written as the risk is then pooled when they

are sold to investors in bulk.

[Laluchacontinua]

9. LOL. Because it worked so well last time.

[sendero]

12. Securitization..

.. of these loans benefits no one but the financial tricksters. Large percentages of these loans will default, they always do.

This is a really bad idea and it will end badly for the idiots dumb enough to buy this kind of crap paper.

[Marie Marie]

6. Oh for Fuck's sake.

Are we capable of ever learning our lesson in this country?

[Kablooie]

10. It's like a ponzi scheme. The people who create the package get rich. The investors lose.

And until someone makes this kind of scam illegal it will be repeated over and over again.

Right now it's a perfectly legal scam that makes the scammers wealthy.

[uponit7771]

11. This is BETTER than 2008, at least they're not packaging the subprime with the prime and calling it

...all good.

The reason the banksters did this is cause US home buyers in the history of buying has never defaulted on their loans like we are now save the great depression.

Everyone of those bastards who wrapped primes with subprimes should be in jail and sued till broke.

[MindPilot]

15. there was a book a couple years ago that totally predicted this.

Car Wreck - How You Got Rear-Ended, Run Over, & Crushed by the US Auto Industry


"A car dealer shares his insider secrets on how you can dodge the financial pitfalls, avoid the emotional pain, and actually enjoy your car-buying experience!
As the owner of nine franchised dealerships, Mark Ragsdale has sold vehicles to thousands of customers. In Car Wreck, he shares personal knowledge of the business schemes that continue to rear-end, run over, and crush your wallet. He calls out the shysters of finance, politics, and greed, who have wrecked the industry and abused your tax dollars. And he divulges secrets automotive professionals don t want you to know--all in a humorous and personalized tone.

Car Wreck explains how you can avoid being trapped by depreciation and long-term finance commitments. It teaches you how to discern advertising hooks, decipher finance contracts, translate car salesman-speak, and much more. Consider it your secret decoder ring to fully understanding a very complex, secretive, and predatory industry.

If you want to know what really goes on behind the guarded walls of today's automobile business, and transform yourself into the auto industry expert among your friends, Car Wreck is a must-read!"


There is a passage in the book, (quoting from memory) "if you think the mortgage meltdown was bad, just wait until the auto financing industry blows up"

http://www.amazon.com/Car-Wreck-Rear-Ended-Over-Crushed/dp/1934938653#_