News article

http://www.courant.com/business/hc-mortgagemod0405.artapr05,0,2668796.story?page=1&coll=hc-headlines-business

Interesting article, these lenders apparently are foreclosing on almost every other loan.

Looks like the same article that ran here today:

http://www.gjsentinel.com/search/content/shared-gen/ap/Finance_General/Mortgage_Modifications.html

Keith

Credit has been easy, which means that lenders have dipped into a client pool which have previously been deemed uncreditworthy. Now they are reaping the predictable results with higher foreclosures. Strike up a conversation with someone who works with subprime borrowers routinely, someone in the buy here pay here car business or in low end furniture sales. These guys will tell you that many of these desperados are not worth doing business with at any interest rate. There is a culture out there which is comfortable with the bobbing and weaving and general avoidance of paying for anything.

My concern is that the media types seem to be painting subprime and Alt-A with the same brush.

Buy here pay here is a great way to sell cars to the credit challanged, a friend of mine does quite well doing that. I’ll tell you exactly how it works. He buys cars that are cheap but ultimately reliable enough to last the buyer a few years. He gets them cheap at auction and fixes what needs to be fixed. He then sells the car for whatever market value is with a down payment equal to what he has into the car and breaks up the payments on the balance over a short term. When he gets the downpayment he’s even, even if they never make a payment. Of course if they don’t he still repos it but if its trashed he’s still even. It’s been a good model for him and works well for someone that’s looking for cheap wheels and doesn’t have much cash.

At one time I had an ownership interest in a BHPH lot, so I am intimately familiar with how it works.

The point of my post is that many people are not credit worthy, and have no business being able to sign for a mortgage.