23 May 2017

Sub-Prime Auto Finance Santander: Predatory Lending Here In Here In Mesa

The City of Mesa went into hyper-drive last year HYPING all the economic development benefits and [low-paying] jobs with headlines like this back in November 2015
Nearly 1,000 jobs coming to Mesa's Fiesta District
Source: AZ Family 
Listen and watch Mesa City Manager Chris Brady make the overblown introductions for the "Grand Opening" at Centrica 

A report published today May 23, 2017 12:06 PM by Phoenix Capital Research 
Subprime 2.0: Lending a $1 Trillion to People
With No Proof of Job or Income
SubPrime 2.0 is proving far worse than even we suspected.
Source: Zero Hedge
If you’ve not been following this story, our view is that the auto-loan industry - and it's VERY BIG HERE IN MESA - is
Subprime 2.0: the riskiest, worst area in a massive debt bubble, much as subprime mortgage lending was the riskiest worst part of the housing bubble.

In both instances, these lending industries were rife with fraud, terrible due diligence, and the like. So when the debt bomb blew up, they were the first to implode.
However, it would appear now that the Subprime 2.0 was even worse than Subprime 1.0 in terms of verifying income.
Santander Consumer USA Holdings Inc., one of the biggest subprime auto finance companies, verified income on just 8 percent of borrowers whose loans it recently bundled into $1 billion of bonds, according to Moody’s Investors Service.
The low level of due diligence on applicants compares with 64 percent for loans in a recent securitization sold by General Motors Financial Co.’s AmeriCredit unit.
The lack of checks may be one factor in explaining higher loan losses experienced by Santander Consumer in bond deals that it has sold in recent years…
 Source: Bloomberg
Santander only verified income on just 8% of autoloans.
Put another way, on more than 9 out of every 10 autoloans, Santander didn't even check if the person had a job.
Pretty horrific.
However, the story also notes that even the more diligent lender AmeriCredit verified income on only 64% of loans.
So… two of the largest autoloan lenders basically were signing off on loans without proving the person even had a JOB either roughly half the time or roughly ALL the time.
And this is on a $1.0 TRILLION debt bubble.
Meanwhile, stocks are flirting with all time highs
Sounds a bit like late 2007 doesn't it?
We offer a FREE investment report outlining when the bubble will burst as well as what investments will pay out massive returns to investors when this happens.
It's called The Biggest Bubble of All Time (and three investment strategies to profit from it).

We made 1,000 copies to the general public.
As I write this there are just 19 are left.
To pick up your FREE copy...
Best Regards
Graham Summers
Chief Market Strategist
Phoenix Capital Research

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