Us Mortgage Lender Collapses

Postby Tama on Tue 3/Apr/07 8:18am

Company lends loads of mortgages to poor people - housing market goes off the boil - clients can't make payments - business is fuxx0red - company files for bankruptcy protection.

http://www.thestar.com/Business/article/198596 wrote:NEW YORK – New Century Financial Corp. filed for bankruptcy protection Monday amid a surge in homeowner defaults, the biggest mortgage lender to collapse in the slumping U.S. housing market.

The Irvine, California-based company fired 3,200 employees, or 54 per cent of its workforce. It plans to sell most of its assets within 45 days through the Chapter 11 process.

New Century was the largest independent U.S. provider of "subprime" mortgages, or home loans to people with poor credit histories. More than 30 rivals have sold or closed similar operations in the past year.

New Century's demise came less than two months after the company first disclosed problems with delinquent and defaulted loans. It stopped making loans last month, after having made nearly $60 billion (figures U.S.) in 2006.

"We are only at the very beginning of the problems facing subprime," said Sanford C. Bernstein & Co. analyst Brad Hintz. "This liquidity crisis is continuing."


Things that make you go "hmmmmm" - could the house of cards that was the U.S. property market be tumbling down, and could it happen here?
Tama
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Postby dented on Tue 3/Apr/07 8:24am

Do we have a mortgage lender that targets "subprime" type customers?
I think this is just another case of the 'underclass' being singled out for unfair treatment yet again.
dented
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Postby Tama on Tue 3/Apr/07 8:29am

dented wrote: Do we have a mortgage lender that targets "subprime" type customers?
Not as obviously as MoneyMart does for car loans - but 100% mortgages have never looked particularly sound to me.
Tama
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Postby phunk on Tue 3/Apr/07 8:30am

We have already had a couple of lenders collapse in the car/consumer lending market.

We dont have the same issues here with the subprime mortgages like in the states, however, a few people will get caught out, but not to the same extent and wont effect the lenders as much.
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Postby Robbie on Tue 3/Apr/07 8:32am

Of course the housing market could collapse, it is only a market after all.
The only thing propping it up is buyers ( market) belief.

Scarey huh.
Robbie
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Postby dented on Tue 3/Apr/07 8:36am

We have a bigger problem in NZ with car finance lenders, and car sales yards with names like
"We Want You Motor Group" (Bad Credit? No Credit? We Want You!)
"Easy Financed Cars"
etc

When terms such as "bruised credit" become part of our language, it is a sad indication that there is Finance Companies that basically prey upon people who cant afford things, to make them feel like its not so bad, and that they should just go right ahead and take the apple that is dangling right in front of them.

I have seen loads of occasions, where customer X has a vehicle that they just finished paying off, its warrant of fitness is due, it needs 4 new tyres, a brake light, muffler, whatever. They dont have $1200 sitting around to keep the car mobile, but they can afford another $100 per week for 4 years so get suckered into trading the vehicle in for a tiny fraction of what it cost them.

Sorry, just realised this is a bit of a hijack.
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Postby phunk on Tue 3/Apr/07 8:40am

dented wrote: We have a bigger problem in NZ with car finance lenders, and car sales yards with names like
"We Want You Motor Group" (Bad Credit? No Credit? We Want You!)
"Easy Financed Cars"
etc

<snip>
Sorry, just realised this is a bit of a hijack.


I hear what you are saying an agree in part, but by the same token why shouldnt poor people have easy access to credit? They may not always do sensible things with it though...
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Postby Tama on Tue 3/Apr/07 8:40am

dented wrote:Sorry, just realised this is a bit of a hijack.

Nah - it's all good - I should probably move this across to "Talkback" :p

I fully agree with dented and phunk that our car/consumer lending are far dodgier than the housing market. I'm guessing the majority of our mortgages are through the big banks which have enough fingers in enough pies to make sure the bottom end of their clients defaulting wouldn't kill them.

Those "prey on stupid people" finance companies suck - but I'm still amazed that so many people fall for their business considering how blatant their advertising is.
Tama
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Postby istepinyards on Tue 3/Apr/07 8:43am

does that mean i don't have to pay my loan and i get the house for free :thumbsup:
istepinyards
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Postby phunk on Tue 3/Apr/07 8:46am

istepinyards wrote: does that mean i don't have to pay my loan and i get the house for free :thumbsup:


I suspect another lender will buy your mortgage and you would pay them..
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Postby Sims on Tue 3/Apr/07 8:46am

phunk wrote:but by the same token why shouldnt poor people have easy access to credit?
Because they should save up and and buy a $500 toyota starlet, rather default on a subaru legacy. (with financed wheels, exhaust, high insurance, and high running costs)
Sims
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Postby phunk on Tue 3/Apr/07 8:47am

Sims wrote:
phunk wrote:but by the same token why shouldnt poor people have easy access to credit?
Because they should save up and and buy a $500 toyota starlet, rather default on a subaru legacy. (with financed wheels, exhaust, high insurance, and high running costs)


Credit snob.
phunk
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Postby istepinyards on Tue 3/Apr/07 8:48am

phunk wrote:
istepinyards wrote: does that mean i don't have to pay my loan and i get the house for free :thumbsup:


I suspect another lender will buy your mortgage and you would pay them..

yeh i was just mucking around
no mortgage for me
istepinyards
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Postby Sims on Tue 3/Apr/07 8:53am

phunk wrote:
Sims wrote:
phunk wrote:but by the same token why shouldnt poor people have easy access to credit?
Because they should save up and and buy a $500 toyota starlet, rather default on a subaru legacy. (with financed wheels, exhaust, high insurance, and high running costs)


Credit snob.
I think we should have a ban on credit advertising. When every second shop in Otahuhu, is a loan shark, surely that tells you something about their market
Sims
Member for: 15 years 3 months

Postby ratrod on Tue 3/Apr/07 9:16am

We could change to a Muslim state and ban lending
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