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Category Archives: Subprime lending

UBS Explains Why The Next Credit Unwind Will Be Unlike Anything We’ve Seen Before

Several weeks ago, Janet Yellen boldly declared “I don’t believe we will see another crisis in our lifetime.”  For the rest of us who live in reality there is little doubt that the latest Fed-fueled credit bubble will eventually burst in epic fashion and once again lay waste to the personal balance sheets of millions […]

Did the Sub-Prime 2.0 Bubble Just Burst?

As you know, we’ve been tracking the sub-prime auto-loan industry closely. Our view is that this industry represents the worst of the worst excesses of our current credit bubble, much as the subprime mortgage industry represented the worst of the worst in excess for the Housing Bubble. For this reason, we refer to sub-prime auto-loans […]

UBS Explains Who’s Most At Risk In The Next Consumer Deleveraging Cycle

In their 2Q 2017 survey, UBS found that, for the first time since at least 2014, the trajectory of financial health of low-income households has started to diverge from that of more affluent households.  Per the graph below from UBS’ credit strategy team led by Matthew Mish, while a firming job market has helped households […]

McMansions Are Back And They’re More Hideous Than Ever

The McMansion rose to prominence in the early-to-mid-2000s and to this day is the epitome of the excesses created by the biggest mortgage bubble in the history of mankind.  In suburbs all across America, these 3,000 – 5,000 square foot, cookie-cutter monstrosities, with their foam pillars and lots that were just barely larger than the […]

Good Luck Getting Out Of That Subprime Auto Loan When Used Car Prices Crash

We’ve written frequently in recent months about the coming subprime auto crisis which will very likely be prompted by a wave of off-lease vehicles that will flood the market with used inventory over the coming years.  In fact, Morgan Stanley recently predicted that the surge in used inventory could result in as much as a […]

Warning: the Subprime 2.0 Bubble is About to Burst

As we’ve been outlining for weeks now, Subprime 2.0 is the subprime auto-loan industry. And just as the collapse in the subprime mortgage lending was what signaled the beginning of the housing crisis… trouble in the subprime auto-loan industry will be what signals that the next Debt Crisis is here. On that note… subprime auto-loan […]

The Other Shoe Drops: Prime Auto Loan Losses Surge As Recoveries Tumble

When we looked at subprime auto delinquencies most recently, we found some troubling trends: first, in February, we showed that 61+ day delinquencies in General Motors’ subprime securitization book would support a rather bleak thesis for future auto sales, and specifically the demand side of the equation, with January 2017 delinquency rates soaring to the […]

Surging Fraud In Auto Loans Looking Eerily Reminiscent Of Mortgage Bubble

So what do you do when you’ve pulled forward every single car sale you possibly can courtesy of low interest rates, lengthening terms and generally loosening credit standards targeting incremental subprime buyers?  Well, you take a play out of the 2008 mortgage crisis playbook and just start submitting fraudulent loan applications, of course. And, at […]

Subprime Pet Rental Company Files For Bankruptcy

Two months ago, Bloomberg’s Patrick Clark penned an article that promptly went viral as it touched on a rather unorthodox topic: a pet leasing, or rather rental, company aimed at subprime borrowers who could not afford to buy their pet outright. The company in question is Wags Lending, a/k/a Bristlecone, was founded by Dusty Wunderlich […]

Morgan Stanley: Used Car Prices May Crash 50%

For months we’ve been talking about the massive lending bubble propping up the U.S. auto market.  Now, noting many of the same concerns that we’ve highlighted repeatedly, Morgan Stanley’s auto team, led by Adam Jonas, has just issued a report detailing why they think used car prices could crash by up to 50% over the […]