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Dear Homeowners, Your Mortgage Payment Is Now Past Due And Your Loan May Be Referred To Foreclosure

A report from Q 13 Fox in Washington. “The month of May in Seattle is traditionally a busy travel period. The summer peaks are when Airbnb hosts were accustomed to raking it in. ‘We were all booked up,’ said Scott Weaver. ‘April and May was full of people. We were ready to go and then along came the lockdown and the guests just all disappeared overnight.'”

“Instead, Weaver chose to shutdown his two Airbnb properties and is turning to long-term tenants for the next year. ‘It hurts but we get by fine,’ said Weaver. ‘For a lot of Airbnb hosts, it is a significant portion of their income. You’re going to have hosts that can’t pay their mortgages, and again you’re going to have businesses that disappear overnight.'”

From Spectrum News on Florida. “We are now two weeks away until foreclosures and evictions resume, putting tens of thousands of residents at risk of losing their homes amid the coronavirus crisis. Yovanna Ortiz reached out to us after she says her 85-year-old mother’s condo was foreclosed on and then sold for $100 on April 21. Spectrum News confirmed that sale on the Orange County Clerk of Court website.”

“Ortiz became emotional when describing the past month: ‘It’s like a nightmare. It’s like a nightmare thinking that my mom is going to be without a roof.’ Having to support her family of four, including her husband with cancer, Ortiz says she simply doesn’t have the room or means to move her mother in.”

The Real Deal on Florida. “With the first days of May ticking by, homeowners and condo associations are keeping a close eye on monthly collections. They’re preparing for nonpayment, as owners and renters struggle to pay their bills. More than 1 million people in Florida have filed for unemployment, according to figures released by the state. The tourism, hospitality and retail sectors have been devastated. And for those newly unemployed, monthly or quarterly condo or homeowners maintenance fees may not make it to the top of their list of priorities.”

“Depending on how long the economic impacts of the pandemic linger, some buildings and housing communities will suffer as a result. South Florida real estate attorney Dennis Eisinger describes it as a tricky balancing act between funding operational costs and having compassion for unit owners who may be struggling financially. ‘We anticipate we’re going to start seeing the impact come June, July and beyond,’ Eisinger said. ‘We may be in for some very difficult times over the next couple of months, potentially [the next] couple of years.'”

“‘April may not be the first month we start feeling the strain. It may happen in May, June, July,’ added Siegfried Rivera attorney Roberto Blanch. ‘It’s almost like you can see the tide, right? The effects are going to be somewhat delayed.'”

From ABC 15 Arizona. “Weeks without a paycheck has put many Arizonans behind on their mortgage. Roselynn Farrell of Prescott Valley says she one of them. The mom of four is furloughed from the dental office where she works and says she doesn’t want to chance going into work any way since one of her sons has an underlying condition that put him in the hospital three times in March.”

“Despite the stress, she and her husband thought their mortgage was taken care of. She says she was told the missed payments would be tacked on the end of her loan. But this past Sunday morning she got a rude awakening. ‘I open my front door and I saw a hand written letter with my name on it, no stamp.’ She said the letter was from her mortgage company. Roselynn provided ABC15 a copy of the letter. It began ‘Dear Homeowners, your mortgage payment is now 60 days or more past due and your loan may be referred to foreclosure.'”

“‘(I’m) thinking this must’ve been something they accidentally sent out,’ she said. It wasn’t. Instead she says a representative from Shellpoint Mortgage Servicing told her, ‘because I have a particular FHA loan they said I wasn’t eligible for the deferment.’ That meant March, April, May and June would due in one lump sum on June 1. ‘The average American just doesn’t have that sitting in their wallet,’ she said.”

“Roselynn isn’t sure what to believe so she is checking with loved ones to see if she can borrow enough money from them to make the lump sum payment. ‘I have a lot of family and it’s just something that’s gonna have to be done. This house cannot be foreclosed on. But the amount of shame that I have, the embarrassment to execute this plan. It’s high,’ she said.”

The Mountain Democrat in California. “In last week’s column I suggested the real estate industry should adopt an emergency policy of ‘no new listings.’ Agents should not be introducing clients to unknown home environments and risking exposure to the coronavirus. As I anticipated, after that column was published, my email was flooded with comments from agents on both sides of that issue.”

“The second most frequent batch of emails were from homeowners with concerns about the direction of the real estate market. Some folks are considering selling and have put plans on hold; others fear a loss of equity and want to list their homes before values collapse. Here’s what I’m thinking: The short-term outlook isn’t pleasant. Confidence and economic prosperity drive home sales. Both, like toilet paper and paper towels, are scarce today. Adding an excessive amount of new inventory from anxious sellers — with reduced demand — will drive down prices.”

“LendingTree chief economist Tendayi Kapfidze thinks that the U.S. might see a complete ‘shutdown in the housing market.’ In a recent interview, Kapfidze noted that the U.S. real estate market could be in for a ‘rude awakening and a drastic impact.'”

“Multifamily real estate is in trouble. Excessive regulations, rent control and the potential loss of the Proposition 13 property tax advantage, have already lowered investment returns and valuations. That’s going to get worse. Locally we should expect 2020 residential sales to be down 30% from last year and prices to fall 15%. Pending sales (new escrows) have declined 60% from this time last year and prices are falling. The median closing price for a county home last month was $515,000. Those were deals signed off in January and February. Pending sales for April are at $450,000.”

From Buffalo News in New York. “Shannon McNichol and Janeen Bolender picked a tough time to start up their new venture. As the rest of Western New York was learning about social distancing in March the two real estate agents went forward with plans to launch a boutique brokerage firm aimed at the area’s high-end housing market. It was a big risk, considering the timing. Still, they were confident enough in their concept, and felt that the need was great – especially now, for formerly high-earning homeowners who are suddenly jobless and desperate to get out of homes they can no longer afford.”

“Luxe Real Estate Advisors, which McNichol and Bolender jointly own, is targeting its services toward buyers and sellers in the region’s most upscale communities, such as Spaulding Lake and Spaulding Green in Clarence. But the impact of the pandemic has also given them a different purpose. ‘People still have to buy and sell homes, and people might be losing their homes. We want to be on the front lines of helping people,’ Bolender said.”

“In particular, she said, the duo see an opportunity in helping homeowners who can no longer afford to live in luxury homes because they’ve lost their jobs or had their finances disrupted due to the pandemic. That includes those who took on significant debt – perhaps on top of what they already owed – but no longer have the high income to cover the payments.”

“Those homeowners need to downsize, either to a smaller house or even to an apartment. Bolender said she has two clients who may have to sell because they are ‘fearful of not being able to support that house anymore.’ She also has an $800,000 listing in East Amherst and ‘several in the pipeline that will go live when this is over.'”

“‘People didn’t have a backup plan,’ she said. ‘It’s a lot of lessons learned, a lot of tears, but a lot of growth, too.'”

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This Post Has 78 Comments

  1. ‘Despite the stress, she and her husband thought their mortgage was taken care of. She says she was told the missed payments would be tacked on the end of her loan. But this past Sunday morning she got a rude awakening. ‘I open my front door and I saw a hand written letter with my name on it, no stamp’

    I said this forbearance thing wasn’t going to go over like we were told. This is an FHA loan too.

    1. If I am reading this right they missed the March payment, which was not affected by covid-19. Sounds like big problems before the shutdown.

      FHA used to routinely have DQ in the 10+ range. I am guessing it is going to be a lot worse in the near future.

  2. ‘Pending sales (new escrows) have declined 60% from this time last year and prices are falling. The median closing price for a county home last month was $515,000. Those were deals signed off in January and February. Pending sales for April are at $450,000’

    Tom?

    ‘Adding an excessive amount of new inventory from anxious sellers — with reduced demand — will drive down prices’

    Open discussion of market manipulation – check!

  3. It just occurred to me, seems like I haven’t heard anything about the debt ceiling for a while… 🤔 And it’s been even longer since the words “balanced budget” were uttered.

    On topic… holy moly, is it just me or is there going to be a figurative h-bomb of foreclosures and evictions when all these forbearances are lifted?

    1. On topic… holy moly, is it just me or is there going to be a figurative h-bomb of foreclosures and evictions when all these forbearances are lifted?

      Which tells me that in the end either they won’t be lifted, or they will and the immediate avalanche of problems triggered will result in them being permanently reinstated, at least for some people. Anything to “flatten the curve” of foreclosures (formerly known as foaming the runway for the banks).

    2. The FED says there’s no limit to what they can print. Every other time in monetary history this has led to disaster so it must be “different this time”

      1. We’re the world’s reserve currency this time. That’s “what’s different”. When that changes, we’re toast. Of course, the whole world will be pretty crispy at that point, too.

        1. “Reserve currency” is a relative term. Sure, COVID is trashing the US, but who else is in better shape? Australia? Canada? China?

  4. “…condo was foreclosed on and then sold for $100 on April 21.”

    Wow, that’s some serious price discovery there!

    1. One example and anecdotal evidence do not mean anything. Stop attacking me. I’m rooting for all you loser renters.

  5. ‘Yovanna Ortiz reached out to us after she says her 85-year-old mother’s condo was foreclosed on and then sold for $100 on April 21’

    The $100 number likely means it went back to the lender.

  6. ‘Multifamily real estate is in trouble. Excessive regulations, rent control and the potential loss of the Proposition 13 property tax advantage, have already lowered investment returns and valuations. That’s going to get worse’

    How are those 5% cap rates looking now?

    1. “…potential loss of the Proposition 13 property tax advantage…”

      Gavin Newsom might be a good looking guy, but he’ll have JFK for a drinking buddy if he starts pimping the end of Prop 13.

      1. It needs to go away. It is one of the most unfair tax laws in history, pushing the tax burden to the young who have the least. I can’t believe it’s not illegal.

  7. Buffalo, $800,000, really? I can’t imagine who would pay that up there.

    People just don’t get how much poorer later-born generations are. Late boomers like myself and Gen Xers were poorer on average too, but most didn’t live that way. They went into debt and failed to save for retirement instead. Our generation is going to be the forced sellers.

    Millennials are even worse off, and know they are even worse off, and have changed they way they live. They already knew they couldn’t afford a house that costs that much. This virus disaster is supposed to change their minds?

    If you are poorer, what can you cut back on? Well, what were Americans spending a crapload on compared with 50 years ago? Housing. Eating out. Health care.

    1. Cars.

      ‘It’s been a mixed bag for Bob Sight Ford in Lee’s Summit since the start of the pandemic. “Sales, new and used cars, was off 10%, better than expected. Sales and body shop was off 35% in revenue,” general manager Zachary Sight said.’

      ’41 Action News spoke with other car dealers in the Kansas City metro that are reporting anywhere from a 40-50% decline in revenue over the last two months. The auto industry as a whole is feeling the pinch. “We’ve reached out to a lot of dealers. We’re a close network of comrades,” Bob Sight Ford dealership manager Brian Sight said. “We’re seeing a wide range of feelings and views of which way this goes.”

      ‘Even with concerns about decreasing sales revenue and inventory for the future, dealerships say now may be the perfect time to buy a car if you’re looking to do so. They’re calling it a buyer’s market. “The new car incentives are better than they’ve ever been in history of new car incentives. Used car inventory is also great. Great buys on both sides,” Zachary Sight said. “With interest rates as low as they’ve been, plus 0% for 84 months, there’s no better time to buy a vehicle.”

      https://www.kshb.com/news/coronavirus/auto-dealers-feeling-pandemic-pinch-but-say-its-a-buyers-market

      1. BTW, I’m going to have to do an international post this evening. There’s too much crater to wait til tomorrow.

        1. All this crater, but all the major US stock indices closed up today…

      2. We’ve reached out to a lot of dealers. We’re a close network of comrades,” Bob Sight Ford dealership manager Brian Sight said

        You mean I was right when I suspected they’re in cahoots to rip off their customers, especially those buying new vehicles?

      3. New cars are so overgadgeted that I don’t want one. Saw Scotty Kilmer on youtube trouble shooting a slow battery draim on an Acura. Turns out it’s the infotainment system that’s draining the battery. Replacing it costs $$$$. His solution: if you aren’t gonna drive it for a few days, pull out the fuse for the infotainment system, then plug it back in when you’re ready to drive, or just leave it out.

        Yeah, that’s what I want in an out of warranty luxury car, to have to pull a fuse so the battery doesn’t get drained.

        1. Clown cars for clown people.

          I bought a new cellphone charger for my wheels yesterday for $8. That’s a serious investment and upgrade.

        2. There’s a relay that cuts power to everything when the ignition switch is deactivated. The relay has contact points that can get sticky leaving some devices drawing power. It’s a known issue that a dealer’s electronics guy can test, and an OEM relay can cost $80, whereas the AutoZone will sell you a cheapie for $20.

    2. Regarding the governor being nonplussed by the high rates of diagnosed cases in people who have been staying at home…

      as a general rule, the most obvious and least palatable explanation is the closest to the truth which in this case is:

      The tests are grossly inaccurate. You could test a piece of fruit and have it be positive.

      https://www.bbc.com/news/live/world-africa-47639452?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=5eb00680c68e4706631e47e0&Tanzanian%20coronavirus%20laboratory%20boss%20suspended&2020-05-04T12:36:52.525Z&ns_fee=0&pinned_post_locator=urn:asset:416b68b2-e070-433c-a92f-88ab7ab0bc1d&pinned_post_asset_id=5eb00680c68e4706631e47e0&pinned_post_type=share

      1. The tests are grossly inaccurate. You could test a piece of fruit and have it be positive.

        That’s my conclusion too. People were getting it multiple times, pets were testing positive. Lots of scary things were happening.
        All turns out to be the result of crappy tests.

        1. Better a false positive than a false negative. And yes, tests are going to be crappy. Science is hard.

          I ventured out to Home Depot yesterday for some herbs and veggie plants. Since everyone is screaming about planting a garden, I may as well have some pots out back. I don’t expect much from it.

          1. Science is hard

            I’m sorry, but that is BS. Being truthful is what appears to be hard. I posted here more than once at the beginning of this conversation that the testing method was supposed to give 10-20% false results. The scientists, who know this, said nothing.

          3. human folly

            The world locked down by a random number generator. Priceless, yet costly.

          5. Better a false positive than a false negative.

            At an individual level yes. For policymaking during a pandemic, not so sure.

  8. ‘In particular, she said, the duo see an opportunity in helping homeowners who can no longer afford to live in luxury homes because they’ve lost their jobs or had their finances disrupted due to the pandemic. That includes those who took on significant debt – perhaps on top of what they already owed – but no longer have the high income to cover the payments’

    Cash-out refi strikes again.

    ‘Those homeowners need to downsize, either to a smaller house or even to an apartment’

    Apartment? Sacré bleu!

    ‘Bolender said she has two clients who may have to sell because they are ‘fearful of not being able to support that house anymore.’ She also has an $800,000 listing in East Amherst and ‘several in the pipeline that will go live when this is over’

    Got it, lots more FB’s to come.

  9. “Roselynn provided ABC15 a copy of the letter. It began ‘Dear Homeowners, your mortgage payment is now 60 days or more past due and your loan may be referred to foreclosure.’”

    “‘(I’m) thinking this must’ve been something they accidentally sent out,’ she said. It wasn’t. Instead she says a representative from Shellpoint Mortgage Servicing told her, ‘because I have a particular FHA loan they said I wasn’t eligible for the deferment.’ That meant March, April, May and June would due in one lump sum on June 1. ‘The average American just doesn’t have that sitting in their wallet,’ she said.”

    This lady has no business having a mortgage, and this has nothing to do with the virus. She didn’t make her March payment. That is well before any lockdown, which means she was already in arrears. She is weaving a “poor me” tale of woe based on false pretenses.

    1. That handwritten notice seems like an odd form of communication, doesn’t it? Seems to me that fear of bad things happening leaves the door open to scammers.

    2. she was already in arrears

      Promising to repay with money you couldn’t possibly have until decades of everything goes right is the essence of dishonesty.

      “I’ll gladly pay you Tuesday for a hamburger today”

      J. Wellington Wimpy 1931

    3. She probably has a car to sell, or maybe a wedding ring. Or she could put an ad up and start doing odd jobs. But it sounds like she’d rather beg from relatives.

  10. Lately I’ve been pondering our future: High inflation? Or deflation?

    With all the money being created out of thin air, it seems like a no-brainer that high inflation is on its way. But nothing in the global eCONomy seems to function normally anymore. So perhaps the opposite will happen.

    Thoughts?

    1. We’re going through a massive deflationary event right now. But I still think eventually they will sacrifice the dollar to save TPTB, and the decision to commit to that path was made in 2008. So my answer is first one, then the other…as predicted by an old white guy.

      1. Real Vision Finance, Peak Prosperity, and other high macro guys agree with you. Deflation because of the demand shock and also to rope in the sucker-rally suckers. And then as demand recovers, suddenly everyone will realize just how many dollars were created. It’s a good time to be diversified.

        1. It’s a good time to owe nothing, need little, have much of what you need secured and to have a great sense of humor.

        2. So I should wait for prices to fall a long ways. Then buy a small, affordable home with a fixed interest rate mortgage and a payment (considerably?) less than my current rent. Then I’d be locked in at that payment while inflation takes hold. Sounds great if it actually happens, and I could time everything right.

          1. Why buy a house when prices are falling? Rent one for half the monthly cost and buy it later after prices crater for 70% less.

            San Diego, CA Housing Prices Crater 20% YOY As One Broker Shared, “Rent A House For Half The Monthly Cost. Buy It Later Because Prices Are Plunging.”

            https://www.zillow.com/san-diego-ca-92109/home-values/

            As a leading economist advises, “Mortgage debt is the most toxic and damaging debt of all. Avoid it at all costs.”

      2. The dollar can’t be sacrificed until the China threat is out of the way. That may take some doing.

  11. “This allows Ally to show the loans as current, rather than delinquent.”

    On what planet should this be allowed? Earth, I guess, but you’ve got to be kidding me. These are the financial and accounting contortions which allow this whole charade to continue on. Ally gets to pretend that they aren’t even holding bad loans.

    1. Sorry. This was supposed to nest below a post which I attached a link to. It will appear above under Ben’s comment about autos.

    2. “Ally gets to pretend that they aren’t even holding bad loans.”

      Their investors might be unwilling to play along.

  13. Dumb question of the day: Aren’t negative bond yields good for stock prices, as worsening returns on bonds make stocks relatively more attractive by comparison?

    1. The Financial Times
      Coronavirus business update 30 days complimentary
      US interest rates
      Treasury market sends bearish signals as stocks rise
      Two- and five-year yields hit record lows as futures investors anticipate negative rates
      Jay Powell, Federal Reserve chair, has said negative interest rates would be inappropriate in the US
      © REUTERS
      Colby Smith and Eric Platt in New York 38 minutes ago

      US bond markets sent bearish signals in stark contrast with rising equity prices as yields on two- and five-year Treasuries fell to their lowest levels ever and futures investors priced in the possibility of negative rates.

      The latest leg lower in government debt yields followed news on Thursday that 3.2m Americans filed for first-time unemployment benefits last week, bringing the total to more than 33m in the coronavirus crisis.

      While the US benchmark S&P 500 index rose 1.2 per cent, the yield on the two-year Treasury note slid to 0.13 per cent, falling below the record set during the European-debt crisis in 2011. The yield on the five-year Treasury fell 0.08 percentage points to 0.3 per cent. Yields fall as prices rise.

      Contracts for fed funds futures — which anticipate the overnight interest rate set by the Federal Reserve — were quoted at prices that implied rates of between minus 0.015 per cent and minus 0.03 per cent for late 2020 and early 2021.

      The move came despite comments in March from Jay Powell, the Fed chair, that a negative interest rate policy was not appropriate in the US.

      “Today is a head scratcher,” said Bret Barker, the head of government debt at asset manager TCW. “The outlook is so uncertain right here it’s hard to make a call on how it looks on the other end [of the crisis].”
      …

      1. “Today is a head scratcher,” said Bret Barker, the head of government debt at asset manager TCW. “The outlook is so uncertain right here it’s hard to make a call on how it looks on the other end [of the crisis].”

        Everything is quite uncertain these days. In fact, I’ve been scratching my head for awhile, since well before I’d ever heard of a virus going around in Wuhan.

    2. “make stocks relatively more attractive”

      There is nothing attractive about buying stock right now.

      1. I keep hearing about all the money central bankers are electronically printing, which appears to drive up the prices of everything else. Wouldn’t this be an argument for HODLing everything else?

        1. Only in the long term. Short term we’re headed for deflation; inflation comes later. Now is the time to sell. Of course the ideal would be to see at the top (or now, during this false top), wait for deflation, buy at the bottom, and then wait for inflation, and then sell out again. But good luck with that.

          1. My baby sister, who occasionally likes to share her investing exploits with me, just sold the coronavirus dip that she bought in March. She pocketed a tidy capital gain after a couple of months’ HODLing time. Now she’s waiting for the next wave of COVID-19 panic to buy the dip again.

            She did pick up some Boeing stock last week on the news that Uncle Warren had thrown the airlines under the bus. “Buy when everyone is selling; sell when everyone is buying.” And play the game, or get played.

          2. Why Shares of Boeing and Its Suppliers Are Up Today
            Some in the industry believe we’ve reached the bottom in air travel demand.
            Lou Whiteman
            (TMFeldoubleu)
            May 7, 2020 at 3:41PM
            What happened

            Shares of Boeing (NYSE:BA) and some of the company’s beaten-down suppliers got a boost Thursday on an overall positive day for market sentiment. Fresh earnings reports have given investors reason to believe airline customers will be able to weather the COVID-19 pandemic and have reassured skeptics about the health of the supply chain.

            Boeing was up 6.2% as of Thursday afternoon…

          3. Some in the industry believe we’ve reached the bottom in air travel demand

            I’d agree with that. Given that short of demand actually going to zero, it can hardly get any lower. But I also think it won’t be rising from this low very quickly at all. Raise you hand if you want to be caged for hours in close quarters with random people.

  14. “…Confidence and economic prosperity drive home sales. Both, like toilet paper and paper towels, are scarce today. …”

    And subject to getting flushed down the toilet…

    1. Indeed!

      Though I think hand sanitizer would be a better analogy. TP and paper towels are readily available in my corner of the world. I haven’t seen hand sanitizer in a store since ~ early March.

  15. ‘Independent lenders who provide asset-backed credit to small and medium-sized businesses face widespread failure in the coming months as funding markets seize up and borrowers struggle to pay their loans.’

    ‘Small asset-backed finance companies, which originate loans and package them together for sale to banks and insurance companies, are being squeezed by a business model that has little capacity to absorb a tidal wave of loan payment deferrals or defaults.’

    ‘Should these lenders begin to fail, small and medium-sized enterprises, from trucking companies to dentistry practices, could lose a crucial source of funding. “I’ve already had a couple of my members call me and say, ‘We’re done,’” said Michael Rothe, chief executive officer of the Canadian Finance and Leasing Association (CFLA), an industry group that represents companies involved in asset-backed finance.

    “They’re dealing with your main street lending, these small guys,” Mr. Rothe said. “They’re dealing with truckers who are financing their vehicles. They don’t have huge margins … and we weren’t coming into this crisis strong, there were a lot of headwinds already.”

    ‘Small and medium-sized businesses frequently finance their equipment through loans secured against the equipment itself. In 2019, about a quarter of these loans in Canada were made by independent finance companies, many of which specialize in specific industries, such as transportation or oil and gas, or smaller-scale loans that banks aren’t interested in. Banks, credit unions and equipment manufacturers provided the other asset-backed financing.’

    ‘All commercial lenders are getting requests to defer loan payments. A survey conducted by the CFLA in early April found that a fifth of their members had deferral requests for more than 50 per cent of their asset-backed loan portfolios. But unlike banks or credit unions, independent lenders have little in the way of capital buffers to accommodate deferrals and absorb losses.’

    “Originators don’t have any cash flow for themselves unless they’re originating, because they’ve pledged it all to the funders,” said Moe Danis, an industry veteran who ran asset-backed securitization programs for Sun Life Financial and Canadian Western Bank, among others. “So if they can’t cover their overhead through new originations, they’re stuck,” he said.’

    ‘To make matters worse, most securitization deals involve “prompt payment” or “perfect payment” clauses, meaning the originators have to pay the funders a guaranteed amount, even if they can’t collect from borrowers.’

    “The structure is built for normal delinquency rates, and sometimes elevated credit delinquency because of a downturn. It’s not designed for a full shutdown of the economy,” Mr. Danis said.’

    ‘Lenders now face the additional risk of equipment prices plummeting. If borrowers default on their loan payments, lenders can repossess the equipment and sell it at auction. The concern is that the used equipment market will have a glut if distancing measures drag on and a wave of companies go bankrupt.’

    “There’s a downward pressure on used trucks and trailers and all of that,” said Bav Malhi, director of sales at Lantern Capital, a Mississauga-based equipment finance broker. “What they thought they were lending against was one-to-one security to loan. But now the resale value is reduced, and therefore they’re at higher risk.”

    ‘The survival of the independent finance industry is crucial for small- and medium-sized business, said Brent Keenan, president and managing partner of Canadian Equipment Finance, based in Breslau, Ont. Independents are willing to fund deals that are too small or risky for banks. That’s become more important in recent years, Mr. Keenan said, as banks pulled back from riskier commercial lending after the 2008 financial crisis.’

    “All of that risk is now dumped onto our industries and our small independent companies, so that the next time a financial crisis hits, it will be guys like us that are the Bear Stearns,” he said, referring to the U.S. investment bank that collapsed in the previous downturn.’

    “And the saying is ‘too big to fail.’ Well, they won’t care about us. They’ll just say, ‘Hey that’s a small operation,’ if it goes it down. But we’ve taken the risk out of the big banks.”

    https://www.theglobeandmail.com/business/article-independent-asset-backed-financing-industry-faces-risk-of-widespread/

  16. ‘Britain’s economy will shrink by 14 per cent this year and two million people will lose their jobs, with a further six million on the furlough scheme, the Bank of England has set out in the most disastrous projections it has ever published.’

    ‘The UK recession will be the deepest since the Great Frost of 1709 and more than twice as bad as the 6 per cent crash in the financial crisis but the economy is projected to bounce back quickly with 15 per cent growth in 2021. In a slower rebound than in the Office for Budget Responsibility’s recent forecast for the government, the lost ground will not be recovered entirely until the second half of next year.’

    ‘The Bank stressed that its figures are a plausible illustrative scenario rather than a formal forecast because so much is unknown, including when and how lockdown will be lifted. It assumes that social restrictions, and the accompanying economic support schemes, begin to be withdrawn in early June and are fully removed by the end of September.’

    https://www.thetimes.co.uk/edition/news/coronavirus-pandemic-could-cause-deepest-recession-on-record-bank-warns-k7nsrqs8g

    1. “the Great Frost of 1709”

      That’s digging deep, really deep. I enjoyed reading The Time Traveler’s Guide To Restoration Britain A Handbook For Visitors To The Seventeenth Century: 1660-1700 by Ian Mortimer.

    2. How often in the past has “the worst recession in history” immediately preceded an immediate recovery within the next year?

      3. Not since we’ve been blessed with Central Banking, and their array of tools.

      4. PB,

        I always thought it was weird that the USA went into a big boom cycle in the 1920s just following the 1919 Spanish Flu. It can be explained by the credit expansion that took place in that decade.

        But, it goes deeper than that I think .People had been through hell leading up to that decade, so it was happy days are here again.

        People were buying cars on credit and than they started buying Stocks on margin. This sort of investments in stocks was more of a rich persons game until the 1920s decade when it became popular with common folk.

        People actually believed that they were going to get rich off Stocks and they would have unstoppable
        prosperity. It was clearly a mania ,in part due to faulty lending on margin.

        The big Real Estate Mania was taking place in Florida in about 1926 also, and as you know it crashed.
        I just think if you give the common wage earner the opportunity to get rich by investment they are going to go for it That’s why proper lending becomes necessary to not set someone up for a big fall.

    3. The UK recession will be the deepest since the Great Frost of 1709

      Wow, skipped right over the 1930’s all the way back to 1709.

    1. The owners of EV’s like to pretend their car grew on a tree, never caused any pollution, and never will.

      1. “The owners of EV’s”

        Not really. Just that on a scale of 0-10 with 10 being most pollution-y they’ll choose a 4 over an 8.

        Or they just think EV technology is cool, as is the case with some righty engineers I know. I like Prius technology, but can’t stand most of their drivers and think they’re ugly as sin (the car not the drivers).

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