Replies to This Discussion

Permalink Reply by Dave Getty on October 8, 2010 at 2:57pm

As a debtor you worry about keeping a roof over your head, once that is safe they will work on keeping their car. so yes Auto Finance should see an uptick in money.

Permalink Reply by Jason Buchanan on October 8, 2010 at 2:58pm

Interesting question. My guess is that most people are aware that if you are going to pay any bills whatsoever, you always pay your home and auto loans. By process of elimination, this should help people pay their auto loans, since most severely delinquent and foreclosed status individuals will likely not make payments on their home loans.

Permalink Reply by Brad Sutterfield on October 8, 2010 at 3:18pm

I think it will help auto collections. As Jason says, if your home is in the foreclosure or short sale process you are not making payments which frees up money to pay off your other bills.

Permalink Reply by Marcie Belles on October 8, 2010 at 5:39pm

Here's another thought, though: Maybe delinquent auto borrowers will start to think that if the foreclosure process can be halted, so can the repossession process. Then we'd be faced with worsening delinquency rates.

Permalink Reply by Michael Duke on October 8, 2010 at 10:45pm

I'm not really sure what we're talking about. Does "foreclosure freeze" mean free rent and no mortgage payments to millions? If so, then yes, that helps auto delinquency because the overall monthly debt of those millions is lowered considerably. On the other hand, if "foreclosure freeze" means that millions will have more time to make mortgage payments, or (heaven forbid) attempt to get current, then that will marginally hurt auto delinquency.

The way I see it is that around 2002 when housing started to become unaffordable, people started spending their money on big screens, PC's, porn, gambling, and yes, cars. Lots and lots of cars. Fancy, expensive cars. Delinquency was good. But then, we found a way to give them houses too. Big, inflated, stupid loans on crummy houses. People couldn't pay for both. And then delinquency was bad.

Then, people stopped paying for the houses and the depression began. But people saved more money and had real down payments for cars again, because they weren't dumping it into houses. And now, delinquency is good again. So if people are buried in unaffordable housing, that's bad for auto. If they dump the houses or can't afford them in the first place, that's good for auto, because they can live in the auto, but they can't drive the house.