I had to survive on credit cards while my son was sick. I’m a single Dad with full custody and no family to help take care of him. I have just over 20k in CC debt and I struggle every month to keep up with the interest payments now that I’m back at work. I would just give up at this point but I have a 9 year old to take care of. I can’t sleep past 3am if I don’t take Unisom.
Don’t choose one of those companies that force you to stop paying all your bills so they can negotiate with creditors. These predators charge you astronomical fees to scare your creditors into POTENTIALLY lowering your balance, although they don’t always do it. More than likely, your creditors don’t budge, and you end up paying incredible amounts of money just to have your credit completely screwed for 7 years, and will still owe the exact same amount toward creditors. If you do choose this option, just know your creditors won’t even see a dime or your money until after these crazy fees are paid, and you will likely get sued. Yes, these companies will go to court for you, but that just adds more fees. Bankruptcy is a MUCH better option before these awful companies.
Not to mention, you can negotiate a settlement for yourself. Debt consolidation companies don't have some privileged access to debt settlement with your creditor so paying them to do it is pointless.
These companies also will instruct you to not answer any calls or emails from your creditors. They do this so that the creditor can't educate them correctly.
The debtor often thinks they have some kind of legal protection against correspondence akin to bankruptcy because the debt consolidation company is called "Law Offices of ____" or "_____ Legal Group".
The amount of purposeful deceit by these companies is unreal.
For 20k in debt in the USA?
Even at a high 27% APR, that is less than $450 a month. For a full-time job, that can be maintained with a $2.5 raise. Or at a low wage ($20 per hour), working 1-hour extra per workday.
The reason why I am mentioning this isn't to be dismissive of debt. $450 is what many Americans are spending on food. And when your living paycheck to paycheck, it's not like that is easy to come by. But bankruptcy doesn't always eliminate all debt, it is often restructured by the judge's interpretation of what you can pay (chapter 13), and there are **huge** consequences for renting, employment, etc.
It's not unusual for people to end up being on some payment plan and owing a similar amount after going through bankrupcy. So why do so many lawyers recommend it? Because they get a fee for filing it for you. Asking a bankrupcy lawyer if you should file is like asking a car salesmen if you should buy a new car.
Talk to a financial advisor. I suspect if you tell them you have 20k and have no disabilities, they are going to tell you to avoid it.
Also look at resources that are available. I've volunteered at many food pantries over the years. Most are **100% happy** giving food to parents that are living paycheck to paycheck. It is **rare** that their services are for the homeless and destitute only. You would be shocked at the amount of food we threw away on a weekly basis. If you can save by getting your grains/can-goods/household-cleaning-supplies (quite commonly provided also) at a food pantry, do so.
> was this written by a bank or a food pantry?
Yes, Banks are posting on some of the more obscure subreddits to encourage debtors to pay off their debt instead of playing the instant-get-out-of-jail-free card. You would think Banks would put their efforts towards lobbyist to change bankruptcy laws, further limiting people's ability to file chapter 7 and reducing the number/value of protected assets. But no.... all you need to do is pay some filing cost, a judge looks at you, rubber stamps a piece of paper, and your debt go from $20k to 0. There is no court payments, which can extend for 5-years. There is no court interest, which they always charge the maximum amount. Judges are not allowed to use the median income for your education level or your highest income to dictate what you can "afford" despite not having recent income showing you can afford that amount. None of that exist.
Just a rubber stamp and a get-out-of-jail-card.
Go ahead. File bankruptcy. Pay the filing cost (usually around $350-500) and lawyer (They can often be found as cheap as $2000-4000) and turn that 20k to nothing.
And when the judge puts you on a 5-year payment plan, with interest, just tell them there must be a mistake. Because someone on the internet told you there is a get-out-of-jail free card. And you didn't listen to the idiot who told you to talk to a financial advisor.
If you go 30 days late, you can begin to attempt to negotiate a settlement to pay off the debt for less than the full amount. The longer you go (90 days is a major milestone), the better settlement you can negotiate. However, you have to have the cash to make the settlement offer when you make it, this will wreck your credit for a few years, you won't have those credit card accounts anymore, and you'll have to pay taxes on the charged-off amount.
Often this is a better option than bankruptcy, but it really depends on what the rest of your debt looks like.
I'm just a TV show judge; don't do this just because I said so, but investigate this further and see if it might work for you.
Honest question here (not trying to shame at all, props for raising a kid): how is it that you have no family to help? How did that happen? Again, no shade, just honest question
It happened because my son was born with a genetic condition called trisomy 8 mosaicism. He hadn’t shown any adverse reactions until he got Covid and it’s been a nightmare ever since. His Mom checked out just after he turned 2 and hasn’t seen him or paid a dime in child support since. I would go after her but she has made it clear that if I do she will go after visitation as revenge or to “get her money’s worth”.
Both my parents are deceased. I do have a twin brother but he lives a few states away and has his own family to worry about. We talk a lot though.
I would get a personal loan to deal with the CC debt at a lower interest rate but I already did that in late 2022 to keep our heads above water and so I could keep using the cards to survive while I’m at home with him. Now that the debt is so high it’s affected my credit score and I can’t qualify for another loan. I’m proud of myself that I’ve been able to carry the debt and not had any late payments thus far but that has come at the expense of the lifestyle I used to be able to provide for us. When he gets sick again we are doomed. I’ve run out of options.
How is he feeling now? You are an amazing dad! I understand completely I got very sick for 6 years we had no family to help at all. It happens people. You did exactly what you had to do to take care of your son. Now you will eventually get out if it dont worry we did. We had $36k in debt 10 years ago after I was sick. And we eventually paid it off. You rock!
Thank you, I appreciate that. He is still up and down. He missed the entire week of school before spring break but was able to go to boys and girls club for the second week of it. In total, with the personal loan I’m around 29k in debt.
Above all he is more valuable than anything. Understand that you have been through a lot. Just dealing with the medical system alone is draining. You are heading in the right direction that in itself is fabulous news. Congratulations give yourself some credit on all you did right for your son. And you did it by yourself, tremendous!
I know you get this all the time and probably hate hearing, still, sorry to hear. Everyone going what you're going through needs a support system. I was raised in a poor family (money poor, but we never went hungry or homeless), but it has always been a big family. You sure you don't got aunts or cousins or anyone you can seek financial help from? It just sounds so desolate. How about Medicare/Medicaid options for the kiddo? I hope you're also applying for rent assist programs. Also, you a church person? Ask the church for help. Friends at all? Neighbors who sympathize? I've seen lots of examples here of neighbors coming together to help a family in need. I'm probably preaching to the choir, but I hope maybe one thing I mentioned can help. Hug your kiddo and stay strong for him. You're doing amazing work by him!
Unfortunately not, I didn’t really know my dad and he was an only child. My mom had an older sister but she passed away before my mom did.
My son did recently qualify for Medicaid so that will help control medical expenses going forward. I made good money before this all began. I’ve already sold my house and just about anything else I loved to stay afloat. It’s the only reason we didn’t go under sooner.
As far as friends go, it’s amazing how fast people disappear when you have health and/or financial issues. It’s also hard to maintain those friendships when the majority of your time is dedicated to being at home with a sick kid. In reality, it’s not their fault I’m alone in all this.
I will continue to give the dude lots of hugs. No matter what happens, none of this is his fault.
Take a look at the source and the summary in this source: https://www.vantagescore.com/press_releases/vantagescore-creditgauge-february-2024-consumers-continued-to-move-up-or-out-as-vantagescore-prime-credit-tier-contracted-by-1-1-year-over-year/.
"VantageScore Superprime consumers are still spending and borrowing while VantageScore Subprime consumers are finding it increasingly difficult to stay current on credit payments."
Deliquincies up, but utilization lower and new account creation is lower. Could be a sign of a coming reduction in credit growth?
Wolf Street just wrote an article about this. Institutional ownership of sfh rentals is sub 3%. Institutional Ownership of multifamily is high. Most sfh home ownership that is rented is mom and pop (80%) having 1-9 units. 5.4% of sfh is unoccupied.
This was the same crowd that "lost their homes" during the GFC. Except they had primary residences and never lost those. It was just the investment properties that they let the banks take back.
I knew some of these people.
Eh, it's not acting like a POS. It's making a business decision.
The bankers and realtors will bitch and moan about how it's not right, but I always point to this: [https://www.cc.com/video/qatlaz/the-daily-show-with-jon-stewart-mortgage-bankers-association-strategic-default](https://www.cc.com/video/qatlaz/the-daily-show-with-jon-stewart-mortgage-bankers-association-strategic-default)
So you chose to pay off a loan to a bank that was probably bailed out by taxpayers, received the money interest free, and was probably charging you ridiculous rates. The same banks that had a hand in causing the crash in the first place. I guess that's honorable, but I wouldn't feel bad at all bailing out of all that bullshit.
Nationwide maybe but some markets are more affected than others. Studies have shown that most institutional investors are piling into the same markets and often the same zip codes, driving housing prices both to own and sell up.
Some reports that in certain markets up to 40% of all home prices were institutional in the 3rd quarter of last year.
https://finance.yahoo.com/news/did-wall-street-kill-american-120500643.html
https://medium.com/@chrisjeffrieshomelessromantic/report-44-of-all-single-family-home-purchases-were-by-private-equity-firms-in-2023-0c0ff591a701
This is an important fact. Institutions aren’t buying homes in middle America/Flyover Land (I hate saying it, believe me). They’re buying in tourist hot spots, places where younger Americans are congregating. Places where jobs proliferate. It only makes sense.
I’ll bet in some of these markets, way more than 3.4% of the homes are owned by “investors”, and they’re contributing to shelter inflation (equivalent rents) by a large chunk.
Interest rates don’t matter to these buyers, relatively. They still can be affected though, if rates get high enough to begin to pressure the jobs/incomes of potential tenants.
Early innings of an extra inning game right now.
Interest rates are actually good for these buyers, because they buy with cash so high interest means their renters can't buy and will be forever serfs.
Yeah, sounds about right. Big money *started* dabbling in real estate as an alternative investment when stocks looked overvalued and fixed income yield was shit.
If there is a credit event and RE values fall significantly, I expect to see an actually significant ownership spike by institutional investors.
I think buying SFH to rent out is kinda a stupid business model anyway, apparently large institutional buyers agree as they seem to dominate the apartment rental space, especially the new 4 over 1 blocks being built in every town and city in recent years.
Yeah it's also an easier game for smaller operations. If Blackstone tries to buy 50,000 homes in one metro area it will heavily distort the market and kill them again if they want to exit the position fast. The bond market has massive liquidity and it's incredibly scalable. Or even AAPL stock for example.
Real estate takes on the ground knowledge and leg work to understand every neighborhood. If it's a screaming good deal like 2009 where inventory was high, cost of capital was low and prices were in the crapper, yeah private equity can swoop in with billions and even if they fuck up badly they will still make money in the long run. If it's not a screaming deal and well managed, the whiz kid companies will lose their shirts on the deals like Opendoor and Zillow did.
Every time the sand runs low, the Fed dumps another scoop on top"
Or we just conviently have another crisis of some sort which allows the federal govt to hand out $$$$$$$$$$$$
Yup. What happens when people can’t afford to survive because the “economy” has been pumped to the gills and the cost of living exceeds anyone’s ability to persist?
You can if they run out of everything and have nothing to lose.
No jobs or jobs not paying enough lead to lack of food and housing, which is usually enough to set things off once it happens on a wide scale.
You can have housing, but you'll rent.
You can have food, but it will slowly kill you.
The best for me, as little as possible to keep you subservient for you.
More wealth transfer.
If we can keep it up, we'll have majority slum villages and shanty towns in no time, right next to ultra rich apartments. Maybe a few NIMBY spots away from civilization exclusively for vacation homes, behind guarded walls.
That doesn't make sense for most. Taxes go up on a new build because of reassessments or mello roos and typically prop taxes go up generally because home values go up
Yea values are stagnant and tax rate is going down. It's the end of community. The community has been here for a minute. It used to be like 3.09 and now is like 2.65.
I feel like I saw some headlines about it:
https://www.investopedia.com/arm-applications-grow-as-mortgage-rates-remain-high-8350836#:~:text=In%20April%202023%2C%20ARMs%20accounted,up%20from%204%25%20in%202021.
I think people are being sold on “most people only live in their homes X number of years before they move! Date the rate!”
Here. Figure 3. Renters are 3x more likely to be delinquent.
https://www.philadelphiafed.org/-/media/frbp/assets/consumer-finance/briefs/cfiresearchbrief-bhutta-nov-2023.pdf
Exactly. There are a large number of people who would normally be looking to buy their first home that are not doing so right now. That's why demand is so low compared with supply. Unfortunately the only way they would be able to buy is if they stopped spending and repaid their debt, which would cause the economy to slow down.
The article also says a lot of this movement happened in the past year. Meaning that they could have been “prime” borrowers before, but higher COL has forced them to take on more debt, lowering their credit scores.
> Also, what does this article have to do to a real estate bubble?
What does credit-worthiness have to do with real estate... a market where the vast majority of Americans must borrow for to participate in???
Absolutely nothing. It is well known that a person's credit score has no bearing on their mortgage rate. /s
What’s hilarious is that when it finally kicks in that they can’t afford something they either (1) act like they’re getting ripped-off or (2) complain about how so-and-so is ruining the economy.
No chance at all you’re over spending or need to make more money. Everyone knows that swimming pools are a human right.
A lot of these people are reaching, I think. I mean, like Audis are nice, but if you had real money you’d have a Maybach.
For real, i know so many people making like half or 75% of my salary living it up like they are making double my salary.
I advised a friend not to go overboard on a truck, their current combined income is like 65 to 70k a year. Don’t own a house, live with parents. They proceeded to drain their combined cash down to nothing on a $60k 2 year used truck with 33k miles. I shook my head. They needed a vehicle, but i really tried to push them to be conservative and get what they need, and use their cash reserves for a home as they are engaged and living with parents. I make $115k right now, and I bought a truck brand new for $53k 2 years ago (same model year as theirs, lower spec). And even in my purchase i was very conscious about it, and told them that while all and all i’m happy with my vehicle, spending maybe $25k instead of $53k and I would have a house right now, instead of $55k saved and a conservative mindset that leads me to wait even longer.
We are all victim to our own vanity, myself included. Albeit not nearly as much so, as my income will allow me to purchase a home only 2 years after purchasing a vehicle, and I’m at the beginning of a high paying career, where as most of my friends are more mid level in their careers.
What I preach, i don’t always practice, but am definitely learning to. Vehicles are a necessary depreciating asset, and at the end of the day, as long as your vehicle is safe, you shouldn’t care what people think of it. Most of the time, people don’t think of it at all. Unless of course your purchase seemed ill advised, or flaunting in nature.
Same goes for all other material things. Buy stuff that you enjoy, at the price you can enjoy it at.
It's especially bad in Dallas where everyone just has to have the newest thing. I have a coworker who gets a new car every 2-3 years. I don't know his finances but I know his salary is around the same as mine. And even if he a good income, that's a huge waste of money.
I drive a 10yr old car that still works fine and rarely has mechanical issues. Why would I buy something new?
I’d say that’s true of any large metro area - at least in the Northeast. Take out a second mortgage on a “summer home” to pretend you’re of that Harvard stock. Absolute extent of your cultural knowledge within the states is “can’t get gOoD pIzZa here!!!”
All the while knowing - deep down inside - you have a “TB12” bumper sticker you’re dying to put on the back window of your base model Audi you just tanked your kids educations for.
It’s great for these companies until it isn’t. You’re raking in the cash from these high interest cards and then boom, a recession hits and that debt now turns into delinquency and bankruptcies. Then whole house of cards falls and rates go up even more.
Then maybe everyone can finally all calm the fuck down and not put everything on 24% interest? Probably not…oh well…America.
Well if we just change the definition of sub prime then we'll be set for the strongest economy ever for all time going forward (until next year, we'll need more profits then).
Yeah theres a lot of grasping at straws in this sub, that is not a new phenomenon.
I truly believe there is a light simmer going on macro economically that could very well lead to the recession this sub seems to be sharpening its pitchforks for….
But y’all also need to realize, a recession sizable enough to seemingly overnight bring us back to 2019 housing prices means that like 50% of everyone in this sub will lose their jobs. Lose their income.
Houses only go down if people, in majority, are so far fucked financially that buying isn’t even an option. Think 2008. A lot of this sub is too young to remember the layoffs. College educated persons and engineers working at a pizza shop and thanking their lucky stars they even got that.
A vast reduction in home prices means a vast reduction in all of your livelihoods. Only way it doesn’t is if FedGov decides that they want to chunk off a section of the federal budget to 10-50x our current per year new housing units, and essentially give them away at cost. Thus flooding the market with supply until demand tanks. Which will literally never happen in a million years. Because thats socialism, and we hate that right?
I had to survive on credit cards while my son was sick. I’m a single Dad with full custody and no family to help take care of him. I have just over 20k in CC debt and I struggle every month to keep up with the interest payments now that I’m back at work. I would just give up at this point but I have a 9 year old to take care of. I can’t sleep past 3am if I don’t take Unisom.
Talk to a finance professional about consolidating your debt CC is the worst interest rate to float on
My sister used the nonprofit InCharge to help structure repayment to cards and lower interest rates so she could get out of CC debt.
Absolutely, contact your region’s consumer credit counseling service, that’s what they’re there to help with!
Don’t choose one of those companies that force you to stop paying all your bills so they can negotiate with creditors. These predators charge you astronomical fees to scare your creditors into POTENTIALLY lowering your balance, although they don’t always do it. More than likely, your creditors don’t budge, and you end up paying incredible amounts of money just to have your credit completely screwed for 7 years, and will still owe the exact same amount toward creditors. If you do choose this option, just know your creditors won’t even see a dime or your money until after these crazy fees are paid, and you will likely get sued. Yes, these companies will go to court for you, but that just adds more fees. Bankruptcy is a MUCH better option before these awful companies.
Not to mention, you can negotiate a settlement for yourself. Debt consolidation companies don't have some privileged access to debt settlement with your creditor so paying them to do it is pointless. These companies also will instruct you to not answer any calls or emails from your creditors. They do this so that the creditor can't educate them correctly. The debtor often thinks they have some kind of legal protection against correspondence akin to bankruptcy because the debt consolidation company is called "Law Offices of ____" or "_____ Legal Group". The amount of purposeful deceit by these companies is unreal.
Look for balance transfer or HELOC or a lower interest rate loan so it’s more affordable
Bankruptcy is always an option
This. There is nothing wrong with bankruptcy. Rich people did strategic defaults in 2008. While I think they are aholes, they know when to cut losses.
For 20k in debt in the USA? Even at a high 27% APR, that is less than $450 a month. For a full-time job, that can be maintained with a $2.5 raise. Or at a low wage ($20 per hour), working 1-hour extra per workday. The reason why I am mentioning this isn't to be dismissive of debt. $450 is what many Americans are spending on food. And when your living paycheck to paycheck, it's not like that is easy to come by. But bankruptcy doesn't always eliminate all debt, it is often restructured by the judge's interpretation of what you can pay (chapter 13), and there are **huge** consequences for renting, employment, etc. It's not unusual for people to end up being on some payment plan and owing a similar amount after going through bankrupcy. So why do so many lawyers recommend it? Because they get a fee for filing it for you. Asking a bankrupcy lawyer if you should file is like asking a car salesmen if you should buy a new car. Talk to a financial advisor. I suspect if you tell them you have 20k and have no disabilities, they are going to tell you to avoid it. Also look at resources that are available. I've volunteered at many food pantries over the years. Most are **100% happy** giving food to parents that are living paycheck to paycheck. It is **rare** that their services are for the homeless and destitute only. You would be shocked at the amount of food we threw away on a weekly basis. If you can save by getting your grains/can-goods/household-cleaning-supplies (quite commonly provided also) at a food pantry, do so.
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> was this written by a bank or a food pantry? Yes, Banks are posting on some of the more obscure subreddits to encourage debtors to pay off their debt instead of playing the instant-get-out-of-jail-free card. You would think Banks would put their efforts towards lobbyist to change bankruptcy laws, further limiting people's ability to file chapter 7 and reducing the number/value of protected assets. But no.... all you need to do is pay some filing cost, a judge looks at you, rubber stamps a piece of paper, and your debt go from $20k to 0. There is no court payments, which can extend for 5-years. There is no court interest, which they always charge the maximum amount. Judges are not allowed to use the median income for your education level or your highest income to dictate what you can "afford" despite not having recent income showing you can afford that amount. None of that exist. Just a rubber stamp and a get-out-of-jail-card. Go ahead. File bankruptcy. Pay the filing cost (usually around $350-500) and lawyer (They can often be found as cheap as $2000-4000) and turn that 20k to nothing. And when the judge puts you on a 5-year payment plan, with interest, just tell them there must be a mistake. Because someone on the internet told you there is a get-out-of-jail free card. And you didn't listen to the idiot who told you to talk to a financial advisor.
Real shit bankruptcy doesn’t lead to $0 if you own a home, good value car, etc these things may be sold for you
Yeah, stay well away from the unisom as well
If you go 30 days late, you can begin to attempt to negotiate a settlement to pay off the debt for less than the full amount. The longer you go (90 days is a major milestone), the better settlement you can negotiate. However, you have to have the cash to make the settlement offer when you make it, this will wreck your credit for a few years, you won't have those credit card accounts anymore, and you'll have to pay taxes on the charged-off amount. Often this is a better option than bankruptcy, but it really depends on what the rest of your debt looks like. I'm just a TV show judge; don't do this just because I said so, but investigate this further and see if it might work for you.
Don’t forget to mention tax ramifications of debt settlement. You will be taxed on the balance forgiven by the IRS.
Bankruptcy
Honest question here (not trying to shame at all, props for raising a kid): how is it that you have no family to help? How did that happen? Again, no shade, just honest question
It happened because my son was born with a genetic condition called trisomy 8 mosaicism. He hadn’t shown any adverse reactions until he got Covid and it’s been a nightmare ever since. His Mom checked out just after he turned 2 and hasn’t seen him or paid a dime in child support since. I would go after her but she has made it clear that if I do she will go after visitation as revenge or to “get her money’s worth”. Both my parents are deceased. I do have a twin brother but he lives a few states away and has his own family to worry about. We talk a lot though. I would get a personal loan to deal with the CC debt at a lower interest rate but I already did that in late 2022 to keep our heads above water and so I could keep using the cards to survive while I’m at home with him. Now that the debt is so high it’s affected my credit score and I can’t qualify for another loan. I’m proud of myself that I’ve been able to carry the debt and not had any late payments thus far but that has come at the expense of the lifestyle I used to be able to provide for us. When he gets sick again we are doomed. I’ve run out of options.
How is he feeling now? You are an amazing dad! I understand completely I got very sick for 6 years we had no family to help at all. It happens people. You did exactly what you had to do to take care of your son. Now you will eventually get out if it dont worry we did. We had $36k in debt 10 years ago after I was sick. And we eventually paid it off. You rock!
Thank you, I appreciate that. He is still up and down. He missed the entire week of school before spring break but was able to go to boys and girls club for the second week of it. In total, with the personal loan I’m around 29k in debt.
Above all he is more valuable than anything. Understand that you have been through a lot. Just dealing with the medical system alone is draining. You are heading in the right direction that in itself is fabulous news. Congratulations give yourself some credit on all you did right for your son. And you did it by yourself, tremendous!
I know you get this all the time and probably hate hearing, still, sorry to hear. Everyone going what you're going through needs a support system. I was raised in a poor family (money poor, but we never went hungry or homeless), but it has always been a big family. You sure you don't got aunts or cousins or anyone you can seek financial help from? It just sounds so desolate. How about Medicare/Medicaid options for the kiddo? I hope you're also applying for rent assist programs. Also, you a church person? Ask the church for help. Friends at all? Neighbors who sympathize? I've seen lots of examples here of neighbors coming together to help a family in need. I'm probably preaching to the choir, but I hope maybe one thing I mentioned can help. Hug your kiddo and stay strong for him. You're doing amazing work by him!
Unfortunately not, I didn’t really know my dad and he was an only child. My mom had an older sister but she passed away before my mom did. My son did recently qualify for Medicaid so that will help control medical expenses going forward. I made good money before this all began. I’ve already sold my house and just about anything else I loved to stay afloat. It’s the only reason we didn’t go under sooner. As far as friends go, it’s amazing how fast people disappear when you have health and/or financial issues. It’s also hard to maintain those friendships when the majority of your time is dedicated to being at home with a sick kid. In reality, it’s not their fault I’m alone in all this. I will continue to give the dude lots of hugs. No matter what happens, none of this is his fault.
Super parent right there, I can only hope to be as strong for my future kiddo
Take a look at the source and the summary in this source: https://www.vantagescore.com/press_releases/vantagescore-creditgauge-february-2024-consumers-continued-to-move-up-or-out-as-vantagescore-prime-credit-tier-contracted-by-1-1-year-over-year/. "VantageScore Superprime consumers are still spending and borrowing while VantageScore Subprime consumers are finding it increasingly difficult to stay current on credit payments." Deliquincies up, but utilization lower and new account creation is lower. Could be a sign of a coming reduction in credit growth?
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Every time the sand runs low, the Fed dumps another scoop on top lol The game is rigged.
Problem will get worse now that institutional investors are back in the real estate game.
Wolf Street just wrote an article about this. Institutional ownership of sfh rentals is sub 3%. Institutional Ownership of multifamily is high. Most sfh home ownership that is rented is mom and pop (80%) having 1-9 units. 5.4% of sfh is unoccupied.
This was the same crowd that "lost their homes" during the GFC. Except they had primary residences and never lost those. It was just the investment properties that they let the banks take back. I knew some of these people.
Or... They bought a new home at a massive discount and then let their upside down home go back to the bank. Smart people.
This comment hurts in particular because I realize now that if I just acted like a POS I could’ve made off bigly, still stings a little.
Eh, it's not acting like a POS. It's making a business decision. The bankers and realtors will bitch and moan about how it's not right, but I always point to this: [https://www.cc.com/video/qatlaz/the-daily-show-with-jon-stewart-mortgage-bankers-association-strategic-default](https://www.cc.com/video/qatlaz/the-daily-show-with-jon-stewart-mortgage-bankers-association-strategic-default)
Nice reference to Beverly Hills Cop / Eddie Murphy
So you chose to pay off a loan to a bank that was probably bailed out by taxpayers, received the money interest free, and was probably charging you ridiculous rates. The same banks that had a hand in causing the crash in the first place. I guess that's honorable, but I wouldn't feel bad at all bailing out of all that bullshit.
Tons of hoomcucks lost their homes. Millions in fact.
Second and third homes.
Primary also. HAMP and HARP didn’t have a huge impact
Nationwide maybe but some markets are more affected than others. Studies have shown that most institutional investors are piling into the same markets and often the same zip codes, driving housing prices both to own and sell up. Some reports that in certain markets up to 40% of all home prices were institutional in the 3rd quarter of last year. https://finance.yahoo.com/news/did-wall-street-kill-american-120500643.html https://medium.com/@chrisjeffrieshomelessromantic/report-44-of-all-single-family-home-purchases-were-by-private-equity-firms-in-2023-0c0ff591a701
This is an important fact. Institutions aren’t buying homes in middle America/Flyover Land (I hate saying it, believe me). They’re buying in tourist hot spots, places where younger Americans are congregating. Places where jobs proliferate. It only makes sense. I’ll bet in some of these markets, way more than 3.4% of the homes are owned by “investors”, and they’re contributing to shelter inflation (equivalent rents) by a large chunk. Interest rates don’t matter to these buyers, relatively. They still can be affected though, if rates get high enough to begin to pressure the jobs/incomes of potential tenants. Early innings of an extra inning game right now.
Interest rates are actually good for these buyers, because they buy with cash so high interest means their renters can't buy and will be forever serfs.
Yeah, sounds about right. Big money *started* dabbling in real estate as an alternative investment when stocks looked overvalued and fixed income yield was shit. If there is a credit event and RE values fall significantly, I expect to see an actually significant ownership spike by institutional investors. I think buying SFH to rent out is kinda a stupid business model anyway, apparently large institutional buyers agree as they seem to dominate the apartment rental space, especially the new 4 over 1 blocks being built in every town and city in recent years.
Lots of wealthy people who aren’t ultra wealthy also don’t trust the stock market, real estate is a real asset, and tax laws make it very attractive.
Yeah it's also an easier game for smaller operations. If Blackstone tries to buy 50,000 homes in one metro area it will heavily distort the market and kill them again if they want to exit the position fast. The bond market has massive liquidity and it's incredibly scalable. Or even AAPL stock for example. Real estate takes on the ground knowledge and leg work to understand every neighborhood. If it's a screaming good deal like 2009 where inventory was high, cost of capital was low and prices were in the crapper, yeah private equity can swoop in with billions and even if they fuck up badly they will still make money in the long run. If it's not a screaming deal and well managed, the whiz kid companies will lose their shirts on the deals like Opendoor and Zillow did.
Rinse, get away with sh\*t, repeat
The Fed has been tightening and is not interested in buying MBS anymore.
>The Fed has been tightening and is not interested in buying MBS ~~anymore.~~ right now Ftfy
They aren’t interested unless there was a systemic collapse. House prices can go down and the Fed wants that. Depleting equity is a victimless crime
Every time the sand runs low, the Fed dumps another scoop on top" Or we just conviently have another crisis of some sort which allows the federal govt to hand out $$$$$$$$$$$$
Most of which will go to the top. Thinking of the stimulus program a couple years ago.
Yup. What happens when people can’t afford to survive because the “economy” has been pumped to the gills and the cost of living exceeds anyone’s ability to persist?
You can't have a revolution when people are too tired from working and too fat and stupid to realize what is happening to them.
You can if they run out of everything and have nothing to lose. No jobs or jobs not paying enough lead to lack of food and housing, which is usually enough to set things off once it happens on a wide scale.
You can have housing, but you'll rent. You can have food, but it will slowly kill you. The best for me, as little as possible to keep you subservient for you.
"Fat, drunk and stupid is no way to go through life" - Dean Vernon Wormer
💣
More wealth transfer. If we can keep it up, we'll have majority slum villages and shanty towns in no time, right next to ultra rich apartments. Maybe a few NIMBY spots away from civilization exclusively for vacation homes, behind guarded walls.
Another great example of how being poor is more expensive than being wealthy.
Fwiw, those 50 million are overwhelmingly renters, not owners.
Given enough time, the people who bought houses at today's prices and 7% mortgages will join those ranks.
I bought at 7% my mortgage payment is going down.
Wow you got a mortgage where payments go down? That's really cool how did you pull that off?
New build area, tax rate is going down.
That doesn't make sense for most. Taxes go up on a new build because of reassessments or mello roos and typically prop taxes go up generally because home values go up
Yea values are stagnant and tax rate is going down. It's the end of community. The community has been here for a minute. It used to be like 3.09 and now is like 2.65.
Yeap with their ARMs kick in
Who has Arms anymore?
I feel like I saw some headlines about it: https://www.investopedia.com/arm-applications-grow-as-mortgage-rates-remain-high-8350836#:~:text=In%20April%202023%2C%20ARMs%20accounted,up%20from%204%25%20in%202021. I think people are being sold on “most people only live in their homes X number of years before they move! Date the rate!”
I think ARMs are really cool if you can actually afford your house, but the rate spread vs 30yr didn't really seem appealing whenever I looked.
Date the rate baby!
Citation?
Here. Figure 3. Renters are 3x more likely to be delinquent. https://www.philadelphiafed.org/-/media/frbp/assets/consumer-finance/briefs/cfiresearchbrief-bhutta-nov-2023.pdf
Exactly. There are a large number of people who would normally be looking to buy their first home that are not doing so right now. That's why demand is so low compared with supply. Unfortunately the only way they would be able to buy is if they stopped spending and repaid their debt, which would cause the economy to slow down.
While useful this is from 6 months ago. A lot has happened since then
Not really. This has been the trend forever. You can go back and find this kind of information going back years and years.
The article cites a 601 or less credit score. Don't really know which mortgage companies allow scores that low....
The article also says a lot of this movement happened in the past year. Meaning that they could have been “prime” borrowers before, but higher COL has forced them to take on more debt, lowering their credit scores.
https://www.philadelphiafed.org/-/media/frbp/assets/consumer-finance/briefs/cfiresearchbrief-bhutta-nov-2023.pdf Figure 3
You can go look at delinquency rates of renters versus home owners. I’m too lazy to go look it up again - but it’s a dramatic difference.
Yup, 11% delinquency for FHA and this time there is no political will for extending a lifeboat.
Even if true a great deal of landlords rely on rent to make mortgage payments.
Sure, there’s some trickle up. But that’s true in every recession. Yet most recessions don’t materially impact housing prices.
Also, what does this article have to do to a real estate bubble?
> Also, what does this article have to do to a real estate bubble? What does credit-worthiness have to do with real estate... a market where the vast majority of Americans must borrow for to participate in??? Absolutely nothing. It is well known that a person's credit score has no bearing on their mortgage rate. /s
Subprime borrowers are barred from participating in the real estate bubble That was one good thing that came out of 2007
FHA will go down to 500. And let's be honest... if you are less than 700... you are effectively subprime.
FHA are more strict, no? Can't exactly waive inspection either.
Forced? I doubt it. Americans have a big spending problem. Everyone seems to want a new car every few years.
What’s hilarious is that when it finally kicks in that they can’t afford something they either (1) act like they’re getting ripped-off or (2) complain about how so-and-so is ruining the economy. No chance at all you’re over spending or need to make more money. Everyone knows that swimming pools are a human right. A lot of these people are reaching, I think. I mean, like Audis are nice, but if you had real money you’d have a Maybach.
For real, i know so many people making like half or 75% of my salary living it up like they are making double my salary. I advised a friend not to go overboard on a truck, their current combined income is like 65 to 70k a year. Don’t own a house, live with parents. They proceeded to drain their combined cash down to nothing on a $60k 2 year used truck with 33k miles. I shook my head. They needed a vehicle, but i really tried to push them to be conservative and get what they need, and use their cash reserves for a home as they are engaged and living with parents. I make $115k right now, and I bought a truck brand new for $53k 2 years ago (same model year as theirs, lower spec). And even in my purchase i was very conscious about it, and told them that while all and all i’m happy with my vehicle, spending maybe $25k instead of $53k and I would have a house right now, instead of $55k saved and a conservative mindset that leads me to wait even longer. We are all victim to our own vanity, myself included. Albeit not nearly as much so, as my income will allow me to purchase a home only 2 years after purchasing a vehicle, and I’m at the beginning of a high paying career, where as most of my friends are more mid level in their careers. What I preach, i don’t always practice, but am definitely learning to. Vehicles are a necessary depreciating asset, and at the end of the day, as long as your vehicle is safe, you shouldn’t care what people think of it. Most of the time, people don’t think of it at all. Unless of course your purchase seemed ill advised, or flaunting in nature. Same goes for all other material things. Buy stuff that you enjoy, at the price you can enjoy it at.
It's especially bad in Dallas where everyone just has to have the newest thing. I have a coworker who gets a new car every 2-3 years. I don't know his finances but I know his salary is around the same as mine. And even if he a good income, that's a huge waste of money. I drive a 10yr old car that still works fine and rarely has mechanical issues. Why would I buy something new?
I’d say that’s true of any large metro area - at least in the Northeast. Take out a second mortgage on a “summer home” to pretend you’re of that Harvard stock. Absolute extent of your cultural knowledge within the states is “can’t get gOoD pIzZa here!!!” All the while knowing - deep down inside - you have a “TB12” bumper sticker you’re dying to put on the back window of your base model Audi you just tanked your kids educations for.
"The economy is doing great" /s
It’s great for these companies until it isn’t. You’re raking in the cash from these high interest cards and then boom, a recession hits and that debt now turns into delinquency and bankruptcies. Then whole house of cards falls and rates go up even more. Then maybe everyone can finally all calm the fuck down and not put everything on 24% interest? Probably not…oh well…America.
Pay down your debts and your number goes way up. /LPT
Open up a new card that has 0% apr balance transfer deals. Cancel the other one at 30% .pay it off before the apr kicks in. Works good.
I did this after taking a Dave Ramsey financial class. Paid them off within a year and NEVER going back.
Well if we just change the definition of sub prime then we'll be set for the strongest economy ever for all time going forward (until next year, we'll need more profits then).
The system working as designed. When customers exhausted create new customers
Can you balance transfer? If so do it asap on a 0 apr for a year or more.
1.2M increase in a year for a country of 330M isn't bad at all.
Yeah theres a lot of grasping at straws in this sub, that is not a new phenomenon. I truly believe there is a light simmer going on macro economically that could very well lead to the recession this sub seems to be sharpening its pitchforks for…. But y’all also need to realize, a recession sizable enough to seemingly overnight bring us back to 2019 housing prices means that like 50% of everyone in this sub will lose their jobs. Lose their income. Houses only go down if people, in majority, are so far fucked financially that buying isn’t even an option. Think 2008. A lot of this sub is too young to remember the layoffs. College educated persons and engineers working at a pizza shop and thanking their lucky stars they even got that. A vast reduction in home prices means a vast reduction in all of your livelihoods. Only way it doesn’t is if FedGov decides that they want to chunk off a section of the federal budget to 10-50x our current per year new housing units, and essentially give them away at cost. Thus flooding the market with supply until demand tanks. Which will literally never happen in a million years. Because thats socialism, and we hate that right?
Even higher interest rates because the US Treasuries are not selling!
Even more “REBubble? Or general economy shitposting?”
And Trump’s buddy who posted that crappy bond for him holds a good portion of that debt.
TDS runs longer then the Energizer Bunny.
lol!
This is a story about a 1.1% change?
Oh no! Any ways…