Auto Finance Companies Making a Comeback
- Originating More Loans than Banks or Credit Unions

From Collections and Credit Risk comes a news item that auto finance companies have drastically increased their share of the auto loan market in the past two years, up 47% overall. Finance companies are originating 38.5% of auto loans versus 17.6% for banks and credit unions.

That finance companies have increased market share should come as no surprise. In 2008 Chrysler Financial and GMAC were severely limited during the bailout. Chrysler Financial ended up biting the dust and the auto arm of GMAC was replaced by Ally Financial. There was shrinkage and consolidation among other players. Most notably, Santander acquired Drive Financial.

How is this important to consumers and consumer lawyer? The finance companies generally buy installment sales contracts originated by the dealers. Traditionally, the dealers would try to write these contracts at as high an interest rate as possible, and the dealers would be rewarded with a yield spread premium kickback from the lender based upon the interest rate. I have heard anecdotally that the dynamic has changed, and the dealers actually have to pay the finance companies to take the deal now. I don't know if that is true, but it does seem like there are more "yo yo" sales going on where the dealer calls the customer back under the premise that the financing has fallen through.

I suggest that it is more important than ever for consumers to avoid financing through the dealer and to arrange your own financing separately through the bank or credit union of your choice. Lenders will bid to get your business at sites like bankrate.com and lendingtree.com. I have found that in most cases, going with an internet consolidator like these sites or by going through your local credit union, you can usually get the best deal and the most straightforward deal at that. If you are not comfortable negotiating a deal at the dealer, many credit unions offer a "car buying service" that will result in a cleaner, better deal than going in to the dealer with no experience.

What's all this fuss about Independent Foreclosure Reviews?

Among an outcry of citizens over bungled mortage servicing, bungled modifications and bungled foreclosures, the Obama administration last week announced a program that will extend independent mortgage reviews for homeowners who were in any stage of the foreclosure process during 2009-2010. The best coverage that I've seen on the topic comes from propublica.org. (Not surprising.) The review process will be undertaken by eight contractors hired by the Office of the Comptroller of the Currency and the Federal Reserve. Note that the OCC has not exactly been a consumer-friendly institution in the past. That's why much of its oversight authority is being transferred to the Consumer Financial Protection Bureau.

I am skeptical of these reviews. It can take an experienced consumer attorney a week of solid work to evaluate the most easily ascertainable flaws in a mortgage. You need to see information that comes from different sources and is stored in different places. You have to look at the consumer's documents, the mortgage broker's documents, the title company's documents, the originator's documents, the servicer's documents, the public record of mortgage transfers, and the loan securitization documents. Finally, to determine a pattern and practice, you have to cross-reference suspected violations from one loan file to another. In short, a complete review costs thousands of dollars. to do this with millions of mortgages will cost billions of dollars. I don't know how much they've budgeted for this task, but it is likely not enough.

The Onion Scores with "Ancient Job Creators"

Great satire here:

WASHINGTON—A team of leading archaeologists announced Monday they had uncovered the remains of an ancient job-creating race that, at the peak of its civilization, may have provided occupations for hundreds of thousands of humans in the American Northeast and Midwest.

According to researchers, these long- forgotten people once flourished between western New York state and Illinois, erecting highly distinctive steel and brick structures wherever they went, including many buildings thought to have held hundreds of paid workers at a time.

"It's truly fascinating—after spending a certain number of hours performing assigned tasks, the so-called 'employees' at such facilities would receive monetary compensation that allowed them to support themselves and their families," said archaeologist Alan H. Mueller, citing old ledgers and time-keeping devices unearthed at excavation sites in the region. "In fact, this practice seems to have been the norm for their culture, which consisted of advanced tool users capable of exploiting their skills to produce highly valued goods and services."

Was Shakespeare a Fraud? The Monty Python View

The movie Anonymous is out now. It's a dramatic take on the old issue of whether William Shakespeare really wrote the plays and sonnets attributed to him. This is an issue that former US Supreme Court Justice John Paul Stevens has spent most of his adult life examining. It's something I spent two minutes on a time or two listening to this Monty Python bit called Stake Your Claim. The thing that I find so shocking is that Youtube doesn't have English language video of this bit, so the English is dubbed on the German Python television special. I think there is a conspiracy among "truthers".




Now that's what I call entertainment.

Is Portfolio Recovery Associates one of the 100 BEST Small Companies in the US?
The Googleteer checks it out.

Portfolio Recovery Associates, Inc. has been named by Forbes magazine as one of the Top Small Companies in the US. If you are a consumer lawyer, you are already headed for the vomit bag - but it gets worse. PRA made this list in 2007, 2008, 2009, and 2010.
You have to wonder if Forbes got their lists mixed up. The Googleteer(tm) wondered. He flew in the window after a much overdue vacation and did the following search

"portfolio recovery associates" (complaint OR complaints)

More than 69,000 hits.

These complaints are not frivolous. PRA is among the worst of the "bottom feeder" or "zombie" debt collectors. Just last year, Portfolio Recovery Associates was in the news for using affidavits signed by Martha Kunkle to prove its debt. Who is Martha Kunkle? she was a woman who died more than a decade before her signature was affixed on the affidavits.

Grammar Alert:

"Americans Driving Less Miles" - Ouch

There are many links to a news story that says Americans are driving less. There's nothing wrong with that. You can say Americans are driving fewer miles. That's okay too. You shouldn't say "Americans are driving less miles." That just hurts my ears. It's just another weird convention in the English language. "Less" can be an adverb, as in "Steve stinks less than last week." It can be an adjective also, but only when describing a noun that isn't being separated into tangible fixed units. In other words, you can use it with "love" or "credibility" or even "water" - when you aren't breaking it down into units. "There's less water in the pool right now."
Boy, you'd think these people never heard of Al Yankovic.

Conan takes on the iPhone 4s

One of my colleagues just got an iPhone 4s. Why don't you get one, Steve? Are you kidding me? I can't even stop watching the squirrels. Giving me an iPhone with Siri would be like giving Charlie Sheen a million dollar gift card to Meth, Coke and Beyond. Here's Conan O'Brien's take on the iPhone 4S.

English Lesson of the Month: WTFC?

The lesson that I learned this month is not to use the acronym WTFC in an email. The reason: the recipient might not know what I'm talking about. I could be talking about Wintrust Financial Corporation. I could also be talking about the "not for profit" Women Together Fighting Cancer, a/k/a the "other" pink ribbon charity. Dear readers, the next time one of your learned correspondents sends you an email with WTFC? Ask him or her whether he or she means Wintrust Financial Corporation or Women Together Fighting Cancer. Stomp out ambiguity before it spreads.

Mr. Green in the Drawing Room with a Frozen Armadillo

From Fox News, in Texas (and only in Texas hopefully) a man was accused of beating a woman with a frozen armadillo.

I think it was a wise person named Steve Altland who said, and I'm paraphrasing:

"If frozen armadillos were outlawed, only outlaws would have frozen armadillos."

Truer words were never spoken.

Publish Post

GM to Finance Cannonball Run Remake?

New York magazine is reporting that General Motors is in talks to finance a remake of the 1981 movie Cannonball Run. Some say that the original Cannonball Run is the worst movie in the history of the world. Some say Cannonball Run 2 was. (I say that honor goes to Little Buddha.) Naturally, if the general is paying the bills, this will be a GM product placement extravaganza. One can only imagine the venom expressed on talk radio when a "Government Motors" movie debuts.