@Anonymous wrote:
Anyone else find it funny how you can get 100K in unsecured stuff without verifying income but a house / car / boat / etc make you go through all that work and verification for a loan that could be much less than that.
I just do not get it. I would not loan anyone 100K without knowing that they could pay me back. And this whole 2x income...it just does not make sense and I fear this wil take us down another path of financial crisis......
I personally have purchased 3 different boats, an endless number of cars and trucks (okay 50+) and I can't remember ever having to supply bank records or employer verification. Real Estate is different due to state and federal law, a lot of it has to do with the securitization of mortgage-backed securitys, most of those federally purchased and/or guarenteed. After the 2007-09 financial melt down, caused mostly by unqualified purchases (LIAR loans) after the feds decided that "everyone deserved a house" you saw the verification process updated and become much tighter again (this is not a political statement, and I'm not going there, just a cause and effect).
Cars and boats can be repo'd, real estate can too, but its a much more difficult process that usually results in a loss for the lender and creates negitive community repercussions (loss of taxs, loss of tax base, community blight, lower overall community tax values). Short term unsecured lending like credit cards are mostly unregulated in the sense of higher risk equals very high interest rates, very poor terms - think Credit One, First Perimer, et al. Should the feds tighten lending standards having to do with credit cards, probably, but until defaults become a real issue with lender liquidity and the health of the banking industry thats not going to happen (again I'm avoiding discussing the political side of this factor).
If you look at the financials of credit card operations, they are highly profitable and they factor in credit losses into their interest rates. CRA's and their scoring are very important for unsecured risk, not as important for secured risk like real estate. The verification process for credit cards is generally automated using computer systems, verification for real estate looks at computer systems/scoring as a prequalifier and then gets more personal.
Note that I have over $260k in credit card availability, untility of 2.79% and I'm rated by the credit reporting agencies as a 2% "risk" - there is no such thing as a zero risk for unsecured debt or even secured debt. Although unpublished, Synchrony Bank has decided that their magic number is $100k in total exposure before they "get personal", that said I can promise you that if you owe Synchrony a high percentage of that number, they will take action quickly to protect their assets (heh) well before you max out the $100k.
(Formerly known as: Credit is my hobby (1.7M)/TCL objective)