STIMULUS PACKAGE

Lenders fear sales won’t
come

A tax incentive meant to
jumpstart stalled vehicle sales may bring just a sputter. The Auto
Ownership Tax Assistance Amendment, a component of the $787 billion
(£563 billion) stimulus package signed into law on 17 February,
enables consumers to deduct sales and excise taxes on new-vehicle
purchases. Though the tax break may increase showroom traffic,
ultimately, the amount is too small and access to credit too tight
for the legislation to have a strong impact on vehicle sales,
lenders said.

“It may drive more traffic to the
dealerships, but the real question is: Will the dealers be able to
get the buyer financed?” said Frank Mercer, chief executive and
president of CU Auto Lending Services LLC.

“Every lender — prime, non-prime,
and subprime — has tightened up their qualifying criteria,
including asking for larger down payments, thereby making it more
difficult to qualify, no matter what your credit profile. Yes,
there will be more car sales as some people will qualify for
financing, but nowhere what the dealers really need to
rebound.”

DEBT PORTFOLIO SALES

Buyer-seller breach limits
activity

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By GlobalData

Portfolio sellers and to a lesser
extent, buyers, are milling around, but they won’t come to the
table.

“There’s an exorbitant number of
sellers, and not enough buyers,” said Michael Casinelli, president
of Reliable Mortgage Resource, a residential and commercial
mortgage lender and broker of auto, marine, and recreational
vehicle loan portfolios.

Sellers typically may be banks or
finance companies in need of capital or in pursuit of an exit from
the auto finance business. Among the capital-seekers are captives
unable to access the frozen securitisation market and smaller
finance companies that need to sell loans in order to make new
ones.

The group retreating from the
business is comprised of banks that had been originating subprime
loans or those that can no longer maintain the level of reserves
required by federal law. The crop of portfolio buyers, meanwhile,
has dropped off.

“We’re in dire need of more
buyers,” Casinelli said. “A lot of banking institutions that were
buying aren’t anymore. They either have stress on their financials,
or they were given a directive [from] inside not to evaluate those
portfolios.”