Feng Yu woke up from his sleep, the plane was about to land, and he came to New York again.
Fengyu Consulting has purchased the stocks of many American real estate companies. This time he came to see when the best time to sell them was.
Many people in the past life know that this year, a serious subprime mortgage crisis broke out in the United States, and it quickly affected the global financial industry. Most people believed that the fuse was the Fannie and Freddie Group.
But in fact, there are already some clues, and the real trigger is New Century Financial Corporation, the second largest subprime mortgage lender in the United States.
What is a subprime mortgage? The United States divides personal credit into five levels. Among them, those with excellent or good credit in the first and second levels can get preferential loans, while the remaining three levels with lower credit can only use subprime loans.
To put it bluntly, subprime loans are loans prepared for those with poor credit and low income.
Many people know that people in the United States like to live on loans. Various bank loans, credit card swiping and early consumption, etc. They think this kind of life is very good, and they enjoy life during their lifetime.
China's model of saving money and then spending it after saving enough money is very ridiculous in their eyes.
Because many products have already increased in price by the time you save enough money. The price increase may exceed bank interest. So why not take out a loan for consumption? Not only can you enjoy a better life, but you might also be able to save money.
But this statement is also very ridiculous, because the price of many products decreases over time, which means that the purchased product depreciates.
Then you have to pay high interest for this product, and you will naturally lose more. It is true that you enjoy it in advance, but you may let this burden weigh on you for half your life.
Unless there is an urgent need, living like this is considered by many Chinese people as a waste of money and a waste of money!
Many Chinese people dare not borrow money for fear of not being able to repay it, but in the United States, they are very bold in taking out loans. What if they can't repay it? It's simple. Can't we just borrow another loan from another bank and pay back the money here
If two credit cards are used together, the repayment time difference between them will be one month. This will give you an extra month of earning time to repay the money.
In theory, this is the case, but what if you don’t make enough money? Originally, if you borrow 10,000 yuan, you only need to repay 10,200 yuan. But if you borrow another 10,200 yuan from another bank, you will have to pay back more.
After using multiple credit cards, you will find that the original loan of 10,000 yuan has become 12,000 yuan, and it is still growing.
As long as one bank thinks that your repayment is late and gives you a credit card, then this scheme will fail, and the borrower may have to use other assets to pay off the debt. If it still fails, the only option is bankruptcy protection.
It seems that bankruptcy is a kind of protection for you. You don't have to worry about paying back the money, or you don't even have to pay it back. But during bankruptcy protection, all your consumption will be restricted and subject to supervision by banks and even police. How can people who are used to living a comfortable life accept this
But many older people like this. Once they are bankrupt, some of them would even rather go to jail and have food and drink, which is better than starving to death on the street corner.
Normally, when you take out a loan, banks and other financial institutions must evaluate your repayment ability to confirm that you can repay the money.
You either have a stable income, a fixed asset mortgage, or a guarantor, etc.
But these are all for preferential loans in the United States. For subprime loans, these conditions can be relaxed.
As long as you can prove that you have income, you can basically get a loan. The review of guarantors is not rigorous enough at all. Many guarantors are even unemployed, so they can just find a part-time worker. There are also mortgage loans. The collateral is not worth the price at all, and some companies dare to lend money.
Many people here have the same thoughts as the Chinese people, that is, they are worried about not being able to pay. They are still young people and do not want to go to jail. The world outside is so wonderful.
The root cause is Xiao Bu Shi. After he came to power, he launched a home purchase plan for ethnic minorities. He wants to complete the purchase of homes by at least 5.5 million minority families during his term.
He said promoting home ownership is an important factor in making the United States safe.
However, ethnic minority families have low education levels and find it difficult to find good jobs with stable income. How can they buy a house
At this time, the subprime mortgage plan is needed.
The interest paid on a subprime loan is at least two to three percent higher than that on a prime loan. In short, the worse your credit is, the higher the interest rate will be.
Speaking of this, do you have a feeling that this subprime loan is basically plucking wool from a thin sheep. The thinner you are, the more you will be plucked.
Their income is already low, and loan interest rates are higher, which puts them under greater pressure to repay, which creates a serious hidden danger.
It is these people who are very likely to not be able to repay their loans. As a result, the bank will suffer losses and bad debts.
But what does the bank's losses have to do with Fannie and Freddie Group
Fannie and Freddie are an important part of the plan to promote home buying. They buy mortgage loans from banks and then make money.
What does that mean? That is, the bank originally lent out one million and could recover one million in principal and one million in interest, but when it was sold to Fannie and Freddie Group, it only sold for one and a half million.
In this way, banks have more funds to circulate and can lend to those who buy houses, and Fannie and Freddie Group also earn a sum of interest. When you see this, do you feel a little familiar
Many financial companies lend money to individuals, which is actually a high-interest loan. What if they can’t get the money back? Sell the IOUs to debt collection companies.
They sold an IOU of one million yuan and repaid two million yuan to a debt collection company for 1.3 million yuan. The debt collection company found a way to recover the 1.5 million yuan and made a profit. They have some profits, and the collection company also has some profits.
Fannie and Freddie, to put it bluntly, act as a debt collection agency. They just turn their accounts into bonds and other financial products and issue them with the tacit approval of Congress.
Fannie and Freddie did make a lot of profits at the beginning. Their CEO’s annual income exceeded US$15 million. Only a few of the EOs among the world’s top 500 companies. People can compare.
Where did Fannie and Freddie get the money to buy the mortgage loan from the bank? One is to raise shares and go public, and the other is to issue its own funds, bonds, etc.
In the previous life, China State-owned Assets bought a lot of bonds from Fannie and Freddie Group, and ended up losing a lot of money and paying for the crisis in the United States.
But in this life, Huaxia State-owned Assets has already sold the bonds of Fannie and Freddie, and even the stocks in the real estate industry have been sold on Feng Yu's advice. This mistake can only be made by Americans themselves!
… (To be continued.)