Another One Bites The Dust

So, today's news is that Fireside Bank is going out of the auto loan business. After 50 years in the auto finance game, Fireside, like so many others recently, could not withstand the losses they had incurred over the last few years.

I can't help but wonder who's next. AmerCredit has run into problems lately, but has managed to work through them, albeit at closing many of their offices and laying off staff. Both CitiFinancial and Capital One have laid off their local reps recently, and many other lenders have consolidated offices in an effort to cut costs. Others have cut back their expansion plans, in order to concentrate on the markets they have already entered.

As business gets more difficult, lenders become scarcer. Those that are left are looking at the business they are doing with a deliberate eye, and have become much more selective in the applications they approve, as well as considerably more conservative in the terms they offer. The old models are gone, and it sometimes seems like lenders are just as confused as we are.

Callbacks continue to amaze me, with approvals and declines making no sense. I had a customer yesterday putting down $6000, and an LTV at less than 70%, yet an "equity" lender I do business with turned down the loan because of "insufficient down payment"! Yet this morning, I get a first time buyer approved for a $350 payment, with only $2000 down. Remember the old days when a rate sheet made sense?