So miss your subprime mortgage payment, perhaps the lender should remotely lock you out? Turn off your DirecTV? Cut off your Verizon WiFi? Set your thermostat for 95 degrees?
Asking for a friend.
I can see your reaction from here.
Pictured: Your reaction
No seriously, there’s a new thing in the subprime auto loan industry where they’re using remote technology to disable cars bought with subprime loans, just like you would with a LoJack or OnStar system if it was stolen.
So is there an equivalent of this that could be done in the mortgage space?
Most states have layers of protections for homeowners – and rightly so – and those rights and protections can’t be waived.
It does raise some interesting possibilities though, what with the increasing pace of technological evolution. Just a few years ago the idea of using your smartphone to set your thermostat or make sure the garage door is closed was next gen – now it’s becoming standard.
And you have to think about the self-defeating aspects of what this means for subprime auto loans.
So you punish the deadbeat by disabling their car. Ok, now what?
They can’t get to work. They lose their job.
What’s the chances they’ll pay their car note then?
What are their chances of paying the mortgage if they can't get to work?
Yes, lenders need to have some leverage to make sure that borrowers honor their commitment. Lenders aren’t in business to be charities. And I’m sure the numbers can be crunched to make even a default and repo still profitable.
I don’t know what it’s like trying to collect from deadbeats. I know lenders are taking a risk, and they should make their profit, and that subprimes are good for taking a chance on people who need another chance and normally come through.
But in the long run, if you’re so sure that someone isn’t going to use that second credit chance and do better that you have to put them on a leash, is it worth it to make the loan at all?
I admit I don’t know.
I’m soliciting input.
And second question — is there an opening in Research & Development for subprime mortgage lenders to leverage technology to ensure timely repayment using similar strong-arm tactics? If so, I have some ideas.