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renok_archnmy t1_j6jyw2h wrote

Reply to comment by MoneyForPussy in Recession concerns overtake inflation concerns by Infamous_Sympathy_91

Ehh, the underwriter will sell the debts before that happens. There’s also insurance.

If they just sat back and did nothing, yeah they’ll go out of business. But they aren’t in the business of going out of business.

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MoneyForPussy t1_j6kihfp wrote

very good point did not consider that.... they prob know other lenders with deep pockets & can sell to another creditor who can afford to take on the risk too which would avoid having to make any claims

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renok_archnmy t1_j6kl8am wrote

Just sell it down until it settles somewhere with efficient collections divisions or easy to claim insurance.

We had to offload and cut off a lot of high risk debts we were buying because our insurance was harder to tap than previous projected. The margin was getting eaten up on operations expenses making the claims as they defaulted. Essentially, we stood to profit even in default except that the hourly wage of the staff processing the default, the lag time from default to paperwork, and the cost file the claims made it less profitable than other options.

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