You’re a Lender! You’re funding unsecured B2C loans? You have no leverage! Sure, credit “dings” will influence a tiny percentage of your borrowers. But, your borrowers will pay their rent, buy food and try to hang on to their transportation before they elect to pay you.
“Many employees in the ‘so-called upper class’ are experiencing their six-figure incomes slip through their fingers. A Nielsen study found that one in four families making $150,000 a year or more are living paycheck-to-paycheck, while one in three earning between $50,000 and $100,000 also depends on their next check to keep their heads above water.
Attention B2C Lenders! Consumers need CHOICES! Competition = < Customer Acquisition Costs = lower fees enabling your company to take market share from incumbents, prepare for “The Corona Aftermath,” and scale BIG!
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Think of the ramifications. Zero friction for your customers. A continuing RELATIONSHIP with your clients. As a Lender, you have a captured audience with tons of historic data about their previous loan history with you. You can charge your 1000’s of customers a monthly subscription fee [Dave.com charges $1/month to 5M borrowers with their app as of last September $5,000,000 per month even if they fund zero loans!! You could make money by arbitraging the interchange fees. Dave.com charges $4.95 to “accelerate the ACH into their borrower’s bank account. And let’s not even talk about “THE TIP!”
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Pre-Corona – January 2020 – CareerBuilder found that 78% of U.S. workers are living paycheck to paycheck.
And this just in from “The Hill:” Tenants are afraid mass evictions will take place in the coming weeks as eviction moratoriums across the country begin to expire.
“As the Coronavirus pandemic began to take a grip on the country in March, dozens of states passed eviction moratoria that protect tenants from being removed from their homes. But landlords in most states are still able to file eviction notices, meaning some tenants only have until the day their state’s eviction orders expire until they have to leave their homes. ”
“In Texas, where the pause on eviction proceedings ended on May 19, a local CBS affiliate found that landlords in North Texas had filed at least 1,111 eviction petitions between March 16 and early May.”
“Eviction protections expire in Iowa on May 28. Residents in Florida could begin facing eviction as soon as June 3, and in Washington state evictions protections are lifted on June 4.”
“In California and New York, two states with giant populations, eviction protections expire in late June.”
“Maya Brennan, a housing policy expert at the Urban Institute, said it won’t take long to see the effects of evictions on communities. ”
“The eviction court process is usually very quick and efficient,” Brennan said.”
[Anyone realize that the tenants thrown out of their homes will have to go somewhere? Homeless housing? A revolving door? Secure housing from the landlord who just evicted their previous tenant for failure to pay their rent. It’s an untenable situation! But allow me to continue…]
J. Edward Moreno from “The Hill” goes on…
“In some cases, tenants are accumulating rent payments even as their source of income is cut off. With no way to make up lost wages, it’s unclear how tenants will make up their rent.”
“The coronavirus relief bill signed into law by President Trump in March suspended evictions through July 24 for those who receive federal housing assistance and for nonpayment of rent on properties with federally backed mortgages. The Urban Institute estimates that the federal moratorium protects more than 1 in 4 rental units nationwide or about 28 percent.”
“Rep. Ilhan Omar (D-Minn.) in April introduced the Rent and Mortgage Cancellation Act, which would cancel rent for tenants and transfer mortgages to the federal government and allow landlords to recoup their rent costs. Efforts by Omar and other progressives to include the bill in more recent corona virus relief legislation fell flat.”
“As the country continues to reel from mass unemployment, a U.S. Census Bureau survey published last week found that 21 percent of Americans are not sure if they will be able to pay rent next month.”
“According to an Urban Institute study, 10 percent of parents and guardians with children under age 19 living at home said they were late or didn’t pay their rent or mortgage between March and April because of financial hardship.
“We are absolutely terrified,” said Cea Weaver, spokesperson for the New York-based tenant coalition Housing Justice for All. “The No. 1 message that we get is from people who are not sure what to do and asking for support, and what we have to tell them is there is no option.”
“It’s also becoming increasingly clear that the economic blow of the pandemic will last until even after states begin to reopen in the coming weeks. According to a recent study from the University of Chicago, 42 percent of coronavirus-related job losses aren’t expected to recover
“During the 2008 financial crisis, Congress passed the Protecting Tenants in Foreclosure Act, which banned the removal of any tenants being evicted if the eviction was solely due to the property being in foreclosure. But without federal lawmakers passing rent relief legislation this time around, state lawmakers are taking on the push as their states face massive budgetary fallout.”
“New York State Senate Majority Leader Michael Gianaris (D), introduced legislation in March that would suspend rent payments for those affected by the pandemic. The bill hasn’t passed committee as the state’s legislative session draws to a close on June 2.”
“Illinois Gov. J.B. Pritzker (D) announced Tuesday he would extend the ban on evictions in his state past Friday when Illinois’s stay-at-home order is scheduled to expire. His move comes as the state legislature has also failed to pass legislation that would cancel rent and mortgage payments statewide for those experiencing coronavirus-related hardships.”
“California Gov. Gavin Newsom’s (D) March eviction order prevented renters from being physically evicted from the premises, but it didn’t actually prevent landlords from filing the eviction in court preemptively. The Judicial Council of California later extended the governor’s order to prevent nearly all eviction filings in the state.”
“At the time, the California Apartment Association said the move is “unnecessary, overly broad,” and “invites tenants who have the financial wherewithal to pay their rent to withhold it, leaving landlords struggling to cover their own bills and to keep employees on their payroll.”
“Shanti Singh, a spokesperson for Tenants Together, a housing nonprofit organization based in San Francisco, said tenants have been contacting their hotline at record numbers this month.”
“Though the organization does not provide formal legal aid, they said most renters reach out seeking more information about what their rights are in these circumstances. Some have said they are working out informal agreements with their landlords to avoid eviction.”
“We are deeply concerned that there’s going to be an eviction cliff when these phases of emergencies are lifted,” she said.”
Here’s a link to “The Hill” original piece: The Hill
Are you itching to get into “the business of lending to the masses?” Do you comprehend the SIGNIFICANT tsunami for the demand for small-dollar loans in Q2, Q3, Q4, and beyond? Are you a vendor, call center operator, payment processor, lead generator, loan management software provider, a lawyer… interested in learning more about this industry? Get a copy of our “Bible: How to Loan Money to the Masses Profitably.” Click to view the “Table of Contents” and get our 500+ page PDF delivered into your inbox immediately.
Finally, for perspective on money and lending read/listen to “Debt: The First 5000 Years” and “The Ascent of Money.” two excellent books that will enable you to grasp the significance of money lending over the millennia and enable you to recognize that the masses will ALWAYS be living paycheck to paycheck!
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