What's your view on wrapping - not a debate, a poll

[Aceyducey]

Nope, in theory alot of wraps suck and in practice 100% of those do also.
McKnight was also recently quoted on TDT as saying his recent "property millionaries" had not been involved in any unscrupulous practices such as "wrapping"

Astroboy,

So you base excluding wrap discussions from this forum on your view that you don't like wraps personally so no-one else should discuss them

McKnight didn't actually say what you claim - tsk, tsk - get the quote right!

What's that - you want me to provide the quote to prove you wrong? Sorry - you should have provided the quote in the first place rather than simply making an unsupported comment about it! Look it up yourself

BTW Steve himself has around 40 wraps in play at the moment.

Cheers,

Aceyducey

 

[astroboy]

Astroboy,

So you base excluding wrap discussions from this forum on your view that you don't like wraps personally so no-one else should discuss them

Thats not what I said, I simply don't understand the 'air time' if you like, the discussion gets.

McKnight didn't actually say what you claim - tsk, tsk - get the quote right!

He implied it though! Wrapping has seen such negative press from TDT and ACA he clearly wanted to distance himself from it in this particular example.

What's that - you want me to provide the quote to prove you wrong? Sorry - you should have provided the quote in the first place rather than simply making an unsupported comment about it! Look it up yourself

And why would I want you to do that ? I listened and papraphrased, draw your own conclussions.

BTW Steve himself has around 40 wraps in play at the moment.

So ??!!
He admitted there are major problems and a lot of unscrupulous wrappers, the current system is open to exploitation of the uneducated unassuming and unaware public being lead into a financial vortex. These methods will be legislated against.
ab

 

[Aceyducey]

He admitted there are major problems and a lot of unscrupulous wrappers, the current system is open to exploitation of the uneducated unassuming and unaware public being lead into a financial vortex. These methods will be legislated against.

I don't believe that any legitimite wrappers (or the Vendor Finance Association) will have any problems with legislation curbing any excesses that may exist in the wrapping market

Regulation both supports the legal basis for wrapping, making it more attractive to people both because it is recognised by governments & because poor practices are outlawed.

So it has the possibility of making wrapping a more attractive strategy...ergo a larger % of the property investing mix.

Astroboy, if laws are passed to legislate how wrapping may be conducted you may find there are more more threads on wrapping in Somersoft than there are now

Next we need to see some action taken against the lenders who charge up to 90% interest on business loans & 40% plus on personal loans! (in fact these are probably more pressing issues)

Cheers,

Aceyducey

 

[NigelW]

I don't believe that any legitimite wrappers (or the Vendor Finance Association) will have any problems with legislation curbing any excesses that may exist in the wrapping market

Regulation both supports the legal basis for wrapping, making it more attractive to people both because it is recognised by governments & because poor practices are outlawed.

So it has the possibility of making wrapping a more attractive strategy...ergo a larger % of the property investing mix.

Astroboy, if laws are passed to legislate how wrapping may be conducted you may find there are more more threads on wrapping in Somersoft than there are now

Next we need to see some action taken against the lenders who charge up to 90% interest on business loans & 40% plus on personal loans! (in fact these are probably more pressing issues)

Cheers,

Aceyducey

What everyone keeps forgetting in the wrap debate is the relationship between risk and reward from the Lender's perspective. So called "wrappees" are sub-prime credit risks. They are, to steal shamelessly from the john west ad typically "the borrowers the banks reject". It follows that the lender needs to charge a higher interest rate and/or fees on each deal to amortise across their whole loan book the higher default rate.

So that's the upwards pressure. The downward pressure is market forces. The more credit which is available, the higher the supply of money the cheaper it becomes to borrow.

Nobody is twisting the arm of the wrappee. If they could get finance from a traditional or even a low/no docs lender they probably would in preference to a wrapper. What wrapping does is fill a market niche, namely that proportion of the community with impaired or unproven credit history to who no-one else will lend. (I'm ignoring the high end wrap deals here because the vast majority of wraps as I understand it are at the bottom end of the property market).

At the end of the day, you can't protect someone from their own stupidity. Why is it any more evil and immoral for a wrapper to charge 12% to finance a person with a bad credit history into a home than a furniture and electrical retailer to charge somebody 25% to buy a DVD/TV/VCR/Playstation/lounge suite to put in their rented home. At least there is a chance that the wrappee will own something at the end of the deal and perhaps benefit from some capital gain upside.

Even if there's a capital loss on the wrapper's marked up price if the wrapee manages to refinance, then is that such a bad outcome for the previously
credit impaired person? At least they've managed to establish a track record of repayment and will have lower cashflow obligations once they refinance. Plenty of homeowners from the late 80s through the 90s probably experienced negative equity - it generally doesn't last forever...

 

[Sunstone]

Dear guys,

Another recent perspective on lease options in the US.

http://www.investinginland.com/lease_options.htm

Cheers,

Sunstone.