SLABS -------- STUDENT LOAN ASSET BACKED SECURITIES!!!!!!!!! I can't believe I haven't heard about this until today, yes these are STUDENT LOAN ASSET BACKED SECURITIES, yes you heard that right, They take these loans and package them nice and tight to create a new asset which can be bought and sold just like those other sub-prime mortgages were done just a few years ago...now were not done yet, from what I read is that these loans CANNOT BE DISCHARGED which means the courts will force you to pay every last nickel and penny and dime but we all know what happened when the housing market collapsed, the government stepped in with tax payer money and bailed out the system, I guess when liquidity dries up and the last person is holding that SLABS, well don't worry this time its different, it always is, right??? If you read what I highlighted in BLUE you will notice the reason why this is happening is because of, drum roll PLEASE, you guessed it, the fed, the fed once again is fucking up the system, record low interest rates are fueling the next collapse, of course you can just ignore it until you can't any longer, the really funny part I laughed at in this article was this... "Perhaps most attractive to investors in SLABS is that the debt has to be paid, even if the borrowers declare personal bankruptcy." and this "The borrowers are high class borrowers. CommonBond CEO David Klein points out that his average customer has a credit score north of 760 and makes $140,000 a year. SoFi also says the loans it repackages were also made to highly qualified borrowers." The DEBT HAS TO BE PAID, HAHAHAHAHAHAHAHAH yea okay, hahaha after the next crisis comes and people are out of a job do you really think those people making $140,000 that are now making $55,000 to $75,000 are going to think ohhh I have to pay that loan off, the answer is no, they will walk away once they realize these were sold off to 189 different people and repackaged and the same the sub prime mortgages were packaged, I love how they are only going after the "HIGH CLASS BORROWERS" yep, thats it, thats a guarantee win right, the greedy fucks on wall street are at it again, they can't just leave it alone....Just thank the fed once again for creating this next crisis. Startups are going to make billions doing a (safer) version of what Wall Street did with home loans JONATHAN MARINO JUN. 10, 2015, 5:11 PM Asset backed securities derived from loans issued to highly-rated borrowers are increasingly being marketed to institutional investors. Student loan asset backed securities (SLABS) are popping up left and right on Wall Street. But it's startups, not the established banks, that are set to profit billions. For the uninitiated, SLABS consist of student loans that have been refinanced and packaged into a large offering.That offering is then cut into pieces and sold to institutional investors, like hedge funds and pension investments. Startup companies including SoFi to Lending Club are getting in on this action and reaping hundreds of millions of dollars in the process. Wednesday, SoFi closed a new SLABS offering totaling more than $400 million. That comes on the heels of a $100 million SLABS securitization from CommonBond also on Wednesday. Soon, SoFi will announce it has funded $3 billion in mortgage, student loan refi and personal loans. The offerings are getting investment-grade ratings from agencies like Moody's and Standard & Poor's and boldface name advisers like Goldman Sachs and Morgan Stanley regularly turn up on their deals. All this comes as the student loan bubble reaches a new high virtually every month and federal estimates are in the $1.2 trillion to $1.3 trillion range for the amount of debt the government has issued to students. More than 10% of those loans could be repackaged as SLABS, Goldman Sachs noted in March. (SLABS are only made up of loans issued to borrowers very strong credit.) One of the reasons that SLABS have taken off is thanks to the Federal Reserve's record-low interest rates. This makes it easier for startups like SoFi to borrow the money they need to lend money to people who want to refinance their student loans. Perhaps most attractive to investors in SLABS is that the debt has to be paid, even if the borrowers declare personal bankruptcy. This year SoFi has already placed $700 million in SLABS. The company expects that figure could rise to $2 billion by the end of 2015. Quarterly SLABS are expected to commence in 2016 and CEO Mike Cagney says SoFi can sell $4 billion in asset backed securitizations in 2016. Altogether Cagney thinks SoFi can capture a total loan volume ranging from $13 billion to $15 billion next year. The whole business of taking loans and repackaging them as securities scares a lot of people who were burned in the 2008 crises. But SLABS are a lot different than the securities made out of home loans before 2008. The biggest difference in the companies' SLABS offerings is where the debt originates. The borrowers are high class borrowers. CommonBond CEO David Klein points out that his average customer has a credit score north of 760 and makes $140,000 a year. SoFi also says the loans it repackages were also made to highly qualified borrowers. Read more: http://www.businessinsider.com/startups-are-securitizing-student-loans-2015-6#ixzz3ci0qRGBm
But aren't there provisions to allow debtors to "pay a very small monthly amount, then have the balance forgiven at a later date"? What does that do to SLAB intrinsic value? Wouldn't this be more like "asset-backed based upon used car loans to illegal immigrants with a <400 FICO"?
The IBR provisions only apply to Federal student loans taken out after a certain date and also don't apply to private student loans : the latter are still subject to non-dischargeability in Bankruptacy, but are not government guaranteed.
Although it's true that student loans cannot be discharged through bankruptcy, just imagine what could happen if a massive flow of student loans started defaulting right before a Presidential election, perhaps causing another economic crisis. Student loan debt has topped $1 TRILLION and could be the next shoe to drop, so the "SLABS" are simply a clever way for the fed to mask the debt by having Wall Street repackage it as an investment.