Houses are immobile, unlike cars. Houses have land tied to them--even if the house is destroyed, there's still value.

For gross recovery values, a lender usually gets about 70%+ of the value of a foreclosed home (before fees), while a car is usually under 50% (minivans and crappy compacts, about 30%!).

9 times out of 10, a million dollars in foreclosed houses will lose far less than a million dollars in cars.

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So sometimes the easiest thing to do is just to cut off the lower 20% of your customers (or even the bottom 50%, possibly eliminating 95% of all potential losses) in order to simply keep the ship afloat...and to be able to reduce overhead in loan servicing (such as repos).

The rub is that you might break even, but at least you don't get hit with the massive downside in losses. And the other side of that coin is that when (if) things turn around for the better, your portfolio is not profitable because all your customers are upstanding individuals who never miss a payment.

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