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Old 02-21-2009, 07:49 AM   #1
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What in the world were they thinking?

This is more a general RV industry puzzle than specifically Airstream. It may shed some light on the present banking crisis and how it affects the RV business. Would appreciate your comments.

If you want to see the original thread here it is. I post on this board as "Rusty O'Toole".

Is there an RV Culture in Europe? Australia? - Antique Automobile Club of America Discussion Forums

The post that started it all:

I work for a major national banking company as a Legal Processor. I have been asked to assist the Repossessions department with a large influx of Voluntary Surrenders of recreational vehicles.

My bank stopped writing these loans - which were done through dealerships as indirect loans in early 2008. What this meant is the RV dealerships had permission to basically give loans to customers on our behalf. We took about whatever was handed us due to market conditions - the competitive search for more ledger monies. At some point management realized this was a bad business model and virtually every loan was for 100% or 120% of invoice. Nobody was putting money down or the over-under was just being added to the new loans.

What I am seeing is a lot of glutany, over-valued loans. 15 to 20 year loans given to 72 year olds and other abuses that came from that free lending period of the recent past.

I could go on and on, but it got me thinking about the CULTURE that creates the demand for billions of dollars in R.V. sales, especially in the past 25 years as long suffering boomers who put in years of toil rebuilding America feel they wanted to be part of the "me too" America of home equity loans used for vacations and muscle cars, among other non essentials.

Personally, at age 45, I have little interest in owning an RV. Last year my wife, daughter and I went to an RV show in the middle of February (winter) just for escapism and I enjoyed it. I can see their appeal BUT I can't picture myself really owning one.

If I had to pick, it would get a Ford V10 based 30 footer with an open cab. But seriously, I wouldn't be able to use it that much, even now at $1.80 gas. The idea that I need to drain the bathroom water, add fresh water, have electricity sources for the appliances, etc - to me negates the supposed freedom these R.V.'s are supposed to allow.

In America we have great stretches where I suppose an RV is a nice amenity. Great western state parks and eastern roads. Southern jaunts and New England falls.

But why did so many Americans pay so much for these RV's? Every week our unit processes hundreds of these loans, repossessing RV's with loan values from lows of $40,000 to well into the $100,000 range. It's not uncommon to process Voluntary Repossessions on COACHES with loan written values of $190,000!

Who has the money for a $190,000 coach???? The explanations I receive, typically unsolicited, are that "it seemed like a good deal at the time" or "We had plenty of money from savings, and now our savings are wiped out"

Loans were written purely on 401k and pension values.

So, is this a strangely unique American past time? Or do R.V.'s exist in other parts of the world? Europe? Australia?

Is the R.V. culture unique to America, going back to the Airstreams and born from the Greyhound bus and it's ability to take America anywhere?

Why did so many Americans get sucked into buying billions of dollars of now worthless R.V.'s in the past 20 years and is this alternative lifestyle finally seeing it's zenith?

For those snowbirders with R.V.'s is this preferable then other alternatives? I mean I doubt they have snowbird parks in the Riviera of France.

My inquiring mind would like to explore this subject. Forgive me for it not being 100% about old cars.
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Old 02-21-2009, 08:05 AM   #2
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Greed and mine is bigger than yours-besides just sure stupidity. We did the samething and went to the RV show last month. We just came away shaking our heads-why???If I had that much money I wouldn't want to be trying to drive it anywhere-a nice little condo with no upkeep would be my preference. Right now we are thrilled to have our Princess that cost less than one year's taxes on one of those monsters.
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Old 02-21-2009, 08:26 AM   #3
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There are an awful lot of idiots in this world that would finance 100% or more of an RV's purchase for 15-20 years, if given an opportunity. And when you match these idiots with equally idiotic bank managers that would make these loans, it's easy to understand the results.

What's largely missing from the equation though is accountability. Rather than talking about stimulus plans and bailouts, we need to be taking more action to throw these idiots into jail. There's no such thing as a free lunch, and frankly I'm tired of people continuing to think that way.

I spent much of my career working in and around multi-billion dollar finance and credit companies, and we would NEVER knowingly make those types of loans. We often had years during which we had net NEGATIVE loan writeoffs - meaning we collected more from loans than we had reserved as possilbe write-offs in prior years than we reserved for writeoffs in the current year.
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Old 02-21-2009, 08:49 AM   #4
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Nice post, Greg-
I think the short answer is that "gotta have it even though I don't have the money for it" jumped up and bit them! I also think that every loan processor in every bank in most every place could tell similar stories whether we are talking about RVs, motorcycles, boats, airplanes, lake property, personal residence(s), or any expenditure that one cannot really afford.
It "sounds good at the time" has bitten me more times than I can (or would relate--There was a red-headed bartender in Boseman, MT, in 1967, but that is for another forum) but rarely in financial matters. My upbringing included the mantra that if you don't have the money in your pocket you didn't need it! A more modern adaptation: You don't finance your toys!
Now some nice folks will post that money became too cheap and too easily available. That is sort of liking blaming Smith & Wesson for you holding up a bank or Jack Daniels for your DUI. Others, of course, had to keep up w/ their neighbors. We can blame the neighbors for that, I guess. Still others simply became stupid and over extended themselves-both individuals and banks.
Why some financial institution would finance 125% of a boat is simply beyond me. What do you call that-the ratio of collateral to debt, or something? (As an old time helicopter pilot, I still have a problem with powering a turbine to 105%-how is it even possible?) Why would a person do that deal, either?
Greed on both parties is my answer. Risk vs reward! There is nothing illegal about borrowing 100k for a boat that, in minutes, is worth less than 75k. Worth, of course, meaning what someone will pay for an item. Stupid? Absolutely, but not illegal. Immoral? Maybe, but there appears to be no law regarding that-you can even become a cabinet appointee now.
The folks will blame the "big oil", finance companies, boat companies, RV companies, their in-laws, or anyone else but the real problem-themselves. A lot fewer people are taking responsibility for their own actions anymore. The sit in rising water up to their knees and expect the gov't to help them. I wonder why they didn't simply walk up the hill to higher ground. Others expect the new government figures will take care of them. They will be sadly disappointed, too.
Why RVs? I don't know either! I don't like to camp-the US Army took the camp clear out of me in the late 60's. To me, roughing it is when the TV remote is broken at a Hilton. My particular reason is way more vague-I like old stuff and, apparently, so does my wife as she puts up with me. I also like travel. Over the years, we've done motorcycles, 4X4 activities, motorcycles, lake property, boats, motorcycles, old British cars (and bikes), back to American motorcycles and now I have a '55 Chevy. If I were forced to guess, I'd opine that there are some really nice people one meets in any particular hobby, especially a hobby that deals w/ old stuff and motor vehicles. No, the Airstream people are no different than the Austin Healey people--just fans of a different marque. Is an Airstream better than a Yellowstone? I don't know and really don't care. I've attended one Airstream rally. It's no different than car shows-nice people telling their stories, drinking a little beer, eating more than one should, and having a good time.
The old Airstream is a natural extension of my habit of buying some old rolling deal, pouring a ton of money into it to make it nice again, and then selling for a loss when we grow tired of it. The difference? I'm not "upside down" or "underwater" or "over my head" in any of these projects spanning the last 40 years. I think that is the key.
Why an Airstream? Why a RV at all? Couldn't tell you! I do know that Budweiser is better than Moulson Ice-no offense, sir! I know that Chevys are better than Fords! I know that tequila and red headed bartenders are an evil combination--no offense to the red headed bartenders out there, either. It all drills down to personal choices. Lately, a whole group of folks have made poor choices and now they are suffering. It's their fault and not mine but I'm going to have to pay for it. Let us hope that there is a real lesson in all of this and, maybe, it won't be repeated.
In the meantime, hit the highway while gas is cheap-it won't be cheap forever but I will let the conspiracy theorists fill you in on that!
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Old 02-21-2009, 09:01 AM   #5
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Question

I prefer a more tolerant view of culture. My mother is French, born in Nazi-occupied Strasbourg. In perfect candor, I do not understand the mores of French culture, but I try to avoid making value judgments. My French relatives, however, are extremely nationalistic and relish making value judgments about American culture. So it goes.

I gently suggest that America... unlike some nations, is truly multi-cultural. I've lived in rural Montana and in inner city Baltimore. I've eaten at an Amish table and at a New York City Jewish deli. I spent time in the deep South and in the Great Plains. I don't think RVs are a cultural phenomena any more than recreational boats are a cultural phenomena. America is a large country. It is the most affluent country on the planet. It has an excellent roadway system. Gasoline is relatively inexpensive. There is enough land to allow for space-consuming uses like RV parks, campgrounds, etc.

Now, to ask why people make specific financial decisions is a different matter. I presume the vast majority of people who bought RVs did so because 1) they wanted to; 2) they felt they could afford one. If a firm made a bad loan, that is simply a poor business decision. As far as I can tell, businesses from every country on earth make poor decisions every day. People make poor financial decisions every day. Some investors had every penny of their life savings with Bernie Madoff. There's nothing cultural about making bad decisions... but the freedom to make them is something Americans do enjoy more than the residents of some countries.

If we are to have a truly free country, then this means allowing adults to make adult decisions... this includes bad decisions. I think your essay misses the point, Ganaraska. What I find remarkable is that America is a country of such freedom and affluence that something like RVing can be embraced by so many, for whatever reasons. I think it ill advised to single out RV purchasers as uniquely poor in financial decision making. With my retirement savings account down 50 percent, I don't feel well qualified to chastize others... although I'd like to wait another 10 or 20 years before I admit to utter foolishness. He who laughs last....

Is it better to have spent a princely sum on an exotic vacation... or on an RV? And who's business is it, really? If my neighbor wants to invest his life savings in a pink flamingo collection, isn't it his money? His passion? His life? If there is a unique American culture, one of its aspects is our willingness to let our fellow human beings generally pursue happiness... even when that happiness makes no sense to us. Now, if I could only get my French relatives to embrace the notion of tolerance.
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Old 02-21-2009, 10:07 AM   #6
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There's two questions here: Why would you take out a loan for %125 of the value of an item over 20 years when you're 72 years old? And Why would you buy an RV anyway? Very different questions. The answer to both might be 'Because you can!' Banks were asking for it - letting RV dealers write loans with no supervision - gee, wonder how that came to be abused? And if you're 72 and someone offers you a 20 year loan, then enjoy it while you can and when you can't your estate can figure out what to do about it. After all, the OP is talking about voluntary repos - I didn't even know you could do that. Take out a loan for %125, enjoy it until you don't want it anymore, then give it back. Get a little ding on your credit, but I'm sure some other greedy bank will still come long and give you more money, after all you just got rid of that huge RV loan No. It's funny how the banks seem to want to blame people for taking advantage of them when they were so greedy to to close their eyes and give anyone money for anything. Now the whole economy is collapsing and they want to blame the people who took them up on it.

As to why anyone would want an RV anyway, I think everyone here understands that. You're right, we're affluent, and our country is HUGE and there's lots of places to explore and camp and you could easily spend years and years in your RV exploring North American and as far South as you care to go. Do they do that in Australia or Canada? I'd guess those two countries would be closest to us in that.
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Old 02-21-2009, 11:35 AM   #7
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Old 02-21-2009, 01:09 PM   #8
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There was a red-headed bartender in Boseman, MT, in 1967, but that is for another forum).I know that tequila and red headed bartenders are an evil combination--no offense to the red headed bartenders out there, either.
Larry, could you please alert us to that Forum ASAP.

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Old 02-21-2009, 01:18 PM   #9
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Old 02-21-2009, 01:47 PM   #10
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On a more serious note, my parents became adults during the Depression. They were stingy most of the time. Like many others, my father loved his cars. He didn't know much about how they worked—one time he traded one that had hardly any oil in the engine—but he loved to drive. My mother encouraged long road trips and he got into it and we went all over the the US, drove to central Mexico, and parts of Canada. He was good a rationalizing purchases that he liked—nice cars every couple of years, electronic toys, nice tools, a nice house. He was also good at lecturing me about thrift.

There were lots of "labor saving" things in the house—washer, dryer (new to many in the '40's), a thing that pressed clothes and sheets, expensive vacuum, big freezer. Life was hard for many people before WWII, so comfort seemed to be a goal in itself. Those appliances came to the middle class after WWII and my generation grew up thinking there was an endless supply of more and more of those things.

I didn't want to be like my parents, but I was somewhat stingy. I did feel the pressure to buy bigger houses, more cars, radios with more than one speaker. The credit card appeared to many of us in the late '60's. My first car loan was in 1962. Some people wanted more and more and couldn't stop. They didn't want to be like their stingy parents and weren't. Not being a baby boomer (though I'm married to one) maybe makes me see this a little differently. Certainly the culture was expanding rapidly in the '50's and the feeling was that the US could forever get richer and everyone could have everything. It was patriotic to believe it. It was a limitless future and every generation would have more than the last. The culture promoted it, we wanted to be different than our parents and not be so stingy, and the addictive lure of all those nice toys.

That's the easy credit, want more part.

The other part is the ever living frontier. Now Frederick Jackson Turner may have declared the frontier was done for in 1890, but the frontier as part of American culture is still alive. The "open road", "two lane blacktop", exploring our marvelous country, seeing the West or the East (depending where you start). Frontier and freedom became entangled. The myth of America as a collection of perfect small towns with houses surrounded by white picket fences, families with 2.2 children, and daddy getting a good sized raise every year in a wonderful, fulfilling job, had to be realized somehow. The suburbs and the jobs didn't feed that myth enough for everyone, especially the "ungrateful" kids raised there. Perhaps as we lost freedoms (no real frontier, the era of the gray flannel suit, corporate "life", debt, involvement in world affairs), we craved it evermore. The automobile was escape—first a place to discover "love" and get away from parents, then a place to "see the USA in your Chevrolet".

But comfort is important too. A lot of city people look to that enormous expanse of America and want to see it, but not really experience it. Some went to "dude ranches" where they could pretend to be cowboys, but wouldn't tolerate living like a real cowboy. When they went camping, they didn't want to get dirty, "eliminate" in the woods, be around wild animals like worms, spiders and worse. So the market for RV's is developed.

Now for some of us did go backpacking and carried lightweight tents far into the wilderness. We also skied, ran and otherwise ruined our knees and backs. Since we didn't die at 40 like we were supposed to, and still want to travel, now we need comfort (just like our parents) and now we own RV's. Some financed them because credit was easy and the markets always go up. Listen to the rah-rah business channel, CNBC, and of course you'll finance more things. They tell us investments increase 10%/year over time, though they don't mention the rough spots. They tell us less regulations and innovative investment vehicles insure ever increasing wealth. A godlike figure running the Federal Reserve is praised by Congress, CNBC, the Wall St. Journal—who can argue with these "experts"? It was hard not to get caught up in it all, and just like before every boom busts, it infects the culture.

I wonder how much you had to put down to buy a Prevost? I wonder what the 2-year-old ones are going for right now?

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Old 02-21-2009, 04:14 PM   #11
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As a matter of fact camping is huge in Europe. Thus Airstream Europe. They have the same range of options we have with the exception of the motor homes. In Europe they may have a BMW diesel engine and look more like our class c. Europe by Motorhome

People were also buying TV's, video game centers, cars, trucks, furniture, computers, fancier cell phones, paying for the teen's text messages, new appliances, more clothes than they could ever wear out, sail boats, trail bikes, skis, building additions, taking vacations, and on and on. Some just borrowed as much as they could on their homes and put the money in the market or gave it to the local "I'll get you 10% broker"....

Those who did not fool themselves with buying a house above their station will not pay for those who did. Now who was smart and who got hosed...
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Old 02-21-2009, 06:12 PM   #12
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To the original post; you have no clue.
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Old 02-22-2009, 05:04 AM   #13
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I wonder how much you had to put down to buy a Prevost? I wonder what the 2-year-old ones are going for right now?

Gene
Well, here's a 2006 Prevost with very low miles on it that retailed for almost $1.4 mil, and was recently offered on Ebay at $515,000, but had no takers. So, I'd say it looks like they are going at considerably less than half of what they sold for new 2 years ago.

eBay Motors: 2006 Prevost Legendary XLII 45' Double Slide 11K Miles! (item 120380318262 end time Feb-18-09 22:32:54 PST)
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Old 02-22-2009, 07:32 AM   #14
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It's funny how the banks seem to want to blame people for taking advantage of them when they were so greedy to to close their eyes and give anyone money for anything. Now the whole economy is collapsing and they want to blame the people who took them up on it.
I differ in my assessment of the bank's position in this whole deal. They had their eyes wide open for the opportunity! They openly and willingly made money available for these loans. Why? Huge amounts of money to be made and nothing illegal about it. The banks are in the money loaning business. My mother used to say something like: "You can't legislate stupid".

No one pointed a gun at any of these people and forced them to buy something w/ 12 years of RV payments that they could not afford. It's the same w/ the housing debacle-people blaming the banks for the creative financing. No one, to date, has produced any documentation that proves that any bank withheld any closing info from these people or hid the small print. Do we want to put boat salesmen in jail next?

The people themselves, with very few exceptions, are absolutely to blame for their own financial problems-no one else!


The people that are having house payment problems because of a job loss are different. But don't try to tell me that a person, now jobless, who is losing his house, cars, boats, lake property, time share, girlfriend and wife, airplane, furniture, motorcycle, and Prevost (all financed and all going away) is the bank's fault. It is, however, becoming my problem as I am helping to pay for it--and so are you!

Now CrawfordGene differs in that not everyone is sharp enough to read a contract. Granted, but w/ all the free programs available like Legal Aid there is help available. If one cannot afford legal advice, one cannot afford an RV or a house. I already help pay for many free programs for people and there is one for the people that are not smart enough to read their own contracts. Sadly, maybe we need a subsidized program for people whom may not be smart enough to ask for free legal help to go ask for legal help. Where does it end?

Larry's Mantra: Stay away from stuff you don't understand. You will get burned, shot at, cut, bit, or abused if you get to poking at stuff you don't fully understand, especially stuff that is alive, running, unhappy, armed, liquored up, scorned, jilted, that you need to sign, or has tires.

The short list: chainsaws, rattlesnakes, women, lions, hand grenades, finance guys at car dealerships, helicopters, napalm, motorcycles, people in ski masks, women w/ guns, downed power lines, running w/ scissors, tequila, or anything you have to finance.

Go ahead, Gene. I know it is coming.
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