Archive for September 2014

A Potentially Important Shift In Income Demographics For Home Loans

Summary

  • The 2013 Home Mortgage Disclosure Act Data show a divergence in the number of home loans going to the low and moderate income buyers versus higher income demographics.
  • The current distribution is more consistent with pre-recession demographics.
  • A post-recession low in overall housing affordability may be at least partially responsible for the shift. Regardless, the shift is something to watch.
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MacArthur Foundation linked to payday lending

The report said the John D. and Catherine T. MacArthur Foundation, headquartered in Chicago, invested in a private-equity fund that bought into a company that had built a network of payday-lending websites. Payday lenders offer quick cash, backed by borrowers paychecks, to people desperate for money. The lending practice has been restricted or banned in several states, including Illinois, to protect consumers.

The story said the MacArthur Foundation was an investor in Vector Capital, a private-equity firm based in San Francisco. In July 2007, Vector said on its website that the MacArthur Foundation was an existing investor that had also joined in a new, $1.2 billion fund.

MacArthur Foundation spokesman Andrew Solomon told the Tribune, As a limited partner, the foundation has no say in the investment decisions made by the fund manager, and so we cannot comment.

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New payday lending laws are good, but not good enough, claim council chiefs

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NEW payday lending laws have been welcomed by council chiefs, although they claim more could be done to tackle illegal lenders.

The Financial Conduct Authority plans to bring in the new controls on interest rates and default charges from January 2015. Better affordability checks, and a crackdown on advertising were introduced in April 2014.

The new measures will complement existing work in Plymouth to tackle the issue.

Councillor Chris Penberthy, cabinet member for cooperatives, housing and community safety at Plymouth City Council, said: The council is already working hard to counter payday loans, with a range of measures including a ban on payday advertising on any council owned hoardings, blocking access to the websites of the top 50 lenders across our computer network, and funding a credit union shop front in the city centre.

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SA’s Payday Lending Ordinance Still Short on Change

This month marks two years since San Antonio passed its payday and auto-title lending ordinance. While elected officials and local advocates say the law makes loans more manageable for consumers and helps the city monitor a largely unregulated lending industry, they point out that the state’s failure to cap sky-high interest rates and fees means payments are still unaffordable for many financially strapped borrowers.

Texas is often referred to as the wild west of payday lending, where payday and auto-title lenders operate without much regulation. They bill themselves as fast and easy ways to get a loan, all the while preying on consumers by not clearly disclosing interest rates and fees. This type of lending is illegal in some states, while others cap interest rates and fees. In Texas, a loophole in state law allows lenders to charge unlimited fees and interest rates, sometimes as high as 500 percent. Currently there is no limit to the number of times a borrower can refinance a loan, nor is there a limit on the number of back-to-back loans, and consumers are often saddled with high loan repayments for much longer than a traditional bank loan, according to the Texas Fair Lending Alliance. After the Texas Legislature declined to address the issue in Austin in 2011 and 2013, cities and municipalities across the state took matters into their own hands where and when they could.

San Antonio’s ordinance, in addition to requiring lenders to register with the City and allow city officials to inspect their stores, limits the size of a payday loan to no more than 20 percent of the borrower’s gross monthly income. An auto-title loan can’t exceed 3 percent of a borrower’s income or 70 percent of the value of the car. The ordinance also limits the number of refinances on a traditional payday or auto-title loan to three, and requires that installment-style loans be paid back in no more than four installments. Also, 25 percent of each payment must go toward reducing the loan.

“In the past, a payday lender could loan someone a very large amount of money and, theoretically, that person could be on the hook for that money, plus fees and interest, in perpetuity,” said District 1 Councilman Diego Bernal, who carried the ordinance to fruition in 2012. “Now, there immediately is a light at the end of the tunnel, and a fee and payment structure that allows them to pay off that loan in a short and manageable period of time.”

As of May 2014, 217 state-licensed lenders were in business in San Antonio, and all but seven of those were registered with the City, said Jim Kopp with the City Attorney’s office. Three of those seven also refused to let the City inspect their stores. The City has filed criminal complaints against the remaining companies for failure to register. The first criminal case involving a company operating two Power Finance locations in San Antonio goes to trial as this issue hits the stands. The Current’s request for comment from Power Finance’s San Antonio-based lawyer was not returned by press time.

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Rise of the online payday lenders

The rise is perhaps best showcased by online lender Nimble, which offers quick loans of up to $1200 that can be approved through its website within minutes.

Nimble is hoping to distance itself from an industry often criticised for predatory lending practices and says it does not target disadvantaged customers on welfare.The companys chief executive, Sami Malia, said a typical Nimble customer earned $65,000 and was about 34 years old. There were some borrowers who earned more than $100,000.

I shiver a little bit when I hear people talk about payday lending, because it has quite a negative stigma attached to it, he said.

Despite this, Nimbles product is similar to many other payday lenders. Borrowers seeking quick cash can get loans of up to $1200 in their bank account within minutes. The companys marketing portrays itself as fun and cool, with quirky television ads and a chatty social media presence.

In an effort to rein in high interest rates, the federal government capped the costs of short-term loans last year. The maximum lenders can charge is a 20 per cent establishment fee and 4 per cent monthly fee.

This means a $1200 loan from Nimble will incur charges of $288 and must be paid back in as little as 17 days, depending on the payment schedule.

Where people can get into trouble is if they struggle to pay the loan back. Nimble tacks on a $35 dishonour fee as well as $7 a day for tardy payers.These fees are not endless – regulations cap total debts at 200 per cent of the initial loan – but can still leave some struggling to pay.

Ascot Vale landscaper Ashley Lord, 24, took out a loan from Nimble for $400, which grew to $800 when he couldnt pay it back. He said he applied for the loan after being short on cash and then seeing the companys ads on television. He believed the 24 per cent interest rate should have been clearer.

They just make it too easy. Within half an hour I had the money in my account, he said.

Mr Malia said the feedback from a vast majority of Nimbles customers was positive and he did not believe its fees and charges were hidden.When you go through the application process, there is a table that clearly stipulates the fees and scheduling, he said. After s inquiries, Nimble offered to reduce Mr Lords interest rate.

Consumer Action Law Centre chief executive Gerard Brody said he had concerns over how online lenders assess risk.

He said the anonymity and speed of online short-term loans also made them attractive for impulse purchasescompared with other forms of credit.

Some online lenders use marketing like, Do you need more cash for a night out or a holiday? I think that is targeting young people, he said.

Mr Malia saidNimbles risk assessment model was thorough, checking everything from credit history to how someone clicks the mouse when filling out the application form.

We see the way some lenders behave and were quite appalled by them, lending money to people who cant repay, he said.

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Customers at 3 NJ UPS stores might have had credit card information exposed

Some customers of The UPS Store may have had their credit and debit card information exposed by a computer virus found on systems at 51 stores in 24 states, including New Jersey

The affected New Jersey stores are on Route 35 in Middletown, Route 70 in Cherry Hill and Strykers Road in Lopatcong, UPS officials said.. The malware intrusion took place on April 29.

A spokeswoman for UPS says the information includes names, card numbers and postal and email addresses from about 100,000 transactions between Jan. 20 and Aug. 11.

United Parcel Service Inc. said Wednesday that it was among US retailers who got a Department of Homeland Security bulletin about the malware on July 31. The malware is not identified by current anti-virus software.

The company is not aware of any fraud related to the attack, spokeswoman Chelsea Lee said.

Atlanta-based UPS said it hired a security firm that found the virus in systems at about 1 percent of the companys 4,470 franchised locations. At many stores, the intrusion did not begin until March or April.

Lee said that the problem was fixed by Aug. 11 and the company took additional steps to protect systems at other stores. She said the affected stores were not linked electronically, and UPS is still investigating how they were compromised.

UPS said it is providing identity protection and credit monitoring help to affected customers.

The affected stores were in Arizona, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Louisiana, Maryland, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Virginia and Washington.

From the companys description, the breach appeared far smaller than one that hit Target Corp. during the holiday-shopping season, when hackers stole credit and debit card information involving millions of customers. Fallout from the incident is still hurting profits. Target, which said Wednesday that second-quarter profit fell 62 percent, has spent $235 million related to the breach, partly offset by $90 million in insurance payments.

The UPS breach wont have a material financial impact on the company, Lee said.

Last week, Supervalu said that hackers might have stolen names, account numbers, expiration dates and other information from card holders who shopped at up to 200 of its grocery and liquor stores. Restaurant operator PF Changs, Goodwill thrift stores and other retailers have been hit by data breaches.

The Associated Press and Star-Ledger staff writer Jeff Goldman contributed to this report.

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Is payday lending predatory or necessary? What you’re saying

COLUMBUS, OhioA fact-check of Connie Pillichs attack of Josh Mandel over campaign donations prompted debate among readers about whether payday lending is predatory.

In a news release last week, Pillich, a Cincinnati-area Democratic lawmaker running for state treasurer, blasted Mandel, the Republican incumbent, for accepting campaign donations from predatory lenders.

Her campaigncited a Dayton Daily News storystating that Mandel received at least $170,000 from payday lenders during his unsuccessful 2012 US Senate campaign.

The companies have been criticized as exploiting poor people by offering them quick cash at extremely high interest rates. Defenders of payday lenders counter that their loans are often made to high-risk borrowers and are preferable to penalties such as bank overdraft charges and utilities disconnect fees.

Even though Ohio lawmakers capped payday lending interest rates at 28 percent in 2008, many loan companies have skirted the new rules by registering as mortgage lenders.

Several cleveland.com readers railed against payday lenders in general, though some readers came to the defense of the loan companies.

Heres a sampling of what cleveland.com readers had to say. You can offer your own thoughts in the comments belowor at the original story.

Vet420:Critics contend that most payday loans are predatory, but theres no agreed-upon definition of what constitutes predatory lending. No. ALL payday lenders are predatory lenders.

RingGirl2 replied to Vet420:Then dont use them. Easy.

Dyt:Payday lenders and predatory lenders: tuh-may-tohs and tuh-mah-tohs. Barring extenuating circumstances, if you cant make it from one pay period to the next and have to borrow and pay it back the next pay period… Well, if you cant figure out the rest, stop reading. Im talking about you.

Have at least a low bar on campaign contributions. These leeches keep working people poor and on social services, which Im sure as the good Republican, [Mandel is] rail[ing] against.

YTown Joe:OK. Show me a payday lender who is not a predatory lender. Its robbing the poor by the well-off. These lenders were simply making an investment in Mandel to keep their scheme going with no interference from consumer protection laws.

Blandrews4:Not everyone has cash and or credit on hand when an emergency occurs. Hate them all you want, PDL [payday lenders] fill that void.

Pizazza:Payday lenders are predatory lenders. Just ask the poor folk that find themselves becoming indebted to them. Your analysis [story] wishes to use semantics to deflect the obvious from the reader.It is common knowledge that these lenders prey upon those with the least financial ability.

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Baton Rouge Metro Council delays vote on payday lending restrictions

The debate over payday lending practices in Baton Rougewill continue, after the Metro Council voted to postpone a decision on whether to restrict the spread of the businesses.

Council members pushing for the restrictions aretaking up a cause initiatedin the state legislature this spring, which failed. Metro Council members Ronnie Edwards and Donna Collins-Lewis want to restrict new credit access businesses from locating within 1,000 feet of residential zones, existing payday lenders, pawn shops, churches, public libraries, schools, daycare centers, public parks, playgrounds, businesses that have liquor licenses, and casinos.

The requirements would only affect new locations, not any that already exist.

Edwards and Collins-Lewis ordinance would also allow payday lenders to only be open between 7 am and 7 pm

Supporters of the ordinance talked about how the lenders are trapping customers in a cycle of debt, charging exorbitant rates and fees so they are forced to borrow more and more to pay them off.

People are actually involved in modern-day financial slavery as a result of payday lending, Edwards said.

To make her point further, she played a critical and satirical video clip about payday lending practicesfrom Last Week Tonight with John Oliver perhaps the only time a comedy news show has been used for background material for the Metro Council.

Representatives of payday lending companies, however, said this debate should be taking place at the state level. The industry is highly regulated, they said, pointing out that no one restricts the number of fast food restaurants even though fast food is unhealthy.

Council member Buddy Amoroso argued against the ordinance, saying that it prevents competition that could improve the payday loan industry.

Sometimes people do make bad decisions, but I believe that citizens of our city and parish are intelligent enough to know the difference between what is predatory lending and what is a loan of necessity, he said.

An initial attempt to approve the item failed by a vote of 4-4. The council will revisit the issue at its next meeting in two weeks.

In other business at Wednesdays meeting, council members voted to approve the reduction of the speed limit on Staring Lane from 40 to 35 miles per hour, at the request of many residents in the area. They also deferred a discussion on what to do about bus bench advertising in the parish, and are waiting for the bus bench companies to meet with the Department of Public Works and CATS.

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Marc Coons opens new office with Caliber Home Loans

Caliber Home Loans, Inc. recently announced the appointment of Marc Coons as a new senior mortgage loan officer in Paso Robles. He joined Caliber in March and is responsible for the originations of purchase and refinance loans, business development, customer service, and office operations. He now runs Calibers office at 554 Spring St., Paso Robles.

I am excited to be a part of Caliber and managing my own office in town, Coons says. We offer competitive financing rates and great customer service for Paso Robles residents and all of the Central Coast, he said. Weve got a great team here and we are regularly closing loans in three weeks or faster.

Coons is a Paso Robles native and began his mortgage lending career with Mid-State Bank amp; Trust in 2005. He is licensed by the Nationwide Mortgage Licensing System which includes training and testing in all aspects of the mortgage and real estate lending industry. He is an affiliate member of the Paso Robles Association of Realtors and a volunteer for the local Special Olympics.

Coons can be reached at (805) 712-8040, Marc.Coons@caliberhomeloans.com, at his new office on Spring St.

About Caliber Home Loans, Inc.

Caliber Home Loans is a full service mortgage bank offering a diverse array of residential loan programs for both purchases and refinances. Programs include conventional, government, and our proprietary portfolio products. The company is an approved Seller/Servicer for both Fannie Mae and Freddie Mac, an approved issuer for Ginnie Mae and is an approved servicer for FHA, VA and the USDA. Caliber Home Loans is committed to enhancing the lives of its customers, employees and business partners.

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Fixed-rate home loans back

MUMBAI: ICICI Bank has brought back fixed-rate mortgages. The bank is offering home loans up to 10 years at a fixed rate of up to 10.25%, which is close to 10.15% it charges its floating-rate customers. The move is aimed at locking into a sizeable home loan portfolio which can be funded by floating infrastructure bonds.

Market leader HDFC offers partially fixed-rate loans where rate is set at 10.25% for first two years, which is close to pricing of its floating-rate loans of 10.15%.

Citibank offers a fixed rate of 10.1% till September 2015, after which it charges a variable rate on home loan product. Among other lenders, PNB Housing also offers fixed-rate home loans at up to 10.75% to salaried borrowers.

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