Archive for June 2016

Of Course 2 out of 3 Millennials Don’t Have Credit Cards

The average household with credit card debt now owes $7,879 — or just $500 less than credit card ratings and analysis site CardHub considers unsustainable for a median household income of little less than $52,000. On top of that, according to the Federal Reserve Bank of New York, roughly 8% of all credit card bills are more than 90 days past due — far worse than the percentage of mortgages (2.3%), home equity loans (2.4%) and car loans (3.4%) similarly behind.

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Life Insurance at Various Life Stages

Dual-income families need life insurance, too. If one spouse dies, it is unlikely that the surviving spouse will be able to keep up with the household expenses and pay for child care with the remaining income.

Single again

If you and your spouse divorce, youll have to decide what to do about your life insurance. Divorce raises both beneficiary issues and coverage issues. And if you have children, these issues become even more complex.

If you and your spouse have no children, it may be as simple as changing the beneficiary on your policy and adjusting your coverage to reflect your newly single status. However, if you have kids, youll want to make sure that they, and not your former spouse, are provided for in the event of your death. This may involve purchasing a new policy if your spouse owns the existing policy, or simply changing the beneficiary from your spouse to your children. The custodial and noncustodial parent will need to work out the details of this complicated situation. If you cant come to terms, the court will make the decisions for you.

Your retirement years

Once you retire, and your priorities shift, your life insurance needs may change. If fewer people are depending on you financially, your mortgage and other debts have been repaid, and you have substantial financial assets, you may need less life insurance protection than before. But its also possible that your need for life insurance will remain strong even after you retire. For example, the proceeds of a life insurance policy can be used to pay your final expenses or to replace any income lost to your spouse as a result of your death (eg, from a pension or Social Security). Life insurance can be used to pay estate taxes or leave money to charity.

Stacy Bush has practiced independent financial advising in the Valdosta area for 15 years. Growing up on a farm in Donalsonville, Georgia, he is keen to the financial needs of South Georgia and North Florida families. Stacy and his wife, Carla, live in Valdosta with their four children. You can submit questions about this article to askstacybush@lpl.com

Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC. The opinion voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Bush Wealth Management and LPL financial are separate entities.

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What Americans Like and Don’t Like About Mobile Payments

Generational demographics could be keeping smartphone payment technologies from gaining real traction. One of the biggest complaints I see about mobile payments is from the older generation, saysScott Vance, a financial advisor at Trisuli Financial Advising, in Cary, NC Older Americans are still not comfortable with handing over information about their accounts to apps and computer programs. I have numerous clients that avoid any sort of mobile app. Instead, I work with them using paper and pen, in a totally old school manner.

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My Town Miracles Helping Those in Need, One Family at a Time

The Greater Memphis area has more beached starfish than any one group can save, so this group chooses to love on those it can help, said Learn more about Richard McClure

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Watch Service>Richard McClure, a member of the My Town Miracles advisory board.

The 501(c) 3 gets its name from My Town Movers, a Collierville-based local and long-distance moving company that has expanded into lawn, garden, roofing and renovation services.

Our goal is, we serve you so well you refer a friend, Fenderson said.

When it comes to their latest nonprofit enterprise, he wants to downplay the story of moving and renovation. My Town Miracles was born in December 2015 and unlike many other charities that focus on a large cause, this group chooses to work with a family or individual.

We all see the person under the bridge, McClure said. We dont know who they are, but we know they didnt get there overnight and they cant get out from under the bridge overnight. We need to learn their story.

So the group seeks to learn the stories of those in need. Help could involve partnering with another organization to learn job skills, break alcohol and drug addictions, or get the person reunited with estranged family members. Each situation can be unique, but the ultimate goal is to empower the one being helped so he or she can help themselves for years to come.

My Town Miracles looks for opportunities to serve throughout the Mid-South, not just in its hometown of Collierville. The group started from the premise of Life, liberty, learning and last days.

Beginning of life issues include everything from birth of a child to adoption, McClure said. Liberty is trying to break the chains of drug and alcohol addictions. Learning is trying to get that individual who may be under-skilled or underemployed gainfully employed back into the workforce. Last days has to do with our seniors, and an example is those in hospice care.

Do for one what you wish you could do for many, is what board member Learn more about Andy Savage

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Watch Service>Andy Savage told McClure. Savage is a pastor from Highpoint Church, which Fenderson and his family attend. Another member of their congregation is Kristen Hachtel, an occupational therapist, who is working with 3-year-old Paisley Alexander of Hernando, Miss. The connections led the group to their first miracle.

Paisley was born with a rare medical condition, Schwartz-Jampel syndrome, which manifests with a form of dwarfism and spinal issues. It will require numerous surgeries. Her mother, Learn more about Stacy Alexander

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Watch Service>Stacy Alexander, had to quit her job after Paisley was born because of the constant medical visits to get therapy, even trips to a specialist in Wilmington, Del. The Alexanders also have a 6-year-old son, Carter, and husband Rusty became the sole source of income.

On May 6, that came to an end when Rusty Alexander was killed in a car wreck. He had no life insurance. Even their auto insurance did not have the vehicle on the policy.

God put them in our hearts, Fenderson said. We want to show love works. We cant just think about doing something. If someone just sits around and waits for someone to do something, nothing gets done.

The advisory board went to the home and met the family.

We had half our board present. All grown men, all fathers, all crying, McClure remembers.

My Town Miracles is letting Stacy and her children adjust by paying her house note for six months, her car note for six months and giving her three years of financial advising, including helping her find a job (she has a business systems background). Plus they opened a Go Fund Me account.

I can breathe, focus on my kids and focus on the new normal, Stacy said. There are no words. lsquo;Thank you doesnt sum it up. Ive never been this grateful in my life.

Ive lost all sense of everything. Its like Im in an alternate universe.

Tears come to her eyes and the energetic Carter turns comforter, jumping into her lap for a big hug. Paisley moves her walker closer, not quite jealous, but definitely in a Hey, dont forget about me way.

We want to change the trajectory of the path of her life, Fenderson said. We want to do something impactful and generational.

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Caveat, Lender: One-Third of Loan Co-Signers Have to Buck Up and Pay Up

If the person cant get a loan in the first place thats a red flag, says Scott Vance, a financial advisor with Trisuli Financial Advising. I advise my clients that if they truly intend on helping the person seeking the co-signer, consider just buying the item outright or contributing enough for them to become eligible for the loan and consider it a gift.

Note also that most student loans do not require co-signers. Federal student loans, such as the Federal Stafford loan and Federal Perkins loan, do not require co-signers, says Mark Kantrowitz, publisher and vice president of strategy at Cappex.com, a company that connects students with colleges and financial aid. Private student loans, on the other hand, almost always require a co-signer. More than 90% of private student loans to undergraduate students require co-signers and more than 75% of private student loans to graduate and professional students require co-signers.

Parents should ask themselves how much they trust their child before co-signing a private student loan for the child, Kantrowitz. Co-signing a private student loan is like giving the student control over the parents finances, since an irresponsible or careless student can easily ruin the parents credit, he says.

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Regulators propose first federal restrictions on payday lending

NEW YORK #x2014; Federal regulators proposed a significant clampdown on payday lenders and other high interest loans on Thursday, the first nationwide attempt to address an industry widely thought of as taking advantage of the poor and desperate.

The proposals, if enacted intact, are likely to cause a nationwide contraction and restructuring of the $38-billion payday loan industry. Consumers desperate to borrow money quickly to cover an unexpected expense might have an avenue they once used now closed, since mainstream banks generally dont provide these kinds of low-dollar, short-term loans.

Payday lending is often thought of as an exploitive, deceptive industry that traps desperate borrowers in cycles of debt that can last for months. Roughly half of all states ban payday lending outright or have caps on how much payday lenders can charge in interest, which often carry annual rates north of 300 percent.

The loans are used widely, partly because many Americans do not have enough savings to cover an emergency. The average borrower takes out eight loans of $375 each per year, spending $520 on interest.

The Consumer Financial Protection Bureaus proposed regulations seek to tackle common complaints about the payday lending industry. The proposal would also be the first nationwide regulation of the payday lending industry, which had largely been left to the states to regulate.

The CFPB is proposing that lenders must conduct whats known as a full-payment test. Because most payday loans are required to be paid in full when they come due, usually two weeks to a month after the money is borrowed, the CFPB wants lenders to prove that borrowers are able to repay that money without having to renew the loan repeatedly. There would also be restrictions on the number of times a borrower can renew the loan.

The CFPB would require that lenders give additional warnings before they attempt to debit a borrowers bank account, and also restrict the number of times they can attempt to debit the account. The aim is to lower the frequency of overdraft fees that are common with people who take out payday loans.

Payday lenders would have to give borrowers at least three days notice before debiting their account. Also, if the payday lender attempts to collect the money for the loan twice unsuccessfully, the lender will have to get written authorization from the borrower to attempt to debit their account again.

In a study published last year, the CFPB found that payday borrowers were charged on average $185 in overdraft fees and bank penalties caused by payday lenders attempting to debit the borrowers account.

The agencys plan is likely to face stiff opposition from lobbyists from the payday lending industry and auto-title lending industry, as well as opposition from members of Congress.

The agency is seeking comments on the proposals before final regulations are issued. Comments are due by Sept. 14. The final rules are likely to go into effect early next year.

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Weighing home equity lending

By Kate Garber and Mohammad Eazaz Khan, SNL Financial staff writers

Home equity loans and lines of credit at large banks declined again during the first quarter of 2016, as both borrowers and lenders continue to rethink the post-crisis HELOC product.

The first three months of 2016 marked the 29th consecutive quarter of declines in home equity loans and lines of credit in the banking industry. The aggregate balance among US banks and thrifts dropped 1.81% to $523.68 billion as of March 31, according to SNL Financial data.

The large base of HELOCs, a hangover from the financial crisis, has locked into maturation, said Vining Sparks analyst Marty Mosby. More of these loans are being paid off and the post-crisis, redesigned version of the product has not been able to originate new loans fast enough to counterbalance that decline, he added.

The four largest US banks and many superregional banks top the list again of institutions with the largest declines in the first quarter of 2016 because of the large portfolios of HELOCs that they accumulated when the product was a key part of their consumer lending business, according to Mosby.

They built up those big portfolios and theyre still getting payoffs and paydowns that are still outpacing their ability to originate, he said.

Before the housing crisis, borrowers were encouraged to draw and spend the funds from their lines of credit, said Guy Cecala, CEO of Inside Mortgage Finance. Now, they are more of a specialized product for banks and a tool for borrowers who want to do home improvement projects, Mosby said.

People also thought that home price appreciation was going to go on forever and never really worried about it, Cecala pointed out. People now recognize theres no guarantee your home is going to appreciate and theyre looking at it more as a loan that has to be paid back or at least paid down at some point.

In the current environment, lenders are also more attuned to the need for a system that enables customers to repay HELOCs instead of maintaining them, Cecala said. He said that before the housing crisis, most lenders exclusively offered an interest-only option for making payments. Now, most banks offer three ways to pay down a HELOC, he said. Cecala said that the two other paydown options allow borrowers to choose interest-only

Still, Cecala said that most banks are hoping to ramp up their HELOC originations. Due to a fairly flat mortgage lending market so far in 2016, financial institutions are looking to related areas to boost volume, he said.

Amid a generally positive tone in the US housing market and rising home prices, some banks are optimistic. During the banks April 14 earnings call, Bank of America Corp. CEO Brian Moynihan said that home equity has kicked back up a little bit because people see equity in their homes.

Mosby said that residential real estate is growing, particularly in the one- to four-family space which has turned a corner.

HELOC is still kind of working through the overhang from the financial crisis and the overemphasis that was so significant back before the downturn, he added.

This article originally appeared on SNL Financial’s website under the title, Banks continue to deal with HELOC hangover in Q116

Download reprint of SNL article

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Federal suit would take Google’s payday lending crackdown one step further

Last year, the Consumer Financial Protection Bureau sued T3Leads, a Burbank, Calif., broker that sells consumer loan inquiries to online lenders, alleging that it does little to prevent the lead-generation sites it works with from making misleading claims. (Jerome Adamstein/Los Angeles Times/TNS)

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Mortgage Technology’s Winning Formula

Modern technology like Snapdocs has been rapidly flooding the heavily regulated and process-centered mortgage industry. Closing operations teams, however, are a camp divided when it comes to embracing new technology. Surely, some are afraid at first glance that their jobs will be replaced. But the dynamic teams understand that taking time-consuming, rule-based tasks out of the hands of humans will open up resources for more service-oriented, white glove initiatives. In an extremely competitive landscape, service and reputation will be the only way companies are going to be able to differentiate themselves.

The aforementioned podcast discusses modern personal financial advising as an example. Today, complicated portfolio allocation is in auto-drive thanks to software. As a result, the hours financial advisors had been draining by manually pulling the levers is now spent counseling their clients and adding value beyond stock picking. Technology is augmenting their ability to spend less time on tedious tasks and more time on optimization and relationship building. And most importantly, clerical errors as to where money is allocated are non-existent. Can you imagine a personal financial advisor promoting the fact that they rarely accidentally put money in the wrong mutual fund?

For mortgage closing operations professionals, the priority is to close a loan package swiftly and pleasantly, without mistakes. The discussion on the table shouldn’t be, “How can technology replace human involvement altogether during the loan closing process?” It should be, “How can we arm our teams with the right tools to promote a new level of service and consultation to our clients and take risky, manual tasks off their plates?” Competing on low error rates and ability to pass audits will soon be a thing of the past. Mortgage companies committing today to arm their workforce with a modern tech stack that augments day-to-day work will surely have a head start on the competition.

As someone tasked with selling mortgage technology, this analysis may seem self-serving. However, fully automating –not just augmenting–my craft (sales teams) is constantly written about, as well. But rather than aiming to replace people, I actively invest in technology for our team to cut down time-consuming tasks like prospecting, data entry and reporting. By leveraging technology to bring rare and valuable skill sets to the forefront, my team is more productive and fulfilled. It’s a mindset that can apply to any industry, and I’ve been lucky to bond with leaders in the mortgage industry who are on the same page.

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Predatory Payday Lenders’ Top Democratic Ally Flip Flops On New Rules

After months of public pressure and a stiff primary challenge from her left, Democratic National Committee chairwoman Rep. Debbie Wasserman Schultz (D-FL) reversed her position on payday lending Thursday.

Hours after the Consumer Financial Protection Bureau (CFPB) unveiled first-ever federal rules for the loans on Thursday, Wasserman Schultz issued a written statement praising the agencys work on Facebook. I stand with the CFPB in its efforts to protect Americans from predatory lending, she wrote. After reviewing the proposed rule, it is clear to me that the CFPB strikes the right balance and I look forward to working with my constituents and consumer groups as the CFPB works towards a final rule.

Wasserman Schultz has been a close ally of the predatory industry for years, dating back to her time in the Florida statehouse around the turn of the century. But it wasnt until this spring, when the official leader of the Democratic party used her heft within the caucus to urge other Democrats to help ensure payday lenders could evade regulation nationwide, that her long advocacy for 400 percent interest rates and endless debt traps for the working poor became a political liability.

In December, Wasserman Schultz signed onto legislation that would have cut up the CFPBs rules before they were even issued. The influential Democrat went further, circulating a memo urging other House Democrats to support that same bill.

The premise of HR 4018 was that the CFPB rules should not be allowed to trump existing state legislation. Leading proponents of the bill argued repeatedly that Floridas own payday lending law was a gold standard for regulating payday lending. It is nothing of the sort, as the data about consumer outcomes in Florida proves. Borrowers face average costs twice as high in Florida as in Colorado, where rules are more strict but payday lending is still allowed. Floridians face an average annual interest rate of 304 percent, compared to 121 percent since Colorados reforms.

Wasserman Schultzs Thursday statement tried to bury her very recent history of seeking to pre-empt the CFPBs rules. From the outset of this process, I have said that I trust the CFPB to do what’s right for consumers, the statement says.

As of Friday afternoon, Wasserman Schultz is still a co-sponsor of the legislation that was explicitly premised on the idea that the CFPB rules would be less good for consumers than Floridas law. While the law has not moved in committee and is likely functionally dead, it could still theoretically be revived late this year as part of widely anticipated Republican attacks on the agency and the rules. The chairwomans office did not respond to requests for comment.

Between her work on HR 4018 and her tens of thousands of dollars in campaign donations from the payday lending industry, the six-term House veteran has been feeling the heat back home. TV and billboard advertising labeled her Debt Trap Debbie.

Bernie Sanders helped raise money for Tim Canova, who is the first primary challenger Wasserman Schultz has ever faced. Canova faces long odds of unseating the powerful chairwoman. But hes won high-profile union endorsements, and Sanders fundraising support has given him a large campaign war chest.

Prominent progressive Sen. Elizabeth Warren (D-MA) also appeared to take shots at the Chairwoman, both when the news of her support for HR 4018 broke and when the CFPB rules dropped Thursday.


The rules CFPB laid out Thursday stop well short of what consumer advocates had hoped for, and prompted especially fervent criticism from the Pew Charitable Trusts research team that has been working on predatory lending for years. While the rules would provide the first-ever nationwide framework for curbing payday loan abuses, the current shape of the rules leaves significant loopholes for the industry to continue squeezing the poor.

The industry is still publicly scornful of the rules. But they have already won a better deal from the agency than most observers anticipated.

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