Lenders – One Payday http://onepayday.com/ Wed, 18 May 2022 13:50:02 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://onepayday.com/wp-content/uploads/2021/11/icon-2-150x150.png Lenders – One Payday http://onepayday.com/ 32 32 The 6 main reasons why lenders check your CIBIL score https://onepayday.com/the-6-main-reasons-why-lenders-check-your-cibil-score/ Wed, 18 May 2022 10:53:42 +0000 https://onepayday.com/the-6-main-reasons-why-lenders-check-your-cibil-score/ New Delhi | Jagran Brand Office: Before applying for a loan, it is imperative that you meet the eligibility criteria set by the lender. Here, the CIBIL score is usually one of the most important criteria that lenders evaluate when deciding whether to approve or reject your application. Your score is based on your credit […]]]>

New Delhi | Jagran Brand Office: Before applying for a loan, it is imperative that you meet the eligibility criteria set by the lender. Here, the CIBIL score is usually one of the most important criteria that lenders evaluate when deciding whether to approve or reject your application. Your score is based on your credit history and helps lenders determine your creditworthiness. TransUnion CIBIL Limited is an organization that records and tracks your credit history. This agency assigns a three-digit CIBIL score to your profile, ranging between 300 and 900.

For unsecured loans, having a healthy credit rating is essential, as you don’t need to give collateral and lenders have nothing to fall back on to recoup losses. From a lender’s perspective, the CIBIL score serves as an unbiased and accurate snapshot of a potential borrower’s credit profile. This makes it a critical factor in the underwriting and valuation processes. For a clearer idea of ​​why lenders check your CIBIL score before approving a loan, read on.

To make sure you meet their loan eligibility criteria

When you qualify for a loan, you must meet the qualifying criteria set by the lender. Regarding the CIBIL score, most lenders will require applicants to maintain a minimum score, which is usually 750. This helps to screen applicants and highlight those who are easily eligible for the loan and those who will require additional supporting documentation and evidence to obtain approval.

Note that some lenders offer special instruments like personal loan for low CIBIL score candidates. These will have different criteria and serve as a funding solution for those who may not have a high enough score. This can happen due to a lack of credit experience or if they have encountered issues that have caused their score to drop.

To assess your credit history and experience

Your CIBIL score is based on your credit history and having an adequate score suggests that you have managed your credit responsibly in the past. Although the length of credit history weighs only 15% on your CIBIL score, it is important. Naturally, in addition to checking your score, lenders will review your credit report to check your repayment history.

Moreover, a balanced credit mix without any defaults is also a good sign for lenders. This suggests that you can manage credit well while maintaining healthy finances. The credit breakdown has a 10% weighting on your CIBIL score, so lenders evaluate both of these factors to better understand your credit profile.

To check the number of new requests

New credit applications cause a temporary reduction in your CIBIL score, and a significant drop over a short period of time can be seen as a sign of a credit-hungry person. These applicants are considered a risk and lenders are less likely to approve. If the loans are approved, the applicable terms will not be the most favorable. Credit-hungry people are a red flag for lenders, so you shouldn’t repeatedly apply for new credit.

To check your existing debts and if you are a guarantor

Although a guarantor is not primarily responsible for repaying the loan, your CIBIL score is negatively affected if the primary borrower misses payments. Moreover, in such cases, repayment becomes your responsibility, which adds to your debt to income ratio. So lenders check your current debts and assess whether or not you can comfortably handle the extra payments.

Decide on loan details

Lenders take your CIBIL score into account when deciding what interest rate and penalty you can qualify for. If you apply with a CIBIL score of 750 or higher, you are more likely to get a favorable interest rate, and you may even have the option of borrowing the maximum penalty offered. The best lenders offer a hefty penalty of up to Rs. 25 lakh but take advantage of this amount; you will need an excellent credit profile.

To extend specialty offers, if applicable

Lenders offer specialized offers, such as pre-approved personal loan offers for existing customers, and these are largely dependent on your CIBIL score. With a high CIBIL score, not only do you qualify for these offers, but you can also access other benefits. This comes in handy when you need instant financing, as lenders consider you a low-risk borrower. Lenders like Bajaj Finserv offer customers who have a healthy credit profile personal loans of up to Rs. 25,000,000. competitive interest. To take advantage of these benefits and more, check your pre-approved offer in just 3 seconds and enjoy instant financing.

(Note: the article is written by the Brand Desk.)

Posted by:
Aalok Sensharma

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Mini-Perm, bridging loan volume hits $1bn in Q4 as lenders become more selective https://onepayday.com/mini-perm-bridging-loan-volume-hits-1bn-in-q4-as-lenders-become-more-selective/ Mon, 16 May 2022 22:53:17 +0000 https://onepayday.com/mini-perm-bridging-loan-volume-hits-1bn-in-q4-as-lenders-become-more-selective/ New mini-permanent and bridging loans for seniors housing hit an all-time high of nearly $1 billion in the fourth quarter of 2021, suggesting some lenders are more comfortable with lending for now. providing shorter-term, low-risk loans. That’s according to recently released data from the National Investment Center for Housing and Aged Care (NIC). In total, […]]]>

New mini-permanent and bridging loans for seniors housing hit an all-time high of nearly $1 billion in the fourth quarter of 2021, suggesting some lenders are more comfortable with lending for now. providing shorter-term, low-risk loans.

That’s according to recently released data from the National Investment Center for Housing and Aged Care (NIC).

In total, lenders distributed more than $3.8 billion in Q4 2021; $2.26 billion in seniors’ residences and $1.57 in nursing care. Of the amount lent for senior housing projects, $991 million came from mini-perm/bridge loans and $236 million from new construction loans.

This is a five-fold increase in mini-perm/bridge loans on a same-store basis from the third quarter of 2021, representing the largest quarterly increase since NIC began its survey of lending trends in 2016.

Mini-permanent/bridge loans have amortization periods typically of three and five years. Borrowers typically use them as interim financing after a construction loan, but before getting a longer-term mortgage.

According to Beth Mace, NIC’s chief economist, the increase in the volume of mini-permanent/bridge loans with the decrease in the volume of loans for the construction of new buildings could reflect a cumbersome selection process.

“Lenders are still making loans, but some may want more evidence of occupancy and rate performance before issuing permanent loans,” she added. “No one wants to see projects fail, so some lenders may be selective in lending as the market continues to recover.”

New construction loan issuance slowed 59%, a “bit of a surprise” development, Mace noted.

“But maybe it’s just a matter of timing,” she added.

Combined, the amount lent through mini revolving/bridge loans and new construction loans increased by 3.2% in 4Q2021, a lower growth rate than the 6.2% increase seen in the prior quarter.

The NIC report also showed that delinquent loans in retirement homes rose slightly in 4Q2021, following two consecutive quarters of declines from pandemic-era highs seen in 2020.

Delinquent loans increased 10 basis points from the previous quarter in 4Q21 and represented 1.1% of total loans disbursed in retirement homes – well below “the variability seen in delinquency data before the pandemic,” according to the report.

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Complaints against non-bank lenders double amid cost of living crisis https://onepayday.com/complaints-against-non-bank-lenders-double-amid-cost-of-living-crisis/ Mon, 16 May 2022 05:23:11 +0000 https://onepayday.com/complaints-against-non-bank-lenders-double-amid-cost-of-living-crisis/ Complaints about unsecured debt have more than doubled in the past year as consumers struggle to repay their loans in the face of rising living costs. Financial services complaints boss Susan Taylor says lenders have a responsibility to “watch out” for people they might see getting into trouble. Photo: 123RF Dispute resolution service Financial Services […]]]>

Complaints about unsecured debt have more than doubled in the past year as consumers struggle to repay their loans in the face of rising living costs.

Financial services complaints boss Susan Taylor says lenders have a responsibility to “watch out” for people they might see getting into trouble.
Photo: 123RF

Dispute resolution service Financial Services Complaints said it was also receiving about 20 complaints a week against non-bank lenders – also doubled from 12 months ago.

The organization said it was the biggest increase since it began 11 years ago.

Chief executive Susan Taylor said the majority of complaints have come from people struggling to honor their payments.

“They want the lender to consider putting in place some sort of relief package for them. Sometimes underlying the hardship complaint there may also be a complaint that the loan was irresponsible in the first place.

“Some people may say that the lender should not have advanced this loan because [they were] always going to struggle to pay it back.”

But consumers have often complained because their circumstances have changed due to rising costs and reduced work hours, Taylor said.

She said if consumers are in trouble, they should speak to their lender as soon as possible.

“Borrowers should be aware that if the lender tries to contact them and they are late, it is better that they have those conversations sooner rather than later.

“We understand that it can be difficult to have these conversations, however, over time the options diminish and you don’t want to have to pay default charges and accrued interest, which will increase the longer it takes to solve the problem. publish.”

For lenders, Taylor said the Responsible Lending Code outlines the steps to take when borrowers are in trouble.

“For example, a borrower may call their lender to tell them that they unexpectedly lost their job and are struggling to meet their repayments.

“The lender should remind them that they can request changes to the amount of the repayment or the credit agreement, tell them what information the lender needs to assess the request and any time limits that may apply.”

Lenders had a responsibility to “watch out” for people they might see getting into trouble, Taylor said.

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Meet the ‘last resort’ mortgage lenders rising from the ashes of the financial crisis to help underqualified borrowers buy a home https://onepayday.com/meet-the-last-resort-mortgage-lenders-rising-from-the-ashes-of-the-financial-crisis-to-help-underqualified-borrowers-buy-a-home/ Sat, 14 May 2022 11:45:00 +0000 https://onepayday.com/meet-the-last-resort-mortgage-lenders-rising-from-the-ashes-of-the-financial-crisis-to-help-underqualified-borrowers-buy-a-home/ A suburban neighborhood.buzzer/Getty Images Demand for mortgages has skyrocketed during the pandemic. The same goes for the number of self-employed people, a group that often struggles to qualify for a mortgage. As a result, unconventional mortgages are gaining ground, while other home loans are collapsing. The number of Americans struggling to get a mortgage is […]]]>

A suburban neighborhood.buzzer/Getty Images

  • Demand for mortgages has skyrocketed during the pandemic.

  • The same goes for the number of self-employed people, a group that often struggles to qualify for a mortgage.

  • As a result, unconventional mortgages are gaining ground, while other home loans are collapsing.

The number of Americans struggling to get a mortgage is on the rise, and a group of niche lenders are cashing in to help.

Sprout Mortgage, Angel Oak, Carrington and Athas Capital Group are four of the lenders promising to help borrowers without W-2s. They offer competitive prices and say they help those who are on the road to repairing their credit.

Their specialty caters to ordinary investors and borrowers who could not qualify for the tough underwriting standards that followed the 2008 housing crisis, as well as the self-employed. Following the subprime crisis, they were embraced by some but did not play a major role in housing finance in the United States.

Now, as the rest of the mortgage industry shrinks, these lenders are doing better than ever by catering to borrowers who were market pariahs due to low credit scores, heavy debt or their self-employed status. Loans from these lenders differ from conventional mortgages in that they are not backed by the US government or financial agencies Fannie Mae and Freddie Mac – which have stricter underwriting guidelines – and they do not meet the definition of a “mortgage qualified” gold standard” set by the Consumer Financial Protection Bureau.

The pool of borrowers for these “non-QM” loans can be large, with about 8% mortgage applications turned down each year, according to mortgage publisher HSH. In another study, personal finance company NerdWallet found that while loans processed by lenders increased by 10% in 2020 compared to 2019, there were approximately 58,000 additional refusals.

As for the self-employed, Pew Research found last year that there were about 16 million of these workers.

“There have been more independent business owners since the pandemic began, and their needs are not easily met by traditional loans,” said Sam Bjelac, executive vice president of Sprout Mortgage.

Sprout Mortgage is a lender run by Michael Strauss, the former head of American Home Mortgage, one of many subprime lenders that went bankrupt in the late 2000s. More regular borrowers are also finding they can’t also not fit into the standard mortgage box, Bjelac said.

So, as the mortgage market intensifies its focus on these underserved workers, the non-QM market is growing. At the end of the year, some experts predict that the non-QM market will quadruple to $100 billion.

Angel Oak Mortgage Solutions, another non-QM lender, projected that its creations would grow to $7.5 billion this year from $3.9 billion in 2021. Angel Oak finds that borrowers who fit into the non-QM mold are “very underserved” today, just as they were when the company spotted the need and jumped into the non-QM business nearly a decade ago, said Tom Hutchens, executive vice president of Angel Oak.

In contrast, conventional lenders are scramble to downsize their businesses as soaring mortgage rates hamper their operations. The Mortgage Bankers Association predicts total U.S. mortgages will likely plunge 40% this year to $6.8 trillion, with most of that decline due to lower refinances.

Non-QMs are “more of an art”

What hurts the conventional mortgage market helps non-QM lenders, whose borrowers are less sensitive to interest rate movements because there are few alternatives. Brokers who have been busy offering easier-to-close loan refinances for the past few years are suddenly keen to help borrowers who are having a harder time qualifying for loans, including those who might take advantage of non- QM, Brian O’Shaughnessy, said co-CEO of Athas Capital Group.

When originating a loan for non-QM borrowers or investors, lenders like Angel Oak and Athas are willing to consider a wider variety of financial information than lenders who sell their loans to Fannie Mae or Freddie Mac. For example, Fannie Mae strictly limits the number of properties it finances for an investorbut Angel Oak approaches this differently.

“If the cash flow from the investment property will cover their mortgage, taxes and insurance, and they have a good credit rating and probably a track record as a real estate investor, then we think that’s a good ready to go,” Hutchens said. .

“It’s really more of an art and a specialty in non-QM,” said Greg Austin, executive vice president of California-based Carrington Mortgage Services, another non-QM lender with ties to the subprime industry. before the crisis.

Carrington — as is often the case with non-QM lenders — works with independent borrowers to analyze bank statements, profit and loss statements, or 1099s to determine their loan eligibility. Some investors even keep a traditional job, just so that their W-2 can save them from a headache.

“It’s so much harder to get a loan as a self-employed person,” Ryan Chaw, a real estate investor, told Insider.

Non-QMs are a “last resort”

Rashad Tillman, a California resident, said non-QM loans have come to be both a lifeline and a “last resort”. Since he started looking for homes in early 2020, the 31-year-old father of three – and soon to be four – said he has encountered obstacles at almost every turn.

First, he said a total of four real estate agents and four loan officers did not want to work with him because of his unique income stream.

“When it comes to the self-employed, they’re like, ‘Well, that’s taking too much time and that’s too much effort,'” he told Insider.

Tillman’s financial situation is complicated. He is a full-time manager at a used car dealership, but also earns income from his small businesses. Because of the way Tillman structures his write-offs, the highest mortgage he was eligible for under traditional methods was $400,000, even though he was confident he could afford more.

“I can’t look at a cabin here in California for $400,000,” he said.

Tillman said he heard about non-QM loans through a Facebook ad touting “bank statement loans,” which are approved based on deposits reflected in a bank account instead of a W-2. He completed the attached survey, but this lender would only review 50% of what he deposited in his business bank account.

He continued his search until he found New American Funding, which he said offered him a non-QM loan valuing 100% of his income.

His journey did not end there. Two residential construction companies would not accept non-QM loans. It wasn’t until October, after nearly 10 months of searching and giving up, that he found a nice homebuilder in Riverside County, California, about 90 minutes from Los Angeles.

He was able to purchase a $640,000 three-bedroom, two-bathroom home still under construction, which has the backyard of his dreams. This would not have been possible without the alternative mortgage, he said.

“It allowed me to finally qualify for a home that I can afford, that is in a safer neighborhood, that my wife would like, and where the kids can feel comfortable living,” he said. -he declares.

A disadvantage of non-QM mortgages is that interest rates are higher than conventional loans, in part because they are sold and bundled into private mortgage-backed securities that do not carry the payment guarantees of bonds issued by Fannie Mae, Freddie Mac or Ginnie Mae. Rates have risen on all mortgages since the start of the year, although Tillman is still paying around 7%, or 2 percentage points more than a conventional loan.

The rate is only part of the cost of having your own business, Tillman said.

“That money was going somewhere anyway,” he said. “Do I want to throw it towards the IRS? Or do I throw it towards my down payment on a house?”

Read the original article at Business Intern

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Which banks offer 95% mortgages? Overview of major lenders https://onepayday.com/which-banks-offer-95-mortgages-overview-of-major-lenders/ Fri, 13 May 2022 09:00:38 +0000 https://onepayday.com/which-banks-offer-95-mortgages-overview-of-major-lenders/ We earn a commission for products purchased through certain links in this article. If you’ve managed to save a small deposit for a home, you might be wondering which banks offer a 95% mortgage. These mortgages used to be like gold dust to be found at one time, but now there are plenty of banks […]]]>
  • We earn a commission for products purchased through certain links in this article.

  • If you’ve managed to save a small deposit for a home, you might be wondering which banks offer a 95% mortgage. These mortgages used to be like gold dust to be found at one time, but now there are plenty of banks offering them.

    A 95% mortgage refers to the loan-to-value ratio when you buy a home. If you have a 5% down payment, you will need to borrow 95% of the property value to purchase a property.

    For example, if you have saved a deposit of £10,000 and want to buy a house for £200,000, you will need to borrow £190,000 (95% of £200,000).

    Your borrowing choices generally become more limited and more expensive the smaller your deposit and therefore the higher your LTV. This is because there is more risk for the lender.

    Image credit: David Giles

    Martin Stewart, Director of London Money, explains: “For higher loan-to-value mortgages, there is perceived risk from a lending perspective. There is little commitment (or incentive) for the consumer to maintain payments if something goes wrong and the last thing a lender needs is a queue of borrowers returning the keys. Therefore, accessibility criteria, underwriting, and ratings are generally more intrusive and rigid when the buyer’s deposit is low.

    “There is also a risk of negative equity with these products. It wouldn’t take much of a negative move in house prices for the mortgage to be higher than the value of the property. This will have a lot of ripple effects for the lender and the borrower.

    The good news is that the 95% mortgage market looks pretty healthy right now. According to Moneyfacts, there are nearly 100 95% mortgages on the market. This could be due, in part, to the introduction of the government’s mortgage guarantee scheme (more details below).

    Which lenders offer 95% mortgages?

    Some lenders offer 95% mortgages under the government’s mortgage guarantee program, while others offer them outside of the program.

    Borrowers will see little difference between mortgages secured by the Mortgage Guarantee Plan and other 95% mortgages. Everything works exactly the same way: you put down a 5% deposit, then borrow 95% of the value of the property and repay it over the agreed term.

    The following banks participate in the Mortgage Guarantee Scheme to offer 95% mortgages:

    • Barclays
    • HSBC
    • Lloyd’s
    • natwest
    • Santander
    • blank silver

    Under the terms of the program, these lenders must include a five-year fixed rate mortgage in their product lineup.

    What is the Mortgage Guarantee Plan?

    The government launched the mortgage guarantee program in April 2021 and it is expected to last until December 2022.

    The pandemic has virtually wiped out 95% of mortgages and the program’s goal is to re-engage lenders in this part of the mortgage market. The government does this by “guaranteeing” part of the amount banks lend to mortgage borrowers.

    Mark Harris, managing director of mortgage brokerage SPF Private Clients, said: “Lenders buy the collateral from the government; this compensates lenders for potential losses if a property is repossessed. Borrowers must always meet the lender’s criteria and affordability assessments.

    “The Mortgage Guarantee Scheme has increased the availability of low deposit mortgages. Additionally, it allows unsecured lenders to enter the space knowing that they are not the only option available and therefore too exposed.

    Clean room with computer

    Image credit: Future Plc

    Under the Mortgage Guarantee Program, borrowers can access mortgages with a 5% deposit, which means they can borrow at 95% LTV. As with traditional mortgages, borrowers will need to pass affordability and credit checks to be offered a mortgage.

    The program reduces mortgage risk by 95% for participating mortgage lenders, allowing them to offer more mortgages at this LTV and at cheaper rates than before.

    The Mortgage Guarantee Program is available to first-time buyers and movers who are buying a property to live in (not buy-to-let). New builds and existing properties priced up to £600,000 are eligible.

    Lenders offering 95% mortgages outside the mortgage guarantee scheme

    Mortgage lenders may also offer 95% mortgages separately from the mortgage guarantee plan. What’s on offer changes all the time, but the following lenders were offering 95% mortgages at the time of writing:

    • Accord Mortgages
    • Aldermore
    • Atom Bank
    • Cambridge Building Society
    • Clydesdale Bank
    • cooperative bank
    • Coventry Building Society
    • Cumberland Building Society
    • Dankse Bank
    • Direct premiere
    • Halifax
    • Hinckley and Rugby Building Society
    • Kensington
    • Leeds Building Society
    • Leek Construction Company
    • Loughborough Building Society
    • Metro Bank
    • Monmouthshire Building Society
    • At national scale
    • Newcastle Building Society
    • Progressive Building Society
    • Trust Bank
    • Royal Bank of Scotland
    • Saffron construction company
    • Skipton Building Society
    • Suffolk Building Society
    • Tipton & Coseley Building Society
    • TSB
    • Vida Home Loans
    • West Brom Building Society
    • Bank of Yorkshire
    • Yorkshire Building Society

    What kind of rate can I expect to pay for a 95% mortgage?

    You will normally pay a higher interest rate on a 95% mortgage than if you had a larger deposit.

    Mark Harris, managing director of mortgage broker SPF Private Clients, says: “The larger your deposit, the less you’ll usually pay for your mortgage. For example, two-year patches at 70% LTV are available starting at around 2.2% (NatWest) while this rises to 2.42% for 90% LTV (NatWest) and 2.69% for 95% (Nationwide).

    For more examples of current rates, Barclays offers a 95% mortgage at 2.77% fixed for two years, with no product charges. Monmouthshire Building Society has a two-year rate set at 2.39% with a fee of £1,149.

    Five-year fixed rates tend to be more expensive. Barclays has a five-year fixed rate at 3.04% (no charge) and Dankse Bank at 2.85% (£999 charge).

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    Councilor says illegal money lenders waiting outside post offices are becoming a ‘huge problem’ https://onepayday.com/councilor-says-illegal-money-lenders-waiting-outside-post-offices-are-becoming-a-huge-problem/ Fri, 13 May 2022 08:13:20 +0000 https://onepayday.com/councilor-says-illegal-money-lenders-waiting-outside-post-offices-are-becoming-a-huge-problem/ Vulnerable people are being targeted outside post offices by illegal moneylenders, a Sinn Féin adviser told Co Louth. he ‘huge problem’ of moneylenders and loan sharks was highlighted by Cllr Kevin Meenan at the last Dundalk Joint Policing Committee meeting. He said he noticed the practice had become more common over the past year, particularly […]]]>

    Vulnerable people are being targeted outside post offices by illegal moneylenders, a Sinn Féin adviser told Co Louth.

    he ‘huge problem’ of moneylenders and loan sharks was highlighted by Cllr Kevin Meenan at the last Dundalk Joint Policing Committee meeting.

    He said he noticed the practice had become more common over the past year, particularly over the festive period in December, and said illegal moneylenders waited for people to cash in their social benefits, to have them delivered immediately.

    Cllr Meenan added that lenders are charging exorbitant interest rates, with those who miss repayment seeing their bills doubled and even tripled in some cases.

    “Particularly over the Christmas period, we had to deal with many people who had problems repaying lenders. The money would have been taken from them,” he explained.

    “The state management team at the Council have been excellent in terms of working with these people. Some of these people have fallen behind on their rents. There are huge problems here.

    He said the practice created “absolute misery” and one of the “most disgusting things I have personally encountered”.

    He told the meeting that he often had to work with the local St. Vincent de Paul society to help victims of illegal moneylenders whenever possible.

    Some of these people did not have enough money to buy food or pay their heating or electricity bills, Cllr Meenan said.

    He also called on the local gardaí and Louth County Council to find solutions to the problem.

    In response, Chief Superintendent Alan McGovern encouraged anyone with information regarding illegal money lending to contact the gardaí.

    “Money lenders must be licensed, there are no gray areas there. I would advise people who need financial support to go to MABS (the Financial Advice and Budgeting Service), which is a free and confidential service,” he said.

    “But if they have any concerns about the payment or the potential for illegal money laundering, they should contact us immediately. We will provide them with confidential support in this regard.

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    Current affordability measures ‘not fit for purpose’, mortgage lenders say https://onepayday.com/current-affordability-measures-not-fit-for-purpose-mortgage-lenders-say/ Thu, 12 May 2022 12:55:02 +0000 https://onepayday.com/current-affordability-measures-not-fit-for-purpose-mortgage-lenders-say/ “We are in the midst of a growing economic crisis, a significant challenge in the form of climate change, and continued dysfunction and inequity in the housing and mortgage markets.” Under the current measures, for fixed rates of less than five years, mortgage applicants must undergo a “stress test” to ensure that the borrower is […]]]>

    “We are in the midst of a growing economic crisis, a significant challenge in the form of climate change, and continued dysfunction and inequity in the housing and mortgage markets.”

    Under the current measures, for fixed rates of less than five years, mortgage applicants must undergo a “stress test” to ensure that the borrower is able to repay their mortgage at 3% at the above the reversion rate of its lender. Mortgage lenders who generate more than £100m a year are also limited to providing 15% of their new loans at a loan-to-income ratio of 4.5 or more.

    The companies’ joint response to the consultation notes that while they both support measures that address excessive leverage in UK mortgages and support a responsible lending environment, the current measures are not “not fit for purpose when considered against customer needs”.

    Perenna and Habito believe that a review of the LTI flow ratio would offer specialist lenders the opportunity to develop products for underserved areas of the UK population, such as first-time buyers and older borrowers, who have often need higher LTV and LTI products.

    Thus, Habito and Perenna came up with two recommendations that would meet the objectives of the FPC, while generating better outcomes for consumers:

    ● Implement the FPC’s proposed recommendation to remove the 3% stress test and also revise the LTI ratio exemption that applies to all lenders with £100m annual originations to no longer apply than to those that generate at least 2.5% of annual gross mortgage loans, or;

    ● Completely remove the LTI ratio, but retain the 3% affordability stress test for loans with a fixed rate duration of less than 5 years

    Lenders say either action would “boost competitiveness in the mortgage market by allowing specialist lenders to compete with high street lenders and improve customer choice while controlling excessive leverage.” in the British economy”.

    Alan Fitzpatrick, vice president of lending operations at Habito, said: “House prices have risen significantly, thanks to a historically low interest rate environment, but many potential homeowners and movers have not been able to keep pace as the lending landscape has not progressed enough. . Our research shows that more than half (53%) of UK homeowners have been limited by what they could borrow for a mortgage, even if they could afford to pay more. Our affordability recommendations come at a time when interest rates are rising, the cost of living is a priority, and we simply need better and more sophisticated ways to help people finance their homes.

    Arjan Verbeek, CEO of Perenna, commented: “We are in the midst of a growing economic crisis, a significant challenge in the form of climate change, and continuing dysfunction and inequity in the housing and mortgage markets. We support FPC’s focus on managing excessive leverage and its own assessment demonstrates that affordability alone can contribute to this. If we are to meet the challenges of today and tomorrow with the right level of accuracy, we believe that the LTI throughput ratio needs to be changed significantly, if not eliminated. By doing so, the financial services industry can introduce much-needed product innovation and competition.”

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    Stripping Wealth on Purpose: The Impact of Predatory Lenders in Memphis – Non Profit News https://onepayday.com/stripping-wealth-on-purpose-the-impact-of-predatory-lenders-in-memphis-non-profit-news/ Wed, 11 May 2022 13:14:08 +0000 https://onepayday.com/stripping-wealth-on-purpose-the-impact-of-predatory-lenders-in-memphis-non-profit-news/ Photo by Avel Chuklanov on Unsplash Memphis, according to the 2020 census, is home to approximately 633,000 people, of which 64.5% are African American. As a new report from the Memphis Black Clergy Collaborative (BCCM) and Political Institute of Hope—the political arm of Hope Credit Union, a Delta-based Community Development Financial Institution (CDFI), demonstrates Memphis […]]]>
    Photo by Avel Chuklanov on Unsplash

    Memphis, according to the 2020 census, is home to approximately 633,000 people, of which 64.5% are African American. As a new report from the Memphis Black Clergy Collaborative (BCCM) and Political Institute of Hope—the political arm of Hope Credit Union, a Delta-based Community Development Financial Institution (CDFI), demonstrates Memphis is also home to an astounding 114 storefronts of predatory lenders. That’s more than one showcase for 6,000 people.

    Those 114 storefronts, the report’s authors point out, represent “more than double the number of Starbucks and McDonalds combined” in the entire city (2). This is just one of the conclusions of the two organisations’ new report, entitled High-Cost Debt Traps Widen Racial Wealth Gap in Memphis, which examines at the micro level how the daily extraction of wealth from black Americans occurs in the city of Memphis, Tennessee.

    Memphis, as census data also shows, is tied for being the second poorest major city in the nation (500,000 or more), with a 2020 poverty rate 24.6%. By depriving working-class and especially black neighborhoods of assets, predatory interest rates reinforce this poverty. In Memphis, 45% of black households and more than 50% of Latinx households are unbanked or underbanked, compared to 15% of white households (6). People without full banking services are of course most likely to turn to other sources of finance, including predatory lenders.

    Memphis in Context: The National Reach of Predatory Lending

    To NPQ we have written regularly about the racial wealth gap. Often the focus is on how to build BIPOC wealth. But no one should lose sight of the fact that BIPOC’s wealth is being stripped from communities every day. As Jeremie Greer of Liberation in a Generation wrote in Refuge Strength earlier this year: “The racial wealth gap is a systemic problem, not a product of the personal choices of black people. And no matter how many wealth-creating opportunities we create for black people and other people of color, those efforts will never be effective if we leave the processes of wealth stripping intact.

    One of the processes described by Greer is predatory lending – loans with three-digit interest rates. According to a article published by the Federal Reserve Bank of St. Louis, the “payday loan” represents a market of 9 billion dollars. As an economist Jeanette Bennett writes, on average “the typical $375 loan will incur $520 in fees due to repeated borrowing”. If check cashers and related businesses are added, the size of the predatory lending industry is even greater. An estimate puts the number at $19.1 billion. Black and Latino families are disproportionately affected. And as a recent study by Jim Hawkinsprofessor of law at the University of Houston, and Tiffany Pennerrecently graduated from law school, published in the Emory Law Review documents, marketing is biased to attract borrowers of color.

    In their paper, Hawkins and Penner found that in Houston, “while African Americans make up only 15.6% of auto title lender customers and 23% of payday lender customers, 34.8% of photographs on the websites of these lenders represent African Americans”. They add that 77.3% of ads in physical locations they surveyed targeted borrowers of color.

    How predatory lending extracts wealth from communities

    Predatory lenders go by many names, with payday loans, car title loans, and flex loans being the most common. Whatever their name, they have in common three-digit interest rates and coercive repayment mechanisms. In their report, Hope Policy Institute and BCCM describe how these lending mechanisms work:

    Payday Loans: In Memphis, under Tennessee state law, a borrower can charge an annual percentage rate (APR) of 460% on a two-week loan. Some states allow even higher interest rates; Texas has the highest in the country, with a 664 percent APR.

    What does 460% translate to bi-weekly? In fact, this equates to a fee of just over $17.50 per $100 borrowed. As the report’s authors explain, “Payday lenders gain access to a borrower’s bank account by requiring a post-dated paper check or electronic banking authorization (ACH) as part of the loan transaction. This means that the day a borrower receives their income – whether it is their paycheck, stimulus check, or Social Security check – the payday lender is first in line for repayment” ( 8). These loans can – and of course are regularly – rolled over for a certain price; more than 75% of payday lenders’ fees are generated by people who borrow for 10 consecutive periods of two weeks or more.

    Car title loans: These are not guaranteed by a paycheck, but by a vehicle. According to the report’s authors, a typical loan of $300 will incur fees of $66 for 30 days, an effective APR of 267%. Like payday loans, these loans are typically rolled over, according to national data, an average of eight times. In Tennessee, in 2019, the most recent year for which data is available, 45% of car title loans issued that year defaulted and more than 11,000 cars were repossessed (9). Notably, 2019 was, relatively speaking, a good year for car title borrowers in Tennessee. In the six-year period from 2014 to 2019, title lending companies repossessed more than 101,000 cars statewide, an average of nearly 17,000 repossessions per year.

    Flexible loans: These were created in Tennessee in 2014 and act like an open-ended line of credit that can be secured by a paycheck or a car. While payday loans are capped at $500, flexible loans allow you to borrow up to $4,000.  Tennessee state law sets the interest rate for flexible loans at 24%; however, borrowers must also pay daily port charges, or “usual charges,” of up to 255%, resulting in an effective combined annual rate of 279% (9).

    The geography of lending

    As noted above, the marketing efforts of predatory lenders are aimed at attracting borrowers of color. What’s more, when you look at a map of Memphis’ 114 predatory lending storefronts, it’s clear that the location of these storefronts is anything but random, almost all located in neighborhoods heavily populated by people of color.

    In addition to tracing the geography of storefront physical location, the report’s authors also trace the geography of storefront ownership. As the report details, 74 of the 114 storefronts are owned by companies headquartered outside of Tennessee, 52 of which are owned by just two companies: Ace Cash Express (Populus Finance Group) of Texas and Title Max (TMX). Financing) of Georgia. This means that more than half of the profits generated by payday lenders, title companies and flex lenders are extracted entirely from the Memphis community and instead end up in the hands of out-of-state investors and managers.

    Political solutions

    There are many complex issues regarding economic policy. However, the end of three-digit interest rates is not one of them. As BCCM President Reverend J. Lawrence Turner puts it in the report, which he co-authored, the impact of charging interest of up to 460% on loans serves to “effectively entrap workers poor in webs of long-term debt” (7).

    It should be noted that today’s predatory lending is a relatively recent development. Like Pew Charitable Trusts has documentedalthough he may appear payday lenders have always been with us, this is not the case. Beginning in 1916, and for many decades, states limited monthly interest rates to 3.5%; annual APR ratings ranged from state to state from 18 to 42 percent. This changed with consumer protection deregulation in the 1970s and 1980s. As Pew puts it, “As this deregulation continued, some state legislatures sought to act in kind for lenders based in the state by allowing deferred presentment transactions (loans made against a post-dated check) and three-digit APRs. These developments set the stage for state-licensed payday loan shops to flourish.

    Even today, only 18 states and the District of Columbia cap loans at annual rates of 36% or less. They include many Northeastern states (Vermont, New Hampshire, Massachusetts, Connecticut, New York, New Jersey, Pennsylvania, and Maryland). But many others have also taken action. For example, in the South, Arkansas, West Virginia, North Carolina and Georgia have passed similar laws. In the West and Midwest, similar laws exist in Illinois, Montana, South Dakota, Nebraska, Colorado, and Arizona. A recent American banker The article adds that similar legislation is currently being debated in four other states: Michigan, Minnesota, New Mexico and Rhode Island. There is also pending federal legislation introduced by Sen. Sherrod Brown (D-OH) that would create a maximum rate of 36% nationwide.

    The report’s authors add that even if the Senate blocks legislative action, the federal Consumer Financial Protection Bureau could use its regulatory authority to act. “The CFPB,” the authors insist, “has the ability to enact new rules that ensure high-cost lenders, like those in Memphis, don’t endlessly trap people in cycles of unaffordable debt like they currently doing” (7).

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    SC – The New Indian Express https://onepayday.com/sc-the-new-indian-express/ Wed, 11 May 2022 01:04:00 +0000 https://onepayday.com/sc-the-new-indian-express/ By Express press service THIRUVANANTHAPURAM: The Kerala Money Lenders Act 1958 is not applicable to Non-Banking Financial Companies (NBFCs) registered under the RBI Act and regulated by the Reserve Bank, the Supreme Court has ruled. In an order issued on Tuesday, a bench consisting of Justices V Ramasubramanian and Justice Hemant Gupta said: “We are […]]]>

    By Express press service

    THIRUVANANTHAPURAM: The Kerala Money Lenders Act 1958 is not applicable to Non-Banking Financial Companies (NBFCs) registered under the RBI Act and regulated by the Reserve Bank, the Supreme Court has ruled. In an order issued on Tuesday, a bench consisting of Justices V Ramasubramanian and Justice Hemant Gupta said: “We are of the view that Kerala law and Gujarat law will not apply to NBFCs registered under the RBI and regulated by the RBI.”

    All aspects of NBFCs regulated by RBI, Supreme Court observes

    The SC cleared a batch of appeals filed by the Kerala Non-Banking Finance Companies Welfare Association and a few NBFCs challenging the Kerala High Court’s order that the Money Lenders Act would apply to all NBFCs . The court also considered an appeal filed by Gujarat against an order by that state’s HC that the Gujarat Money Lenders Act would not be binding on NBFCs and dismissed it.

    The Kerala government had previously ordered NBFCs to obtain a license under the Kerala Money Lenders Act 1958, which was challenged in the High Court. The HC rejected a plea from the NBFCs, prompting them to file an appeal with the CS. The Kerala Assembly passed the Money Lenders Act 1958 for the regulation and control of money lending activities.

    The SC, after reviewing the provisions of the State laws and the RBI (Amendment) Act, observed that Chapter IIIB of the RBI Act provides the RBI with a supervisory role to oversee the operation of the NBFCs.

    “From inception to commercial death, all NBFC activities automatically fall under the RBI scanner. Since the regulations issued by RBI are binding on NBFCs, it is clear from the above that all aspects of NBFCs are regulated by RBI and nothing is left untouched,” the order reads.

    Attorney RK Nair, who represented NBFCs at the SC, said: “The above decision resolves the long-standing question regarding the applicability of state moneylender laws to Reserve Bank-governed NBFCs. . The SC clarified that as a result of this order, money lender laws of other states will also not apply to these NBFCs.

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    Foreign lenders continue to strangle Ukraine https://onepayday.com/foreign-lenders-continue-to-strangle-ukraine/ Tue, 10 May 2022 04:39:10 +0000 https://onepayday.com/foreign-lenders-continue-to-strangle-ukraine/ Foreign lenders continue to burden Ukraine with billions of dollars in debt, even as experts predict the country’s GDP will fall by 45-50% this year. While massive amounts of weapons and money to buy weapons are flooding Ukraine for free, the funding kyiv needs to stay afloat and repair major infrastructure damage is only a […]]]>

    Foreign lenders continue to burden Ukraine with billions of dollars in debt, even as experts predict the country’s GDP will fall by 45-50% this year. While massive amounts of weapons and money to buy weapons are flooding Ukraine for free, the funding kyiv needs to stay afloat and repair major infrastructure damage is only a fraction of what is needed. , primarily intended to pay off current debts and frequently coming in as relatively short-term loans.

    In early March, the International Monetary Fund (IMF) announced a $1.4 billion bailout package for Ukraine. Since the invasion, the EU and the World Bank have respectively pledged financial support of $1.2 billion and $3 billion, with funds being released in stages.

    IMF Headquarters, Washington, DC. (Credit: IMF)

    The IMF has also created an international account through which other states, including Canada, Poland and the Scandinavian and Baltic countries, can channel money to Kyiv in the form of “loans and grants”. The World Bank has also set up a “Multi-Donor Trust Fund” which attracts funding from the UK, Japan, Austria, Switzerland and elsewhere. Ukraine is also tapping into a $2.7 billion tranche of IMF funds released at the end of last year.

    The promises of these institutions and foreign governments pale in comparison to Ukraine’s needs. Experts expect the cost of damage to Ukrainian infrastructure to be between $220 billion and nearly $600 billion. The capital’s School of Economics estimates that about $4.5 billion in destruction occurs every week. In mid-April, the Zelensky government declared that without receiving $7 billion each month during the summer, it could no longer function.

    Kristalina Georgieva, managing director of the International Monetary Fund (IMF), told the BBC: “We found [the money] for the first and second months”, but not yet for the following months, because the lending agency is banking on an economic recovery in parts of Ukraine outside the war zone and “remittances from those who are now working elsewhere are starting to come in”.

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