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Archive for ◊ May, 2016 ◊

Take the Emotion out of Buying a Home
Tuesday, May 31st, 2016 | Author:

Keeping up

Unfortunately, a “keeping up with the Joneses” factor can affect homeownership decisions. Say renting a house was the best thing for your family financially. Would you be comfortable with that choice if you were the only one in the neighborhood who didn’t own his or her property? Many people might say no because American culture places a high social value on homeownership, and they might feel pressure to keep up with their peers.

But what if you bought the house and then had to move for a job? You’d have to sell the house, probably pay a commission to a real estate agent and possibly get rid of new items for your home that won’t work in the next place. At that point, it wouldn’t matter at all what the neighbors thought. You would be much more concerned with the mounting costs of moving and selling your home.

Renting might be the better option for you. Despite what you may often hear, paying monthly rent on a lease is not wasting money, especially when your career or living arrangements are uncertain. Whether you just got a new job, your company is undergoing major changes, you are thinking about having kids or you have other family obligations, renting could be a better fit until your situation is more permanent. Renting can be the best financial decision for people who aren’t planning to stay in one place for at least five years.

Focus on your finances

But if you are considering buying a home, rather than focusing on the emotional aspects of the decision, you should look at key financial indicators to determine whether you can truly afford it. Will you be able to get a good mortgage rate based on your finances? In particular, you’ll need to make sure you have cleaned up your credit score and paid down debt.

Although people in many different financial circumstances do purchase homes, to be on the safe side, it’s smart to use conservative benchmarks when determining whether you can afford to buy a home. For example, if your credit score is below 700, buying a home may not be in your best interest because you won’t get the best terms and conditions on your mortgage. This means you may have to put down more money upfront or end up paying more in the long run because of higher rates. Instead, look at why you have a low credit score and work on building that score to at least 720 before a home purchase.

Similarly, if you have more than $10,000 in credit card debt or you are leasing a car because you couldn’t purchase it outright, you may have too many possessions you can’t afford. In these cases, adding on a large amount of debt to buy a home probably isn’t in your best interest.

However, if you are planning on buying a home, the best approach is to have 20% of the home purchase amount saved in liquid assets outside of your retirement accounts. You don’t necessarily need to put 20% down as a down payment, but you want to have enough saved up as financial padding in case something goes wrong. This money should be in addition to your retirement savings and held in taxable accounts.

These are simply general rules, and they will vary for some homebuyers. But to have the best chances for overall financial success, remember that home purchases are large financial commitments and should be evaluated based on the facts, not emotions.

Happiness starts at home

Going into homeownership with poor credit, too much debt or not enough savings could mean trouble down the line. If your budget is razor-thin and unexpected expenses or issues come up, your finances will quickly become strained. If you wait until they are squared away, your financial security won’t be in jeopardy. Like having children or getting married, you must want a long-term commitment when buying a home. Rentals can be left behind, but walking away from a house could land you in trouble.

And just because happiness starts in the home, that doesn’t necessarily mean you need to buy one. Your best bet is to make sound financial decisions without letting your emotions get the best of you.

Daniel Friedman is the chief executive of wealth management firm WMGNA in Farmington, Connecticut.

This was originally on NerdWallet.

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Auto lending delinquency rates stay low
Monday, May 30th, 2016 | Author:

TransUnion’s analysis of the auto lending market at the start of 2016 has found that delinquency rates remain low, though energy state rises are beginning to have greater impact.

Its Q1 2016 Industry Insights Report found that the oil slump continued to impact consumer credit performance in those states with economies more reliant on the energy sector.

The research indicated that serious delinquency levels for auto loans and credit cards continued to increase in energy-sector states such as North Dakota, Oklahoma and Texas.
Driven in part by these state-level increases, the national average for auto loan delinquencies rose to levels not observed during the first quarter in at least three years.

TransUnion analyzes year-over-year metrics to account for seasonality.

Serious delinquency on auto loans (60 or more days past due) hit 1.12% in Q1 2016, the first time it has topped 1% in the first quarter since 2011.

“Rising delinquency rates in energy-sector states such as Oklahoma and North Dakota are contributing to the uptick in the national delinquency rate for auto loans. An increase of loans to non-prime credit risk borrowers also has pushed these delinquency rates up. Despite the delinquency rises, overall levels of delinquency remain relatively low from a historical perspective,” said Ezra Becker, senior vice president of research and consulting in TransUnion’s financial services business unit.

In Q1 2016, 76.37 million consumers had an auto loan, an increase of five million from the first quarter of 2015. The number of consumers with an auto loan grew 7.1% from 71.29 million in Q1 2015, according to TransUnion figures.

Serious auto loan delinquency rose to 1.12% in Q1 2016, a 13.1% increase from 0.99% in Q1 2015. Despite the yearly increase, the delinquency rate remains below the levels observed in Q1 2010, when the delinquency rate reached 1.21%.

Viewed one quarter in arrears (to ensure all accounts are reported and included in the data), auto loan originations grew 5.4% year-over-year to 6.51 million in Q4 2015, up from 6.17 million in Q4 2014. The average new account balance (reported one quarter in arrears) reached $20,469 in Q4 2015, its highest level since the recession. The average new account balance increased 2.9% from $19,890 at year-end 2014.

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Buy a luxury flat for only HK$1.2m downpayment? Henderson Land’s 95pc home mortgage scheme offered at Mid-Levels project

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Real Estate

Mortgage M#038;A Looms As Soaring Costs Pinch Nonbank Lenders

Rapid growth in the home mortgage industry has led to stepped-up scrutiny of lenders — and thats cutting into profits. (Bloomberg)

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In our initial article announcing our top 10 considerations for financial institutions in 2016, which can be foundhere, our tenth and final consideration was fair lending risk, which seems to be perpetually on the radar of financial institutions lending to consumers. Fair lending risk consistently challenges lending institutions because of the reputational implications, among others, of getting it wrong. Discrimination does not sit well with current or potential borrowers and, therefore, countless hours of work go into developing and implementing fair lending compliance programs. Despite the hard work, the risk that application or lending data shows a unintended lending pattern continues to keep compliance officers awake at night.

The Dodd-Frank Wall Street Reform and Consumer Protection Act established the Office of Fair Lending and Equal Opportunity within the CFPB. This office is charged with providing oversight and enforcement of Federal laws intended to ensure the fair, equitable, and nondiscriminatory access to credit for both individuals and communities that are enforced by the [CFPB].1To that end, the CFPB recentlyreportedthat its fair lending supervisory and public enforcement actions directed institutions to provide approximately $108 million in remediation and other monetary payments in 2015 alone.2In 2015, the CFPB focused its fair lending efforts on mortgage lending, indirect auto lending and credit cards. These will continue to be areas of focus for the CFPB in 2016 and beyond.

Another significant development for fair lending risk more broadly was the Supreme Court decision inTexas Department of Housing amp; Community Affairs v. The Inclusive Communities Project, Inc.3(Inclusive Communities). On June 25, 2015, the Supreme Court (the Court) issued its ruling in Inclusive Communities which upheld the doctrine of disparate impact under the Fair Housing Act (FHA). While the court held that disparate impact claims are cognizable under the Fair Housing Act, it did impose some limitations to the decision.

Importantly, the decision noted that disparate-impact liability could pose serious constitutional questions4if liability were imposed based solely on a showing of a statistical disparity5and that a disparate-impact claim that relies on a statistical disparity must fail if the plaintiff cannot point to a defendants policy or policies causing that disparity.6The Court also noted that the FHA contains a robust causation requirement and that a plaintiff who fails to allege facts that demonstrate a causal connection cannot make out a prima facie case of disparate impact.7The Court further noted that policies [of a defendant] are not contrary to the disparate-impact requirement unless they are artificial, arbitrary and unnecessary barriers8and that businesses should be permitted to make practical business choices and profit-related decisions that sustain a vibrant and dynamic free-enterprise system.9

Under the doctrine of disparate impact, an institution applies a facially neutral policy in a uniform manner to all consumers, but the policy or practice has an adverse impact on a protected class of consumers. This theory is much more problematic for financial institutions than the doctrine of disparate treatment, which is more blatant discrimination based on a prohibited basis, such as race, sex or national origin. While the doctrine of disparate impact creates greater challenges for financial institutions, it remains a focus of the regulatory and enforcement community in 2016, especially since the holding inInclusive Communities.

Fair lending risk has been a consistent concern for compliance departments, in large part because of the CFPB and banking agency enforcement efforts, which can result in referrals to the Department of Justice. Risks can present themselves in all phases of a credit transaction, especially in the pricing and underwriting phases. Indeed, in these phases, lenders should think about tracking and documenting the reasons for any exceptions, monitoring for exceptions and responding with corrective actions where necessary and appropriate. More generally, institutions must ensure that their compliance programs, which include the governance structure, policies and procedures, the control environment, and monitoring and training programs, are robust and flexible to address new products or services offered by the institution. This will be especially critical as new rules are implemented with fair lending risk implications, such as new rules that expand the collection of information on credit decisions under the Home Mortgage Disclosure Act (HMDA).

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Tougher lending criteria could also be introduced in a move to head off new rules on the sector from the Bank of England, which has launched a consultation on proposals designed to force banks to take into account a wider range of fees when assessing buy-to-let mortgage affordability.

Earlier this week the BoE released a research paper that claims the tax changes next year, coming after a tax duty surcharge this April, would not prevent continued demand for buy-to-let property as investors anticipate positive expectations of rental growth in the years ahead.

Will buy-to-let tax changes push rents up more?

13 May

A major tax assault on the buy-to-let sector due to be ramped up next April could make it even harder for already squeezed tenants to get by financially, according to one housing academic.

Kath Scanlon of the London School of Economics told the Daily Telegraph it is not clear what the government wants these policies to accomplish.

They seem to reflect the public unpopularity of landlords, who are easy objects of blame for the current situation in the housing market, especially in London… Shrinking the sector does not seem sensible given what we know about unmet demand and need, said Scanlon, who has published a report on the issue along with colleagues Christine Whitehead and Peter Williams.

It is said that tenants cannot pay more than they already are – yet a lot of sitting tenants have not had recent rent increases, she added. That may change.

Scanlon argues that the real enemy of housing affordability is lack of adequate supply and that without a huge increase in building, buying a home will remain unaffordable and the number of people being forced to rent will rise. In this context, the squeeze on private landlords will only threaten supply further and almost certainly drive up already high rental costs.

So far, the government has introduced a three per cent stamp duty surcharge on new investment purchases and excluded landlords from a cut to capital gains taxes. From next year, cuts to mortgage interest relief will double the tax paid annually by landlords paying higher rate tax – but these cuts will also drag more landlords into upper tax brackets.

Such reforms will hit the yield on landlords properties and, it is hoped, cool the rampant demand for buy-to-let investments. They could also result in many landlords selling their second homes, thereby increasing the supply of houses for sale. This should help to moderate house price growth, making it easier for renters to become first-time buyers instead.

But landlords will feel squeezed if they keep rents largely unchanged, rather than raising them to cover lost income. If market forces alone are not able to contain price rises, political intervention may be needed.

That is precisely what the new Mayor of London has pledged. Sadiq Khan wants to introduce a London living rent, which would require the support of the government and be set in each area at a third of local average earnings, with increases indexed to inflation.

The Financial Times reckons that at least larger developers will not be as opposed to such a scheme as might be assumed. There is evidence from similar schemes in Germany and New York that certainty over rent increases is useful to investors and encourages tenants to stay on for longer. This reduces other expenses such as the opportunity cost of a property standing empty.

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CFPB Issues Annual Fair Lending Report
Thursday, May 26th, 2016 | Author:

The CFPB has issued its annual Report summarizing its fair lending activities in 2015. The Report is comprehensive and lays out not only the activities of the Bureau but also its methodology in reviewing fair lending issues. For those not familiar, the Dodd Frank Act established an Office of Fair Lending and Equal Opportunity within the CFPB and charged it with providing oversight and enforcement of Federal laws intended to ensure the fair, equal, and nondiscriminatory access to credit for both individuals and communities. In doing so, the Offices two primary tools are the Equal Credit Opportunity Act (ECOA) and the Home Mortgage Disclosure Act (HMDA).

While much of the Report has been previously discussed in prior blog entries, the key takeaways for lenders are as follows:

  • The Bureau uses a risk based prioritization process to focus their enforcement and regulatory efforts on markets or products that represent the greatest risk for consumers. The Report confirms the Bureau is currently honed in on four products:
    • Mortgage Lending. Mortgage lending is a priority for the Office and they continue to focus on the HMDA data to identify risks in the areas of redlining, underwriting and pricing. In 2015, the Bureau resolved two public enforcement actions involving mortgage lending.
    • Indirect Auto Lending. The Report confirms that the Office remains focused on indirect auto lending and is conducting auto finance targeted ECOA reviews which generally include examination of three areas: credit approvals and denials, interest rates quoted by the lender to the dealer (Buy Rates) and any discretionary markup or adjustments to the Buy Rate. In 2015, the Bureau resolved two public enforcement actions involving discriminatory pricing and compensation.
    • Credit Cards. The Report suggests that this is a product which is receiving increased fair lending scrutiny. The Report indicates that the Bureau is focused in particular on the quality of fair lending compliance management systems and on fair lending risks in underwriting, line assignment, and servicing, including the treatment of consumers who indicate a preference to speak Spanish.
    • Small Business Lending. The Report indicates that the Bureau has begun targeted ECOA reviews of small-business lending and is focused on the quality of fair lending compliance management systems and on fair lending risks in underwriting, pricing and redlining.
  • The Bureau is conducting three types of fair lending reviews:
    • ECOA Baseline Reviews. The CFPB uses ECOA Baseline Reviews to evaluate how well an institutions compliance management system identifies and manages fair lending risks. To this end, the Bureau updated their Baseline Review Modules in the CFPB Supervision and Enforcement Manual.
    • ECOA Targeted Reviews. The CFPB uses Targeted Reviews to evaluate areas of heightened fair lending risks and generally focus on a specific line of business, including those identified above.
    • HMDA Data Integrity Reviews. The CFPB makes no bones about it. HMDA data is a primary tool used to identify redlining issues.
  • The Report also summarizes the Bureaus pending investigations:
    • Mortgage Lending. The Report makes it abundantly clear that mortgage lending is among the Bureaus top priorities and has focused its fair lending enforcement efforts on redlining practices. Currently, the Report indicates that it has a number of authorized enforcement actions in settlement negotiations and pending investigations.
    • Indirect Auto Finance. Similarly, the Bureau has prioritized discrimination resulting from discretionary loan pricing. The Report indicates the Bureau currently has a number of pending enforcement actions and several authorized enforcement actions in settlement negotiations.
  • The Report also summarizes the new HMDA rule and indicates that the Bureau is in the pre rulemaking stage with respect to developing rules as to the collection of small business lending data as required by the Dodd Frank Act.
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*A positive value represents appraiser opinions that are higher than homeowner perceptions. A negative value represents appraiser opinions that are lower than homeowner perceptions.

About the HPPI amp; HVI

The Quicken Loans HPPI represents the difference between appraisers and homeowners opinions of home values. The index compares the estimate that the homeowner supplies on a refinance mortgage application to the appraisal that is performed later in the mortgage process. This is an unprecedented report that gives a never-before-seen analysis of how homeowners are viewing the housing market. The HPPI national composite is determined by analyzing appraisal and homeowner estimates throughout the entire country, including data points from both inside and outside the metro areas specifically called out in the above report.

The Quicken Loans HVI is the only view of home value trends based solely on appraisal data from home purchases and mortgage refinances. This produces a wide data set and is focused on appraisals, one of the most important pieces of information to the mortgage process.

The HPPI and HVI are released on the second Tuesday of every month. Both of the reports are created with Quicken Loans propriety mortgage data from the 50-state lenders mortgage activity across all 3,000+ counties. The indexes are examined nationally, in four geographic regions and the HPPI is reported for 27 major metropolitan areas. All indexes, along with downloadable tables and graphs can be found at

About Quicken Loans

Detroit-based Quicken Loans Inc. is the nations second largest retail home mortgage lender. The company closed more than $220 billion of mortgage volume across all 50 states since 2013. Quicken Loans generates loan production from web centers located in Detroit, Cleveland and Scottsdale, Arizona. The company also operates a centralized loan processing facility in Detroit, as well as its San Diego-based One Reverse Mortgage unit. Quicken Loans ranked Highest in Customer Satisfaction for Primary Mortgage Origination in the United States by JD Power for the past six consecutive years, 2010 – 2015, and highest in customer satisfaction among all mortgage servicers in 2014 and 2015.

Quicken Loans was ranked No. 5 on FORTUNE magazines annual 100 Best Companies to Work For list in 2016, and has been among the top-30 companies for the last 13 years.It has been recognized as one of Computerworld magazines 100 Best Places to Work in IT the past 11 years, ranking No. 1 in 2015, 2014, 2013, 2007, 2006 and 2005. The company moved its headquarters to downtown Detroit in 2010, and now more than 10,000 of its 15,000 team members work in the citys urban core. For more information about Quicken Loans, please visit, on Twitter at @QLnews, and on Facebook at


To view the original version on PR Newswire, visit:

SOURCE Quicken Loans

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Landmark Credit Union has become the first state credit union to top $3 billion in assets, solidifying its place as the third-largest financial institution based in Wisconsin.

Landmark, with headquarters in New Berlin, passed the $3 billion-asset milestone in the first quarter of this year. A financial institutions assets consist mostly of the loans it has on its books.

The fast growth in assets — Landmark reached $2 billion in assets only four years ago — has been achieved through a combination of lending and acquisitions.

Since 2012, Dodge Central Credit Union and Badger Campus Credit Union have merged into Landmark, and the credit union acquired Hartford Savings Bank.

At the same time, lending has grown, with Landmark claiming the title of top auto lender in southeastern Wisconsin and expanding its mortgage, home equity and business loan portfolios as well. Business loans are up 70% over the last four years, Landmark said.

When you talk about it from a lending perspective, we have been very fortunate to continue to see very strong demand on the auto lending side, Jay Magulski, chief executive of Landmark, said in an interview. Business lending has been very robust for us, mortgage lending has been terrific. And in the end, what our members know is that they can count on us to have very competitive rates.

Credit unions are like banks in many ways, but they are financial cooperatives owned by their members instead of by stockholders.

With more than $3 billion in assets, Landmark is smaller than only Green Bay-based Associated Bank, at $28 billion, and Racines Johnson Bank, with $4.3 billion, among financial institutions headquartered in Wisconsin. Bank Mutual, based in Brown Deer, is next with assets of $2.5 billion.

In 2015, Landmark, which has 31 branches, posted net income of $38.1 million.

Bankers often complain that credit unions, especially large ones, have an unfair competitive advantage because they are exempt from income taxes. Bankers efforts to change the tax-exempt status of big credit unions are ongoing.

Magulski said Landmarks large size and strength help give it the ability to offer members state-of-the-art financial services.

When I think about our size and scale, what I love about it is that its allowing our members to utilize our expert resources in the manner in which they choose, he said. So if you want to conduct your banking via your smartphone, you can do that. But when you need to have a conversation with a trusted adviser, you can do that as well.

Landmark has 274,000 members, up about 40% since 2012. Relationships are key to membership growth, Magulski said. Many new members are referred to Landmark by friends and family because theyve been happy with the service, he said. Landmark has about 600 employees, and making sure they are well-trained is crucial, Magulski said.

In addition, Landmark has developed relationships with southeastern Wisconsin auto dealers as a willing lender for car shoppers. Sometimes a car loan will be a consumers path to becoming a Landmark member.

Landmark also offers investment services to members.

We continue to add to the number of investment advisers we have throughout the company because as weve expanded Landmark, we want to make sure that people who are experiencing us in the Hartford market or Beaver Dam market area or the Madison market area or Burlington have access to the same type of investment counsel and professional advice that we provide right here in Milwaukee and Waukesha counties, Magulski said.

Size also enables Landmark to be a more-generous supporter of local civic and charitable efforts, and to keep adding employees and provide advancement opportunities for existing staff, he noted.

Landmark was founded in 1933 by the foundry employees of Rex Chainbelt Co., which later became Rexnord Corp. In 1985, with a community charter that let it expand its membership to anyone who lived in the area, it changed its name from Rexnord Employees Credit Union to Landmark.

Most of its initial growth surge came after former CEO Ron Kase arrived in 1973. The credit union had about $2 million in assets back then. Magulski succeeded Kase as chief executive in 2013.

As it grows, Landmark is keeping its eyes open for other merger partners, Magulski said. The financial services industry — banks as well as credit unions — is in the midst of a consolidation period.

Wisconsin had 150 state-chartered credit unions at the end of 2015, down from 267 only a decade earlier. However, membership was up in the state, at 2.6 million compared with 2.1 million 10 years earlier. The result has been fewer but bigger credit unions in Wisconsin — none bigger than Landmark.

Were always looking for smart ways to continue to grow our business, Magulski said.

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Report: Home sales hold ground despite TRID
Monday, May 23rd, 2016 | Author:

Mortgage rates are close to record lows, and April home mortgage applications were at their highest since 2010, however lack of inventory continues to give sellers the upper hand, according to Capital Economics report, titledUS Housing Market Monthly.

Annual growth rate for home sales rose to 5.4% in March, despite volatility caused by theConsumer Financial Protection Bureausknow before you oweregulations, aka TRID, according to the report.

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