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Entries in Loans (15)

Friday
Jun082012

Credit Card Borrowing Slows as Consumers Worry About Jobs

Comstock/Thinkstock(NEW YORK) -- Consumers cut back on their use of plastic to buy stuff in April and that has got economists worried.

While Americans did increase borrowing by $6.5 billion that month, due largely to auto and student loan costs, the Federal Reserve said it only represented half the gain from March.

The concern now is that consumers don't see employers in a rush to make big hires so they're less inclined to borrow -- a factor that could further slow down the already tepid economic recovery.

When hiring picks up, as it had during late 2011 and the early part of this year, people will use their credit cards more often because they're less fearful of taking on more debt.  Less borrowing mean more anxiety about the economy.

Even though most economists don't anticipate another recession, consumers are unlikely to use their credit cards as much as they had during the peak housing boom that ended in 2007.

Copyright 2012 ABC News Radio

Thursday
Mar082012

Kiva Offers Free Loans to Women Entrepreneurs

Creatas/Thinkstock(SAN FRANCISCO) -- Kiva is offering 4,000 free loans to women borrowers in celebration of International Women’s Day.

Kiva.org connects lenders to mostly low-income entrepreneurs and families around the world for “micro-loans” of as little as $25. Kiva lenders receive the amounts they lent without interest at a repayment rate of 98.91 percent, according to the non-profit organization.

Over 1 billion people live in extreme poverty, 75 percent of whom are women and girls, Kiva said, and women produce half the world’s food, but own only 1 percent of the world’s farmland.

Kiva said skin-care company Dermalogica will provide free trial loans to the first 4,000 registrants, allowing lenders to make a loan of $25 free of charge.

These 4,000 free trial loans are disbursed to borrowers in the same way other loans are disbursed on Kiva, headquartered in San Francisco. However, since Dermalogica is funding the free trial, any repayment funds from the free trial loan will go back to Dermalogica, not to the free trial lender.

Kiva lenders are usually paid back their loan in a manner of months from a loan recipient whom they choose on the Kiva site.

“New lenders invited during the promotion dates may use their own funds to make a loan, in which case repayments will go back to the lender,” Kiva said.

Since Kiva was founded in 2005, it has arranged $291 million on loans to 698,064 people in 61 countries. In 2009, Kiva made its lending network available to borrowers in the U.S.

Copyright 2012 ABC News Radio

Tuesday
Jan102012

Debt Skyrockets: Americans Borrowed $20.4 Billion in November

iStockphoto/Thinkstock(WASHINGTON) -- Consumer borrowing soared by $20.4 billion in November, the Federal Reserve reported Monday, marking the biggest gain since November 2001 when Americans asked for credit to the tune of $28 billion.

November's surge in borrowing was spurred by more loans to purchase vehicles and a greater willingness to use plastic instead of cash to pay for holiday gifts and other big ticket items. Some economists are concerned consumers leaned increasingly on their credit cards to get them through holiday spending.

The reliance on plastic is apparently linked to the fact Americans are seeing paltry growth in their paychecks, if any at all. After-tax incomes shrank by nearly 2 percent from July to September. As a result, Americans are borrowing more and able to hold onto less of their money: the savings rate fell to the lowest level since the recession began in late 2007.

Copyright 2012 ABC News Radio

Wednesday
Dec212011

Countrywide Fine Is Largest in History for Loan Discrimination

Jin Lee/Bloomberg via Getty Images(WASHINGTON) -- Bank of America, which now owns Countrywide Financial, agreed to pay more than $300 million -- the largest fine ever of its kind -- to settle allegations of discrimination against African-American and Hispanic borrowers, the Justice Department announced Wednesday.

An investigation looked at 2.5 million loans made during the height of the housing boom in 2004 through 2007 and found, according to Attorney General Eric Holder, "widespread violations of the Fair Housing Act and the Equal Credit Opportunity Act and resulted in African-American and Hispanic borrowers being charged higher rates for mortgage loans solely because of their race or origin."

Assistant Attorney General Tom Perez says black and Latino borrowers who qualified for prime loans were steered toward risky subprime mortgages.

"As a result of these policies and practices, the odds of an African-American or Latino borrower receiving a subprime loan instead of a prime loan were more than twice as high as those for similarly situated non-Hispanic white borrowers," Perez said Wednesday.

The Justice Department said Wednesday what Countrywide did was not criminal, rather a violation of federal civil rights law.  But many disagree and find it difficult to understand how loans ripe with fraud, applications forged and applicants lied to can not result in one elite person at Countrywide being prosecuted. This is the fifth time Countrywide has been targeted for fraud.

The $300 million settlement against the now defunct Countrywide Bank, once the largest home mortgage company in America, means at most the 200,000 discrimination victims in 41 states will get no more than a couple of thousand each in restitution.

Copyright 2011 ABC News Radio

Wednesday
Sep142011

Student Loans are Crippling Borrowers 

Comstock/Thinkstock(WASHINGTON) -- For many Americans, student loans are the only way to pay for a college education, but new figures are showing that repaying them is crippling borrowers across the country.

According to the Department of Education, the national two-year default rate rose to 8.8 percent last year from 7 percent in fiscal year 2008. The overall increase was mostly from students borrowing from the government to attend for-profit colleges.

The troubling figures are coming at a time when recent graduates are being hit from all sides. New Census Bureau information shows that 14.2 percent of 25- to 34-year-olds lived with their parents in 2011, a 25 percent increase from before the recession began.

Many are living at home because they can't find full-time positions. Many of the people who took out loans to cover college costs aren’t thinking about the payments they would have to make post-graduation.

And it's not just young adults who are burdened with thousands of dollars in loan costs. Many parents intending to help their kids are making payments for them.

"This is a crisis situation," said Dave Jones, president of the Association of Independent Consumer Credit Counseling Agencies. "The average amount of money that a recent graduate has in student loans after a 4-year degree approaches $70,000. It's at an all-time high."

Copyright 2011 ABC News Radio

Monday
Aug222011

Mortgage Delinquencies Rise, Foreclosure Rate Down

ABC News(WASHINGTON) -- More Americans are in danger of losing their homes, according to a new report.

It's not just sub-prime loans and risky borrowers. According to the Mortgage Bankers Association report, delinquencies are up in all loan types, with more people reported at least one month behind in their payments.

The association's chief economist says the increase represents more people out of work and having trouble paying their bills.

The report, however, says the rate of actual foreclosures is down, as courts demand more and better paperwork and the re-checking of documents.

Copyright 2011 ABC News Radio

Friday
Aug192011

Mortgage Rates Tumble to Near All-Time Low

Digital Vision/Thinkstock(MCLEAN, Va.) -- In addition to this being a buyer's market because of the continued plunging prices of homes, mortgage rates are near an all-time low.

Freddie Mac's weekly survey says that 30-year fixed-rate home loans are now being offered at 4.15 percent.  Prospective buyers would have to go all the way back to 1950 and 1951 to find a deal like that when long-term fixed-rate mortgages averaged 4.08 percent.

Shorter-term fixed-rate loans have also bottomed out with a 15-year fixed-rate loan now at an average rate of 3.36 percent.

It's possible these rates could sink lower, which might also sink spirits of people who want to buy a house but can't swing it right now because of economic hardships.

Copyright 2011 ABC News Radio

Thursday
Jul212011

New Rule on Credit Score Disclosure Goes into Effect

Comstock/Thinkstock(WASHINGTON) -- Starting Thursday, lenders who deny a borrower credit or offer a higher-than-normal interest rate are required to show the borrower his credit score.

The new rule is part of an amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act that passed exactly one year ago.  Introduced by Sen. Mark Udall, D-Colo., it requires creditors to provide additional information in adverse action notices if a credit score was used in making a credit decision.

Udall said the credit scores to which consumers previously had access were often not the same as those lenders used to gauge an applicant's creditworthiness.  Bad credit scores, of course, can mean higher interest rates, less-favorable loan terms, or outright rejection for a loan or a mortgage.

Now when lenders such as banks or credit card companies use credit scores to deny credit or offer an unusually high interest rate, they must disclose not only the relevant scores to the borrowers but also what influenced how their scores were arrived at, the range of possible scores under the model used, the date the score was created and the name of the entity or person that provided the score.

"Your credit score can skew the terms of your car loan or even prevent you from being approved for a home mortgage.  With such important financial decisions hanging in the balance, you ought to be able to see the score that is being used against you," Udall said.  "This law adds a level of protection for American consumers while giving them access to a crucial tool to make smart choices about their finances. "

Fair Isaac and Company, or FICO, the developer of the software that generates most of the credit scores used by U.S. lenders, estimates the new provision will result in more than 500 million credit score disclosures each year.  The new Consumer Financial Protection Bureau, which also officially launches Thursday, will enforce the rule with the Federal Trade Commission and other banking regulators.

But consumer advocates fear the law may not be strong enough nor the rules clear enough for consumers to get the information they need to secure a better loan later.

"The good news is consumers will get credit scores...when they apply and are rejected for credit," Ed Mierzwinski, director of the consumer program at the U.S. Public Interest Research Group, said.  "The disappointing news is you will also not get a complete notice explaining why you paid more."

Some lenders that use a proprietary scoring system may not be required to provide that score to the consumer, and some industries, such as car financing, may fall out of the purview of the new rule altogether.

Copyright 2011 ABC News Radio

Wednesday
Jul202011

Fed Fines Wells Fargo $85 Million on Mortgage Fraud Allegations

PRNewsFoto/Wells Fargo Wealth Management Group(WASHINGTON) -- The Federal Reserve has assessed an $85 million penalty against Wells Fargo, saying the bank’s employees steered potential homebuyers into subprime loans when they qualified for prime loans. These subprime home loans came with additional costs to the borrowers. The Fed says Wells Fargo also falsified income information without the knowledge of the borrowers.

This is the first time a federal regulator has taken formal action based on allegations that banks put borrowers in higher-priced, subprime loans. The Fed says it’s also the largest penalty in a consumer-protection enforcement action.

People who were affected by the Wells Fargo practices will likely get between $1,000-$20,000 in compensation. The Fed says between 3,700–10,000 homebuyers will likely get compensation.

Copyright 2011 ABC News Radio

Monday
Jul182011

New Law Gives Consumers New Access to Credit Scores

Comstock Images/Thinkstock(NEW YORK) -- Beginning this week, a new law will give consumers more information about their credit scores when they need it most -- while seeking to take out a loan.

Your credit score can make a huge difference when you apply for a loan, with better scores guaranteeing you cheaper rates on mortgages or car loans.

As John Ulzheimer of SmartCredit.com says, consumers have a right to know what their score is when borrowing money.  And now, thanks to the Fair Access to Credit Scores Act, consumers will be told what their scores are when they apply for several types of loans.

"We're talking about any loan that is underwritten with a credit score," Ulzheimer says.

"You're going to have consumers now who are going to see their actual legitimate score who've never seen it before and for some of them it's going to be the equivalent of shock therapy," he adds.

Why "shock therapy?" You need a score of at least 750 to get the best rates, and many consumers have no idea where they rank.

Copyright 2011 ABC News Radio







ABC News Radio