September 22, 2014 · Manage Debt · (No comments)

Imagine youve worked hard for years to get an undergraduate degree, and then worked your way through medical school, law school or another professional degree. But just as you start to launch your career, you’re sideswiped by an accident or serious illness that leaves you disabled and unable to work. Not only do you need to find a way to pay for your day-to-day expenses, but you have student loan debt  a lot of it.

How will you possibly make those payments if you are unable to work?

With the average student graduating with just under $30,000 in student loan debt, and graduate and professional students often carrying $100,000 to $150,000 or more in debt, it’s no surprise that such a scenario strikes fear into the heart of debt-laden grads.

Also not surprising is the fact that there is a market-based solution to the problem: disability insurance for student loans. The Guardian Life Insurance Company of America recently announced it is expanding its Student Loan Protection Rider on its individual disability policy so that it will be available to anyone with student loan debt applying for disability income insurance. In a press release, the company said that, “for as little as $5 per month, Guardian’s Student Loan Protection can be obtained for either a 10- or 15-year term. Applicants can help protect their ability to pay their student loans in case of disability  including undergraduate debt  from multiple sources, up to $2,000 per month. No loan documentation is required until a claim is filed.” (That estimate is the monthly additional cost for a 30-year-old male, occupation class 4M, 90-day elimination period, 15-year term, generic non-discounted rates, $500 monthly coverage.)

Should You Insure Your Student Loans?

Do you need insurance for your student loans? It’s a good question and an important one for those with substantial debt. Late payments on student loans can have a significant impact on your FICO score, and a small problem can quickly become a big problem.

For most consumer debts, if you become disabled and are unable to repay them, you can file for bankruptcy and discharge all or part of the balances. Your ability to discharge those obligations is largely based on your financial situation in the months leading up to when you file.

But with student loans, that’s more difficult. Disabled borrowers must often prove that they won’t be able to return to work and pay those loans back in the future, and relatively few are successful discharging those loans in bankruptcy.

It is also possible to get federal student loans discharged due to total and permanent disability, but that option can also come with a price. Student loan debt that is discharged due to disability is considered taxable income unless the borrower qualifies for the “insolvency exclusion.” And for more temporary disabilities, such as those arising from an accident or a serious illness like cancer, it may not be an option.

Check Credit Before Paying Down Student LoansGet your free Credit Score personalized Action Plan. See where you stand learn ways to better manage your score before paying down your student loans. Free and updated every 30 days.
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“With a one-in-four chance of 20-year-olds becoming disabled sometime before they retire and student loan debts on the rise, this rider sounds very intriguing,” says Jeff Rose, a Certified Financial Planner and founder of “I would caution anyone interested to first do a thorough analysis of their budget and make sure they arent insurance poor and paying out too much for all their insurance coverage. If the budget makes sense and there is a sizable amount of student loan debt then it definitely deserves some consideration.”

Lawrence Hazzard, Guardians vice president, product and marketing strategy, explains that this program offers a rider to a disability insurance policy. As such, the coverage is for a limited period of time  usually 10 to 15 years  the “high-risk period” for professionals who have invested a lot of time and money into their educations, but who owe more money than they are currently making. When it’s no longer needed, the rider can be canceled without canceling the entire disability policy.

Hazzard says the company found this rider, which was previously offered to professionals such as doctors dentists and attorneys, was so popular that other customers with a lot of student loan debt were requesting it as well. It is now available to “any working adult with student loans” who can qualify for a disability policy. That means the insured must have an income stream, and must successfully complete an application. The rider has been particularly popular with medical school residents.

What Else Can You Do?

If this kind of insurance is not feasible for financial reasons, or because you can’t qualify, make sure you look into other options as soon as possible if you become disabled and are unable to work and pay your student loans. Those may include bankruptcy (yes it’s difficult, but not always impossible); putting payments on hold with deferment or forbearance; income-based repayment; loan forgiveness programs; or discharge due to total and permanent disability. Some of these options are not available for private student loans for borrowers who are in default and it’s important to investigate options as quickly as possible.

Wonder how your student loans are affecting your credit? You can get a free credit report once per year and you can get your credit score for free from

More on Student Loans:

  • How Student Loans Can Impact Your Credit
  • A Credit Guide for College Graduates
  • Strategies for Paying Off Student Loan Debt

Image: iStock

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September 22, 2014 · Manage Debt · (No comments)


The North Carolina Department of Justice and Attorney General Roy Cooper are working to reverse a trend showing college students are most at risk for identity theft.

Its why he visited East Carolina University (ECU) Thursday for his College Cash and Credit Tour.

Theyre in the financial world for the first time so its important for them to know the rules and how to protect themselves, Cooper said.

The Attorney General and a panel of experts presented lessons to students about preventing identity theft, managing credit cards and paying down student loans.

ECU junior Ebony West said the presentation gave her useful information.

I know what to check; what to do now if I feel like Im a victim of identity theft, West said. Its a really empowering feeling.


For steps to take if you become a victim of identity theft, visit the North Carolina Department of Justiceswebsite.

If youre interested in obtaining free credit reports, clickhere.

To place free security freezes on your credit reports, clickhere.

For additional information, visit the Department of Justices home page.

—Original Story—

Student loan debt is considered one of the biggest threats to our recovering economy.

Its sitting at a record of more than one trillion dollars.

Its why State Attorney General Roy Cooper visited the east Thursday to speak with East Carolina University students about how to manage debt.

Its part of his College Cash and Credit Tour.” He and several experts are visiting schools throughout the state to discuss student loans, credit card debt, and identity theft.

Attorney General Cooper says its important to make young people smart consumers.

Having college age children myself, I got the idea that this might be a good refresher course for some young people, and it might introduce some of them to the world for the very first time,” said Roy Cooper, NC Attorney General.

Coming up Thursday night after the game, 9 On Your Sides Brandon Goldner will have more on useful tips not just college students, but all of us can use.For steps to take if you become a victim of identity theft, visit the North Carolina Department of Justices website.

If youre interested in obtaining free credit reports, click here.

To place free security freezes on your credit reports, click here.

September 22, 2014 · Manage Debt · (No comments)

In denying the Scots the option of devo-max on the ballot paper today, David Cameron made arguably the most monumental mistake of any recent premiership. And whatever the result of the referendum, that mistake cannot be undone.

There is a clear economic justification for a union between two countries, in that it allows for the provision of joint public goods more efficiently. This may include things like border controls (assuming that both Scots and English would like free migration between the two countries), foreign policy and defence, but probably little else. Such a state of affairs would also satisfy traditionalists, who would like to see the two nations stay together: we may be “better together”, but we don’t need to have the same pensions systems.

Indeed, if we had a union with nearly all powers devolved, this would take us back to the situation that existed at the time of the Act of Union. The government did very little except manage debt and provide defence. Everything else was devolved – to the people.

So what about everything else? Pensions, welfare for people of working age, education, health, policing, justice, and so on make up the vast majority of public spending. The economic evidence suggests significant efficiency gains from fiscal decentralisation in these areas. However, these efficiency gains are only realised if the decentralised entity is also responsible for raising the taxes to finance the services.

As such, I would propose that, apart from a very small number of union-funded items, financed by a single union-wide tax, Scotland should have complete tax raising powers and complete control of its own spending – devo-super-max. There would be no direction from Westminster. Existing debt would be managed jointly. But in the future, the UK as a whole would only incur debt in relation to the tiny number of things it financed on a union-wide basis. If Scotland could not raise the taxes to pay for spending on welfare, it would have to raise debt on its own account with no possibility of any bailout. This debt would not be taken as collateral or bought in monetary policy operations by any union-wide central bank under any circumstances.

There would be other substantial benefits. The rest of the UK and Scotland could decide on the policy mix that most closely matched the wishes of the electorate in each nation. Each nation could copy policies that work from the other. And fiscal discipline arising from Scotland directly raising revenue to fund its welfare system would make it more likely that its system would be reformed. When it comes to issues such as regulation, the two nations – still in the United Kingdom – could either agree to go their separate ways or agree a common policy.

It might be argued that all this will happen in any case if a slim No vote is announced tomorrow. However, if Cameron had presented devo-super-max as a referendum option at the start, it could have been granted on his terms. There could have been a UK parliament to decide on a very small number of issues (such as defence), and Scottish MPs would have had no say on any other matters.

However, in the post-referendum chaos, it is likely that a scrap between various interests will lead to a compromise position, whereby Scottish MPs are allowed to vote on the additional devolved matters in the UK parliament – especially if Labour wins the election in May. In other words, there will be a group of MPs who are voting on issues that have nothing to do with any of their constituents. This situation existed in the nineteenth century through the concept of “rotten boroughs”. They were mainly abolished in the 1832 Reform Act. The result tomorrow could take us back in that direction.

The best outcome would have been devo-super-max, but it was refused by Cameron. Unfortunately, a narrow victory for the status quo could well be the worst of all outcomes – devo-max with Scottish MPs still voting on issues that do not affect Scotland. It’s possible that these problems will be resolved in the future, but it’s unclear whether the political impetus to do so is there.

In many areas of government policy, we at the Institute of Economic Affairs argue that the pursuit of the perfect is the enemy of the good. In this case, Cameron’s rejection of the perfect has been the friend of the worst possible outcome. Or to put it another way, the pursuit of the mediocre has been the enemy of the perfect.

September 22, 2014 · Manage Debt · (No comments)

ICICI Prudential Mutual Fundhas launched a new fund as ICICI Prudential Multiple Yield Fund – Series 7 – Plan E, a close ended income fund. The tenure of the plan is 1825 days from the date of allotment of units.

The primary objective of the scheme is to seek to generate returns by investing in a portfolio of fixed income securities/ debt instruments. The secondary objective of the scheme is to generate long term capital appreciation by investing a portion of the schemes assets in equity and equity related instruments.

The new fund offer (NFO) opens for subscription from September 17 to October 01, 2014. The new fund offer price for the scheme is Rs 10 per unit. The scheme is proposed to be listed on NSE.

The scheme offers direct and regular plan. Each plan will offer cumulative and dividend option. Dividend payout is the only facility available under dividend option.

The minimum application amount is Rs 5000 and in multiples of Rs 10 thereafter.

The entry and exit load charge are not applicable for the scheme.

The scheme will allocate 65% to 95% of assets in debt securities (including government securities), invest upto 30% of assets in money market instruments, cash and cash equivalents with low to medium risk profile and it would allocate 5% to 35% of the asset in equity or equity related securities with medium to high risk profile. Of the investments in debt instruments, 75%-80% would be invested in AA rated non convertible debentures.

The benchmark index for the scheme will be CRISIL MIP Blended Index.

The fund managers for the scheme are Vinay Sharma (equity portion), Rahul Goswami and Aditya Pagaria will jointly manage (debt portion). The investments under the ADRs/GDRs and other foreign securities will be managed by Ashwin Jain.

September 22, 2014 · Fundings · (No comments)

Estimated net worth: $140 million

2. Jeremy Stoppelman (below)

Role in PayPal: Joined PayPal as an engineer whilst it was known as, eventually becoming the Vice President of Engineering.

Post-PayPal: Resigned soon after PayPal was picked up by eBay for $1.5
billion in 2003, taking a year to attend Harvard Business School. Inspired
whilst poorly with flu and finding it tricky to find decent doctor
recommendations, he and a former colleague Russel Simmons dreamed up the
idea for online reviews site Yelp in 2004 and convinced former PayPal Chief
Technology Officer Max Levchin to put up $1 million in initial funding.
Steve Jobs convinced him to reject Googles acquisition offer in 2010 and in
2012, Yelp became a public limited company. But its not been a smooth
recent few years: Yelp reviewers leaving negative reviews have faced legal
action from affronted businesses and the sites faced accusations of handing
positive reviews to advertisers.

Estimated net worth: $111-$222 million

PHOTO: Getty

3. Andrew McCormack

Role in PayPal: Joined in 2001, working closely as an assistant to
Peter Thiel as the company prepared for its initial public offering (IPO)

After PayPal: Helped set-up another Thiel venture, hedge fund company
Clarium Capital before founding a restaurant group in San Francisco.
Currently a partner at venture capital firm Valar Ventures, he found his way
back to Thiel in 2008 to join Thiel Capital via corporate development roles
at eCount (now part of US banking conglomerate Citigroup) and Yahoo!.

Estimated net worth: Unknown

4. Premal Shah

Role in PayPal: Spent six years at the company as a product manager.

After PayPal: Became President of non-profit organisation Kiva, which
allows people to lend money to struggling entrepreneurs and students in over
70 countries via the internet. Founded by former programmer Matt Flannery
and his businesswoman ex-wife Jessica Jackeley, the site was raising around
$1 million every three days by November 2013.

Estimated net worth: Unknown

Peter Thiel: the billionaire tech entrepreneur on a
mission to cheat death

5. Luke Nosek

Role in PayPal: One of the co-founders, alongside Thiel, Elon Musk and
Ken Howery and his friend from the University of Illinois, Max Levchin and Vice President of Marketing and Strategy.

After PayPal: Departed after the eBay takeover and travelled the world,
before founding San Francisco venture capital firm Founders Firm (slogan:
lsquo;We wanted flying cars, we got 140 characters) with Thiel and Howery in
2005. Has spoken extensively about the benefits of brain training through

Estimated net worth: $1.2 billion

6. Ken Howery

Role in PayPal: A co-founder and Chief Financial Officer between

After PayPal: Hung around as eBays Director of Corporate Development
for just under a year after the takeover, before rejoining Thiel as vice
president of private equity at Clarium Capital in 2004. Started Founders
Fund less than 12 months later with Thiel and Nosek. In 2012, he co-founded
Popexpert, an online learning platform that allows users to connect
face-to-face with experts across a broad range of fields. Howerys available
for consulting sessions if you have a spare few $100,000.

Estimated net worth: $1.5 billion

PHOTO: Getty

7. David Sacks (above)

Role in PayPal: Joining from management consultancy firm McKinsey amp;
Company, Sacks became PayPals chief operating officer.

After PayPal: Sacks boasts one of the Mafias more diverse post-PayPal
CVs. After eBay assumed control, he left for Hollywood and produced and
financed the Golden Globe nominated 2005 movie Thank You for Smoking. The
next year, he founded genealogy website Frustrations with
inter-office communication led him to develop a productivity tool to help
employees share information. This was to become the social network Yammer.
Mircosoft acquired the company for $1.2 billion in July 2012. Sacks was
named corporate vice president in Microsofts Office Division. He hit the
headlines in 2012 after throwing himself historys most gauche 40th birthday
party. The theme? lsquo;Let them eat cake French revolution. The entertainment?
Snoop Dogg. The cost? A reported $1.4 million.

Estimated net worth: Unknown

8. Peter Thiel

Role in Paypal: Co-founder and CEO.

After PayPal: After earning $55 million from his 3.7 per cent stake in
the eBay deal, Thiel immediately founded hedge fund Clarium Capital, a
global macro hedge fund and made the ludicrously savvy decision to angel
invest $500,000 in fledgling social network Facebook. Thiel was the first
outside investor in the company and sold almost has made over $1 billion
selling his shares. You can read Mick Browns in-depth profile on Thiel
right here.

Estimated net worth: $2.2 billion

The Thiel Fellowship: meet the college dropouts ready
to change the world

9. Keith Rabois

Role in PayPal: Held the nicely extravagant title of Executive Vice
President, Business Development, Public Affairs and Policy between November
2000 and November 2002.

After PayPal: Regarded as a very useful person to have around at a
start-up, Rabois went onto hold senior positions at LinkedIn (more on that
in a minute), Max Levchins Slide (a company responsible for slideshows and
animations in social networks) and electronic payment firm Square (founded
by Twitters Jack Dorsey). Controversy accompanied his exit from Square,
with a threat of a lawsuit over sexual harassment claims by a male employee
who allegedly obtained a job at the company after beginning a relationship
with Rabois. Which makes Gawkers accusations of Rabois undergraduate
homophobia all the more disturbing. Rabois is now a partner at venture
capital outfit Khosla Ventures and serves on the board of directors at Yelp
and Xoom.

Estimated net worth: $1 billion

PHOTO: Getty

10. Reid Hoffman

Role in PayPal: Joined from the worlds first (failed) social network
SocialNet to become a member of the board of directors, then went full-time
to become PayPals COO. By the time of the 2002 eBay takeover, he was
executive vice president.

After PayPal: lsquo;The most connected man in Silicon Valley co-founded
inbox bothering business social network LinkedIn in December 2002, owning a
stake now worth an estimated $2.39 billion with its IPO in May 2011. The
eldest of the Mafia is also lauded for his clever/lucky angel investing.
Hes made upwards of 80 angel investments (including Facebook, Zynga,
Flickr, Digg and and in 2010 joined Greylock Partners, running
their $20 million Discovery Fund; designed to seed fundings of worthy

Estimated net worth: $3.9 billion

11. Max Levchin

Role in PayPal: A co-founder and the firms chief technology officer,
well regarded for his contributions to PayPals anti-fraud efforts.

After PayPal: Took his $34 million from the PayPal sale and founded
Slide. Google picked it up for $182 million in August 2010, with Levchin
becoming Googles Vice President of Engineering on 25 August. A year and a
day later, Google closed Slide and Levchin departed. Between Slides rise
and fall, he helped start Yelp in 2004 (and is the companys largest
shareholder), was appointed to the board of directors of Evernote and and
co-founded financial services company Affirm. In recent years, hes started
a company called HVF (standing for, enjoyably, lsquo;Hard, Valuable, and Fun), a
firm designed to fund projects looking to leverage data and joined Yahoo!s
Board of Directors. Hes keeping himself busy.

Estimated net worth: $300 million

12. Roelof Botha

Role in PayPal: A qualified actuary, South African Botha negotiated
PayPals sale as its Chief Financial Officer. He had joined the company
prior to his graduation from the Stanford School of Business, becoming
director of corporate development.

After PayPal: A regular on the Forbes Midas List of top tech investors,
Both joined venture capital giant Sequoia Capital in January 2003 as a
partner, wheres hes stayed ever since. His extra curricular business
pursuits include sitting on the boards of 13 companies, including Jawbone,
Evernote, Tumblr and Xoom. He was also on YouTubes board before the company
was acquired by Google.

Estimated net worth: Unknown.

13 Russel Simmons

Role at PayPal: The firms Lead Software Architect.

After PayPal: Co-founded Yelp with Jeremy Stoppelman and served as its
CTO until he lsquo;transitioned into an advisory role in June 2010 to take some
lsquo;much needed time off to travel. Fresh from his high end gap year, Simmons
launched Learnirvana in 2012, a web tutor program that helps users learn

Estimated net worth: Very difficult to discover. Its very easy to tell
you that near-namesake and hip-hop mogul Russell Simmons is worth around
$340, however.

PHOTO: Art Streiber/August Image

Not in the picture, but absolutely worth profiling:

Elon Musk (above)

Role at PayPal: PayPal had merged with Musks financial services and
email payment firm in 1999 and Musk became the new companys largest
shareholder by the time of its sale to eBay. He earned $165 million from the

After PayPal: Strap yourselves in. Musk launched Space Exploration
Technologies (SpaceX) in June 2002, where he serves as the CEO and CTO. In
May 2012, their Dragon spacecraft ensured SpaceX became the first commercial
vehicle to launch and dock a vehicle to the International Space Station. He
assumed leadership of electric car firm Tesla Motors in 2008 and in 2013
unveiled a proposal for a new form of transportation between the Greater Los
Angeles area and the Bay Area in San Francisco. His lsquo;Hyperloop is a
subsonic air travel machine completely reliant on solar energy.

Estimated net worth: $9.7 billion

September 21, 2014 · Getting A Mortgage · Comments Off

Denver, Colorado (PRWEB) September 20, 2014

Mortgage Banker, Jason M. Ruedy, also known as The Home Loan Arranger, realizes that many potential home buyers are dissuaded from buying a home because they are misguided by common mortgage-related myths that have been circulating in the United States for the past several years. Unfortunately, according to Mr. Ruedy, the myths are preventing many first-time homebuyers from the benefits of home ownership and low mortgage interest rates.

An article published by on September 15, 2014 entitled Wells Fargo Finds Mortgage Myths Hamper Home Purchases says, Getting a mortgage in the United States may be easier than many borrowers think.

The article, which references survey results published in a press release distributed by Wells Fargo on Monday, September 15, 2014, states, Nearly two-thirds of respondents thought that a very good credit score was necessary to buy a home, and more than 40 percent thought they needed a down payment equal to at least 20 percent of the purchase price to buy a home.

The article goes on to say that in reality, Under government-backed programs, first-time homebuyers with subprime credit scores can get a mortgage insured by the Federal Housing Administration, and they can put down as little as 3.5 percent of the purchase price.

The story published by talks about potential home buyers being discouraged from applying for a mortgage because they believe they will be turned down. I feel that its my job to set the record straight. As a top mortgage lender, I can assure you that there are many mortgage options available and potential home buyers are not automatically turned down based on their credit score.

  • Jason M. Ruedy, The Home Loan Arranger

According to The Home Loan Arranger, mortgage myths are plentiful, but many myths are misguiding potential home buyers. Its Mr. Ruedys mission to educate his clients on their options, and provide them with proper guidance throughout the entire mortgage application, underwriting and closing process. Many potential home buyers know that right now is a great time to buy a home because mortgage interest rates are low, and theres no need for unfounded myths to hinder their desire to purchase a home.

About The Home Loan Arranger:

Mr. Jason M. Ruedy, also known as The Home Loan Arranger, has 20+ years of experience in the mortgage business. His company was built around the crucial principles of hard work, discipline, and determination. The Home Loan Arranger evaluates client applications quickly and efficiently and structures loans with the best possible terms. Mr. Ruedy is successful in achieving loan closings for clients while meeting their highest expectations. Jason M. Ruedy is ranked #2 in the state of Colorado by Scotsman Guide, which is the top leading resource for mortgage originators.

For media inquiries, please contact Mr. Jason M. Ruedy, The Home Loan Arranger:

The Home Loan Arranger

512 Cook St #100

Denver, CO USA

Phone: (303) 862-4742

Toll Free: (877) 938-7501

September 21, 2014 · Financial Partners · Comments Off

Independent Financial Partners has hired Louis Hanna as its new director of recruiting. He will be responsible for recruiting financial advisors and advisor teams from wirehouses, and regional and independent broker-dealers.

Hanna has over 25 years of diverse financial services industry experience, including senior level positions with Conduit Advisors, ING Furman Selz, Corigin Holdings, Paradigm Multi-Strategy Funds and American Independence Funds.

Independent Financial Partners is a comprehensive wealth management firm located in Tampa, Fla.

Please send On the Move items to Kathy Lynch.

September 21, 2014 · Getting A Mortgage · Comments Off

Fear of a loan denial has led some consumers with low credit scores to simply not bother applying for a mortgage. But, while youll still have to provide proof of your income and assets and an explanation of your low credit score, it is possible to get a mortgage with a low credit score from some lenders.

Your credit score is a piece in the qualification puzzle, but its not the whole puzzle, says Josh Moffitt, president of Silverton Mortgage Specialists in Atlanta.

View Todays Lowest Mortgage Rates!

Fair to Poor is Considered a Low Credit Score

There arent any hard lines between a good and bad credit score. The scores break down like this:

Credit Score

A number, roughly between 500 and 850, that summarizes a consumers creditworthiness.

The higher the score, the more able and willing a consumer is to repay a loan, lenders believe. The best mortgage rates and terms go to borrowers with credit scores of 740 and higher. Generally, a low credit score is in the fair to poor ranges below.

750 and higher = excellent 749 to 700 = good 699 to 650 = fair 649 to 600 = poor 599 or lower = bad

Borrowers Credit Scores are Falling

Lenders in 2014 are approving more loans with lower credit scores. According to mortgage software provider Ellie Mae, 33% of closed loans in spring 2014 were for borrowers with a credit score below 700, compared with 27% a year earlier.

Borrowers with Low Credit Scores Often Get FHA Loans

Lenders are typically more lenient with credit qualifications for borrowers who opt for government-insured Federal Housing Administration loans, but Clint Madison, a senior mortgage adviser for Envoy Mortgage in Walnut Creek, California, says his company approves both FHA and conventional loans for borrowers with credit scores as low as 620.

With the market slowing down, standards are relaxing a little bit because lenders are getting hungry for business, Madison says.

Carrington Mortgage in Santa Ana, California, accepts applications from borrowers with a credit score as low as 550 for FHA loans, with minimum down payments of 10%.

Demand is There for Low-Score Borrowers

Theres a huge segment of underserved borrowers today, says Ray Brousseau, executive vice president of the mortgage lending division of Carrington Mortgage Services. In 2005, 1 out of every 7 loans were approved for borrowers who had a credit score under 630. By 2013, 1 out of every 500 borrowers had a credit score that low.

3 Things About Getting a Mortgage With a Low Credit Score

  • Lenders are becoming less strict about credit scores.
  • Some lenders see a difference between irresponsible applicants and those who lost jobs.
  • Proving a year of on-time rent payments could be helpful.

Brousseau says that Carrington is able to offer loans to borrowers with low FICO scores because employees have experience in managing subprime loans.

We invested in people with expertise in manually underwriting loans and making common-sense decisions about borrowers, and theyre joined at the hip with servicers who talk directly to borrowers and help them manage their loans, Brousseau says. Our loans are perfect for the group of people that got caught up in the recession and lost their job or had their hours or pay cut or had to move and take a loss on their home.

Automated and Manual Underwriting

Two methods that lenders use to approve or deny mortgage applications:

  • Fannie Mae and Freddie Mac have software programs (Desktop Underwriter and Loan Prospector) that can automatically approve loans based on the borrowers credit score, income, total debts and other criteria. That is automated underwriting.
  • In other cases, the lender may approve loans based on the lenders judgment. That is manual underwriting.

Qualifying for a Low-Credit Mortgage

Moffitt explains that lenders run loan applications through automated underwriting systems from Fannie Mae or Freddie Mac. The applications must meet the standards established by their investors.

If a loan doesnt make it through the automated system, you can look at it manually and find out why the credit score is low, Moffitt says. Sometimes investors will allow a loan to be approved with a low credit score but with other compensating criteria, such as having six months of cash reserves in the bank or no late payments for the past 12 months.

How to Improve the Odds of Approval

Moffitt says you increase your chances of an approval if you can verify that youve paid your rent on time for the past 12 months and that you wont have a payment shock on your housing payment.

If youre paying $500 a month in rent, then we wouldnt want your payment to go above $750 if you also have a low credit score, Moffitt says.

Another way to offset the impact of poor credit is to make a bigger down payment, particularly a payment of 20% or more. If you can only go from 3.5% to 5% for your down payment, Moffitt says, youre better off keeping the extra cash in reserve.

Explaining a Low Score

Madison says that borrowers with a lack of credit history and therefore a low score can sometimes overcome their score with nontraditional forms of credit such as utility and rent payments. If you have a long credit history and a low score, youll need to explain it.

You can provide a letter about the circumstances that caused your score to drop, such as a job loss or a death in the family, which could make a difference to a lender, says Madison.

Some of the common issues that can cause your credit score to drop that lenders view as less risky are issues with a late medical bill or student loans, says Moffitt. He says a default on a car loan would be much worse than those financial issues.

Lending is a Judgment Call

At Carrington, borrowers with a low credit score must go through an educational process to make sure they understand their loan.

We make sure that if theres a potential problem with the borrower, we wont make the loan, says Brousseau. Just because FHA guidelines say a loan is permissible doesnt matter because our underwriters will make decisions based on common sense.

If youve got a low FICO score, consult with a few lenders to see if your reasons for your low score can be overcome enough for a loan approval.

Copyright 2014, Bankrate Inc.

September 21, 2014 · Getting A Mortgage · Comments Off

He said: Weve got a housing shortage. Wages are low and increases in mortgages and house prices are making it ridiculous.

People enter the market depending on their parents. This is a possible alternative and we have the land all we need to do is bring it together.

Scores of homes in Hull are being demolished by the city council as part of a major regeneration programme.

Hull City Council housing portfolio holder John Black has said he would ask developers working alongside the city council to look into Lord Prescotts idea.

He said: I think its commendable people are looking at all these things.

Clearly, weve got to find a solution to this housing problem.

I think its something weve got to do. If youre working full-time and working hard and you still cant afford to buy a house, its clearly not acceptable to just leave it at that.

Although many families still struggle to get on the ladder, property prices in Hull remain lower than in many other cities.

Earlier this month, a study by the TUC revealed average prices are less than four times the average income in the city the only place in Yorkshire where the ratio is so low. For Cllr Black, that is still not good enough.

He said: Despite Hulls low house prices, wages are commensurately lower and many people cant afford a property if they have to provide a 10 per cent deposit as well as getting a mortgage.

Any ideas that can reduce or remove those barriers, any ideas which appear to be innovative and able to make it work for people striving to be owner-occupiers, have got to be worthy of examination.

Im more than willing to look at this system and see how the council can help.

The Gentoo system, called Genie, has been running in Sunderland for several years.

It sees the company buy new-build houses from developers before advertising them on the market.

When an owner moves in, they pay Gentoo every month.

The scheme grew out of a financial instrument designed for Muslim buyers, who are discouraged from getting into debt.

Ben and Lucy Watson, who live in a development in the Doxford Park area of Sunderland, said it turned their distant dream of home ownership into a reality.

Mr Watson, a 39-year-old IT worker, said: We were renting and struggling to get a deposit for a mortgage.

He and his wife have two young children and moved into a four-bedroom house with a garden in 2012.

They pay pound;983 a month for the pound;180,000 home and did not need a mortgage.

Lord Prescott said: This allows families to buy without the stamp duty, without the mortgage, and have the house now.

It would be very sensible to bring this scheme to Hull.

There are already some efforts to help get first-time buyers on the property ladder.

The Governments flagship mortgage initiative Help to Buy allows new owners to borrow with a smaller deposit.

The maximum amount needed under the programme is 5 per cent of the total value of a house.

Banks normally want a deposit of at least 10 per cent.

Kingswood, where developers including Barratt Homes and Persimmon Homes are building hundreds of houses, is a Help to Buy hotspot.

At least 143 people have used the scheme in the area since its launch, according to a national newspaper more than anywhere else in the country.

Cllr Black believes it goes some way to addressing the issue. However, he is convinced more must still be done.

He said: People have got to find solutions to fit the current circumstances.

The proof is in the pudding and if people find these kinds of schemes attractive, they could make a difference.

Business news for Hull and East Yorkshire

September 21, 2014 · Getting A Mortgage · Comments Off

In its latest Mortgage
Lender Sentiment Survey Fannie Mae detected an interesting switch in attitudes
and opinions in two areas. The
third-quarter survey, the third since Fannie Mae originated the series last
March, found that large lenders expect to see their underwriting standards ease
over the next three months. Perhaps not
coincidentally, the share of lenders of lenders, regardless of the size of the
institutions they represent, who expect the demand for purchase mortgages to go
up over the next three months dropped by 26 to 33 percentage points depending
on the mortgage type.

The largest decline in
expectations was for GSE-eligible loans where the percentage of respondents expecting
borrower demand to increase fell from 54 percent in the second quarter to 21
percent. The other categories fared only
marginally better. Expectations of
increasing demand for non-GSE eligible loans were reported by 53 percent of
participants in the second quarter but only 27 percent in the third. Only 16 percent looked for increased demand
in government loans compared to 42 percent the previous quarter.

Two hundred fourteen executive
officers representing 196 lenders participated in the 10 to 15 minute on-line
survey. Fifty-seven of the participating institutions
were mortgage banks and 128 were depository institutions. Fifty of the entities were classified as larger
institutions with 2012 total industry loan origination volume in the top 15
percent or above $1.14 billion. There
were 55 mid-sized institutions that participated and those had an origination
volume which put them in the 16 percent to 35 percent range or $325 million to
$1.14 billion. The 91 remaining
respondents classified as smaller institutions fell below those benchmarks.

Overall, most lenders
reported no major changes
in their underwriting credit standards for the prior three months and expected
no major changes
for the next three months. However,
the credit tightening for GSE eligible loans noted in the first quarter seems
to have gradually trended down in quarters two and three. Larger lenders continue
to be more likely
than smaller lenders to say their credit
standards eased over the prior three months and that they expect standards to ease during the next three months, in particular for non-GSE eligible and government
loans. Fannie Mae said perhaps this indicates an effort to boost purchase mortgage
activity before the year comes to a close.

diminished purchase mortgage demand outlook is broadly in line with the softened
consumer housing sentiment seen in the August National Housing Survey results
released last week, said Doug Duncan, senior vice president and chief
economist at Fannie Mae. Historically, as lenders face a more competitive
market for loan volume, its not uncommon to see some loosening in the lending
standards; however, this time, the easing will likely be around the
edges. These latest third quarter results are largely consistent with Fannie
Maes study released last month, titled Impact of QM, that
shows larger lenders are more likely than smaller lenders to pursue non-QM
loans. Larger lenders are expecting to tap into the non-GSE-eligible and
government loan market to maintain or grow their market share and offset their
anticipated slowing mortgage demand as the peak spring/summer selling seasons
are coming to an end, said Duncan.

Interestingly senior
mortgage executives continue to be much more pessimistic than the general
public when it comes to the ease of getting a mortgage. Fannie Mae compared the lenders responses to
how easy it would be to get a mortgage to answers to the same question gathered
from the most recent National Housing Survey conducted with consumer homeowners
and renters. Only 15 percent of the
senior executives (down from 19 percent in the second quarter) thought it was
easy for consumers to get a mortgage today.
Among those consumers themselves 48 percent thought that was true.

Those executives
however have an optimistic streak. When
confronted with a question about the direction of the economy, 51 percent of
the lenders said it was on the right track compared to 35 percent of National
Housing Survey respondents.

The lenders were slightly
more bullish about home prices as well.
Forty-eight percent expect those prices to rise over the next 12 months,
only 2 percent expect a decline. Among
consumers price increases were expected by 42 percent and declines by 9
percent. The average increase among
those expecting price hikes was 1.9 percent for the executives (down from 3.2
percent in the first quarter) and a slightly higher 2.1 percent for consumers.

The Mortgage Lender Sentiment Survey
which was conducted between August 6 and 26 also found that the majority of
lenders surveyed reported, as they had in the two previous surveys, that they
expect to maintain both their Mortgage Servicing Rights and their post mortgage
origination execution strategies for the next three months. However their profit margin outlook appears
to have worsened. The net percentage of larger and mid-sized lenders reporting
decreased profit margin expectations increased from Q2 to Q3.