Accounts – Future Komp Fri, 24 Sep 2021 10:37:59 +0000 en-US hourly 1 Accounts – Future Komp 32 32 How many student loan borrowers have failed to graduate? :: Tue, 09 Mar 2021 10:57:20 +0000

Rep. Alma Adams, DN.C., says many Americans who carry heavy student loan debt don’t even get their money’s worth.

Your comments come as the Biden administration is considering action to pay off some student loan debt.

“Almost 40% of borrowers with student loan debt have not graduated from college. Now they are facing the worst of both worlds: all debts and no graduation, ”Adams tweeted on February 9th.

Is it true that nearly 40% of borrowers haven’t graduated?

Adams’ tweet caught our attention because he did not cite a source for their claim. When we contacted Adams’ office, a spokesman said Adams received the statistics from Senator Elizabeth Warren.

Warren tweeted a similar claim on Jan. 27, saying, “Up to 4 in 10 people with student loan debt were unable to graduate, many because of high costs, so they are now in the worst of both worlds – crushed by debt, no diploma, to increase their income. “

Warren mentioned the statistic again on February 3rd Confirmation hearing for the Minister of Education nominated by President Biden. (Warren has previously misrepresented facts about student loans.)

After speaking with Warren’s office and tracing the origins of this claim, the statistics shared by Warren and Adams seem to be on the right track. However, it is based on a limited data set with a short tracking period.

Current report

Warren’s office said their source was Data compiled by the National Center for Education Statistics and analyzed by Mark Huelsman, former assistant director of policy and research at Demos, a progressive think tank.

Huelsman is now a fellow at Temple University’s Hope Center for College, Community and Justice. He is also a fellow in the Student Borrower Protection Center, a nonprofit advocacy group.

Huelsman told PolitiFact that he looked at students who were in college in the 2011-12 school year and who had borrowed from public or private lenders. Then he looked to see if those students graduated by 2017.

“I looked at the accumulated debt. If at any point in college you were in debt, did you graduate? ”He said.

The number that emerges from his research: 38.6% of people who took out a student loan over this six-year period did not complete their college education during that period.

PolitiFact reached out to other experts about Huelsman’s findings.

Adam Looney, economist and senior fellow at the Brookings Institute, and Judith Scott-Clayton, professor of economics and education at Columbia University, said they analyzed the same NCES data and got practically the same result.

Incomplete data

Of course, Huelsman’s analysis is only a snapshot of a period of time. Experts from the NCES and the Urban Institute, a non-partisan think tank, look at graduation rates in six-year windows, as that period can take into account part-time students and other variables, as explained in a recently released institute report.

However, some people return to school outside of the six-year deadline and eventually graduate, ”said Jill Barshay, writer and editor for The Hechinger Report, a nonprofit education newsroom.

“The problem with the six-year timeframe is that it takes many people more than six years to graduate,” Barshay said in an email. “I don’t know what percentage of them end up doing it. Some colleges like to use an 8 year period to measure how many students complete their 4 year degrees. “

We asked Looney and Scott-Clayton if they were aware of any other significant studies on the subject. They said it was difficult to get information about long-term repayment of individual debts and graduation from college.

“This 8-year survey is the best readily available,” Looney said.

In an email, Scott-Clayton said:

“Unfortunately, there are only a few data sets that link information about the loan with information about the degree. Many student borrowing statistics (such as those from the Federal Reserve Banks) are based on credit report data – this is not tied to any degree information. Because of this, we have to rely on these NCES surveys, which track people over time and gather a lot of valuable information, but are only used every now and then. “

Huelsman noted that his 38.6% figure for student loan borrowers is in line with general trends in college degrees. The NCES last year reported that the overall six-year graduation rate for most full-time students in 2018 was 62%, meaning nearly 40% did not graduate.

In the debate about whether lawmakers should waive student loan debt, it’s important to note that the nearly 40% of non-graduates don’t hold 40% of the debt.

“While 39% of borrowers have no college degree, they account for only 23% of the debt they borrow,” Looney said. Bachelor’s degrees make up 41% of all borrowers but hold 64% of the debt, Looney said.

Our verdict

PolitiFact: Mostly true

Adams tweeted, “Nearly 40% of borrowers with student loan debt haven’t graduated from college.”

Three separate analyzes of data from the National Center for Education Statistics found that 38% to 39% of people who took out college loans between 2012 and 2017 did not graduate from college during that period.

Although there is a lack of data on this particular topic, experts consider this analysis to be the most reliable to date. We rate this claim as largely true.

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Credit moratorium: RBI calls on SC to lift the order banning NPAs Tue, 09 Mar 2021 10:57:20 +0000

The RBI on Thursday called on the Supreme Court to overturn its restraining order, which found accounts opened by Jan.

As a relief for stressed borrowers who are in distress due to the effects of the COVID-19 pandemic, the Supreme Court issued the injunction on September 3.

The Reserve Bank of India (RBI) attorney informed a bank headed by Judge Ashok Bhushan, who heard a series of pleadings regarding banks charging interest on EMIs from borrowers who claim it took, failed to pay the credit moratorium in the face of the pandemic.

We are facing difficulties due to the order prohibiting the declaration of NPAs, Senior Advocate V Giri on behalf of RBI told the bank while urging the bank to lift the interim order.

The RBI and the Treasury Department have already submitted separate additional affidavits to the Supreme Court stating that banks, financial institutions and non-banks will be allowed up to Rs 2 crore up to 5 during the period of the moratorium.

Senior attorney Rajiv Dutta, who stood on behalf of one of the petitioners, told the bank that they were grateful to the center and RBI for holding small borrowers and said his plea would be dismissed.

The attorney appearing for the center said that attorney general Tushar Mehta, who has to argue on the matter, was on his feet in another case before a special bench of the Supreme Court.

Senior attorney AM Singhvi, who appeared on behalf of one of the applicants, said the energy sector needs to be heard.

The bank said it would bring the matter up for a hearing on November 18.

The pleas concerned the charging of interest on interest by banks for EMIs that were not paid by borrowers after the RBI loan moratorium had been invoked from March 1 to August 31.

Previously, the RBI had issued an affidavit that it has asked all banks, financial and non-bank financial institutions to take “necessary measures” to compensate the accounts of eligible borrowers for the difference between compound interest and simple interest on loans of up to. credit Rs 2 crore during the moratorium.

Previously, the central government had informed the Supreme Court that lenders had been asked to reduce the difference between compound interest and simple interest, which had been made during the RBI’s credit moratorium program by April 5th.

The government said the ministry had issued a plan for credit institutions to credit borrowers’ accounts with this amount for the six-month credit moratorium announced after the COVID-19 pandemic.

On October 14, the Supreme Court ruled that the center should implement the interest waiver on loans of up to Rs.2 billion as part of the RBI’s moratorium plan “as soon as possible” and declared that the common man’s Diwali would be in the In the hands of the government.

The RBI had issued the circular on March 27, which enabled credit institutions to grant a moratorium on the payment of installments of fixed-term loans due to the pandemic, due between March 1, 2020 and May 31, 2020. The moratorium was later extended to August 31 of this year.

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Small business loan approval rates are improving, new Biz2Credit data shows Tue, 09 Mar 2021 10:57:19 +0000

July saw an encouraging rebound in small business loan approval rates for banks and non-bank lenders. This is evident from the recently published Biz2Credit Small Business Lending Index.

The approval rates show an increase in the approval percentage for small loan applications from large banks by 0.3%. This approval rating increase does not include Paycheck Protection Program (PPP) loans. It also only applies to major banks with assets of $ 10 billion or more.

Biz2Credit Credit Index July 2020

The small business loan approval rate was 13.5% in June and rose to 13.8% last month. Small bank approval rates rose 0.2% to 18.6%, with both large and small bank approvals still massively below the 50.3% seen in February.

Encouraging approval rating trend for small businesses

While the rise in the loan approval rate seems gradual, the upside for small businesses in the US is still encouraging. This is clearly little good news for small businesses that may need such loans to help them stay afloat. Customer numbers and sales are still declining for many companies, but the upward trend will hopefully continue.

Other improvements in the labor market show that economic activity is slowly recovering. The health sector has seen a significant surge in employment. There were also notable increases in the leisure and hospitality, retail, business and professional services sectors. Many of these jobs were created by small businesses, which are clearly vital to the recovery of the economy.

Institutional Lenders ‘Steady Growth’

The monthly research of Biz2Credit is overseen by its CEO and leading small business lending expert, Rohit Arora, who commented: “The economy was clearly booming in July, particularly in the Northeast. The big banks have played a key role in PPP lending and are making other loans to their clients as some of them have used up their PPP funds.

“It will be interesting to follow major bank lending as the coronavirus spreads in the south and west of the country.”

Arora also said regional and community banks are now providing other types of credit to new customers. Previously, they had made many PPP loans only available to small businesses.

“The smaller banks are now in a good position to resume SBA 7 (a) loans and other funding requests,” added Arora. “Institutional lenders, like the other types of lenders, are steadily declining after disastrous results in March and April. They continue to play a strong role in lending to small businesses. “

Alternative lenders and credit unions continue to struggle

Unfortunately, the increase in the loan approval rate at large and small banks contrasts with the rates at alternative lenders. They fell 0.3% between June and July. The loan approval rate for alternative lenders is now 23.1%.

Credit union approvals also fell slightly in July, approving 21.2% of loan applications. That’s a 0.15% drop to match the May approval rating of 21.2%.



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California complies with state income tax treatment of PPP lending | Sheppard Mullin Richter & Hampton LLP Tue, 09 Mar 2021 10:57:19 +0000

As reported in our previous blog post The CARES ACT – tax breaks, Federal CARES Act provides debt relief for eligible recipients of Paycheck Protection Program (“PPP”) loans equal to the sum of the recipient’s labor costs, interest on mortgage obligations, rental obligations, and benefits (subject to certain conditions and restrictions ). Under federal law, any amount of covered loans that was enacted under the CARES Act is excluded from gross income for federal income tax purposes.

Because California only complies with the Internal Revenue Code selectively and from a certain date on the date the CARES Act came into effect, the issuance of PPP loans for California income and franchise tax purposes would have been taxable. However, California now has Assembly Bill No. Adopted in 1577 that complies with PPP loan waiver rules. AB 1577 added

Sections 17131.8 and 24308.6 of the California Revenue and Taxation Code, which provide that gross income does not include a funded loan amount under Section 1106 of the CARES Act, the Paycheck Protection Program and Health Care Enhancement Act, or the Paycheck Protection Program Flexibility Act of 2020 AB 1577 also denies deduction of business expenses for expenses paid with waived loan funds, as provided by federal law. The provisions apply to tax years beginning on or after January 1, 2020.

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The government extends the interest rate benefits on crop loans for farmers until May 31 Tue, 09 Mar 2021 10:57:18 +0000

May farmers have time to repay their short-term crop loans while retaining the benefit of interest subsidies and timely repayment incentives, PTI reported Monday, attributing the government decision to help people during a national lockdown to prevent the spread of. to prevent the coronavirus.

The government has given banks the benefit of 2 percent interest subsidy and 3 percent immediate repayment incentive (PRI) for all bank-granted crop loans up to Rs 3 lakh due or due between March 1, 2020 and May 31. this year.

ALSO READ: Coronavirus LIVE: SC Requests Lockdown Report; Government says no community breakout

“… due to restrictions on passenger traffic and difficulties in selling and receiving payment for their produce on time, farmers may have difficulty paying back their short-term crop loans due during this period,” an Agriculture Department official told Economic. Times, based on the lockdown.

Last week the government announced a Rs 1.7 trillion stimulus package to help millions of low-income households navigate the 21-day lockdown.

The package was announced two days after Prime Minister Narendra Modi ordered the lockdown to protect the country’s 1.3 billion people from coronavirus. This led to supply shortages of essential goods and panic buying, making the poor and day laborers the most vulnerable.

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Fed is entering a risky new world with the Main Street loan program Tue, 09 Mar 2021 10:57:18 +0000

WASHINGTON (AP) – As the US economy plunges into a severe recession, the Federal Reserve will embark on a risky program that it is starting for the first time since the Great Depression.

More than the eight other credit facilities the Fed put in place in the nearly two months since the economy collapsed from the virus outbreak is Loan program on the main street will be the most complex and demanding to date, say economists. It will likely pull the Fed into greater public scrutiny than it has since the 2008 financial crisis.

In setting up a lending program that inevitably excludes some companies, the Fed is criticizing that it is in fact picking economic winners and losers – an area the central bank, an independent agency, has long sought to avoid.

Critics already claim that the Fed has changed some of the program’s terms to allow highly indebted oil and gas companies to borrow under the program. The Fed says its changes came in response to requests from many different industries. Many economists fear that the Fed’s intention to minimize its losses, in part at the direction of the Treasury Department, will force it to limit its lending.

Nellie Liang, a senior fellow at the Brookings Institution and former director of the Fed’s Financial Stability Department, said the Fed and the Treasury Department have set a tight target for the program: to provide loans to small and medium-sized businesses in need of financial assistance to survive the slowdown caused by the virus. And they want to avoid lending to troubled companies that will soon fail despite their ability to borrow from the Fed, or to relatively healthy companies that would have survived anyway.

“They’re trying to target this middle segment of businesses,” Liang said. “It limits what you can offer if you don’t want to take losses.”

That task may have been made more difficult when Treasury Secretary Steven Mnuchin told reporters last week that he expected the Fed to repay the $ 454 billion the Treasury Department allocated to halt the Fed’s loan programs. The $ 454 billion was approved by Congress in late March as part of the government’s $ 2 trillion aid package. The money is intended to offset potential losses on the Fed’s loans.

“We look at it in a baseline scenario where we get our money back,” said Mnuchin.

But that priority arguably clashes with what many economists see as the need to distribute credit quickly and widely. This would likely mean that many loans would default and much of the Treasury’s money could be lost.

“In the midst of a severe recession, you are rushing to make many loans to many companies, some of which will not survive,” said George Selgin, senior fellow at the Cato Institute. In this atmosphere, if the Fed is concerned about repaying the funds, it may not be able to lend as much as it hopes.

The Fed has announced that it will provide up to $ 600 billion in Main Street loans. The money can either include new loans or top-ups on existing loans. The Treasury Department has allocated $ 75 billion to offset any losses. The banks make the actual loans, but the Fed will buy 95% of a loan to minimize the risk to the banks. However, Selgin estimates that this backstop is insufficient and that the Fed may need to stop lending in excess of $ 300 billion.

However, this is a bigger buffer than for any of the Fed’s other lending initiatives, including its upcoming programs for the Fed Purchase of predominantly higher rated corporate bonds. This suggests that the Fed sees Main Street lending as riskier.

The Fed could benefit from the corporate bonds it buys, interest payments, and the ability to buy bonds at low prices before they eventually bounce back. Those gains could offset some of the Main Street program’s losses and still allow the Fed to repay the Treasury in full.

Chairman Jerome Powell reiterated on Wednesday that the Fed cannot lend bankrupt companies or “give money to certain beneficiaries.” In those cases, Powell suggested, the small business loan program in the federal aid package would be a better option. These Small Business Administration Paycheck Protection Program loans can be made to companies that have spent most of the money keeping their employees or reinstalling all of their laid-off employees. Congress has made available US $ 660 billion for this.

The Main Street Program requires borrowers to use “commercially reasonable” efforts to keep all of their workers. However, it does not require redundant workers to be reinstated, as is the case with the PPP.

Last week the Fed updated the terms of the loans so that some borrowers can bear more debt than the original proposal. The maximum workforce for creditworthy companies has been increased from 10,000 to 15,000. And the maximum loan amount has been increased from $ 150 million to $ 200 million. In some cases, borrowers can use the loan to refinance existing debts.

Environmental groups pointed out that these changes reflected the demands of the ailing oil and gas industry, which the collapse in oil prices has made more difficult in part because driving and flying have fallen sharply around the world. The Fed said its changes are aimed at expanding the availability of its lending across all sectors. It is forbidden by law to grant loans to insolvent companies or to design loans for a specific industry. The central bank has also announced that it will identify the borrowers.

William English, a finance professor at Yale and a former director of monetary affairs at the Fed, noted that in the roughly 2,000 comments the Fed received, retailers and other industry groups also called for many of the same changes as the oil and gas industry.

Despite its name, the Fed’s Main Street Facility targets midsize companies, essentially halfway between the PPP and the large companies that can sell bonds on the Fed’s corporate credit facilities. Initially, the Fed set a minimum loan of $ 1 million, but in its latest draft it was reduced to $ 500,000. That should open it up to some smaller businesses, English said.

But the average loan on the first round of the PPP was about $ 200,000 and dropped to less than half by the second round.

“If you really want to lend to small businesses and call something Main Street, you should lower the floor,” said Glenn Hubbard, a critic of the program and an economics professor at Columbia University. But because smaller companies are riskier, “they have to take losses”.

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What is a Secured Loan? some form of debt that requires collateral Tue, 09 Mar 2021 10:57:17 +0000

Personal Finance Insider writes on products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners like American Express, but our reporting and recommendations are always independent and objective.

  • A secured loan is a type of loan that is guaranteed by collateral that you hold, such as: B. your house or your car.
  • There are several types of secured loans available, from mortgages and auto loans secured credit cards and secured personal loans.
  • Lenders may offer better interest rates and terms on their secured loans, but they also have the right to seize your collateral if you miss a payment or late payment.
  • Read More.

While borrowers take out many different types of credit every day, they all fall into one of two categories: secured or unsecured loans.

Certain types of loans, like mortgages, are always secured loans. But with other types of debt, you may have a choice between secured and unsecured loan options.

Which type of loan is the best? In short, it really depends on your specific situation. In some cases, a secured loan can be a smart choice, but it can also put you at higher risk. Here’s what you need to know.

What is a Secured Loan?

A secured loan is a type of loan that is guaranteed by collateral that you hold. If a borrower defaults on a secured loan, the lender can seize the collateral to minimize their losses. Here are some common examples of secured loans:

  • Mortgages: Secured by your home or property
  • Car loans: Secured by your vehicle
  • Secured credit cards: Usually secured by a deposit
  • Secured personal loans: Could be secured by a wide variety of financial assets

These are just a few examples of secured loans. But every time you fund the purchase of a physical item, be it a couch or a boat, there is a great chance that you have a secured loan. In any event, the lender has the right to repossess the collateral (in the event that you fail to make a payment) until the loan has been repaid in full.

What can be used as collateral for a secured personal loan?

With car loans or Mortgages, the item you purchased is also security. But with personal loans, you will receive cash instead of a tangible asset. Because of this, most personal loans are unsecured.

However, there are ways for a borrower to secure a personal loan. Here are some assets a lender can accept as collateral for a personal loan:

  • Home equity
  • Savings account or Payment slip
  • Vehicle title
  • Insurance policies
  • Stocks, bonds, and other stocks
  • Jewellery
  • Precious metals
  • Collectibles

What are the pros and cons of having a secured loan?

Secured loans are less risky for the lender. Because of this, they may be willing to offer you better terms on a secured loan than an unsecured one.

If you opt for a secured loan, you can get one lower interest rate, a higher credit limit or better repayment terms. And if you have a limited or damaged credit history, pledging an asset as collateral can help you obtain a loan approval.

But while secured loans could offer more credit options or more attractive terms, they also pose a higher risk for you as a borrower. If you default on the loan, the bank can hold your house, car, jewelry, or whatever as collateral was used, take it back.

It is also important to note that not all secured personal loans offer better terms or interest rates than their unsecured counterparts. In fact, secured loans aimed at borrowers with poor credit ratings (such as title loans or pawnbroker loans) often require expensive fees and high interest rates.

Should You Pay Off Unsecured Debt With A Secured Loan?

If you are struggling with credit card debt, you might be tempted to get a second mortgage or title loan on your paid off vehicle in order to consolidate your debt at a lower interest rate.

On the surface, this may seem like a solid financial decision. However, in reality, this is a very dangerous step as you would be converting an unsecured form of debt into a secured debt.

While credit card collection agencies can be overwhelming to deal with, they cannot take away your personal belongings without a court ruling. However, once you switch to a secured loan, your collateral is now at risk.

Instead of turning unsecured debt, like credit card bills or medical bills, into a secured loan, try working out a payment plan with the lender. And if you feel you need additional help managing your debt, you can make an appointment with a credit counselor National Foundation for Credit Advice or the Financial Counseling Association of America.

Is Getting A Secured Loan A Good Idea?

In some cases, getting a secured loan can be a wise decision. For example, your bank may offer you a better interest rate and better terms on a home loan than on an unsecured loan. Also, a secured loan can help you restore a damaged credit score.

On the flip side, some secured loans targeting low credit borrowers, such as auto title loans, can charge outrageous rates and fees. Before taking out a title loan, Make sure that you have explored all of your other loan optionssuch as Payday Alternative Loans (PAL) that are offered at

Credit unions

As with any loan, you need to make sure that you can really afford your monthly payments on a secured loan. And make sure you do your research as well Compare Lenders before you choose the right secured loan for you.

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Upholded conviction and 10 year prison sentence for payday loan fraud | Missouri News Tue, 09 Mar 2021 10:57:16 +0000

NEW YORK (AP) – An appeals court on Tuesday upheld the conviction and 10-year prison sentence for a man who carried out a $ 220 million payday loan robbery that defrauded over half a million people nationwide.

The ruling by the Second Manhattan Court of Appeals upheld the 2018 conviction of Richard Moseley Sr. of Kansas City, Missouri.

The appeals court said Moseley’s arguments were “inconclusive”.

The 76-year-old Moseley was convicted of extortion, fraud and identity theft in 2017 for crimes he committed while running the company from 2004 to 2014.

He was charged with abusing borrowers in New York and other states with interest rates that – many times over – exceeded the maximum rates allowed in those states.

Political cartoons

Prosecutors said Moseley’s credit company exploited over 600,000 of the country’s most financially vulnerable people, and then Moseley dodged disgruntled customers and state regulators by operating out of the Caribbean or New Zealand.

When sentenced, a public prosecutor said Moseley was “playing a mole with the supervisory authorities”.

The judge read extracts from a business plan that served as a blueprint for Moseley’s company and said, “If this is a business plan, it is a business plan for a criminal company.”

Copyright 2020 Associated press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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North Avenue Capital closes $ 2.2 million in high-tech loans Tue, 09 Mar 2021 10:57:16 +0000

PONTE VEDRA, Fla., Aug. 12, 2020 (GLOBE NEWSWIRE) – North Avenue Capital, a specialist commercial lender that finances USDA rural development loans, has signed a contract with high-tech shrimp farmer Royal Caridea, LLC for A $ 2.2 million loan completed the purchase of new equipment and working capital for the aquaculture farm in Gila Bend, Arizona.

Royal Caridea is a shrimp farming company focused on rebuilding the shrimp farming industry by growing a variety of fresh and frozen shrimp products for distribution to local grocers and restaurants. The loan, operated from two neighboring properties southwest of Phoenix, will help strategically upgrade the existing ponds, allowing the company to scale and establish itself in the U.S. shrimp market. In total, the Gila Bend sites house over 40 shrimp ponds of various sizes with a combined production capacity of around 300,000 pounds of shrimp per year.

In recent years, consumers have become more health conscious and have turned to the fish industry for low-calorie, low-fat sources of protein to help them lose weight and avoid health complications associated with high-fat foods.

Local farms cannot meet the demand for fresh, live and / or frozen shrimp. With seafood consumption expected to increase across the country, NAC’s loan will fuel sales growth in the region and reduce US reliance on international shrimp production and imports. Royal Caridea’s farm is poised to transform the local shrimp industry while meeting unmet market needs.

Royal Caridea will provide jobs to 18 men and women over the first three years that on average pay more than the state and federal minimum hourly wages. Due to the breadth of Royal Caridea’s supply chain, the loan will also help businesses and consumers by increasing job opportunities in the rural communities around the Phoenix MSA.

About North Avenue Capital
North Avenue Capital is a specialist commercial lender exclusively sourcing, underwriting and funding USDA rural development loans. As the fourth largest B&I lender in the country, NAC uses its expertise, capital, and relationships to build businesses, grow the economy, and create jobs in rural America. Find out more about NAC and its borrowers below

About Royal Caridea, LLC
Royal Caridea is a high tech shrimp farming company focused on bringing its transformative shrimp farming technology to market. Their patent-pending production offers innovative and sustainable methods and, above all, supports the consumer-oriented rearing of shrimp without antibiotics and toxic chemicals. To learn more about Royal Caridea visit:

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What can a credit service provider do in terms of compliance? Tue, 09 Mar 2021 10:57:15 +0000

Credit service providers today operate between a rock and a tough place. Customers demand high quality service. Regulators require that products and services be provided fairly and equitably. OK, but the current business climate adds complexity with credit modifications, forbearance, and compliance confusion.

Regulators and lenders have not agreed on certain fair servicing models, valuation practices, or formally approved compliance tools. Data is challenging and is seldom captured accurately and completely in standard maintenance platforms. And while regulators and credit institutions in general have a common understanding of fair lending Pitfalls and what they could mean HMDA Compliance with fair servicing is still a moving goal.

The Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020 introduced new requirements for loan deferral, with some guidelines later issued by various agencies. While the rules instruct servicers to offer a payment vacation without penalizing customers’ credit or loan rates, servicers must help customers through options and maintain the quality of service that customers expect.

They have to do all of this and at the same time comply with the rules, inform borrowers about options or change the loan. This increases the operational complexity of maintaining fair treatment in loan processing, where customer service must take into account the uniqueness of each loan and borrower, as well as the various people and systems involved in day-to-day processes and maintenance.

Consumer and fair service issues

When JD Power recently interviewed Customers who took out or refinanced mortgages with more than 30 of the country’s largest service providers reported long waiting times and little proactive communication. The survey was conducted from March to April 2020 at the height of the pandemic chaos in a time of historically low interest rates, record high unemployment and rising payment defaults.

Results analyzes onboarding, billing and payment, escrow management, fees, communications and digital, live and automated telephone interaction. It also examined customer satisfaction with risk / credit status, handling of transfers, tenure with servicer, and demographics. The survey results showed persistent challenges for many service providers with customer satisfaction, digital and call center experiences, which were then exacerbated by the COVID-19 pandemic.

In addition to customer experience challenges, consumer fears and frustrations from increased uncertainty about the expiration of unemployment benefits and general economic concerns can also fuel further Forbearance on residential mortgages Inquiries and omissions.

For example, Guidance for government-backed FHA and Veterans Affairs (VA) loans, it is clear that a lump sum payment may not be required after a deferral. However, there is still conflicting information about repayment options, confusion about how deferred payments can be made up after the deferral has expired, and a lack of understanding of borrowers’ rights, including the ability to receive deferral at all. Outstanding FHA and VA loans make up about 20% of the market.

The legislator questions whether the administration of deferral requests by mortgage service providers complies with the CARES Act. The newly appointed vice presidential candidate, Kamala Harris, is sure to have a vote. Notes from HousingWire Editor Kathleen Howley: “Eight years ago [Harris] came to be known as the toughest negotiator among the 49 attorneys general who stood up against the country’s largest banks to seek a $ 25 billion settlement for mortgage service violations.

Corresponding a special report of the Federal Housing Finance Agency (FHFA), Fannie Mae, Freddie Mac, and FHFA do not have adequate procedures in place to ensure that mortgage servicers comply with the CARES injunction.

Technology companies rise

New technologies can help with compliance, performance reporting, and analytics, and solve many of the challenges described above.

Asurity recently launched its RiskExec Fair Servicing Module. The tool is specifically configured to help lenders and service providers track practices and performance and manage complex loan deferrals and changes in accordance with CARES law.

The web-based RiskExec platform manages compliance reports and analyzes, automates the Home Mortgage Disclosure Act (HMDA), Community Reinvestment Act (CRA), redlining analyzes and processes for compliance with fair lending. In addition to overseeing borrower treatment, it also manages regulatory compliance obligations for lenders.

“It’s the best integrated fair lending compliance solution on the market,” said Dr. Anurag Agarwal, founder, president and chief architect of RiskExec. “Our customers have to react quickly to the evolving compliance landscape and our Fair Servicing Module helps to meet this need.”

What is a Lender to Do?

Nowadays it is difficult to say for sure whether the staff of a service company are completely fair and non-discriminatory. Discriminatory behaviors can occur unconsciously or occasionally, and it can be difficult to spot persistent patterns or isolated incidents in the midst of the high volume of activity. Forbearance and CARES compliance still feels like the Wild West. No models or tools have yet been fully accepted by the industry.

Millions of homeowners have already availed of Mortgage Forbearance and Amendment. Mortgage lenders and administrators today must employ targeted strategies for managing fair servicing risk – if they are not already. You need to balance the management of processes and regulatory changes in real time while ensuring fairness and compliance in day-to-day operations.

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