Smart Borrower Blog

Archive for March, 2010

Too Much or Too Little Regulation – Small Banks Can’t Win

There was obviously too little regulation during the recent housing boom as many banks went hogwild making loans, traditional as well as risky ones. Now the market has crashed and banks have regulations and examinations up the wazoo, and they are having a hard time even making normal small business loans. A recent article in USAToday gives an example of the current difficulties small banks are facing. David Bridgeman, CEO of Pinnacle Bank in Orange City, Fla., described his last examination in November as “overwhelming.” Twenty-one examiners from both the FDIC and the state showed up at his tiny 28-employee... more »

Small Banks Struggling to Lend to Small Businesses

Many small businesses throughout the country are still finding it difficult to get approved for loans from the banks that have always, in the past, lent to them. Even businesses with perfect credit records and profits are being turned away. At the same time economists continue to say that our economic recovery depends on the growth of small businesses. The Obama administration has also stressed the importance of small business and has openly supported small business lending. So why isn’t small business lending happening? An article in USA today reports on the struggle that is going on between small... more »

Finally, Some Real Mortgage Help

Bank of America has announced a dramatic change to its mortgage modification efforts that may finally offer some serious relief for the most at-risk home loans on its books. The company announced yesterday that it plans to initiate a $3 billion loan forgiveness program that could help as many as 45,000 homeowners. “The centerpiece of these enhancements is a program of earned principal forgiveness that addresses severely underwater mortgages with some of the highest rates of delinquency,” said Barbara Desoer, President of Bank of America Home Loans. The “earned principal forgiveness” will be available to borrowers whose mortgages are more... more »

Student Loan Bill Passes the House

Update March 25th, 2010: The Senate also approved the bill , all but assuring it will become law. This past Sunday, the House passed the largest student loan overhaul seen in decades. Under the new legislation, federal backing of private student loan lenders will end, and instead the federal government will be funding student loans. While private companies will still help in servicing the loans, the federal government will now be issuing them. The savings for this program is in the billions. Just over $60 billion over ten years is the projected savings according to the Congressional Budget Office. The... more »

Subprime Borrowers: It’s Used Cars or Nothing…For Now

The newest data from Experian Automotive shows that the average credit score was 775 for a new car loan in the third and fourth quarters of 2009. That’s right, 775! So basically that means if you are a subprime borrower in the market for a new car, you are out of luck (unless you can bring a hefty down payment). The good news is that lenders seem to be loosening their lending standards for loans on used cars. The Experian Automotive report found that the average credit score for those loans fell to 680 from 684 in the latest quarter.... more »

Student Aid Bill: Will It Finally Pass?

The student loan bill is back in the news this week. The bill that would put the government in charge of dispersing student loans instead of commercial lenders passed by the House last year but has yet to pass in the Senate. Private lending lobbyists have been working overtime to stop the bill, and have succeeded in the very least by stalling it in the Senate. The bill was originally predicted to save the federal government around $87 billion over a ten year time period. New cost saving estimates show that the number may be closer to $61 billion. Currently... more »

Credit Card Rates Soar in Wake of New Laws

CreditCards.com reported today that average interest rates on new credit card offers are skyrocketing since the implementation of the CARD Act. According to its data, the national average interest rate on new credit cards is now 14.56 percent, the second highest figure on record since the survey began in 2007. The higher rates are very clearly a reaction to the stricter rules being placed on the credit card companies. For instance, lenders are now limited in how much they can raise the interest rate on existing credit card accounts. There is no limit, however, on rates for new cards. “The... more »

SBA Stimulus Funding Extended Through March 28th

The Small Business Association (SBA) and small businesses across the country got their wish last week when Congress passed and Obama signed an extension to an SBA stimulus program that had expired on February 28th. The stimulus funded program provides money for SBA funded loans. The funds are used to waive fees associated with SBA backed loans and to provide a higher backed loan value of 90 percent. The program will now run through March 28th of this year. This is the program’s second extension and many experts consider it a success. The program to date has helped approximately... more »

Small Business Administration Fully Funded…For Now

Very recently the Small Business Association announced that it had run out of funding for its special economic relief loan programs. That left plenty of small business owners in the lurch when it came to financing. Fortunately for those, and thousands of others, the Senate passed an unemployment benefits bill that will include extra money for the SBA. As part of the Recovery Act last year, the SBA has been offering loans with guarantees of up to 90 percent and a waive on its usual fees. These incentives have been instrumental in keeping the small business lending industry alive during... more »

Mortgage Delinquencies Hit a New High

While the economy is showing few signs of recovery and the national unemployment rate is staying steady at around ten percent, more and more people are struggling every day to make ends meet. Each month the number of homeowners across the country who must make the decision to purchase food for their family or to make their mortgage payment rises. New data shows that more homeowners than ever before are at risk of foreclosure. Once again, TransUnion, one of the national credit data providers, is reporting a rise in the number of homeowners who are at least 60 days... more »