Smart Borrower Blog

Archive for August, 2010

Banks Ease Lending Standards for Small Businesses

According to a Federal Reserve survey, banks have started to ease lending standards for small businesses. Since 2006 lending practices have made it very difficult for small businesses across the country to get loans. Many economists believe that this has been detrimental to our economy’s financial recovery. While large businesses have already been finding easier criteria to receive business loans for the first time in over three years, banks are finally easing standards for small businesses as well. A small business is defined as one that has sales of $50 million or less, according to the federal reserve. “After three... more »

How Low Can You Go, U.S. Home Sales?

News on the home sales front this week was not good. July sales of existing homes dropped 27.2 percent from the previous month to 3.83 million units and new home sales fell to a 47-year low of 276,000, down 12.4 percent from June. New home sales were also off 32.4 percent from July 2009 figures, and existing home sales drooped 25.5 percent form the year before. Prices for both new and existing homes decreased in July, with the median new home price across the nation falling to $253,300, the lowest price since 2003. Existing homes slouched down to $182,600 from... more »

Government Employees Get Help in Paying Back Student Loans

According to an article in the Washington Post, Federal government employees with student loans benefited last year, as many of them had their student loans repaid for them. 36 different federal agencies provided student loan payback assistance to over 8,000 federal employees. The total cost to the government was $61.8 million in 2009, a 20% increase from 2008. “President Barack Obama has highlighted the importance of recruitment and retention tools and has asked each Federal agency to do its part to ensure ‘this Government is as efficient as possible and that every taxpayer dollar that is spent is being spent... more »

Mortgage Delinquency Rates Still High, But Falling

For the second quarter in a row, the mortgage delinquency rate for loans more than 60 days late dropped, even thought the rate is still up significantly from a year ago. That’s according to the latest data from credit-reporting bureau TransUnion, which says that delinquency rate for the second quarter of 2010 fell 1.48 percent to 6.67 percent. The quarter before the rate had dropped 18.52 percent from the previous one. However, the current rate is still historically high and it is up 14.8 percent from the same time last year (5.81 percent in the 2009 second quarter). TransUnion stats... more »

For Profit Colleges and Universities Have Low Student Loan Repayment Rates

Last week, the Department of Education released new data that should be a wakeup call to many for-profit colleges and universities across the country. The data shows that there are a high number of for-profit universities that are falling very short on student loan repayment. If new proposed regulations pass these colleges could see a substantial cut in their federal aid. In 2009 an outside advocacy group looked at college student loan repayment rates, comparing public, private non-profit and for-profit colleges and universities. What they found was that for-profit schools had the lowest repayment rates coming in at just a... more »

Americans Now Owe More on Student Loans than Credit Cards

Student loans now comprise a bigger chunk of American consumer debt than do credit card charges, according to recent data from Mark Kantrowitz, of FinAid.org and FastWeb.org, a somewhat unexpected finding considering the rough state of the economy. Kantrowitz asserts that as of June, Americans owe about $826.5 billion in revolving credit (most of which is credit card debt), while student loans, both federal and private, all together have now grown to $829.8 billion. This economic twist has apparently caught many by surprise. “The growth in education debt outstanding is like cooking a lobster,” Mr. Kantrowitz said as quoted on... more »

Consumer Credit Drops Again in June

According to the Feds Credit report, borrowing once again dropped in the month of June. This will mark the 16th drop over the last 17 months. While this is bleak news for the struggling economy the drop is actually much lower than earlier predicted at 1.3 billion. In comparison, May’s drop was much higher coming in at 5.3 billion. This does however mark the 21st straight month of less credit card use by Americans. It is clear from looking at the figures that Americans are being cautious. While many are still out of work others fear that the economy has... more »

Get Ready For Guaranteed Lending Again

Remember the early 1990s? The economy was fairly lackluster as the S&L crisis had just wiped out over a thousand banks. Plus the Resolution Trust Corporation was sinking the commercial real estate market by dumping thousands of properties on the market at low prices, and war was heating up in the Persian Gulf. To lower the risk of lending to small businesses and yet provide the market’s need for long term real estate financing, bankers started discovering the U.S. Small Business Administration’s loan guaranty programs in droves. The SBA survived the Reagan Administration’s efforts to kill the agency, and the... more »

Auto Lenders Loosen Up in July

Based on July sales figures, car loan money is becoming easier to acquire. Sales for most U.S. automakers rose last month, proving both that money is available and that consumers are cautiously exercising a little confidence in car-buying. Here’s how the numbers shaped up: General Motors Co. saw its sales rise 6.4 percent from a sluggish June and 24.6 percent from July 2009. Chrysler Group experienced a 5 percent increase in sales over a year ago aided by a strong outflow of Jeeps and Ram trucks. Ford Motor Co.’s sales were unchanged in July from June, but were up 3... more »

Bank of America Giving $10 Million to Boost Small Business Loans

Last week Bank of America made an announcement that potentially could help boost loans to small businesses throughout the country. Bank of America will be giving $10 million in grants that could have a large impact on small business lending. Community Development Financial Institutions and other non-profit micro-lenders who will receive the grant are expected to turn the $10 million in grant money into $100 million in loans to small businesses. Bank of America, is taking a bold step and is the first large financial bank to ever give money, not lend money to these type of organizations. “We started... more »