Smart Borrower Blog

Archive for September, 2010

Is FHA Trying To Force Private Lenders Back into the Market?

A recent article on CNBC reported that it looks as if the Federal Housing Administration (FHA) is trying to downsize its share of the mortgage market these days. Over the past year, loans sponsored by the government have made up almost half of all new loans. That is mainly a result of all the tightened lending standards that private banks have adopted in the wake of the housing meltdown. FHA loans are some of the only programs left that don’t require much of a down payment or absolutely perfect credit. But it’s not necessarily very healthy for the government to... more »

The Banking Crisis – Two Years Later

As we wind down September, 2010, I am reminded of the second anniversary of the darkest days of modern commercial banking. It is still painful for me to recall going to my bank job each day in September and October 2008 wondering what else in the world could go wrong. Just recount what happened over the course of roughly forty-five days: US Treasury placed Fannie Mae and Freddie Mac into receivership Lehman Bros. filed the largest bankruptcy in history for $639 billion Merrill Lynch was acquired by Bank of America in a controversial transaction Federal Reserve paid $122 billion for... more »

Student Loan Debt Passes Consumer Credit Card Debt

Student loan debt has topped credit card debt. With college students borrowing more each year and student loan defaults on the rise, student loan debt currently tops $830 billion, where credit card debt is right around $825 billion. Why the shift? According to the financial aid director Cynthia Van Pelt at Eastern Michigan University there are a couple of different factors that have helped contribute to the increase in student loan debt and it surpassing credit card debt. “This is at least particularly due to the decrease in credit card debt, which has been falling for the past two years,”... more »

New Small Business Bill Would Give Owners Sweet Tax Breaks

Yesterday the Senate passed a bill call the Small Business Jobs Act and the House was expected to approve this Obama-sanctioned law today. The law is designed to drum up some hiring activity among small business leaders, amidst recent reports from the Joint Economic Committee recently that found small business hiring is in a holding pattern right now. “We’re all a bit gun-shy because we don’t want to hire and then lay off,” said David Jones, a small businessowner in Dallas, as quoted in the Wall Street Journal. “But if I can get private equity…and get some money in the... more »

New Study Shows Student Loan Defaults are On the Rise

A new study released last week by the US Department of Education reports bleak news for colleges and universities across the country. According to the study, student loan defaults are on the rise, with for profit schools having the highest default rates. The stats showed that 7% of student loans go into default within the first two years of beginning loan repayment. This number is up from 6.7% the previous year and 5.2% from two years ago. “This data confirms what we already know: that many students are struggling to pay back their student loans during very difficult economic times,” ... more »

Three Years Away From A Housing Price Bottom?

I thought that economists were saying months ago that the housing market had already hit bottom and we were on the way back up. I guess they were wrong or the economists today are wrong, because new forecasts are predicting at least three more years of price declines before things start turning around. The problem seems to be excess inventory as well as shadow inventory, or home that are in foreclosure and will be on the market sometime in the near future. “Whether it’s the sidelined, shadow or current inventory, the issue is there’s more supply than demand,” said... more »

Refinancing Your Car Loan Might Save You Money

With interest rates at rock bottom lows, many people are unaware that they may be able to refinance their auto loan and save money. While refinancing your car loan will not save you the kind of money you would save from refinancing your home, it certainly can be worth looking into. You should not expect your monthly payment to drop significantly however, your overall savings for the life of the loan can make it worthwhile. To determine if you are eligible and if refinancing your car loan will be worth your while, you will first want to check the terms... more »

Consumers Choose Cash Again

For the sixth straight month, the amount of consumer credit debt decreased in July. Credit, including things like credit cards and auto loans, fell 1.8 percent or $1.02 billion, down to a total of $3.63 billion in outstanding debt, according to the Federal Reserve. This also marks the 17th decrease in 18 months. The same old issues seem to be responsible for the drop. “On the demand side, households continue to show signs of caution as they face high unemployment, minimal wage increases and poor housing conditions,” said Gregory Daco, senior U.S. economist at IHS Global Insight as quoted in... more »

Private Student Loan Web Tool: Available for Students in 12 States

Twelve states have recently launched a new website to assist college students in obtaining privately funded student loans. Colleges and Universities in partnership with their states and private student loan lenders in the states of Ohio, California, Maryland, Pennsylvania, New York, Indiana, Michigan, Kentucky, Mississippi, Tennessee and Alabama are trying to ease the burden placed on students who need private college funding. Students can now visit the new website, The Student Marketplace and be able to compare private funding options all in one place. The website is set up to first direct students to sources of federal aid and funding.... more »

Auto Delinquencies Are Down – And So Are Interest Rates

More Americans are getting back on top of their car payments, according to credit ratings agency TransUnion. The company’s latest data show that just 0.53 percent of auto loans were 60 days or more delinquent in the second quarter of the year. That’s down 20 percent from the first quarter and 27 percent from the previous year, accounting for the largest yearly drop in nine years. “The national trend we are seeing continues to point to a clear improvement in payment behavior,” said TransUnion’s Peter Turek as quoted in the Wall Street Journal. “Although part of the reason for the... more »