Smart Borrower Blog

Archive for February, 2011

Auto Loan Delinquencies Should Stabilize Sometime This Year

Automakers are finally getting some good news. First, auto sales are on the rise. Last month all of the major automakers posted double digit sales. Leading the way was General Motors with a 49% sales increase, followed closely by Toyota who saw a 42% increase. The second piece of good news is that defaulting auto loans are diminishing, leaving more funds for new borrowers. In fact lenders were able to offer 28% more loans for automobiles in the last quarter of 2010 than the previous year at the same time, according to TransUnion, one of the credit reporting agencies. “The... more »

Controversial Car-Title Lending Bill Moves Forward in VA

The Virginia House passed a bill Monday that has tweaked many noses, including those of neighboring states. The bill, which now must go back to the state Senate for a vote, would allow car-title lenders to make loans to out-of-state drivers. The problem is that many of the surrounding states have banned this type of lending, because of its so-called predatory nature. Car-title lenders operate by lending quick money to individuals who use their cars as collateral. Virginia itself has had a ban on these loans to out of state residents for the past 6-months, but this bill, which is... more »

US Banks Could Soon Face Sanctions for Foreclosure Violations

Last fall federal investigators began looking at 14 of the largest banks in the US, including Bank of America, Citibank, Wells Fargo, JP Morgan and more. Allegations had been made that the banks had wrongfully foreclosed on homes across the country. As a result Attorney Generals in all 50 states and the Federal Government began to carefully look at foreclosure proceedings and whether or not they were lawful. US regulators are now getting ready to sanction some of the banks investigated. Banks were being accused of illegally foreclosing on homeowners by taking shortcuts in order to speed up foreclosure proceedings.... more »

Study: New Laws Have Not Diminished Credit Availability

New regulations put in place for credit card companies last year are having a positive impact on consumers, according to a study from research group Center for Responsible Lending, and at the same time credit available has not shrunk as previously feared. The Credit Card Accountability Responsibility and Disclosure (CARD) act passed in 2009 was designed to protect consumers by creating more transparency in credit card company practices. For example, the Act that took effect about a year ago requires that companies give consumers notice 45 days before any big rate changes or penalty fees are added. It also forbids... more »

UPS Store Now Offering $22.5 Million in Franchise Loans

United Parcel Service’s UPS Store, which is the largest retail shipping outlet in the world, just announced that it is making funds totaling $22.5 million available for franchising UPS stores. Both new franchise loans as well as loans for new buyers of current locations will be offered. The business loans will be arranged by Bancorp Inc. and Franchise American Finance. $15 million will be available for new location development and the remaining $7.5 million will be available for lending to new owners of current locations. UPS is offering the financial assistance in an attempt to meet their goal of 120... more »

Demand Falls as Mortgage Rates Jump

Mortgage interest rates jumped up this week, according to the Mortgage Bankers Association , and as a result home loan applications took a dive, a sign that the housing market is not reviving on pace with the rest of the economy. The MBA reported that the average rate on a 30-year fixed rate mortgage broke the 5 percent barrier this week, moving up to 5.13 percent from 4.81 percent the week before. That is the highest rate in almost 10 months. As rates increased, demand for mortgages slowed with the MBA seasonally adjusted mortgage application index falling 5.5 percent. “Mortgage... more »

Student Loan Default Rate Rises Even More

Earlier this month new data releases by the Department of Education revealed that the default for student loans has gone up. For those students who started repayment on their loans in 2008, defaults were up to 13.8% compared to 11.8% of years prior. The percentage shows those students who defaulted on their loan during the first three years of repayment. According to education department officials and other student lending experts, college graduates have had an extremely difficult time over the past few years in gaining sustainable employment. Additionally, since the majority of the defaults are from college graduates who attended... more »

Consumer Group Calls for More For-Profit College Regulation

For-profit colleges received another poor review for their student loan practices in a recent study from the National Consumer Law Center’s Student Loan Borrower Assistance Project. The report titled “Piling It On: The Growth of Proprietary School Loans and the Consequences for Students” dings for-profit schools for creating private student loans with high fees and “predatory” terms, while criticizing the government for its lack of regulation of the situation. The main problem seems to stem from the “90-10” law that requires for-profit schools to prove that at least 10 percent of their revenue comes from non-federal student loan sources. In... more »

Banks Start to Ease Lending Standards for Large Corporations: What about Small Businesses?

Banks are finally starting to ease lending standards at least for large corporate clients, according to a new survey from the Federal Reserve. According to the survey, banks have felt an increase in competition over the last few months and as a result they are reacting and making some loans easier to get. While big companies and corporations are seeing the benefit, it is yet to be seen whether or not the lending will trickle down to smaller businesses, whether many new jobs will be created as a result and so on. From the Federal Reserve Report: The January survey... more »