Smart Borrower Blog

Archive for June, 2011

Kiva Launches MicroLending For U.S. Small Businesses

Kiva.org, an online microlending company has partnered with Visa Inc. and former president Bill Clinton to implement its international lending model to help U.S. small business owners. Kiva began in 2005 and has helped small-time entrepreneurs get funding for their businesses by connecting them with lenders who pool their resources for the loans, sometimes contributing as little as $25 a piece. The loans are typically about $7,000 or less, a very manageable sum for a community of lenders to contribute. And for some small businesses that amount is the difference between success and failure. “In this economy where lending has... more »

Small Business Borrowing Moves Upward In May

A sign that the US economy might see some improvements in the coming months, US small business borrowing moved upward during the month of May. Compared to a year ago, lending took a surge to the highest level small business lending has seen since July of 2008. According to an article on Reuters: The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to U.S. small businesses, rose 26 percent in May from a year earlier. Small business lending is critical to the economy and with lending up this could be a good indicator that in... more »

Credit Card Late Payments Hit Pre-Recesion Lows

The Associated Press reported last week that late payments and defaults on credit cards are falling to lows not seen since the beginning of the economic meltdown. For accounts behind 30 days or more, American Express posted an annualized late payment rate of 1.6 percent of all its balances in May, which is a vast improvement from its rate from before the Great Recession. JPMorgan Chase reported a late payment rate of 2.66 percent; the last time its rate was so low was in the middle of 2006. Discover Financial Services came in third with a rate of 2.88 percent,... more »

Mortgage Fraud Rises During First Quarter

According to a new report releases by the Financial Crimes Enforcement Network (FinCEN) during the first quarter this year reports of mortgage fraud rose sharply, up a total of 31%. During the first three months of the year there were 25,485 new cases reported where last year during the same time period the number was much lower at 19,420. Why the increase? With Fannie, Freddie and other mortgage investors putting pressure on banks to buy back loan losses related to fraudulent activity, banks are being forced to open their books and relook at loan documents and practices. Most of the... more »

Fannie Mae Offers Incentives to Buy Foreclosed Homes

In an attempt to knock down its rising stockpile of foreclosed properties, mortgage finance company Fannie Mae is now offering incentives to both buyers and real estate agents who take these homes off the market. For eligible properties, the government-run entity will give homebuyers up to 3.5 percent of the purchase price for closing costs, as long as they plan to live in the home, not rent it or flip it. What’s more, buyers could be eligible for mortgage and renovation financing, which gives them the opportunity to pay just a 3 percent down payment. The agents representing these buyers... more »

Relief May Be In Site For Some Student Loan Holders

An article on USNews.com reports that there are new bills in front of both the congress and the Senate that could relieve the burden of student loans for some borrowers. The two bills would allow for private or commercial student loans to be forgiven in cases of bankruptcy. College students today are faced with high tuition costs and diminishing student aid. Many parents of college students are struggling to make ends meet and cannot contribute to their children’s college educations. As a result more students are being forced to borrow and borrow more money than at any time in the... more »

New For-Profit College Rules – Are They Enough?

New rules proposed last week by the Obama Administration are designed to protect students and federal dollars from abuse at for-profit colleges. Data uncovered in the past several years has shown that students attending for-profit colleges have the highest post-graduation default rates of any higher education group. According to Senator Tom Harkin (D-Iowa), students at for-profit colleges receive roughly 25 percent of government student aid account for 46 percent of all defaults. And students of for-profit colleges only make up 10 percent of the nation’s total graduates. Senator Harkin has led five panels on this issue in the past year.... more »

Second Mortgage Holders Much More Likely To Have Underwater Mortgages

According to an article on the Wall Street Journal website, a recent study released by the real estate data firm CoreLogic Inc. shows that if you have a second mortgage on your home, you are much more likely to be an underwater borrower. Nearly 40% of all underwater mortgaged homes are those that carry more than one loan. This is yet another catastrophe adding to the devastated housing market. In contrast, home owners with just one mortgage are much less likely to be underwater. Only about 18% of homeowners who only have only one loan are underwater. Additionally, the data... more »

Small Business Lending Surges in April

The latest survey from PayNet Inc shows that small business loans increased significantly in April over the past year, a hopeful sign for the economy in an otherwise dismal news week. The Thomson Reuters/PayNet Small Business Lending Index, a measure of total loan volume to small businesses, jumped up 17 percent compared with April 2010, making nine consecutive yearly double-digit gains. However, borrowing by small businesses was down 1 percent from March of this year. “The fact that small businesses are hanging in there is a good sign for the economy,” said William Phelan. PayNet president in an interview as... more »