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Facing cash crunch, Greece to tap into bank rescue fund

To help ease the looming crisis, the government plans to take 555 million euros sitting at the Hellenic Financial Stability Fund (HFSF) — the bank rescue vehicle that was used in 2012 to recapitalise its main lenders.

Greece’s four top banks — National, Piraeus, Eurobank and Piraeus — handed over this money in commissions following their recapitalization.

Read More‘Wasting time’: War of words over Greece heats up

“This is money for which there is no other claim, it is available for the government,” a senior banker with direct knowledge of the matter told Reuters, declining to be named.

“The HFSF has discussed this with the European Stability Mechanism over the weekend and there is no issue,” the banker added, referring to the euro zone rescue fund. He said it was up to the government to decide when it withdraws the cash.

The HFSF, funded from the country’s EU/IMF bailout with 50 billion euros, recapitalized lenders with European Financial Stability Facility (EFSF) bonds, which banks can still use as collateral for direct funding from the European Central Bank.

Greece has been also looking to tap into the cash reserves of pension funds and public sector entities through repo transactions to cover part of its funding needs in March.

In such transactions, pension funds and other state entities sitting on cash lend the money to the country’s debt agency through a short-term repurchase agreement for up to 15 days, debt agency officials have told Reuters.

Greece is due to resume talks with its creditors in Brussels on Wednesday, with the aim of unlocking desperately needed funding for the heavily indebted state.

[…]

How To Dodge Mortgage Insurance Fees When Applying For A Home Loan [Infographic]

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How To Dodge Mortgage Insurance Fees When Applying For A Home Loan [Infographic]

Today 2:30 PM Discuss Bookmark

Lenders Mortgage Insurance (LMI) is a one-off fee payable when borrowing more than 80 per cent of a property’s value. It’s yet another expense that can make life difficult for cash-strapped home buyers; even for a modestly priced property. This “hustler’s guide” from Home Loan Experts outlines the various ways you can reduce — or completely avoid — your LMI fee.

Australian house picture from Shutterstock

LMI can be a pain in the butt. It’s designed to protect the bank’s interests and can result in serious money woes if you default on your mortgage. As Home Loan Experts explains on its blog, if you borrowed $510,000 for a property worth $550,000, you could be paying over $23,000 upfront just to get your loan settled: not exactly small change.

The below infographic explains how to reduce or even avoid mortgage insurance altogether. Some of the advice will be unfeasible to most readers (you’re probably not going to become a doctor just to avoid an LMI fee) but there are also some viable tips that could save you a bunch of money. See for yourself!

[Home Loan Experts]


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Regulators prepare rules on payday loans to shield borrowers | New …

WASHINGTON (AP)—Troubled by consumer complaints and loopholes in state laws, federal regulators are putting together the first-ever rules on payday loans aimed at helping cash-strapped borrowers avoid falling into a cycle of high-rate debt.

The Consumer Financial Protection Bureau says state laws governing the $46 billion payday lending industry often fall short, and that fuller disclosures of the interest and fees—often an annual percentage rate of 300 percent or more—may be needed.

Full details of the proposed rules, expected early this year, would mark the first time the agency has used the authority it was given under the 2010 Dodd-Frank law to regulate payday loans. In recent months, it has tried to step up enforcement, including a $10 million settlement with ACE Cash Express after accusing the payday lender of harassing borrowers to collect debts and take out multiple loans.

A payday loan, or a cash advance, is generally $500 or less. Borrowers provide a personal check dated on their next payday for the full balance or give the lender permission to debit their bank accounts. The total includes charges often ranging from $15 to $30 per $100 borrowed. Interest-only payments, sometimes referred to as “rollovers,” are common.

[…]

The Mortgage Mistake You May Not Realize You're Making

It’s no secret you need cash on hand to get a mortgage, but you may not know that the way you handle that cash as you apply for a loan can seriously derail your homeownership chances.

Keeping your money in one place is vital to a mortgage transaction. Cash to close and savings after closing escrow are critically important to sealing the deal. Here is what you need to know if you’ve been moving money around and are applying for a mortgage.

It’s an Issue for Banks

Moving money around in different accounts may raise concerns for suspicious activity with mortgage lenders. Lenders these days must be able to document the paper of funds on each and every loan made. While 99.9% of mortgage borrowers are simply moving money from one bank account to another for various convenience reasons, they’re creating a red flag for lenders when the origin of the funds cannot be substantiated.

When you move money around, the lender has to document each account the money passes through. Let’s use an example. You have a standard checking account that does not contain significant assets, but it’s used for your monthly accounting of bills and expenses. If you moved the money for your down payment into your checking account from your savings account while continuing to pay bills, it could appear to the mortgage lender like you are spending part of your down payment, creating a cash to close roadblock. A better solution? Keep the money in the same place. Transfer the money when needed, sending it directly to escrow on your loan transaction, simplifying the paper trail.

Create a Paper Trail

To best avoid lending condition surrounding money movement, be prepared to show the full statements of the monies leaving each account. It is customary within mortgage lending to provide two months of statements for each account needed for cash to close escrow and/or for savings required after-the-fact as a safety cushion. This paper trail must appear to the naked eye that the money begins in one account, goes to another, and ends up at close of escrow. As long as the paper trails is clear and conspicuous, the lender should have no concerns with these monies so long as the funds can be supported. The same goes for gift funds. Gift monies will also need a clear paper trail. The same requirements that come into play may be needed for that safety cushion, depending on your loan program.

Here’s a quick guide to typical requirements for “safety net” funds your lender may require:

Conventional Loans: Two months of mortgage payments needed in the bank in most cases if you’re financing a primary home. You’ll need six months of mortgage payments for investment homes for all properties owned.FHA Loans: No reserve requirementVA Loans: No reserve requirementJumbo Loan: Requirements vary by lender, but you will generally need at least six months of mortgage payments in assets after closing escrow.

The bottom line: If you plan to use a bank statement that shows a history of money movement, including money transfers and other various accounts and/or additional monies being deposited independent of your income, you’re going to have some homework to do.

Just because you have a paper trail doesn’t mean you’re home free yet. If you have a joint bank account or have cash outside of your normal income that’s entering your account, you have a few more steps to satisfy lenders. Here are the details.

Joint Bank Accounts

If you’ve been moving money in and out of a joint bank account with another party who is not a party to the mortgage transaction, the lender is going to request a letter from this other individual stating you have 100% access to those funds.

Cash Deposits

Placing cash deposits in your bank account independent of your normal income can be problematic for getting a mortgage. Since these deposits can’t easily be traced to their origin, it may raise some suspicious activity concerns even though they can be legitimate deposits from other income sources like freelancing gigs or side jobs.

Lenders want to see at least two months of mortgage statements without cash deposits and without large movements of money. Otherwise, expect these transfers and deposits to be identified, questioned and documented. While these requirements can seem like a nuisance to the average homebuyer,it’s a byproduct of the quality of loans being made in the market today. By fully documenting everything and leaving no stone unturned, lenders can do their due diligence in further substantiating a mortgage borrower’s ability to qualify. As such, these credit requirements help ensure there is little risk to buying a home or taking on a mortgage you cannot afford. (Here’s a calculator to help you figure out that home affordability number.)

In addition to income and a paper trail for your homebuying funds, make sure your credit score is in good shape before you head to your lender to get pre-approved or apply for a mortgage,. You can get your free annual credit reports at AnnualCreditReport.com under federal law. And you can see your credit scores for free every month on Credit.com.

More from Credit.com
How Much House Can You Afford?How to Get Pre-Approved for a MortgageWhy You Should Check Your Credit Before Buying a HomeFinanceLoansmortgage lendersbank account […]

Weak economy set to spur Reserve Bank cash rate cut on Tuesday

Concern about deteriorating economic growth lies behind the Reserve Bank’s determination to cut interest rates, a move most likely at its first board meeting for the year on Tuesday.

A cut in the bank’s cash rate from 2.5 per cent to 2 per cent would bring the standard discounted home loan rate below 5 per cent, knocking $53 off the cost of servicing a $350,000 loan.

Although the latest official figures show Australia’s unemployment rate falling, the Reserve Bank’s preferred measure shows it continuing to climb.

The bank averages the unemployment rate for each quarter and compares it with the average for the previous quarter.

Board members will be told on Tuesday that over the past year the average unemployment rate has climbed from 5.9 per cent to 6 per cent to 6.1 per cent to 6.2 per cent. The averages mean that abstracted from monthly “noise” there has been no let up in the pace at which unemployment is climbing.

The board will be told economic growth figures released since it last met show the annualised pace of growth slipping from 3.6 per cent to 1.6 per cent in the space of six months.

The bank’s previous forecast of rising economic growth published in November is now regarded as out of date and will be revised when new forecasts are issued on Friday.

No lift in business confidence

Board members will be told that neither consumer nor business confidence has lifted since the budget, as would be needed for economic growth to climb back to its long-term trend.

Retail sales are solid but not spectacular, maintained by discounting and weighed down by low wage growth and rising unemployment.

Inflation provides no impediment to cutting rates. The headline rate is now just 1.7 per cent after the collapse in oil prices. Importantly, the bank expects lower oil prices to continue to weigh down on inflation as they feed through into a myriad other prices, something it did not expect late last year when it looked as if the collapse in the oil price would be less severe.

Rather than focusing on the unexpectedly high rate of so-called underlying inflation in the December quarter, the bank is paying special attention to the rate of inflation on so called “non-tradables” – products that are not internationally traded, which is well down on where it was a year ago, reflecting low wage growth and weak consumer demand.

“Tradables” inflation, the rate on products that are internationally traded, is now negative despite the lower dollar.

The bank is minded to cut its cash rate despite doubts about its effectiveness in boosting the economy. It is concerned that another cut may simply reignite the investor housing market and it fears it could fail in its objective of encouraging businesses and consumers to borrow and spend more. While a boost to the economy from the budget would be preferable, it isn’t likely.

Another impediment is the statement the bank released after its December board meeting, saying “the most prudent course is likely to be a period of stability in interest rates”.

The bank believes that enough has changed since December to release it from the commitment. The oil price has collapsed, economic growth has weakened, and the steam has gone out of inflation.

It believes that if it is clear it has to cut rates, there is little point in waiting. And it is also concerned that if it doesn’t cut when it is clear it should, the Australian dollar will head back up after dropping.

Canada has just cut its cash rate to 0.75 per cent. Denmark has just cut its rate to minus 0.5 per cent. The United States is keeping its rate at 0.25 per cent. An Australian cash rate maintained at 2.5 per cent in the face of these moves would give the dollar support the bank would prefer it not to have.

The final decision will up be made by the nine members of the board, including the newly appointed treasury secretary John Fraser, who will meet in Sydney on Tuesday.

If they decide to keep the cash rate at 2.5 per cent in the face of recent developments, they are likely to indicate they intend to cut it soon, in March. But it is more likely that they will cut on Tuesday.

Peter Martin is economics editor of The Age.

Twitter: @1petermartin

The story Weak economy set to spur Reserve Bank cash rate cut on Tuesday first appeared on The Sydney Morning Herald.

[…]

Wells Fargo, JPMorgan settle mortgage kickbacks probe

WASHINGTON (AP) — Wells Fargo and JPMorgan Chase have agreed to pay more than $35 million combined to resolve claims that loan officers at the two banks received kickbacks in exchange for steering mortgage borrowers to a Maryland title company.

The Consumer Financial Protection Bureau said Thursday that JPMorgan and Wells Fargo each agreed to consent orders filed in federal court to settle the claims.

Wells Fargo has agreed to pay $24 million in civil penalties and $10.8 million to consumers affected by the scheme. JPMorgan is to pay $600,000 in penalties and about $300,000 in redress.

The CFPB and the Maryland attorney general found that loan officers at the banks referred borrowers to a now-defunct title company, Genuine Title, in exchange for cash and marketing services.

Federal law prohibits giving anything of value in exchange for a referral of business related to a real estate settlement service.

According to the CFPB, loan officers at Wells Fargo and JPMorgan sent homebuyers financing a mortgage through the banks to Genuine Title, which provided real estate closing services.

In return, the title company, which went out of business last April, provided the loan officers with cash, as well as consumer information and marketing services aimed at helping them drum up more loan business, the CFPB said.

“These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly,” said CFPB Director Richard Cordray.

The CFPB noted that more than 100 Wells Fargo loan officers in at least 18 branches, mainly in Maryland and Virginia, participated in the scheme, referring thousands of loans to Genuine Title.

The agency also contends that Wells Fargo failed to stop the scheme, even though it had multiple warnings of what was going on, including a federal lawsuit that alleged the bank’s loan officers had illegal arrangements with the title company.

In a statement, Wells Fargo spokesman Tom Goyda said the bank has fully cooperated with the CFPB, fired the employees who were involved in the scheme and taken steps to enhance its procedures to provide greater oversight and monitoring of both the process and its employees.

The agency found that at least six Chase loan officers in three different branches in Maryland, Virginia and New York were involved in the scheme.

Jason Lobo, a spokesman for Chase Mortgage Banking, said the bank’s own investigation into the kickback scheme found six of its mortgage loan officers received marketing services, though not any cash, in return for steering borrowers on 191 loans to Genuine Title.

“We also found no evidence that borrowers incurred title fees in excess of the market rates,” he said.

Four of the Chase loan officers had left the bank when the scheme was uncovered. The bank fired the two others who remained, Lobo noted.

FinanceLoansJPMorgan Chase […]

Best Business Cash Indicator

You need cash to run your business. Then why don’t you know how to read your cash flow statement? It might be the truest way to tell when the tank begins to run seriously dry.

I don’t mean your profit and loss (P&L) statement and I don’t mean your balance sheet. I bet that lots of you run businesses that don’t even prepare a cash flow statement.

This statement combines your P&L and balance sheet to tell you what happened to your cash over a given period. It tells you if you create cash or use cash. And if you don’t create cash, you and your company might come in for an unhappy surprise.

Thought your P&L told you if you made money? Your P&L can tell you revenues, costs and expenses and whether you made money according to generally accepted accounting principles – guidelines that sometimes don’t help a lot with the realities of running a small business.

For instance, remember that bank loan you made a payment on? The principle of that loan doesn’t show up on your P&L; it does show up on your cash flow statement. Ditto the cost of that new truck you just bought for the business and the money you spent on increasing your inventory.

In your business, you either create cash or use it. If your business grows really quickly you might actually show a profit while having negative cash. Think of firms worth a lot on paper because they have big deals in the works – deals still yet to pay a dime.

Your cash flow statement tells it like is. These documents are one of the quarterly financial reports any publicly traded company must disclose to the U.S. Securities and Exchange Commission and – maybe an even harsher judge – the shareholding public. In your hands, this document is your best business friend who always puts the truth to you straight.

If you look at your cash flow statement at least monthly, you can see trends. You see if your inventory grows. You see if your principle payments to lenders are too high and you might see need to re-negotiate a better repayment schedule.

Once you understand your cash flow statement, you really start to get a handle on what’s going on in your business. And so do others.

Banks, for example, are very aware that cash reigns in your business. Your bank will take your numbers and look first for how many times your cash flow can make interest payments on your outstanding loans. If your cash flow is $200,000 and your interest payments $20,000, your bank will be happy.

Next your bank sees how your cash flow does paying both interest and principle. With the above numbers, if your annual bank payments total $50,000, your bank is still happy. If your annual payments total $150,000, on the other hand, your bank might not be as happy.

In short, to know how your bank thinks, know how to read and understand your cash flow statement.

Happiness (in business, anyway) is positive cash flow. Know how to spot it.

Follow AdviceIQ on Twitter at @adviceiq.

Josh Patrick is a founding principal of Stage 2 Planning Partners in South Burlington, Vt. He contributes to the NY Times You’re the Boss blog and works with owners of privately held businesses helping them create business and personal value. You can learn more about his Objective Review process at his website.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

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Six mantras to get the best car loan deal

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These tips can save a lot of money for every car loan customer

Image: VW Cross Polo. Photograph: Kind courtesy, Volkswagen

Believe it or not, buying a car is still considered a status symbol in India. Though the advent of the small car has created a huge dent in this reputation, but the fact still remains that a car is a cherished dream of every Indian. Owning a car is made simpler by the fabulous offers by various banks and car finance companies in India on almost every car model. Now, you don’t need to book a car (most of the models) in advance, there is no requirement that you pay entire cost of the car in cash, just have a part of the total cost, add some creditworthiness and rest is filled up by a decent car loan.

Almost every car, be it used or new, is financed and accessible to all those who inspire confidence in banks and car finance companies.

With the car loan taking so much importance and lots and lots of information bombarded on the average consumer via different media, it is very easy to get lured into a trap. To know the intricacies of car loans is the only way one can avoid getting into an unwanted situation and later repent in leisure.

Here we take a look at few such things, which can save a lot for every car loan customer.

1. Borrow as little as possible

Remember every paisa you borrow has to be paid back to the bank or finance company with interest. So, the less you borrow the better it will be. In addition, the interest payments will be lesser and loan can be paid off within a short period. This also means that you should pay a good sum as the down payment for your car loan.

Of course, arranging this down payment can be a daunting task, but if you are able to do it without pushing too hard, go for it.

2. Popular models have better interest rates and good tie-ups

If you are looking for a model, which is rarely seen on road, be prepared to shell out more. Higher interest rates, processing fees, down payments and other charges greet those who are looking for an offbeat model. On the other hand cheaper terms make the popular models better option to buy.

Good reputation, great after sales service, and low maintenance make a car popular and backed by a good car loan they become simply irresistible.

3. An on-road price car loan is definitely better than ex-showroom one

Banks providing car loan at on road prices include the registration charges, insurance, road tax and other costs associated with the car purchase thus making it a comprehensive solution. On the other hand if you go for a car loan at ex-showroom price, you will have to shell out the road tax, insurance, registration charges and any other costs from your pocket and this will be in addition to the down payment you have made.

4. Compare and find the lowest interest rate and EMI

The car loan market is very competitive, and there are many players vying for your attention. By all means contact them and ask for quotes. Choose the one, which offers the best deal on your favourite mode.

5. Processing fees and other costs are negotiable

Do you have consistent credit card repayment record? Does the bank see you as a credit worthy individual? In that case, chances are good that with a little negotiation you can get the processing fees waived. Banks want customers who can take a loan and repay it completely with interest. A trouble free customer always has more worth than processing fees.

6. An offer which looks too lucrative can be deceptive

Dealers and small time companies, in order to lure in needy customers, come out with sugar coated offers which appear too unreal. By posing as agents of big lending companies and banks, they take guarantee to provide a car loan for persons with all backgrounds and without any checks on income and other credentials. These offers can land you in big trouble, beware!

Remember, information is power and this applies to the car loans also. The more you know about them, the better equipped you will be to negotiate a good deal.

Courtesy:

[…]

Bank's loan sale doesn't end risk

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Posted: Friday, January 2, 2015, 9:58 AM

Despite the retirement of founder Betsy Z. Cohen and a Dec. 31 deal to sell off one-quarter of the Cohen family-controlled loan and cash management company’s $1.1 billion in largely Philadelphia-area business and consumer loans, The Bancorp still has a ways to go before the Wilmington and Philadelphia-based company will have a positive new story for investors, writes analyst Frank Schiraldi in a report to clients at Sandler O’Neill + Partners this morning.

Schiraldi notes the company sold its $268 million “nonperforming/sub-performing” loan book, which had already been marked down by $54 million (plus another $4 milllion during the fourth quarter) to around $210 million, for $194 million in 10-year senior and subordinated notes at around 2.2%, plus $16 million in (probably) cash.

But “unfortunately, the sale does not result in a ‘clean break,'” Schiraldi writes. “We were disappointed” to see that Bancorp is still exposed to losses from the portfolio — because the buyer “is a newly-formed entity, Walnut Street, in which the bank owns a 49% stake.” Plus, most of the proceeds of the sale were paid for in Walnut Street debt, which is backed by those same lower-quality Bancorp loans and collateral (the Philadelphia-area properties whose owners used them to secure their loans from Bancorp).

“We would have thought that minimizing future exposure to this book would have been a priority,” but maybe Bancorp could find no other buyers, Schiraldi adds. Given the small bounce the stock enjoyed on Cohen’s departure announcement (after a sharp decline since last winter), Schiraldi expects shares may now drop again, at least in the short term. The analyst expects the bank will report a fourth-quarter loss, and will keep the stock rated “hold” at least until Bancorp gives investors “greater clarity” on how it will boost profits from its remaining business lines.

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