AMCAP Mortgage – NHB Launches Latest FHA Facts Due to Standard Loan Denial Rates

Spring, TX (SBWIRE) 12/09/2015 While the US Census Bureau reported an estimated 10 percent uptick in home sales across the country as of October 2015, at least 15 percent of mortgage loan applications were denied over the course of the year. Top lending institutions list credit history, unacceptable debt-to-income ratio and lack of financial reserves as primary reasons for turning away would-be homeowners. In response to this development, Gerry Nicodemus of AMCAP Mortgage North Houston has launched the latest FHA information geared toward local potential home buyers.

Nicodemus confirmed, A number of Americans apply for home loans with many different conventional lenders only to receive a resounding no from them all. The road to home ownership holds a few hidden pathways though few know just where to find them. While the FHA still holds borrowers to certain guidelines, the organization also realizes life is filled with extenuating circumstances and was developed with those in mind.

Addressing the issue of credit, typical lenders expect scores of around 700; in contrast, FHA loans can be acquired with a score of 580 in some cases. Rather than taking the numbers alone into consideration, lenders under the FHA program are authorized to delve further into these matters to determine root causes of imperfect credit history. Unemployment stemming from recession, temporary critical illness and death of a household primary income provider are common elements often considered forgivable by the FHA.

Debt-to-income ratio refers to combined monthly expenses versus income. Conventional lending institutions require a back-end ratio of approximately 35 percent whereas the FHA prerequisite is generally 50 percent, a trait exclusive to this organization. Down payments on traditional home loans range between 10 and 20 percent depending on various factors as opposed to 3.5 percent for eligible applicants through the FHA. Steady employment with a conceivably solid future is required before receiving FHA consideration.

Concluded Nicodemus, We realize our applicants are far more than just credit scores and financial figures; theyre local citizens sometimes vulnerable to issues beyond their control. By providing information about the loans we offer, we hope to show those in our area there may still be hope where all seems lost. Detailed material can be found on our website, and of course, we welcome those whove been turned down by other lenders or feel they dont qualify for the average mortgage loan to contact us online or in person.

About AMCAP Mortgage NHB
With a commitment to exemplary customer service and prevailing where other lenders fall short, AMCAP Mortgage NHB is a registered entity with the Texas Department of Savings and Mortgage Lending. Staff members have streamlined their approach to home loans, making the process more straightforward for clients striving to achieve the American dream.

For more information on this press release visit: http://www.sbwire.com/press-releases/amcap-mortgage-nhb-launches-latest-fha-facts-due-to-standard-loan-denial-rates-647969.htm


MerchACT credited with successfully getting rejected merchant accounts approved

BOCA RATON, Fla., Nov. 9, 2015 /PRNewswire/ — Accepting payments is a core requirement for all online businesses.  For medium- and high-risk businesses or those with imperfect credit, this creates a stressful and serious roadblock.  MerchACT is celebrating success in setting up merchant accounts for those that have been turned down elsewhere – all with low fees, exceptional customer support and long-term results. 

We are incredibly pleased to be able to partner and assist businesses in pursuing success, commented a spokesperson from MerchACT.  We understand the frustration, stress and disappointment that comes along with being turned down for a merchant account.  Its our mission to deliver a smooth, headache free experience so that our clients are serviced with success.  Its wonderful that our clients have expressed so much gratitude for our services.

MerchACT describes how they are able to set up both offshore and high-risk merchant accounts, depending on the needs of their clients.  The MerchAct team is continuously sourcing new strategies and partnerships in order to provide solutions and advice to their clients.  Feedback from clients has been positive.


Blacks, Latinos targeted in a discriminatory auto loan scheme

Philadelphia City Council and its public advocate want people of color in Philadelphia to be aware they may have been targeted in a discriminatory auto loan scheme. Lance Haver, Director of Civic Engagement, issued an advisory October 13, alerting residents, and especially African Americans and Latinos, that car dealerships offering loans through Fifth Third Bank (Fifth Third Bancorp) charged thousands of minority applicants an average of $200 more in interest from 2012-2014. 

The Equal Credit Opportunity Act prohibits lending discrimination based upon an applicant’s race, color, religion, national origin, sex, marital status, or age, or status as a welfare recipient.

Fifth Third offers what are known as indirect auto loans — rather than taking applications directly from consumers at a local branch, it makes most of its auto loans through car dealers. Indirect lenders quote dealers a credit risk-based interest rate called a “buy price,” and allow dealers to make a profit from loans by adding a dealer mark-up to the initial rate.

That’s not illegal, says Haver, unless it is done in manner which is discriminatory — and Fifth Third allowed lenders to add a percentage point or more interest to loans offered to African Americans and Latinos, splitting the profit between bank and car seller.

Indirect loans are typically taken by people with imperfect credit, who are often over-eager to accept financing offers and unaware they have alternatives. These buyers are “used to being taken advantage of,” and were targeted by dealers in the arrangement with Fifth Third, which Haver described to AL DÍA in an interview yesterday as “completely wrong [and] obscene.”

“I issued the notice because I was hired by the Council President to help the people of Philadelphia make the most of their limited resources,” he said.

Haver explained that car buyers frequently have no idea to whom their credit application is submitted. This is not a bank you know you have a relationship with.

“The dealer will get an early commitment from a low-credit score applicant at say 7.5 percent [interest], knowing they will be able to secure financing, and allow the buyer to leave with the car before signing for a loan. Then they’ll contact the buyer and say ‘your credit’s just not good enough, we couldn’t get you 7.5, but we can get you a loan at 8.5 percent.” Often buyers are disinclined to renegotiate, believing the extra one percent not worth the inconvenience, or embarrassed to return a car already seen by family and friends. “If they would say ‘no thanks, I’ll bring the car,’ it would fall back to 7.5 percent,” said Haver.

“We live in a society where people who look like me [clean-cut white man with a mustache] go around and say we live in a ‘post-racial’ world,” he added in earnest, adding that Ally bank, another indirect lender, was recently fined $80 million for similar practices. Haver says it’s happening to marginalized demographics routinely all over the United States but is not on the radar of much of white America.

The bank has agreed to offer refunds and change its credit and lending policies, after a lawsuit filed by the Consumer Financial Protection Bureau (CFPB) and the Civil Rights Division of the Department of Justice (DOJ) led to a consent decree and an agreement to a settlement. 

Specifically, Fifth Third has agreed to change the way it prices its loans by limiting dealer markup. It must also improve its monitoring and compliance systems, and regularly report to the DOJ and the CFPB on the results of its efforts as well as discuss potential ways to improve results. 

Havey encouraged potential victims to file a complaint with the CFPB, “so we can keep track of where the complaints are coming from,” and then to “make sure you open every letter from the car loan company — information regarding the refund should be mailed to you.” 

Kenneth Lipp is a journalist in Philadelphia and editor of the local news site PhillyDeclaration.org.
 


Home » Mortgage firm owner pleads guilty to $64M mortgage fraud scheme

A Miami-area real estate developer and owner of a mortgage company, his business partner and a senior mortgage underwriter each pleaded guilty to a mortgage fraud scheme involving federally insured mortgages that caused losses of $64 million to the Federal Housing Administration.

Including these defendants, 25 individuals have pleaded guilty to offenses related to this scheme to date.

Assistant Attorney General Leslie R. Caldwell of the Justice Departments Criminal Division, US Attorney Wifredo Ferrer for the Southern District of Florida and Special Agent in Charge Nadine Gurley of the US Department of Housing and Urban Development Office of Inspector General made the announcement.

Hector Hernandez, 57, of Miami; Aleida Fontao, 62, of Miami; and Olga Hernandez, 58, of Lake Mary, Florida, each pleaded guilty to conspiracy to commit wire fraud affecting a financial institution.

Hector and Olga Hernandez both pleaded guilty late yesterday, while Fontao pleaded guilty on July 7, 2015. As part of his plea, Hector Hernandez also agreed to forfeit $8 million, which amounts to his profits from the scheme.

Hector Hernandezs mortgage company, Great Country Mortgage Bankers, specialized in mortgage loans that were insured by the FHA, a division of HUD, as part of a program designed to make homeownership more accessible to first-time buyers and borrowers with lower income and imperfect credit history.

To qualify for these federally-insured mortgages, potential borrowers must meet certain income and other financial requirements. Under the program, HUD relies on lenders like Great Country to review and approve only those borrowers who meet the employment, income and other financial requirements needed to qualify for an FHA mortgage.

According to admissions made in connection with the guilty pleas, although most of Great Countrys potential borrowers did not qualify for the FHA-insured loans, Hector Hernandez and his business partner, Aleida Fontao, directed Great Country employees, including underwriter Olga Hernandez, to falsify important documents in the potential borrowers loan applications to make them appear qualified. In particular, Hector Hernandez and Fontao admitted to pressuring their employees to approve and close loans using earnings statements and verification of employment forms that made it appear as if the borrowers had higher incomes and more favorable work histories than they actually did, and documents falsely improving or explaining borrowers credit histories.

As an underwriter responsible for reviewing and approving loan applications, Olga Hernandez admitted that she provided her coworkers with false information and that she endorsed the applications knowing that the borrowers did not actually qualify for the loans.

After Great Country closed the fraudulent loans, the company sold the loans to financial institutions for profit. In connection with their guilty pleas, the defendants admitted that they offered kickbacks to the borrowers in the form of cash back after closing, which payments were not disclosed during the loan application process in order to hide the payments both from HUD and from the financial institutions that purchased the loans from Great Country.

The vast majority of the borrowers on these fraudulent loans failed to meet their monthly mortgage obligations and defaulted on their loans. When these loans went into foreclosure, HUD, which had insured the loans, was required to pay the outstanding loan balances to the financial institution investors, resulting in substantial losses to the FHA of at least $64 million.


Justice for Victims of $64M Mortgage Fraud Scheme

Prosecutors said the fraud cut through 16 developments from North Broward to Kendall.

The Department of Justice said those heading to prison,Specialized in mortgage loans that were designed to make homeownership more accessible to first time buyers and borrowers with less income and imperfect credit history.


China central bank issues guidelines on internet finance development

BEIJING (Reuters) – Chinas central bank on Saturday issued guidelines promoting the development of internet finance, saying it would support qualified financial institutions to set up platforms for online banking, insurance and securities businesses.

It added it would encourage high-performing and qualified internet finance firms to list.

A senior central bank researcher said last month that regulators should set up clear rules allowing banks to set up online finance subsidiaries to fend off rising competition from technology giants that have expanded into their territory.

In recent years, China has seen rapid development in internet finance, but some problems and hidden risks have also cropped up, an official with the Peoples Bank of China, the central bank, said in a statement.

Fund security, operating risks, an imperfect credit system and consumer protections were among the issues, said the official.

The central bank called on the government to support internet firms in setting up platforms for expenditures and loans, crowdfunding, the sale of financial products and other financing platforms.

It called for broadening channels of financing and supporting private investment funds to back the internet finance industry.

The bank also recommended tax breaks for qualifying small enterprises including start-ups, saying that provincial level governments should increase their support for those companies.

Alibaba Group Holding Ltd said in April its finance affiliate sped up a drive to be a fully-fledged online financing network by launching an e-commerce tracking stock index. It launched an internet bank targeting small and medium enterprises last month.

(Reporting By Xiaoyi Shao and Megha Rajagopalan; Editing by Michael Perry)


Owner of Mortgage Company Pleads Guilty to $64 Million Mortgage Fraud Scheme

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, US Attorney Wifredo A. Ferrer for the Southern District of Florida and Special Agent in Charge Nadine Gurley of the US Department of Housing and Urban Development Office of Inspector General (HUD-OIG) made the announcement.

Hector Hernandez, 57, of Miami; Aleida Fontao, 62, of Miami; and Olga Hernandez, 58, of Lake Mary, Florida, each pleaded guilty to conspiracy to commit wire fraud affecting a financial institution. Hector and Olga Hernandez both pleaded guilty late yesterday, while Fontao pleaded guilty on July 7, 2015. As part of his plea, Hector Hernandez also agreed to forfeit $8 million, which amounts to his profits from the scheme.

Hector Hernandez’s mortgage company, Great Country Mortgage Bankers, specialized in mortgage loans that were insured by the FHA, a division of HUD, as part of a program designed to make homeownership more accessible to first-time buyers and borrowers with lower income and imperfect credit history. To qualify for these federally-insured mortgages, potential borrowers must meet certain income and other financial requirements. Under the program, HUD relies on lenders like Great Country to review and approve only those borrowers who meet the employment, income and other financial requirements needed to qualify for an FHA mortgage.

According to admissions made in connection with the guilty pleas, although most of Great Country’s potential borrowers did not qualify for the FHA-insured loans, Hector Hernandez and his business partner, Aleida Fontao, directed Great Country employees, including underwriter Olga Hernandez, to falsify important documents in the potential borrowers’ loan applications to make them appear qualified. In particular, Hector Hernandez and Fontao admitted to pressuring their employees to approve and close loans using earnings statements and verification of employment forms that made it appear as if the borrowers had higher incomes and more favorable work histories than they actually did, and documents falsely improving or explaining borrowers’ credit histories. As an underwriter responsible for reviewing and approving loan applications, Olga Hernandez admitted that she provided her coworkers with false information and that she endorsed the applications knowing that the borrowers did not actually qualify for the loans.

After Great Country closed the fraudulent loans, the company sold the loans to financial institutions for profit. In connection with their guilty pleas, the defendants admitted that they offered kickbacks to the borrowers in the form of cash back after closing, which payments were not disclosed during the loan application process in order to hide the payments both from HUD and from the financial institutions that purchased the loans from Great Country.

The vast majority of the borrowers on these fraudulent loans failed to meet their monthly mortgage obligations and defaulted on their loans. When these loans went into foreclosure, HUD, which had insured the loans, was required to pay the outstanding loan balances to the financial institution investors, resulting in substantial losses to the FHA of at least $64 million.

This case was investigated by HUD-OIG’s Miami Field Office. This is being prosecuted by Senior Litigation Counsel David A. Bybee and Trial Attorneys Michael T. O’Neill and William E. Johnston of the Criminal Division’s Fraud Section.

Source: www.justice.gov


Is This Startup the Answer to Middle Class Financial Woes?

Good news for middle-class Americans with imperfect credit:ZestFinance, a6-year-old Los Angeles technology startup, wants to fundnear prime customers, who are actually not as risky as traditional wisdom holds, says founder and CEO Douglas Merrill.

On Wednesday, ZestFinance launched its new Basix Loans feature, which targets underserved American consumers by reassessing their credit risk and then, if theyre deemed eligible, offering them loans on the spot. Merrill was inspired to start the company when he noticed how many people were being unfairly denied loans based on their inability to access credit–his own sister-in-law, Vick, included.

Shes a single mother of three who has a full-time job and is a full-time student, Merrill tells Inc. by phone. Shes one of 25 million Americans who have no access to credit. He adds thatpayday lenders can also charge mammoth fees, which makes borrowing even short-term cash a serious and lasting headache.

So, in 2009, Merrill decided to launch his own startup, which would apply artificial intelligence principles–which hed honed during his time spent working for a military think tank–to better analyze credit risk. Merrill, its worth noting, was no stranger to high-stakes tech: Hed also previously served as Googles CIO and vice president of engineering, where he was personally responsible for leading its IPO in 2004.

I really wanted to transform financial services in a way that hadnt been done in a long time, in the same way that Google transformed that experience on the Web, he says.

Enter: Basix Loans, which parses as much as 50,000 data points to determine true credit risk for any prospective borrower. Where traditional banks only consider around 10to 20 data points–such as the number of credit cards a user possesses, and how quickly and effectively they can pay off their debts–Basix will look at subtle patterns, such as cell phone payment history, how much research someone does on the site before application, how they fill out a form, as well as where various credit signals fail to align and how. The company charges a 26 to 36 percent annual interest rateon loans typically between $3,000 and $5,000 dollars. Borrowers get three years to pay back ZestFinance in monthly installments, with a 15-day grace period each time.

The hope, says Merrill, is that Basix will bolster users credit over time, since the company reports payment performance to credit reporting agencies. At present, Basix has rolled out to Alabama, Georgia, Missouri, New Mexico, and Utah, though it will soonbe made available nationwide. The company plans to license its service to other financial technology businesses.

If this sounds like payday lending to you, think again, says Merrill–ZestFinance is a horse of a different color. Payday loans are nothing like Basix. [Those] are short term, theyre small dollars, theyre paid back over a few months, and their interest rates are more like 500 percent, he explains.

Also unlike some payday lenders, Basix boasts an easy-to-use web platform. Prospective borrowers fill out two pages (it takes around fiveminutes,) and they then receive a loan offer (or refusal) within 15 seconds. If accepted, the loan will appear in the users bank account the next morning.

When asked if he felt that Max Levchins student lending startup, Affirm, was a fair comparison to make to ZestFinance, Merrill was quick to point out that the former serves up a higher credit market. Still, in many ways, its hard to see the difference: Affirm, which similarly charges steep interest rates, servesthose who are often turned away from risk-averse student lenders.

Despite the glossy veneer of using smart data analysis to offer up more loans, ZestFinance and its ilk have their skeptics. All lenders, including payday lenders, should be required to fully consider a borrowers ability to repay a loan, in full and on time, without additional borrowing, says Tom Feltner, the Director of Financial Services at the Consumer Federation of America. Its not enough to mine data and better predict whether a lender can successfully collect payments from a borrowers bank account–we need [to set] higher standards for borrower success and ensure that repayment doesnt result in simply forgoing other necessities to make payments.

Still, ZestFinance is doing well for itself so far: The company pulled in nearly $90 million in revenue in 2014, and projects 50-70 percent growth in 2015. Its raised $112 million over threefunding rounds, from investors such as Peter Thiel, Northgate Capital, and Matrix Partners,as venture capitalists grow increasingly hungry for a stake in the data-saturated lending sector.


CreditCardscom Weekly Credit Card Rate Report: Average card rates remain …

Most issuers left interest rates alone this week. Pentagon Federal Credit Union introduced a range of APRs to the PenFed Platinum Cash Rewards card, making it more likely that cardholders with imperfect credit will be able to qualify for the card. However, the change didnt affect the national average because the cards lowest available rate of 9.99 percent was left unchanged. CreditCards.com considers only a cards minimum rate when calculating average interest rates.

Cardholders who apply for the Platinum Cash Rewards card are now offered an APR ranging from 9.99 percent to 17.99 percent.

Meanwhile, US Bank narrowed the range of possible APRs on the Visa Platinum card by lowering the cards maximum rate from 23.99 percent to 20.99 percent.

The CreditCards.com credit card rate survey (permalink: http://www.creditcards.com/rate-report) is conducted weekly, using offer data from the leading US card issuers websites. Introductory offer periods and regular interest rates will vary with applicants credit quality and issuer risk-based pricing policies.

About CreditCards.com
CreditCards.com is the leading online credit card marketplace connecting consumers with multiple credit card issuers, including a majority of the 10 largest in the United States, based on credit card transaction volume. CreditCards.com, http://www.creditcards.com, enables consumers to search for, compare and apply for credit cards and offers credit card issuers an online channel to acquire qualified applicants.

Logo- http://photos.prnewswire.com/prnh/20090210/CCLOGO

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/creditcardscom-weekly-credit-card-rate-report-average-card-rates-remain-unchanged-at-1487-percent-300045564.html

SOURCE CreditCards.com


Implications of a Post Peak Car Homeland

A couple weeks ago I proposed the US has achieved Peak Car, suggestingthat the car to adult ratio will only go down from here. I interpret the lack of death threats as general skepticism verses American’s propensity to acceptheresy (or maybe it’s that no one heard the tree falling). Regardless, the impact of changes in car ownership are real.

Rideshare networks are exploding. Uber alone is said to add50K drivers permonth. Ease, speed and priceareenticing more young city-dwellers to forgo car purchase entirely. Andthe ridesharing boom also has potential to unlock demand from drivers that previously struggled to access credit and insurance at affordable rates.

Here’s why. Typicallya borrower with limited or imperfect credit, or with spiky seasonal income (typical among self-employed or part-time workers), would struggle to access an affordable car loan. They quite likely are paying north of 18% APR. In contrast, rideshare drivers are acquiring both a personal vehicle and a productive asset that earns them money. Quantified correctly, this reduction of risk should allow nonprime rideshare drivers to access credit on more favorable terms than they otherwise would.

Uber seems to share the view that membership on their network mitigates financing risk. The company is partnering with Santander and other lenders to offer financing to drivers who may have struggled to qualify otherwise – immigrants and those with spotty or limited credit history. While innovative, that program has also attracted criticism – with some arguing that skimming repayments off the top of driver earnings creates defacto indentured servitude until the loan is repaid. (Indeed, the economics of paying down a new car via driving alone don’t look too pretty – at least not at recent network rates).

The start-up Breeze is solving for this problem, by offering sharing economy workers a flexible financing product. For a weekly membership fee of $195, drivers get access to a new Toyota Prius on lease. Most of that fee goes to the lease payment, with Breeze retaining a portion. Members use the vehicle to work onany combination of sharing economy jobs, with diverse incomes aggregated into a single account administered by Breeze. In exchange for membership, drivers have the flexibility to walk away from their lease at any time – with no damage to credit. In addition to facilitating access to the sharing economy, membership in Breeze functions like a kind of insurance – protecting drivers from being stuck with a lease they cannot afford if/when their circumstances change.

Shifting consumption patterns in transportation will also impact the pricing and features of auto insurance. For urban residents who aren’t ready or able to fully forsake their car, the ubiquity of rideshare and growing transit alternatives mean they are likely driving less. Here in LA, Angelinos are increasingly abandoning their cars after hours, preferring the cost of an Uber to the risk of driving after a few drinks. Decreased mileage among urban drivers (who already log fewer miles to begin with) will make Usage Based Insurance (UBI) very appealing. Given that mileage is the #1 predictor of accident risk, companies like Metromile are able to offer light drivers reduced premium rates.

Rideshare networks are also creating liability grey-areas that stimulate demand for new kinds of insurance products. Uber recently announced an innovative partnership with Metromile to close the liability gap between a commercial driver and personal driver. By integrating with Uber, Metromile will enable drivers to exist in a dynamic state of coverage – switching between personal and commercial coverage.

In addition to product innovation, we can also expect new distribution channels for those expensive an annoying add-ons they try to sell you at the dealer (“Famp;I” in the parlance). Currently, Famp;I distribution is highly intermediated by dealers, agents and brokers, who make a good buck on this “services.”BlueYield is an innovative auto finance company that empowers the consumer away from the dealer, and provides competitive Famp;I services at a lower cost.

My day job involves looking for companies that empower everyday Americans. Underserved Americans spend over $50B on finance and lease related fees (not principal) for their car. There is incredible potential to improve people’s lives and disrupt a big, sleepy industry.