Equifax Fallout: What You Need To Know

Posted on September 14, 2017 by Laura Lam

equifaxFor many people, the news late that Equifax was hit with a data breach that may have compromised personal data of 143 million U.S. consumers brought on a heavy case of déjà vu.  From mid-May through July 2017, social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers and credit card numbers were exposed in the breach.  It may have felt like one of the many previous data breaches including Yahoo, Target, and Home Depot.  However this breach looks to be a bit more severe than most of these others and it will have consequences in multiple areas. Here’s a rundown of what we can anticipate.

Identity theft. When credit card account data is compromised, card issuers are notified, card numbers get retired, and the cards are reissued.  But with a consumer’s Social Security number, date of birth, name, address, and in some cases driver’s license number, a fraudster can open a new credit account relatively easily.  Equifax said that it hasn’t seen any unusual activity among any of the 143 million victims.  However, according to Nick Clements, former member of Citigroup’s fraud department and owner of finance site MagnifyMoney, this stuff takes time.  “There’s a long shelf life here.”

New account opening. This breach heightens the risk of fraudulent account openings at a time when banks and fintech companiess are increasingly allowing consumers to open new accounts on mobile devices in faster time frames – often in less than 10 minutes.  This info is verified by credit reporting agencies.  “Banks and fintechs will need to closely evaluate their processes in light of the Equifax breach to make sure the information they are getting is still accurately verifying their online customers,” said financial attorney Scott Sargent.

Authentication. This incident may call into question the industry’s dependence on consumer data and personally identifiable information for authentication.  They can no longer rely strictly on this info as a means of verifying identity.  Banks will have to require the use of multifactor authentication, said Al Pascual, head of fraud and security at Javelin Strategy & Research.  In addition to user name and password, they will need a one-time passcode, biometric, etc. to grant people access to applications.

Lawsuits. Within 24 hours of the announcement, Equifax was slapped with a class-action lawsuit on behalf of the victims so that the company finally adopts adequate safeguards to protect against this type of cyberattack in the future.  According to attorney Craig Newman, “the legal implications could be significant … you not only have a class action lawsuit filed … but then you have the specter of regulatory investigations.”

New credit cards. Compared to other large-scale credit card data breaches, the 209,000 card numbers exposed in this breach are small potatoes. Still, it can cost $5 or more to issue each new credit card. It’s possible banks will sue Equifax to recoup these costs.  Target paid $19 million in reparations to banks affected by its 2013 breach, in which 40 million card records were compromised.

The unknown. “Some victims didn’t even provide information to Equifax and may not even know they’ve been affected by this breach,” Newman said. “It’s clear they’re going to face additional lawsuits and regulatory inquiries. The real question is whether a breach of this magnitude forces a change in behavior and whether organizations view significant breaches as teachable moments and learn from the very tough lessons they are being dealt.”‘

Source: American Banker

Hurricane Aftermath: Over 25% Could Miss Mortgage Payment

Posted on September 13, 2017 by Laura Lam

havey defaultOver one-quarter of all mortgages in the areas affected by Hurricane Harvey are likely to become delinquent within 4 months because of the storm, according to an analysis from Black Knight.  Approximately 300,000 mortgage borrowers will miss at least one payment on their loan because of the storm, with 160,000 not making 3 or more payments.  Black Knight modeled this estimate based on changes in the delinquency rate in Louisiana and Mississippi following Hurricane Katrina in 2005.

Mortgage delinquencies in affected areas in Louisiana and Mississippi peaked at 34%, with the rate of seriously delinquent loans peaking at 16%. But there were far fewer mortgage properties affected by Katrina than for Harvey, only 456,000 loans with an unpaid principal balance of $46 billion.

“Millions of American lives have already been impacted by the storm and immense flooding … for many, their struggles are just beginning,” said Ben Graboske, Black Knight Financial Executive Vice President.  “There are 1.18 million mortgaged properties in Harvey-related disaster areas, more than twice as many as were hit by Hurricane Katrina, with nearly four times the unpaid principal balance (of $179 billion),” he added.  “This will be a long-term recovery. If the Harvey-related disaster areas follow the same trajectory as those hit by Katrina, within four months we could be looking at as many as 160,000 borrowers falling 90 or more days past due on their mortgages.”

Fannie Mae, Freddie Mac and the Federal Housing Administration have all announced temporary moratoria on evictions and foreclosure sales in Harvey-related disaster areas. With these organizations accounting for nearly 900,000 of mortgaged properties, the moratoria should help temper the negative effects, stated Graboske. Forbearance plans will help as well, though interest on the mortgage will continue to accrue under any of these efforts.

Source:  Black Knight Financial Services/National Mortgage News

Purchase Lending Hits 10-Year High

Posted on September 12, 2017 by Laura Lam

black knight lending 2During the second quarter of 2017, purchase originations jumped significantly even as refinances shrank, according to Black Knight Financial Services’ latest Mortgage Monitor report.  First lien mortgages jumped 20% from the first quarter and 16% from last year to $467 billion in the second quarter.

During the second quarter, refis fell 20%, or $37 billion, from the second quarter to 31% of the market share of originations, the lowest level in 16 years.  However, the 57% quarterly surge in purchase originations more than made up for the fall in refis. This is an increase of 6% from last year to $321 billion, the highest level since 2007.

But while purchase lending is up significantly, Black Knight explained the lending market is still performing below its peak capacity.  “The market still does not appear to be performing at peak capacity,” said Ben Graboske, Black Knight Data and Analytics executive vice president. “One key cause is the more stringent purchase lending credit requirements enacted in response to the financial crisis. Consider that borrowers with credit scores of 720 or higher accounted for 74% of all Q2 2017 purchase loans as compared to a pre-crisis average of 47%.”

“Today, there are 65% fewer purchase loans being originated to borrowers with credit scores below 720 than in those years,” Graboske said. He explained the purchase market is operating at less than two-thirds of peak capacity because of these factors.

The average purchase loan origination amount increased to an all-time high of $286,000 in the second quarter of 2017.  “As a result of growing average loan amounts for purchase originations, the total dollar amount of purchase originations is higher than averages seen from 2000-2003, prior to both the peak in home prices and the Great Recession that followed,” Graboske said.

Source:  Black Knight Financial/Housing Wire

Never Forget: Remembering 9/11

Posted on September 11, 2017 by Laura Lam

9-11Most of us still remember it like it was yesterday.  September 9, 2001, a black day that shook the whole world. A massive attack was launched by the Islamist terrorist in US. It is regarded as the worst terror attacks that shook the world.  The attacks resulted into massive destruction and death, it triggered major initiatives by US to combat terrorism a global menace.

Today, September 11, 2017, the world will remember the day that changed the life of millions. Here are some facts about the 9/11 attacks that we know.

  • It was September 9, 2001 when 19 hijackers took control of 4 passenger jets flying above US.
  • 2 of the 4 hijacked jets deliberately hit the twin towers of World Trade Center in New York, considered to be symbol of power and influence of US.
  • A 3rd plane hit the Pentagon just outside Washington, D.C., and the 4th plane crashed in a field in Pennsylvania.
  • The 19 hijackers were among 3,000 people killed in the attack carried out by Osama Bin Laden led Al-Qaeda.
  • 9/11 came as biggest terrorist attack in US. Country faced worst loss of life due to terror attack on its soil.
  • It took firefighters 100 days to extinguish all the fires ignited by the attacks in New York.
  • At the World Trade Center site in Lower Manhattan, 2,753 people were killed when hijacked American Airlines Flight 11 and United Airlines Flight 175 were intentionally crashed in the north and south towers.
  • Of those who perished during the initial attacks and the subsequent collapses of the towers, 343 were New York City firefighters, another 23 were New York City police officers and 37 others were officers at the Port Authority.
  • The victims ranged in age from 2 to 85 years. Approximately 75-80% of the victims were men.
  • At the Pentagon in Washington, 184 people were killed when hijacked American Airlines Flight 77 crashed into the building.
  • Near Shanksville, Pennsylvania, 40 passengers and crew members aboard United Airlines Flight 93 died when the plane crashed into a field. It is believed that the hijackers crashed the plane in that location, rather than their unknown target, after the passengers and crew attempted to retake control of the flight deck.
  • As of September 2015, 1,640 of 2,753 WTC victims’ remains have been positively identified.
  • December 18, 2001– Congress approves a measure to allow the president to designate September 11th as “Patriot Day” on each anniversary of the attacks.

Economic Impact:

  • $500,000 Estimated amount of money it cost to plan and execute the 9/11 attacks.
  • $123 billion –Estimated economic loss during the first 2-4 weeks after the World Trade Center towers collapsed in New York City, as well as decline in airline travel over next few years
  • $60 billion– Estimated cost of the WTC site damage, including damage to surrounding buildings, infrastructure and subway facilities.
  • $40 billion– Value of the emergency anti-terrorism package approved by the U.S. Congress on September 14, 2001.
  • $15 billion – Aid package passed by Congress to bail out the airlines.
  • $9.3 billion– Insurance claims arising from the 9/11 attacks.

The anniversary of the terrorist attacks of 2001 has become a day not only for memorial ceremonies but for service projects to benefit the community and those less fortunate.  Congress declared Sept. 11 as a National Day of Service and Remembrance in 2009, and across the country millions of people take the day to do good deeds.

What will you do today to keep the spirit of unity and compassion that arose after 9/11 alive?  Many people choose to donate blood or volunteer for a local charity.  Check out 9/11Day for a list of volunteer projects or take part in the Good Deed Challenge.

Source:  CNN, Oneindia

Does Your Credit Score Affect Your Love Life?

Posted on September 08, 2017 by Laura Lam

dating surveyIt turns out credit scores have much more meaning than the likelihood you’ll repay a loan, according to a number of recent surveys.  One study looked at consumer credit data and found that the higher the year-end credit score, the likelier the person was to form a romantic relationship over the next year.

Now comes a survey from Discover Financial Services and Match Media Group, parent of Tinder and other dating sites, that shows just how appealing a good credit score can be. Financial responsibility was ranked as a very or extremely important quality in a potential mate by 69% of the 2,000 online daters surveyed. That placed it ahead of sense of humor (67%), attractiveness (51%), ambition (50%), courage (42%), and modesty (39%). A good credit score was associated with being responsible, trustworthy, and smart.

“If you’ve got a pretty good credit score, you probably have other good personality traits,” said Helen Fisher, Match.com’s chief scientific adviser.  “You’re not only managing your money, you’re managing your family, your friends.”  She even called it “an honest indicator of who you really are.”  Good credit scores are earned by a long history of responsibility, dependability, and careful maintenance of accounts. Both sexes in the survey valued financial responsibility highly – 77% of females and 61% of men.

According to a 2015 paper, Credit Scores and Committed Relationships, dating someone whose score is similar to yours increases the odds the relationship will succeed.  The authors analyzed 15 years of data from the Federal Reserve Bank of New York Consumer Credit Panel/Equifax.  People “with higher credit scores are more likely to form committed relationships relative to other observably similar individuals” and more likely to maintain relationships, the authors found. They identified committed relationships by creating an algorithm to spot the formation and dissolution of marriages and long-term cohabitation.  The bigger the mismatch in scores when daters meet, the higher the likelihood the relationship won’t work out in the long run.

A credit score could trigger feelings about reliability, responsibility and trustworthiness, which could trigger an attachment, suggests Fisher.  However daters may want to verify this info.  A survey done earlier this year for student loan company SoFi found that nearly 24% of respondents said a date or partner had lied to them about how much debt they carried. The millennials surveyed said debt was the second-biggest potential deal-breaker, behind workaholism.  In the Discover/Match survey, only 7% of online daters said they would provide information on their credit score, debt level, income, and spending habits before meeting a date.  For most people, the soonest they’d feel comfortable sharing financial details is sometime in the first 6 months of a relationship.

Source: Bloomberg News

Does Record Credit Card Spending Signal a New Recession?

Posted on September 07, 2017 by Laura Lam

credit card recession 1Wallet Hub’s latest Credit Card Debt Study, based on Federal Reserve data, revealed that we’ve returned to our pre-recession bad habits with regards to credit cards: average debt is climbing faster than we are paying it off, meaning that we are on track to top $1 trillion in credit card debt by the end of 2017.

The Great Recession that started nearly a decade ago was largely triggered by high debt loads, and while mortgage debt may have been the primary culprit, credit card debt was a significant factor. Americans were spending more than they earned, believing that the stock market and the value of their homes would continue to rise and allow them to put off the day of reckoning indefinitely.  The stock market crash – combined with plunging housing markets – left far too many people with debts they could never hope to pay.

Credit card debt statistics speak to the financial health of American households. These stats can foretell overleveraging bubbles that may trigger constriction across lending markets. From that perspective, the $89.4 billion in new credit card debt that we added to our tab in 2016 represents serious cause for concern.  The fact that we repaid $31.5 billion of our debt during the first quarter of 2017 actually provides little reason for comfort.

credit card recession 2First-quarter debt reduction is customary because people generally receive annual salary bonuses (and make New Year’s resolutions) early in the year.  While this year’s Q1 payment was 14% higher than the previous year’s, it’s still nearly 9% shy of our effort in 2015.

The months to come will be especially telling, as this mediocre first-quarter performance comes on the heels of a number of low-water marks set in 2016. We started the year with the smallest Q1 paydown ($27.6 billion) since 2008. We finished it by setting post-2007 records for the most debt added in a second, third and fourth quarter, respectively.

So it is not a question of whether consumers are weakening financially, but rather how long this trend toward pre-recession habits will last and just how bad it will get.  WalletHub projects that we will end 2017 with more than $60 billion in new credit card debt. That would mean we’d owe well over $1 trillion in credit card debt overall.

Source:  Motley Fool/International Business Times

Americans are Getting Better at Paying Mortgages

Posted on September 05, 2017 by Laura Lam

Over the last few weeks, report after report all show the same thing – more Americans are paying the mortgages on time right now than at any time since the housing crisis.  A recent Black Knight Financial Services report showed that there were fewer loans in foreclosure in the month of July than in any month in more than 10 years.

Recent data from Transunion showed that mortgage delinquency rates fell to the lowest rate in 10 years during the second quarter, while a recent report from S&P Dow Jones Indices and Experian showed that in July, the average mortgage default rate hit its lowest level in a decade.

The most recent report from CoreLogic showed that mortgages in some stage of delinquency – that’s 30 days or more past due and includes those in foreclosure – fell to a 17-year low in the month of May.

Now, a new report from the Mortgage Bankers Association shows that the delinquency rate for mortgages on one-to-four-unit residential properties fell to a seasonally adjusted rate of 4.24% of all loans at the end of the second quarter of 2017.  That’s the lowest that figure has been since 2000.

According to the MBA’s National Delinquency Survey, the second quarter delinquency rate declined 47 basis points from the previous quarter, and was also down 42 basis points from one year ago.  The MBA report also showed that the percentage of loans in the foreclosure process at the end of the second quarter was 1.29%, down 10 basis points from the previous quarter and down 35 basis points from one year ago.

Additionally, the report also showed that during the second quarter, mortgage delinquencies for all loan types – including conventional, Federal Housing Administration and the Department of Veterans Affairs – fell to lows not seen in at least 12 years.  According to the MBA report, the conventional delinquency rate fell from 4.04% in the first quarter to 3.47% in the second quarter, on a seasonally adjusted basis.  That’s the lowest that figure has been since 2005.  The FHA delinquency rate fell from 8.09% to 7.94%, reaching its lowest level since 1996.  The VA delinquency rate dropped to 3.72% from 3.9% in the first quarter – its lowest level since 1979.

According to Marina Walsh, MBA’s vice president of industry analysis, the foreclosure inventory rate was also at its lowest level since the first quarter of 2007.  “The employment outlook continues to support loan performance. Monthly job growth topped 200,000 jobs in June for the fourth time in the first six months of the year,” Walsh said.

Source:  MBA/Housing Wire

Labor Day 2017: Facts and Figures

Posted on September 04, 2017 by Laura Lam

Marina Labor Day ParadeToday is Labor Day – the holiday will be celebrated by families around the country with picnics, barbecues, road trips, and sports events.  It is the last blast of the summer vacation season.  Labor Day is a federal holiday and most Government offices, schools, and, businesses are closed.  Here are 10 Labor Day Facts.

  1. Labor Day in Canada began in 1872 in Toronto but quickly made its way south to the U.S.  Originally it began as a significant demonstration demanding rights for workers.
  2. The first U.S. Labor Day was celebrated on Tuesday, September 5, 1882, in New York City, planned by the Central Labor Union.  The Labor Day parade of about 10,000 workers took unpaid leave and marched from City Hall past Union Square uptown to 42nd street, and ended in  Wendel’s Elm Park at 92nd Street and 9th Avenue for a concert, speeches, and a picnic.
  3. Oregon was the first state to make Labor Day a holiday in 1887.
  4. On June 28, 1894, Congress passed an act making the first Monday in September of each year a legal holiday in the District of Columbia and the territories.
  5. What are we celebrating? The contributions and achievements of the 159.8 million men and women who are in the U.S. workforce.
  6. In the late 1800s the average American worked 12-hour days and seven-day weeks to eke out a basic living.  Children as young as 5-6 years old worked in factories and mines.
  7. The year in which the 8-hour day was firmly established was 1916 with the passage of the Adamson Act.  This was the first federal law regulating hours of workers in private companies.
  8. Traditionally people did not wear white or seersucker clothes after Labor Day as it unofficially marked the end of summer.
  9. The football season starts on or around Labor Day and many teams play their first game of the year during Labor Day weekend.
  10. Labor Day is viewed as the unofficial last day of vacation before the start of the new school year (and mourned by students all over).  Stated differently, it is the Back-to-School kickoff (cheered by parents all over!).

So take some time during this last summer hurrah to relax, enjoy the family, and enjoy the end of summer!

Source: Forbes


Millennial Homebuyers Worry About Affordability

Posted on September 01, 2017 by Laura Lam

loanDepot-THE-MILLENNIAL-MINDSET-InfographicAccording to a recent survey conducted by loanDepot, 52% of Millennials (born between 1981 and 1997), cite no longer wanting to pay rent and being ready to start a family as two top drivers motivating them to start looking into homeownership.  However, half of those surveyed are anxious about the expense of real estate and mortgage payments, with only 18% saying they think a home purchase is affordable for them.

As for barriers to entering the housing market, Millennial renters are concerned about having enough money for a down payment (63%), knowing where to start the process (48%) – with 56% saying they’d start with a Google search – poor credit history (43%) and too much existing debt (38%).

“It’s clear from the survey results that Millennials have a lot of anxiety built up about the home-buying process,” says David Norris, loanDepot’s head of retail lending. “There is good news, however, as there’s more flexibility than most Millennials think regarding how to qualify for a loan and what’s needed for a down payment.”

Of those surveyed, 49% currently have a home mortgage, yet just 27% said they felt knowledgeable about the home purchase process when they began. For those who have already made the jump to homeownership, they wished they had known more about interest rates (55%), types of loans available (47%) and how the pre-approval process worked and what down payment they’d need (45% each) before setting out.

About 54% of Millennials say they plan to ask their parents about how to buy a home, with slightly fewer, at 52%, saying they would first turn to a mortgage broker or company.

Source:  LoanDepot/Mortgage Orb

Foreclosures at Lowest Level in Over 10 Years

Posted on August 31, 2017 by Laura Lam

black knight foreclosureA new report from Black Knight Financial Services shows that there were fewer loans in foreclosure in the month of July than in any month in more than 10 years.  According to the report, there were 398,000 properties in foreclosure pre-sale in July. That’s down 12,000 from June and down more than 150,000 from the same time period last year, a decline of 28%.  July also marked the first time that the number of loans in foreclosure was below 400,000 since February 2007.

Additionally, Black Knights report showed that the national foreclosure rate sat at 0.78% in July, down 2.96% from the previous month and down nearly 28% from the previous year.  That’s the lowest that figure has been in more than 10 years, as well.

Black Knight’s report also showed that there were only 53,300 foreclosure starts in July, which is the second lowest amount in any month since the start of 2005, behind only April of this year.  While foreclosures are down, loans in delinquency status increased slightly month-over-month in July, but 2017’s total is still below last year’s figures.  Overall, the total U.S. loan delinquency rate (that’s loans that are 30 or more days past due, but not in foreclosure) is 3.9%, up 2.82% from June, but down 13.49% from July 2016.

Broken down by bucket, there were 1.99 million properties that are 30 or more days past due, but not in foreclosure, in July. That’s up 54,000 from June, but down 300,000 from 2016. The number of properties that are 90 or more days past due, but not in foreclosure, held steady at 555,000 in July, but that’s still 140,000 lower than last year.

Overall, Black Knight’s report shows that there were 2.38 million properties that are 30 or more days past due or in foreclosure in July. That’s up 42,000 from June, but down 452,000 from last year.

Source: Housing Wire/Black Knight