Posts Tagged ‘risk’

Subprime Auto Defaults are Soaring

Posted on August 02, 2017 by Laura Lam

It’s classic subprime: hasty loans, rapid defaults, and, at times, outright fraud.  Only this isn’t the U.S. housing market circa 2007. It’s the U.S. auto industry circa 2017.  A decade after the mortgage debacle, the financial industry has embraced another type of subprime debt: auto loans. And, like last time, the risks are spreading as they’re bundled into securities for investors worldwide.  In July, 90-day auto loan delinquency rates eclipsed 3.8%, their highest levels since the financial crisis. Subprime car loans have been around for ages, and no one is suggesting they’ll unleash the next crisis. But since the Great…

Rate Hike Prevented 1 Million Americans From Paying Mortgage

Posted on July 25, 2017 by Laura Lam

A new analysis from TransUnion found that 10.6 million Americans could struggle to absorb their increased monthly payments after the Federal Reserve Board raised interest rates in December, however further examination showed only 1 million struggled with being delinquent after the rate hike. TransUnion’s study identified 63 million consumers who carried debts where the minimum monthly payments was tied to the market interest rate, and would be effected by rate hikes. Using its CreditVision aggregate excess payment algorithm, TransUnion found that 10.6 million consumers were at an elevated risk of not being able to absorb the 0.25% rate hike. The average change in monthly payments was an…

Mortgage Risk Hits Highest Level in 2 Years

Posted on July 12, 2017 by Laura Lam

The frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications increased in May to levels not seen since 2015, according to First American Financial Corp.  The frequency of defects, fraud and misrepresentations increased 2.5% in May, according to the Application Defect Index. This is an increase of 13.7% from the year before. “The Loan Application Defect Index is now reaching levels of risk not seen since 2015,” First American Chief Economist Mark Fleming said. “While risk is growing in both purchase and refinance transactions, it is important to recognize that loan application defect, fraud and misrepresentation…

Electronic Communications: A Growing Compliance Risk

Posted on June 01, 2017 by Laura Lam

The 7th annual Electronic Communications Compliance Survey from Smarsh reveals that finaical firms are struggling to keep up with the multitude of electronic communications channels.  More than half of respondents (52%) cited text messages as their current No. 1 source of non-email content compliance risk. About 33% of respondents cited social media communications as the greatest compliance risk, and 8% cited instant messaging. The survey also found that almost half of firms have no oversight or retention of text messages.  “Firms need to leverage new and emerging channels to communicate with their customers and stay competitive, but they’re failing to manage the risk,”…

Are Automakers Creating the Next Financial Crisis?

Posted on March 06, 2017 by Laura Lam

The country’s auto debt hit a record in the fourth quarter of 2016, according to the Federal Reserve Bank of New York, when a rush of year-end car shopping pushed vehicle loans to a dubious peak of $1.16 trillion. The combination of new car smell and new credit woes stretches from Subarus in Maine to Teslas in San Francisco.  It’s an alarming number, big enough to incite talk of a bubble. On average, every licensed driver in the U.S, owes about $6,100 in car payments. But the market for cars is a lot different than that for houses. Vehicles are a more fluid asset…

Modest Economic Growth Expected in 2017

Posted on November 22, 2016 by Laura Lam

The U.S. economy is expected to continue growing modestly in 2017, but the unknown about policies to be enacted by President-elect Donald Trump’s administration pose both upside and downside risks, according to Fannie Mae.  Economic growth is still forecast to come in at 1.8% for this year, and a similar pace is anticipated for the following year, said Fannie Mae.  But uncertainty remains about Trump’s approach to economic and housing issues once he assumes office in January. “We haven’t changed the general tone of our forecast at this time, but we will incorporate new policy assumptions as they become more…

The Biggest Threat to Data Security?

Posted on July 21, 2016 by Laura Lam

Chief information security officers at U.S. banks say their top priority is keeping data of all kinds (customer, employee, credit, performance, you name it) safe from attacks. Recently, banking officials weighed in when American Banker asked what the greatest risks are. Too Much Data Everywhere – There’s a huge pool of data out there that is hard to protect, and it also provides attackers with lots of ammunition.  “The more data out there, the higher the risk,” says Dominic Venturo, chief innovation officer at U.S. Bank.  “We’ve also got this old system of user ID and password and the fact…

U.S. Top 3 in Global Credit Card Fraud

Posted on July 19, 2016 by Laura Lam

According to a new data from ACI Worldwide and Aite Group, 30% of global consumers have experienced card fraud in the past 5 years.  The global fraud study revealed that, compared to ACI’s 2014 benchmark study, card fraud rates – unauthorized activity on 3 types of payment cards (debit, credit and prepaid) – is on the rise worldwide. Of those surveyed, 14 out of the 17 countries reported an increase in card fraud between 2014 and 2016. Risky behaviors, such as leaving a smartphone unlocked when not in use, have a direct correlation to fraud – and the overall risk for fraud is…

What Keeps Business Professionals Awake at Night?

Posted on July 08, 2016 by Laura Lam

The Wall Street Journal rounded up some recent surveys and reports dealing with payments, risk and security issues.  Here are some of the findings. Pay Up: A survey of around 200 private practice lawyers, in-house counsel and corporate C-level executives in the U.S., U.K., Europe and Asia by global finance firm Burford Capital found 86% of private practice lawyers have clients who in the last 5 years have not been paid the full value of a successful litigation or arbitration judgment or award. Almost 1 in 5 lawyers (19%) said their clients’ unenforced judgments were worth between $10 and $50 million, while 14%…