Posts Tagged ‘risk’

Credit Card Delinquencies on the Rise

Posted on October 18, 2017 by Laura Lam

Credit card delinquency rose for the third straight month in September, data from JPMorgan Chase & Co. and card issuer Discover Financial Services suggested.  The data add to signs that U.S. consumers are struggling amid rising household debt, after bank results last week pointed to an increase in provisions for future losses. September delinquencies for JPMorgan rose 1.22%, while those at Discover Financial were up 1.64% from August. Those at Bank of America also rose 1.56% — the second rise in three months.  Credit quality at several banks appears to be deteriorating as lenders target consumers with worse credit ratings to…

Leasing Delinquencies Remain at Historic Lows

Posted on October 11, 2017 by Laura Lam

Recent statistics from the Federal Reserve validate what leasing professionals have understood about their industry for years. The data reach back to the first quarter of 1985 and underscore the fact that, when it comes to delinquencies and charge-offs, equipment leasing remains one of the best performing sectors under the broader umbrella of commercial finance. According to Bob Rinaldi, CEO of Commercial Industrial Finance, Inc., the most recent data on charge-offs and delinquencies offer no surprises. Rinaldi stated, “There’s nothing in this data that should alarm anyone in the industry…the data points are exactly where they should be. Everything here…

Mortgage Lending Getting Riskier

Posted on October 09, 2017 by Laura Lam

During the second quarter this year, the risk in mortgage lending inched up as the market shifted toward an increased share of investor loans, according to the Q2 2017 Housing Credit Index released by Core Logic.  The index increased to 117 during the second quarter, up a full 20 points from the second quarter last year. However, even after this increase, the credit risk in the second quarter is still within the levels seen from 2001 to 2003, a timeframe that is considered to be a normal baseline for credit risk. The chart shows that while mortgage risk remains at…

Mortgage Fraud Risk on the Rise

Posted on September 28, 2017 by Laura Lam

An estimated 13,404 mortgage applications, representing 0.82% of all applications, filed during the second quarter contained indications of fraud, according to the Mortgage Application Fraud Risk Index released by CoreLogic.  The second-quarter figure is a 16.9% increase from the 12,718 mortgage applications, comprising 0.70% of total applications, that contained indications of fraud recorded in the second quarter of 2016. By state, mortgage application fraud risk was highest in New York, pushing it to overtake Florida as the state with the highest risk. After holding the top spot for the last several years, Florida is now in third after posting a…

Homeowners Continue to Regain Equity

Posted on September 27, 2017 by Laura Lam

Homeowners with mortgages saw an overall gain of $766 billion in their home equity during the second quarter from the year-ago period, or an increase of 10.6%, according to the second-quarter home equity analysis released by CoreLogic.  On average, the year-over-year gain is $12,987 for each homeowner. The biggest increases were seen in Western states as higher home prices drove equity gains. Homeowners in Washington saw average home equity gains of about $40,000, while California homeowners gained an average of $30,000 in home equity. The quarter also posted a year-over-year decrease in the number of homes with negative equity. During the period, 2.8 million homes – representing…

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…