Cars repossessed by lenders 'worse than Wonga'

Logbook loan companies that allow borrowers to secure a loan against a car are more worrying than payday lenders, according to the Financial Conduct Authority's consumer champion.

Sue Lewis said the lenders take "advantage of desperate people" who might "not understand the consequences" of their borrowing. While payday lenders such as Wonga conduct credit checks, customers taking out logbook loans simply hand over their car logbook as collateral instead.

Applications can be made online and cash transferred in less than 24 hours. If the borrower falls behind on repayments with interest rates of 400 per cent, their car is repossessed.

Unlike payday lenders who advertise on television, the loan companies advertise near pawnbrokers, in cheque cashing centres and in newspapers, according to Andrew Leakey, a lawyer and consumer litigation specialist.

He recalled one customer who secured loans against four vintage cars. After he defaulted on his repayments, a logbook loan company seized the cars and also took three others. Leakey said: "I wouldn't even go to them as a last resort."

Kerry McCarthy, Labour MP for Bristol East, said: "The deals are structured in such a way that they are designed to fail – it's about the lenders getting their hands on the cars, rather than getting interest on loans. Interest rates on these loans are so high that people inevitably default, and the agreements allow them to seize the cars after only one default."

Save money: Tips before you take a home loan

Home loans can be very beneficial for property buyers, as they not only help you buy your dream home, but also help you save on taxes. But you must remember to choose the right home loan if you do not want to face the hassles in the process. Here are a few quick tips that you could keep in mind while applying for a home loan. These tips could help ease the complicated procedure a little bit and at the same time help you save some money.

Some of the tips that are recommended are mentioned below:

Research well - These days loan are made quite attractive for the buyers with low interest rates and additional schemes. Therefore it is better to educate yourself about the terms and conditions of each loan agreement so that you are prepared beforehand. Clarify all your doubts regarding the loan scheme before you finalize anything and don't hesitate to ask questions to the sales person even if you have the smallest difficulty understanding a particular clause.

Take a look at the EMI - Calculate the EMI that you will be able to afford beforehand. Remember that you know your money more than anyone else so keeping in mind your current job and income you can make an approximate calculation about the amount of EMI you can pay. Don't make hasty decisions on this one because paying penalties due to non payment of EMI on time can prove to be more troublesome. If you have a temporary job, there are other things to take into consideration so make a wise decision taking care of all the parameters.

Negotiate on the interest rate - Even though banks and financial institutions swear that interest rates are non-negotiable, they could still make a few adjustments if you list a few honest issues with the high rates. This can be done only if you have finalized the property you would like to buy and you need it as soon as possible. Also, if it is the end of the month, it could prove to be beneficial for you. Sales persons have an aggregate number of sales that they need to complete every month; so in order to complete their target; they are bound to give you certain benefits.

Loan eligibility - Carry documents which include information like your credit history when you make purchase of a loan. You should have paid all your credit cards and car loans on time in order to move a step higher on the eligibility while applying for a loan. If you have a clean record in your credit history for payments done on time, then you can use it as an advantage when applying for the loan. Also, try to focus on the tenure of your loan. If you opt for a long tenure loan then you will be paying more overall as the interest paid would be very high.

Additional charges to be kept in mind - When you are applying for a home loan, you need to be educated about the various other charges that the lenders add to the current schemes. They will add administrative and service charges or processing fees. These additional fess fall under the amount that is sanctioned in your name and not under the amount that you take home. So before you finalize any deal, you should make note of such additional charges that the lenders put into the scheme.

Read the fine print of the agreement carefully - Even if the home loan agreement with your bank is a bulky document, make sure you read it thoroughly. Sometimes, lenders may nod to certain points but in the end whatever is present on the paper will only be taken into consideration. So it is best if you could just spend some extra time reading the document carefully rather than getting stuck in complications related to the same later on. Never sign on a blank loan paper even if the sales person asks you to sign. Ask questions if you still have some doubts because at the end it is very important to be aware of every term and condition mentioned in the loan.

Home Loan Servicing Solutions, Ltd. Schedules Conference Call 3rd Quarter 2013 Results.

 Home Loan Servicing Solutions, Ltd.^TM ("HLSS" or the "Company") (HLSS) will hold its conference call on Thursday, October 17, 2013 at 11:00 a.m. (ET) to review the Company's operating results. This event will follow Home Loan Servicing Solutions' 3rd Quarter 2013 earnings release. The press release will also be available on the HLSS Shareholder website at www.hlss.com.

A live audio webcast and slide presentation for the call will be available over the internet at www.hlss.com (through a link on the Shareholders page). Those who want to listen to the call should go to the website at least fifteen minutes prior to the call to register, download and install any necessary audio software.

The conference call will be available for replay via telephone beginning at 12:01 p.m. (ET) on Thursday, October 17, 2013 through Friday, October 25, 2013. To listen to a replay of the conference call by telephone dial 1-402-998-1711. For more information on prior releases and SEC Filings, please refer to the "Shareholders" section of our website at www.hlss.com.

Home Loan Servicing Solutions is an internally managed owner of high quality mortgage servicing assets, predominantly mortgage servicing advances and non-agency mortgage servicing rights, which are highly overcollateralized with historically stable net asset values. HLSS' primary investment objective is to generate stable, recurring fee based earnings and dividends throughout the economic cycle. For more information, visit www.hlss.com.

Loan Mods Up from Year Ago in Q2; Foreclosure Starts Plumme

Although the pace of loan modification activity slowed from the first to the second quarter this year, foreclosure starts saw an even greater quarterly decline, according to data from HOPE NOW, a private sector alliance of mortgage servicers, investors, mortgage insurers and nonprofit counselors.

In the second quarter, servicers provided 204,000 loan modifications to distressed borrowers, down by about 16 percent from the prior quarter. However, loan modifications were still up 13 percent from a year ago.
Short sales, another alternative to foreclosure, decreased 25 percent year-over-year to 81,000 in the second quarter.

Meanwhile, foreclosures were initiated on 329,000 properties in the second quarter. The total for foreclosure starts represents a 30 percent decrease compared to the first quarter and a sharp 38 percent decline from last year.
Foreclosure sales also slowed, dropping to 158,000 in the second quarter, down 2 percent from the first quarter and down 15 percent from the same quarter a year ago.
HOPE NOW data continued to show a significant majority of completed modifications are through the private sector. Out of the 204,000 completed modifications in the second quarter, 160,000 were proprietary modifications, while 44,860 were completed under the government’s Home Affordable Modification Program (HAMP).
Since 2007, about 6.52 million homeowners have received permanent loan modifications for homeowners, and about 5.31 million of those modifications were proprietary programs.
The industry has also provided 1.32 million short sales since December 2009. This brings the total for non-foreclosure solutions to over 7.84 million.
“In addition to the progress made via our solution data, HOPE NOW has sponsored over 140 face to face events in more than 70 markets nationwide and has been a driving force in bringing together all mortgage stakeholders in the interest of improving the nation’s housing market.

 

 

 

The company's post-tax profits rose 36% in six years to £62.5m and four million loans totalling £1.2bn were advanced

The payday lender's financial results for 2012 confirmed how far Wonga has come in six years. Post-tax profits rose 36% to £62.5m and four million loans totalling £1.2bn were advanced to more than one million customers. The company is on a roll.
How has it been done? Wonga's business model seems to have four key elements. First, the company rejects two-thirds of applicants as bad credit risks. Efficient assessment of credit risk kept default rates last year to 7.4% – a rate that would disgrace a mainstream lender but is easily tolerable for Wonga at its astronomical rates of interest. It is also why chief executive Errol Damelin can breezily offer to help Welby give credit unions a leg-up. Damelin, you can be sure, will not be offering to hand over the algorithms that are central to Wonga's system.
Second, Wonga is, one must admit, a slick operation that gives its customers what they want. Processing loans rapidly is not a trick mainstream banks have mastered. Whether you regard many of Wonga's customers as desperate or misguided, the company has clearly identified an appetite for instant loans.
Third, Wonga is an extraordinarily capital-efficient business. Damelin boasts that the company makes only £15 net profit per loan. That sounds low but the point to remember is that the company is turning over its capital several times each year. Thus the "same" £200 might earn £15 six or seven times in the space of 12 months. That is what produces financial statistics that leave mainstream lenders in the shade. Wonga's return on shareholders' equity is about 30% and after-tax profit margins are 20%.
The fourth characteristic is the one that – rightly – enrages Wonga's critics. It is the company's presentation of borrowing at high interest rates, even for a short period, as a fun-filled everyday activity undertaken by aspirational folk. The adverts are humorous and Damelin reports that his typical customers are "young, urban, digital, and with a very strong proportion of smartphone ownership".
There will, of course, sometimes be sensible economic reasons for some borrowers to take out a short-term loan at high interest rates – avoiding overdraft charges, for example. But, on Damelin's description of his customers as members of the "Facebook generation", most would be better off curtailing their spending or joining the world of mainstream finance.
More fool them, one might say. Well, yes, but society should also protect the interests of the victims of the growth of payday lending – the already over-indebted who are dragged deeper into trouble by becoming hooked on short-term loans. There is a clear case for placing caps on how much payday lenders can charge. A limit of 50%-60% rates of interest sounds reasonable to curb rollover lending.
Certainly somebody in the financial or government establishment should take an interest in the rise of easy-access payday lending. At the very least, Wonga and its ilk, via their cheery adverts, are undermining everything the new regulator says about the importance of financial education in avoiding the next crisis.

Greece 'may renegotiate rescue loans'

Wolfgang Schaeuble (left) was the first to break the silence, and now Yannis Stournaras is adding his voice

Greece may seek to ease its debt burden by renegotiating its bailout terms, the Greek finance minister said on Monday.

Yannis Stournaras told German newspaper Handelsblatt this could involve lower interest payments and more time to repay 240bn euros (£206bn) in loans.
It comes a day after he conceded that Greece may face a hole in its finances of up to 10bn euros.
Speculation over Athens' borrowing needs comes at a sensitive time, with German elections due in September.
Earlier this month German Finance Minister Wolfgang Schaeuble said for the first time that Greece will need another bailout to plug a forthcoming funding gap.
The Greek bailout remains a sensitive topic in Germany. Chancellor Angela Merkel is seeking re-election on 22 September, and many German voters feel they have already contributed enough to European bailouts.
High hopes Mr Stournaras told German business daily Handelsblatt on Monday that it may not be necessary for Greece to seek a third bailout package from European partners and the International Monetary Fund (IMF) after all.
This was despite having himself alluded to the possibility of a 10bn-euro package in an interview on Sunday with the Greek newspaper Proto Thema, and insisting that it should not come with any more austerity conditions attached.
The IMF last month estimated Greece would need around 11bn euros in 2014/15.
Instead, Mr Stournaras expressed optimism that the government could manage within the terms of its existing bailouts.

  Angela Merkel is running for election again in September

The finance minister claimed his government may even be able to borrow money from the financial markets by the second half of 2014, obviating the need for any further rescue loans.
He said this would be possible if his country's economy grew next year - after six years of contraction - and if the government managed to achieve a primary surplus on its finances, meaning that it only needed to borrow money in order to meet interest payments on its existing debts.
"That would be a great success which would allow us to test the market with a new bond issue in the second half of 2014," Mr Stournaras said.
He also criticised his own countrymen's habit of avoiding taxes - an issue often highlighted in the German tabloid press - admitting that many treated it as "a kind of national sport".
He said that more than 600 tax avoiders had already been sent to prison under current Greek laws.
'Domino effect' The minister ruled out the possibility of another "haircut" on the country's private sector debts, saying it would be better to alleviate the terms of the country's rescue loans instead.
Last year, as a condition to the country's second bailout package, the Greek government had to negotiate a formal reduction in the amount owed to private sector lenders.
German Chancellor Angela Merkel has also warned about writing down any more Greek debt.
Chancellor Merkel said a haircut of Greek debt would be bad for the stability of the eurozone, which has seen a return in investor confidence after years of worrying about the future of the single currency and bailouts of several nations - most recently, Cyprus.
"I am expressly warning against a haircut," Mrs Merkel said. "It could trigger a domino effect of uncertainty with the result that the readiness of private investors to invest in the eurozone again falls to nothing.

The federal government has made it easier than ever to borrow money for higher education - saddling a generation with crushing debts and inflating a bubble that could bring down the economy.

On May 31st, president Barack Obama strolled into the bright sunlight of the Rose Garden, covered from head to toe in the slime and ooze of the Benghazi and IRS scandals. In a Karl Rove-ian masterstroke, he simply pretended they weren't there and changed the subject.

The topic? Student loans. Unless Congress took action soon, he warned, the relatively low 3.4 percent interest rates on key federal student loans would double. Obama knew the Republicans would make a scene over extending the subsidized loan program, and that he could corner them into looking like obstructionist meanies out to snatch the lollipop of higher education from America's youth. "We cannot price the middle class or folks who are willing to work hard to get into the middle class," he said sternly, "out of a college education."
Flash-forward through a few months of brinkmanship and name-calling, and not only is nobody talking about the IRS anymore, but the Republicans and Democrats are snuggled in bed together on the student-loan thing, having hatched a quick-fix plan on July 31st to peg interest rates to Treasury rates, ensuring the rate for undergrads would only rise to 3.86 percent for the coming year.
Though this was just the thinnest of temporary solutions – Congressional Budget Office projections predicted interest rates on undergraduate loans under the new plan would still rise as high as 7.25 percent within five years, while graduate loans could reach an even more ridiculous 8.8 percent – the jobholders on Capitol Hill couldn't stop congratulating themselves for their "rare" "feat" of bipartisan cooperation. "This proves Washington can work," clucked House Republican Luke Messer of Indiana, in a typically autoerotic assessment of the work done by Beltway pols like himself who were now freed up for their August vacations.
Not only had the president succeeded in moving the goal posts on his spring scandals, he'd teamed up with the Republicans to perpetuate a long-standing deception about the education issue: that the student-loan controversy is now entirely about interest rates and/or access to school loans.
Obama had already set himself up as a great champion of student rights by taking on banks and greedy lenders like Sallie Mae. Three years earlier, he'd scored what at the time looked like a major victory over the Republicans with a transformative plan to revamp the student-loan industry. The 2010 bill mostly eliminated private banks and lenders from the federal student-loan business. Henceforth, the government would lend college money directly to students, with no middlemen taking a cut. The president insisted the plan would eliminate waste and promised to pass the savings along to students in the form of more college and university loans, including $36 billion in new Pell grants over 10 years for low-income students. Republican senator and former Secretary of Education Lamar Alexander bashed the move as "another Washington takeover."
The thing is, none of it – not last month's deal, not Obama's 2010 reforms – mattered that much. No doubt, seeing rates double permanently would genuinely have sucked for many students, so it was nice to avoid that. And yes, it was theoretically beneficial when Obama took banks and middlemen out of the federal student-loan game. But the dirty secret of American higher education is that student-loan interest rates are almost irrelevant. It's not the cost of the loan that's the problem, it's the principal – the appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008.
More Taibbi: The Biggest Price-Fixing Scandal Ever
How is this happening? It's complicated. But throw off the mystery and what you'll uncover is a shameful and oppressive outrage that for years now has been systematically perpetrated against a generation of young adults. For this story, I interviewed people who developed crippling mental and physical conditions, who considered suicide, who had to give up hope of having children, who were forced to leave the country, or who even entered a life of crime because of their student debts.
They all take responsibility for their own mistakes. They know they didn't arrive at gorgeous campuses for four golden years of boozing, balling and bong hits by way of anybody's cattle car. But they're angry, too, and they should be. Because the underlying cause of all that later-life distress and heartache – the reason they carry such crushing, life-alteringly huge college debt – is that our university-tuition system really is exploitative and unfair, designed primarily to benefit two major actors.
First in line are the colleges and universities, and the contractors who build their extravagant athletic complexes, hotel-like dormitories and God knows what other campus embellishments. For these little regional economic empires, the federal student-loan system is essentially a massive and ongoing government subsidy, once funded mostly by emotionally vulnerable parents, but now increasingly paid for in the form of federally backed loans to a political constituency – low- and middle-income students – that has virtually no lobby in Washington.
Next up is the government itself. While it's not commonly discussed on the Hill, the government actually stands to make an enormous profit on the president's new federal student-loan system, an estimated $184 billion over 10 years, a boondoggle paid for by hyperinflated tuition costs and fueled by a government-sponsored predatory-lending program that makes even the most ruthless private credit-card company seem like a "Save the Panda" charity. Why is this happening? The answer lies in a sociopathic marriage of private-sector greed and government force that will make you shake your head in wonder at the way modern America sucks blood out of its young.
In the early 2000s, a thirtysomething scientist named Alan Collinge seemed to be going places. He had graduated from USC in 1999 with a degree in aerospace engineering and landed a research job at Caltech. Then he made a mistake: He asked for a raise, didn't get it, lost his job and soon found himself underemployed and with no way to repay the roughly $38,000 in loans he'd taken out to get his degree.
Collinge's creditor, Sallie Mae, which originally had been a quasi-public institution but, in the late Nineties, had begun transforming into a wholly private lender, didn't answer his requests for a forbearance or a restructuring. So in 2001, he went into default. Soon enough, his original $38,000 loan had ballooned to more than $100,000 in debt, thanks to fees, penalties and accrued interest. He had a job as a military contractor, but he lost it when his employer ran a credit check on him. His whole life was now about his student debt.