As a support to their clients’ efforts to meet the requirements of the Federal Deposit Insurance Corporation’s (FDIC) Large Bank Pricing Rule, specifically in the subprime loan reporting that will start effective Oct 1, 2011, Experian is creating a complete product to be made available to its banking clients. The company, known for being a leader in global informatio

n services, will allow its clients to use its credit attributes together with its debt-to-income insight model (SM) in order to deliver the complete reporting requirements needed on subprime loans.

The latest reporting requirements for large banks, qualified as having at least $10 billion in assets, describes a subprime loan as a type of installment or revolving loan with one or more of the following properties: First, at least two 30-day delinquencies in the past year or at least one 60 day delinquencies in the last two years. A second requirement is foreclosure, judgment, charge-off or repossession in the previous 24 months. The third is bankruptcy in the last five years. Fourth is a debt service to income ratio of at least 50% which limits the ability to pay for the living expenses of the family once the entire amount of the debt-service monthly requirement is deducted.

With the company’s combined delivery of the needed reporting characteristics, the clients are provided with an option that they can rely on and easily access as they address their requirements in reporting. With this, clients must also check with their regulatory and legal compliance specialists regarding their specific reporting requirements.

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Michele Pearson, Experian’s Consumer Information Services Vice President, says that once the new regulation takes effect, the FDIC rates of the bank will be directly affected by the composition of its assets. This then becomes a different situation from the present environment, where the charges in the insurance rates of deposits are based on its size. The implication of this is that banks that have subprime loan amounts which are considered of a higher risk may have higher charges in their FDIC insurance rates. Pearson further adds that their company is committed to provide their clients with the complete products that will help them comply and maintain their usual business without experiencing any interruption.

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Mortgage loans that were obtained between 2005 and 2007 account for almost two-thirds of delinquent balances said Equifax. Although there is a decrease in the number of past due accounts of at least 30 days, those for 60 and 90 days are still continuously increasing.

In 2010, first mortgage loan write offs, installment loans and revolving accounts of home equity totaled to $304.6 billion. According to the analysis of Equifax, the number will keep on rising without any indications on when it will reach its peak. This number is way above the $126.7 billion total of loan write offs in the year 2006 and 2007.

According to the estimates of Equifax, as of May 2011, the total amount of first mortgage in the early stages of foreclosure is at $319.7 billion. This started in the years 2006 and 2007, a not surprising fact since those were the years when subprime lending activity started to rise.

REO properties is a main obstacle to the recovery of the economy, says Equifax. The reason for this is that REO rates stay high while lenders are struggling to get rid of their properties through short sales and auctions.

The completion rate of foreclosure is at 1.45%. This is in the same level as bankruptcies which are at 1.6% at the present time. Equifax says that the same rates indicate that most REO properties are brought about by the bankruptcy proceedings.

Equifax Mortgage Services’ senior vice president and general manager Craig Crabtree says that real estate owned properties and shadow inventory are performing a main role in the current mortgage market and slowing down the road to recovery of the economy.

Even if there are some stabilized lending sectors, there is still a high volume of past due first mortgage loans which has caused a slowing down of the foreclosure process. The mortgage market will keep on impacting the growth of the economy until the foreclosures are processed.

Related articles

• Three roadblocks to a refinancing boom (finance.fortune.cnn.com)
• Consumer bankruptcies on the rise: Equifax (marketwatch.com)

Scammers advertising loans with advance fees seek out people who are in great need of money. They promote their products and services in local print materials and legit looking websites online. They entice people to grab their offer by using words like “guaranteed” and phrases such as “easy credit.”

Oftentimes, websites offering advance fee loans asks their applicants to fill out an application form that requires personal information such as social security and bank account numbers. Then, the applicants are victimized when they are informed that their loan is approved but need to pay an advance fee amounting to several thousands of dollars before they get it. After they make the payment, they never get the loan they were promised or they are even asked to pay more.

In order to avoid these scammers, the Better Business Bureau warns individuals seeking for loans to be wary of the following lenders:

1. Lenders who request upfront fees. Fees may be required by a lender but not prior to completing the loan application. Be cautious once you are asked to send money through wire transfer or money order.

2. Lenders who do not give their contact information. You must always ask for a physical address of their office and their phone numbers. If they cannot provide you with any of these, it may be a sign that they are trying to avoid law enforcement.

3. Lenders who commit to provide a loan despite of the applicant’s credit history. Lenders operating legally will usually not guarantee approval before application most especially if the applicant has poor credit rating.

4. Lenders that do not operate within the U.S. Most of these lenders use fake U.S addresses or P.O boxes.

5. Lenders who pressure their applicants to take immediate action. Scamming lenders will ask you to rush in making a payment to them and sending your information before serving any paperwork. Make sure to check the company’s background before providing any information. As much as possible obtain a written contract of your loan.

6. Lenders who use names that sounds like other legit companies. They do this to confuse you and tempt you to obtain their products and services.

It is tempting to obtain advance fee loans especially when you are in need of money. However, be cautious and think about it deeply. You can check with the attorney general’s office to find out if the lenders are registered. You may also check if they are legal through the BBB.

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Lawmakers are passing a bill as a second attempt to control the industry of payday lending. During the previous year, lobbyists and politics had a big role in creating legislations for the purpose of regulating an industry that is said to take advantage of vulnerable residents.

The sponsored act of Rep. Gordon Hintz, D Oshkosh entitled Predatory Lending Consumer Protection Act blocks auto title loans and sets limits to the loan amount. Specifically, the maximum amount must be at 35% of the gross monthly income. However, this act did not put the same cap of 36% to interest rates.
Spending huge amounts, lobbying lawmakers and contributing to campaigns were all done by the payday lending industry to fight the bill.

At present, two Republicans namely Rep. Evan Wynn, R-Whitewater, and Sen. Glenn Grothman, R-West Bend, are submitting a proposal to the legislature for a 36% limit to payday loan interest rates.
This new bill is also co-sponsored by Hintz. It was Wynn who sought information from Hintz and banking industries to work on the proposal. Wynn praised the work of Hintz and his colleagues in the previous session and blamed lobbyists for the failure of the interest rate cap proposal.

A Payday loan is a small amount, high interest loan with a short payment period. Typically, a payday loan is paid on the next paycheck of the borrower. The usual charge amounts to $20 for every $100 of loan. However, when the borrower fails to pay during the specified period, the debt is rolled over and the interest charges pile up.

The payday lending industry began in Wisconsin in 1995. Back then, interest rates were at 18 percent maximum. Eventually, 17 payday lenders emerged in the state. At present, there are about 550 of them.
According to Hintz, it is expected that the payday loan industry is preparing to prevent the bill on interest rate cap from becoming a law.

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• Payday Lending’s Final Days? Not by a Long Shot, Reports AboutPaydayLoan.com (prnewswire.com)
• Payday Loan Lenders Under Fire (nowpublic.com)
• Should interest rates be capped? (cleardebt.co.uk)

Getting a bad credit loan is one of the options of people who cannot obtain a personal loan in their times of need. A poor credit history is the main reason why people cannot take out a traditional loan. Banks and other traditional lenders do not want to run the risk of approving a loan for borrowers with a history of poor payments. With a bad credit history, an application for cash advance will be denied.

When one seeks a loan from a bank, collateral is usually required. This can be in the form of any valuable and tangible asset that can replace the value of the loan once it is unpaid. But, money advance is one of the types of loan that do not need collateral. The application is easy and the approval is quick. A money advance loan is deposited in the same day the loan is approved.

In the application process, there are certain requirements for the applicant to be eligible. The applicant must be at least 18 years of age and a legal citizen. Also, the applicant must show residency for at least three months in the city or state where the application was submitted. An existing checking account that has been valid for at least three months is also needed. There are other lenders that will request the loan to be paid using an automatic checking account withdrawal on specified dates. Any late payments may incur charges to be added to the principle loan amount.

Bad credit loan is an alternative for people with poor credit standing. This is especially helpful in emergency situations such as car repair, job loss and medical expenses. The main advantage of this type of loan is that it does not consider the credit score as a factor. Moreover, it does not require any form of collateral. Finally, it is a loan that can be easily applied for and can be quickly approved.