Sailing fund – Sail Theory http://sailtheory.com/ Tue, 10 May 2022 22:46:56 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://sailtheory.com/wp-content/uploads/2021/06/icon-2021-06-25T011712.182-150x150.png Sailing fund – Sail Theory http://sailtheory.com/ 32 32 Who regulates home equity loans? https://sailtheory.com/who-regulates-home-equity-loans/ Tue, 10 May 2022 19:32:15 +0000 https://sailtheory.com/who-regulates-home-equity-loans/ A home equity loan, also called home equity loan, home equity installment loan, or second mortgage, is a type of consumer debt. Home equity loans allow homeowners to borrow against the equity in their home. The loan amount is based on the difference between the home’s current market value and the homeowner’s mortgage balance. These […]]]>

A home equity loan, also called home equity loan, home equity installment loan, or second mortgage, is a type of consumer debt. Home equity loans allow homeowners to borrow against the equity in their home. The loan amount is based on the difference between the home’s current market value and the homeowner’s mortgage balance.

These types of loans carry risks. Home equity loans force mortgage holders to put their homes at risk if they do not repay the loan. And since property is often a family’s most valuable asset, defaulting on a home equity loan can have serious consequences. Because of these risks, home equity lending is relatively tightly regulated by both state and federal agencies.

In this article, we will examine the regulatory environment for home equity loans and explain which federal agencies control which of these loans.

Key points to remember

  • Many rules affect home loans: federal regulations, state laws, and codes of conduct issued by industry organizations.
  • The federal agency that regulates a specific home equity loan depends on the agency issuing the loan.
  • Home equity loans can be issued by banks and credit unions, as well as several other types of financial institutions. Each is regulated by a different body.
  • If you believe a lender has acted in violation of the law, a good place to start is to contact the Consumer Financial Protection Bureau (CFPB) or the US Department of Housing and Urban Development (HUD). Either agency may be able to tell you where to file a complaint.

Home Equity Loan Regulation

There are basically two main sources of home equity loan regulation: individual states and the federal government.

There are a number of federal laws relating to home equity loans. These include the Truth in Lending Act (TILA), which details how this type of loan can be sold and provides consumers with some key rights when it comes to working with them. Another key piece of mortgage regulation is the Property Settlement Procedures Act (RESPA). This law was enacted by Congress so that buyers and sellers would be aware of the full settlement costs of buying a home. Then there are laws like the Dodd-Frank Wall Street Reform and Consumer Protection Act, which Congress passed in the wake of the subprime mortgage meltdown that contributed to the 2007-2008 financial crisis. .

Additionally, each state in the United States has laws that affect home equity loans in some way, and these are constantly changing. There is indeed a manual in several volumes published each year, Pratt State Regulations on Second Mortgages and Home Equity Loanswhich gives an overview of these laws.

In short, many rules and regulations apply to home equity loans, and the same loan can be subject to several different regulators.

Who regulates home equity loans?

Just as there are many rules and regulations that affect home equity loans, there are also many organizations that can regulate any given loan. This is because home equity loans can be issued by a wide variety of financial institutions; banks and credit unions are most common, but home equity loans can also be obtained from commercial or agricultural lenders. Each type of institution has its own regulator who is ultimately responsible for monitoring the loans they make.

Here are the most important of these regulators:

Regulatory agency Regulated entity(ies) Phone/Website
Federal Reserve Consumer Aid PO Box 1200 Minneapolis, MN 55480 Federally Insured State Chartered Bank Members of the Federal Reserve (888) 851-1920 www.federalreservecon-sumerhelp.gov
Consumer Financial Protection Bureau (CFPB) PO Box 4503 Iowa City, IA 52244 Deposit-taking institutions and insured credit unions (and their affiliates) with assets greater than $10 billion, and non-custodial institutions such as mortgage originators, mortgage brokers and managers, large participants other financial services products, private education loan providers and payday lenders (855) 411-2372 www.consumerfinance.gov
Office of the Comptroller of the Currency (OCC) Customer Assistance Unit 1301 McKinney Street Suite 3450 Houston, TX 77010 National banks and savings banks/federally chartered associations (800) 613-6743 www.occ.treas.gov www.helpwithmybank.gov
Federal Deposit Insurance Corporation (FDIC) Consumer Response Center 1100 Walnut Street, Box #11 Kansas City, MO 64106 Federally-insured state-chartered banks that are not members of the Federal Reserve (877) ASK-FDIC or (877) 275-3342 www.fdic.gov www.fdic.gov/consumers
National Credit Union Administration (NCUA) Consumer Assistance 1775 Duke Street Alexandria, VA 22314-3428 Federally chartered credit unions (800) 755-1030 www.ncua.gov www.mycreditunion.gov
Federal Trade Commission (FTC) Consumer Response Center 600 Pennsylvania Avenue, NW Washington, DC 20580 Finance companies, retail stores, car dealerships, mortgage companies and other lenders, and credit bureaus (877) FTC-HELP or (877) 382-4357 www.ftc.gov www.ftc.gov/bcp
Farm Credit Administration Office of Congress and Public Affairs 1501 Farm Credit Drive McLean, VA 22102-5090 Agricultural lenders (703) 883-4056 www.fca.gov
Small Business Administration (SBA) Consumer Affairs 409 3rd Street, SW Washington, DC 20416 Small business lenders (800) U-ASK-SBA or (800) 827-5722 www.sba.gov

Each of these regulators oversees a different type of lender, and some lenders are covered by multiple federal agencies in addition to state regulators.

Does Reg Z apply to home equity loans?

Yes. Regulation Z is a federal law that standardizes how lenders pass on the cost of borrowing to consumers. It also limits certain lending practices and protects consumers against deceptive lending practices. It applies to residential mortgages, home equity lines of credit, reverse mortgages, credit cards, installment loans and some student loans.

How does a mortgage loan work?

A home equity loan is a loan for a set amount, repaid over a set period of time, which uses the equity in your home as collateral for the loan. If you are unable to repay the loan, you risk losing your home to foreclosure.

Are there state laws on home equity loans?

The essential

There are many rules that affect home equity lending: federal regulations, state laws, and codes of conduct issued by industry organizations. The federal agency that regulates a particular home equity loan depends on the agency that issued the loan. Home equity loans can be issued by both banks and credit unions, as well as several other types of financial institutions, and each is regulated by a different body.

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FINANCIAL LITERACY NEW LEAP A1 | https://sailtheory.com/financial-literacy-new-leap-a1/ Sun, 08 May 2022 21:30:06 +0000 https://sailtheory.com/financial-literacy-new-leap-a1/ Studies have long shown that high school students are woefully misinformed about personal finances and how to manage them. But the COVID-19 pandemic, which has revealed how many American adults are living on the financial edge, has spurred ongoing efforts to make financial literacy classes a school requirement. Seven states now require a stand-alone financial […]]]>

Studies have long shown that high school students are woefully misinformed about personal finances and how to manage them. But the COVID-19 pandemic, which has revealed how many American adults are living on the financial edge, has spurred ongoing efforts to make financial literacy classes a school requirement. Seven states now require a stand-alone financial literacy course as a high school graduation requirement, and five more state requirements come into effect within the next year or two. About 25 warrants at least some financial training, sometimes as part of an existing course. This year, about 20 other states have considered establishing or expanding similar rules.

Opponents of state mandates say the requirements, while laudable, may encroach on the limited time available for other high school electives and would impose costly demands on teacher training or hiring. Nevertheless, financial literacy courses are gaining ground.

“I think there’s a lot of momentum now; many more states have legislation pending,” said Carly Urban, an economics professor at Montana State University who has studied financial literacy. In seven states — Alabama, Iowa, Missouri, Mississippi, Tennessee, Utah and Virginia — “almost all schools require it,” she said, though some graduation prerequisites don’t come into play. force only in 2023.

People also read…

Over the past two years, Nebraska, Ohio, Rhode Island, and most recently Florida have passed laws making financial literacy a staple in high schools within a year or two. In North Carolina, graduation requirements take effect in 2023.

Thirty-four states and the District of Columbia introduced bills addressing financial literacy in the 2021-22 legislative sessions, according to the National Conference of State Legislatures. Of these, about 20 focus on secondary schools.

The Kentucky and District of Columbia bills appear to take into account that student-athletes are now allowed to earn money for the use of their name, image or likeness. None of the measures require secondary schools to teach financial literacy. But the Kentucky bill, which the governor signed into law, requires colleges to set up financial literacy workshops for student-athletes. The DC bill would encourage colleges with student-athletes to teach financial literacy.

Last month, Republican Florida Governor Ron DeSantis signed a bill calling for students entering high school in the 2023-24 school year to take a financial literacy course as a condition of graduation. . The new law provides a half-credit course on personal money management, including how to open and use a bank account, the meaning of credit and credit scores, types of savings and investments and how to get a loan.

At a signing ceremony, DeSantis touted the law as something that “will help improve the ability of students in financial management, when they find themselves in the real world.”

Financial literacy is an issue that is remarkably bipartisan. Rhode Island Gov. Dan McKee, a Democrat, sounded a lot like DeSantis when he signed Rhode Island’s requirement for financial education in high schools last year.

“Financial literacy is key to a young person’s future success,” McKee said. “This legislation paves the way for our public high schools to provide young people with the skills they need to achieve their financial goals.”

Urban, from Montana, said state policies that require stand-alone financial literacy courses help students the most, especially if states set standards on what topics should be included in the curriculum. . Most courses last one semester.

Some states are using materials provided by the nonprofit Next Gen Personal Finance — which offers a free study guide and educational materials for teaching financial literacy — to help set the standards, while d Others have expanded units already included in economics, math, or social studies courses.

Next Gen’s free courses include tutorials for teachers, plus in-class study guides on topics like managing credit, opening checking and savings accounts, budgeting, paying for school academics, investing, paying taxes and developing consumer skills.

In a 2018 study, only a third of adults could answer at least four out of five financial literacy questions on concepts such as mortgages, interest rates, inflation and risk, according to the Foundation for Financial Literacy. Financial Industry Regulatory Authority Investor Education. Financial literacy was lower among people of color and youth.

According to the Organization for Economic Co-operation and Development, about 16% of 15-year-old American students surveyed in 2018 did not meet the basic level of financial literacy skills.

But with a little education, those numbers can improve, according to Urban studies.

“The results are striking,” she said in a phone interview. “Credit scores go up and delinquency rates go down. If you’re a student borrower, you go from low to high interest, you don’t accumulate credit card debt, and you don’t use private loans, which are more expensive. Additionally, his research found that young people who have taken financial literacy courses are less likely to use expensive payday loans.

The COVID-19 pandemic has underscored how few Americans are prepared for financial emergencies, giving new impetus to financial literacy requirements, according to John Pelletier, director of the Center for Financial Literacy at Champlain College in Vermont. “COVID woke people up,” he said in a phone interview.

He cited a 2020 Federal Reserve study that showed many Americans couldn’t come up with $2,000 in an emergency, and “it really hit home when people were forced off work. and collect a paycheck. If policymakers haven’t found a way to get money from people, we’re dealing with more than just paying the rent; we face hunger and homelessness.

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Governor Hochul Signs Legislation Strengthening Consumer Protections and Addressing Inequities in the Financial Services System https://sailtheory.com/governor-hochul-signs-legislation-strengthening-consumer-protections-and-addressing-inequities-in-the-financial-services-system/ Thu, 05 May 2022 18:15:33 +0000 https://sailtheory.com/governor-hochul-signs-legislation-strengthening-consumer-protections-and-addressing-inequities-in-the-financial-services-system/ Governor Kathy Hochul today signed legislation that strengthens consumer protections and addresses inequities in the state’s financial services system. The legislation (S.1684/A.8293) directs the Department of Financial Services to conduct a study of underbanked communities and households in New York City and make recommendations to improve their access to financial services. The legislation (S.4894/A.1693) protects […]]]>

Governor Kathy Hochul today signed legislation that strengthens consumer protections and addresses inequities in the state’s financial services system. The legislation (S.1684/A.8293) directs the Department of Financial Services to conduct a study of underbanked communities and households in New York City and make recommendations to improve their access to financial services. The legislation (S.4894/A.1693) protects consumers from potentially dangerous banking products by prohibiting the issuance of unsolicited postal loan checks.

“This legislation is the first step in addressing the lack of safe and accessible banking services that contribute to inequities in our state’s financial system,” Governor Hochul said. “Dangerous postal loan checks and banking deserts prevent already underserved New Yorkers from safely accessing the services they need to build wealth and pursue economic prosperity. I am proud to sign this legislation that will strengthen consumer protections for New Yorkers and explore ways to bring these much-needed resources to consumers.”

“Protecting consumers and implementing data-driven policies to help build a fairer and more resilient financial sector in New York is a top priority for DFS,” said Superintendent of Financial Services Adrienne A. Harris. “We look forward to engaging with all stakeholders to shed light on the current state of financial services in underserved areas and to offer collaborative recommendations to increase access to financial services for the benefit of all New -Yorkers.”

The legislation (S.1684/A.8293) directs the Department of Financial Services to conduct a study of underbanked communities and households in New York City and make recommendations to improve their access to financial services. Access to safe and affordable financial services is necessary to achieve financial stability, but far too many New Yorkers are either unbanked, without access to a checking or savings account, or underbanked, with access to some banking services but also need to use alternatives and riskier financial services like payday loans. This bill will update the number of unbanked and underbanked households and analyze the data to develop an assessment for the New York State Department of Financial Services to more effectively assist these communities.

Assembly Member Patricia Fahy said: “Far too many communities in New York State do not have equitable access to our financial system and our banking services. Often it is our underresourced communities and communities of color, while a lack of banking services contributes to the financial instability that keeps New Yorkers from building I thank Governor Hochul for signing my legislation that will require the Department of Financial Services to update its list of underbanked and unbanked households in New York, to further help these New Yorkers achieve financial stability and reach their full economic potential.

The legislation (S.4894/A.1693) protects consumers from potentially dangerous banking products by prohibiting banking institutions from issuing unsolicited postal loan checks. A postal loan check is an unsolicited loan offer that is sent through the mail that, when cashed or deposited, binds the recipient to the terms of the loan, which may include high interest rates for several years. The practice of mailing unsolicited loan checks can be confusing and dangerous to consumers and this legislation will protect New Yorkers from the associated risk.

State Senator James Sanders Jr. said: “Safe and affordable financial services are necessary to establish financial stability, but banks see low-income families as a burden. Many of these people live check to check and find it difficult to leave the minimum amount over accounts, forcing banks to charge an unreasonable overdraft S.1684/A.8293 will help ensure that communities with significantly more unbanked and underbanked households get the assistance they need on the In addition, S.4894/A.1693 protects consumers from unsafe banking products by prohibiting banking organizations from issuing mail-order loan checks without a request or request. unsolicited money received in the mail can be cashed by an unknown recipient causing the recipient to repay the loan.This bill would avoid this problem.

Assemblyman Gary Pretlow said: “I am pleased to be one of the sponsors of this legislation correcting this dangerous banking practice of sending unsolicited loan checks through the mail. This has caused unnecessary hardship for consumers when checks were in cash in their name. without any knowledge of those transactions. This bill will negate that issue before.”

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Earnipay leverages integrated finance to offer frictionless transactions to generate on-demand salary revenue. https://sailtheory.com/earnipay-leverages-integrated-finance-to-offer-frictionless-transactions-to-generate-on-demand-salary-revenue/ Tue, 03 May 2022 13:36:57 +0000 https://sailtheory.com/earnipay-leverages-integrated-finance-to-offer-frictionless-transactions-to-generate-on-demand-salary-revenue/ Earnipay, the fintech startup committed to improving workforce productivity and financial well-being by giving employees flexible, on-demand access to their earned wages before payday, has partnered with OnePipe to ensure that the financial transactions that characterize Earnipay’s offerings are carried out frictionlessly and at lightning speed. In Nigeria today, employees often have to wait for […]]]>

Earnipay, the fintech startup committed to improving workforce productivity and financial well-being by giving employees flexible, on-demand access to their earned wages before payday, has partnered with OnePipe to ensure that the financial transactions that characterize Earnipay’s offerings are carried out frictionlessly and at lightning speed.

In Nigeria today, employees often have to wait for a 30-day pay cycle, during this time life does not stand still and unforeseen financial obligations and the pressure to meet expenses and settle bills have historically cost employers up to 30 working days in lost productivity per year. Earnipay is quickly becoming the definitive on-demand salary access solution, addressing the biggest source of workplace distractions and productivity declines – money worries and helping employers stay out of cycles. debt from predatory payday loans and unlocking financial freedom.

Speaking on the collaboration, Earnipay Founder and CEO, Nonso Onwuzulike said; “We are constantly improving the way we serve our key customers; employers and employees, and our adoption of the robust APIs available on the OnePipe gateway is consistent with our commitment to providing financial freedom for businesses. For employers, it is the absence of the challenges of poor performance and turnover created by employees facing financial difficulties, while for employees, the absence of restrictive monthly payment cycles and an open door flexible access to the money you’ve earned. Leveraging OnePipe’s resilient infrastructure ensures that disbursements/collections happen in seconds, enhancing our promise to our consumers. »

This partnership paves the way for Earnipay to further expand its service to over 200,000 employees before the end of 2022 and rapidly expand across the African region.

Commenting on the partnership, OnePipe CEO Ope Adeoye said, “OnePipe’s core promise is to work with its partners to achieve customer intimacy and operational excellence through integrated finance. We deliver on that promise every day by ensuring the OnePipe Gateway delivers world-class service on time, every time. Earnipay choosing OnePipe as they progress on this laudable journey is an added incentive for Onepipe to deliver on their promise.

About EarniPay

Earnipay is a financial wellness fintech solution that integrates employers’ payroll and HR systems to provide employees with on-demand funding to instantly access their interest-free earned pay. Earnipay’s flexible payroll access helps organizations improve employee engagement and productivity by relieving financial stress caused by eliminating the need for a payday advance or predatory payday loans with interest rates. ‘interest. For more information visit Earnipay.com

press contact

Busayo Oyetunji (hello@earnipay.com)

About OnePipe

OnePipe is a mission-driven organization that believes the world needs a new kind of financial services ecosystem. A world where everyone has a role to play and where everyone has value to grasp. And even if some guardians are necessary, their influence should be minimal. Since its inception in August 2018, OnePipe has facilitated the seamless launch of financial services products by diverse cross-industry innovators. OnePipe successfully processed over $70 million in embedded finance transactions in February 2022

For more information, visit the OnePipe website at https://onepipe.com/

Press contacts:

Femi Apesin (consult@onepipe.com)

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“Broken” premises | AMERICAN SOCIETY OF PENSION PROFESSIONALS & ACTUARIES https://sailtheory.com/broken-premises-american-society-of-pension-professionals-actuaries/ Sun, 01 May 2022 23:38:28 +0000 https://sailtheory.com/broken-premises-american-society-of-pension-professionals-actuaries/ Perhaps because of the full moon last week, the 401(k) “enemies” were out in force. Yes, last week we were treated to a Bloomberg op-ed with ideas on how to “fix” America’s broken retirement savings system, a backhanded compliment (sort of) on SECURE 2.0 in Forbes by Teresa Ghilarducci, and the trifecta was completed by […]]]>

Perhaps because of the full moon last week, the 401(k) “enemies” were out in force.

Yes, last week we were treated to a Bloomberg op-ed with ideas on how to “fix” America’s broken retirement savings system, a backhanded compliment (sort of) on SECURE 2.0 in Forbes by Teresa Ghilarducci, and the trifecta was completed by an academic editorial in the Washington Post alleging that the current pension system is “built for the rich”.

Much of the criticism was of the same old myopic view of taxes and tax preferences, all seasoned through the prism of a very skewed preference for federal government involvement in these matters, rather than the private sector.

Key points

So, allow me to take a few minutes to highlight a few points that always seem to be overlooked:

1. Tax deferral is not tax avoidance. These dues and earnings will be taxed (although generally outside of the 10-year budget scoring window used by Congress).

2. The ability to save for retirement on a pre-tax basis is a powerful incentive – even, and perhaps especially, for those who, according to academics, have no rational reason to do so (because, on a net, they do not have to pay federal income tax).

3. Tax benefits encourage not only plan participation (even if this is the case), but also the creation/existence of pension plans, in which low-income workers are 12-15 times more likely to save only alone.

4. Non-discrimination tests and legal contributions limit work (as intended) to maintain an effective balance between the benefits of the highest-paid workers and those of the others. In fact, real data proves that even though higher income earners have higher account balances, those balances are roughly proportional to their income. They are not “upside down”.

Now, with those things in mind (we’ll get to them later), what did the “enemies” have to say?

The “fixes”

Well, the Bloomberg editors’ “fix” to the system they claim is “broken” involves: (1) making access universal (but wait, what about Social Security?) – with a 3% self-default rate with an opt-out (they cite the UK NEST opt-out rate of 8%, although the opt-out rate for comparable state-run IRA schemes in the United States is three to five times higher); (2) making it “simple” (the federal government’s Thrift Savings Plan, or TSP, has been cited), ostensibly with an abbreviated fund menu – or perhaps simply because it’s a government solution; (3) make it “portable” (actually they want it centralized, presumably with the feds, so it never has to be moved/knocked down), and (4) they want it to be ” progressive,” which essentially means shifting the current tax deferral to a direct government match with “the lowest earners.”[1]

There’s really nothing new here – the solution seems to be, more or less, a “nationalisation” of retirement savings – with a program focused on helping those at the bottom of the income scale, but completely ignoring the vast sea of ​​middle-income savers — for whom Social Security alone is unlikely to be enough to reproduce their retirement income needs.

the Washington Post The editorial was written by Daniel Hemel, professor at the University of Chicago Law School and visiting professor at New York University School of Law. He seems quite angry with bipartisan support for SECURE 2.0 (actually the Securing a Strong Retirement Act of 2022) as some kind of Congressional sellout of the financial services industry. He has a problem with “mega-IRAs”, but he also targets Roth contributions, the extension of the minimum distribution period required, the tax non-refundability of the saver’s credit, as well as the gradual increase in the catch-up. limits – all of which are characterized as either a freebie to the rich or a budget “trick” – or both. He offers no solution to any of this, although he does suggest that focusing on stronger social security would be a better use of their time (I for one would support that). Nor is it acknowledged that somewhere along the way this system “built for the rich” managed to end up with about two-thirds of its participants in tax brackets which, by most measures , would fall well below what this label would encompass. Groups for whom this “broken” system is a lifeline beyond the baseline of Social Security and retirement benefits they never had.

And then, just before this article, Teresa Ghilarducci, a familiar critic of 401(k)s, writes an article ostensibly focused on the provisions of SECURE 2.0 (even taking time to try to explain why it garnered such a bipartisan support) on his way of pointing out why his proposal (now called the Ghilarducci/Hassett/EIG Retreat Proposal) is superior. Now most of us would think that the legislation – any legislation – that passed the United States House of Representatives by a margin of 414 to 5 should be about something as innocuous as naming an office position – that it would advance so many aspects of retirement security rather speaks to the importance of the problem(s) and the possibility of making progress in resolving them.

Well Ms. Ghilarducci seems to think that while SECURE 2.0 might be better than punching the eye with a sharp stick (my words, not hers), but she claims the patches it provides are too small (and probably too late), compared to her solution (if bipartisanship in the US Congress is quickly removed, she is very proud of her alignment with conservative economist Dr Hassett) that would build a TSP-like program for – well , everyone – or at least those who don’t. Don’t already have a retirement savings plan at work. This particular article doesn’t go into the details of its solution, but we’ve seen (and written about) it before. Notice that she’s not really worried about what you and I might consider middle-income workers — she’s focused on the low end (under $52,000 median household income). He asks for a counterpart from the government (rather than from the employer), but which is only 3%. Now, that’s a number that’s come up in previous proposals that she’s put forward – and Jack VanDerhei, when he was at the Employee Benefits Research Institute, predicted that to be well in below where the status quo brings that same group into the current system.[2]

“Broken” premises

Now, those of us who actually work with real people know that this supposedly “broken” system works incredibly well – for those who have access to it – including, especially, those at the bottom of the income scale. Academics consistently target the well-to-do in their criticisms, but ignore the needs of middle-income households for whom Social Security will almost certainly not be…enough. And completely ignore/ignore the role that current tax benefits play in promoting the formation and maintenance of these pension plans.

Indeed, beneath all the criticism, the real problem seems to be that, as we have repeatedly noted, too few American workers have access to this system. What these critics don’t seem to appreciate is that, rather than bridging this gap by further encouraging plan formation and participation, these haphazard editorials – often based on myopic opinions and faulty premises – only serve to to undermine this objective. But then, there might be a reason…

There are many success stories out there – I bet each of our 35,000+ readers knows one, ten, a dozen, maybe hundreds… it’s high time we started telling them.

Footnotes

[1] Bizarrely, they suggest that people should be able to “dip into their accounts for occasional emergency expenses”, which they say would “save billions more that would otherwise go towards interest on loans on often predatory wages”.

[2] I think, like previous proposals, its calculations work because it assumes that any balance not actually withdrawn by the individual (and possibly their spouse) would be absorbed into the “pool” and used to fund other payments .

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Protection against high-cost lenders in place May 1 https://sailtheory.com/protection-against-high-cost-lenders-in-place-may-1/ Fri, 29 Apr 2022 17:36:13 +0000 https://sailtheory.com/protection-against-high-cost-lenders-in-place-may-1/ Financially vulnerable British Columbians will benefit from better protections that come into effect on Sunday, May 1 with new legislation to regulate lenders of high-cost credit products. “The coming into force of this new framework strengthens consumer protection and improves financial education to help people make important decisions,” said Mike Farnworth, Minister of Public Safety […]]]>

Financially vulnerable British Columbians will benefit from better protections that come into effect on Sunday, May 1 with new legislation to regulate lenders of high-cost credit products.

“The coming into force of this new framework strengthens consumer protection and improves financial education to help people make important decisions,” said Mike Farnworth, Minister of Public Safety and Solicitor General. “Those using or considering high-cost financial services will benefit from regulation and oversight of the industry.”

As part of the 2019 amendments to the Business Practices and Consumer Protection Act, under the new framework, businesses that offer high-cost credit products, such as installment loans and lines of credit with more than 32% interest, will be required to obtain an annual license and be regulated by BC Consumer Protection.

This oversight will help ensure that businesses understand and comply with these new requirements, and that consumers are protected and can make informed choices when using high-cost alternative financial services.

The amendments also establish new requirements for transparency and borrower protection. The rules prohibit certain charges, establish requirements for credit agreements, and establish the rights and remedies of borrowers.

These improvements are part of the government’s 2018 Financial Consumer Protection Action Plan to strengthen consumer protection and improve affordability for the most financially vulnerable people in British Columbia. Previous phases included enhanced financial protections for consumers using payday loans and government check cashing services.

A new Consumer Financial Education Fund, also coming into effect May 1, 2022, will improve consumer financial education and awareness across the province. The fund will be supported by industry as part of its annual fee.

As the province’s consumer protection authority, Consumer Protection BC will administer the new framework and the Consumer Financial Education Fund. Information on high cost consumer credit products and the business licensing process is available on the Consumer Protection BC website.

Learn more:

Action plan for the financial protection of consumers:
https://news.gov.bc.ca/releases/2019PSSG0020-000263

Regulating high-cost credit products to protect consumers:
https://news.gov.bc.ca/releases/2021PSSG0093-002228

Online resources for borrowing money:
https://www2.gov.bc.ca/gov/content/family-social-supports/borrowing-money

Information on British Columbia consumer protection laws – Consumer Protection BC:
www.consumerprotectionbc.ca

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The 3 Best Installment Loan Apps to Get You Started https://sailtheory.com/the-3-best-installment-loan-apps-to-get-you-started/ Mon, 25 Apr 2022 15:24:58 +0000 https://sailtheory.com/the-3-best-installment-loan-apps-to-get-you-started/ Lending apps are gradually replacing traditional loan agencies or credit unions. Today, traditional lending institutions struggle to keep up with the convenience and transparent processes of these apps. Moreover, these applications and online lenders accept applicants regardless of their credit history. However, identifying trustworthy installment loan applications can be difficult. There are many lending companies […]]]>

Lending apps are gradually replacing traditional loan agencies or credit unions. Today, traditional lending institutions struggle to keep up with the convenience and transparent processes of these apps. Moreover, these applications and online lenders accept applicants regardless of their credit history.

However, identifying trustworthy installment loan applications can be difficult. There are many lending companies in this industry, and while some offer good service, others are opportunistic and deceptive.

Accordingly, we have listed the top three installment loan apps that can help you get started on the right foot. Let’s dive!

The 3 best installment loan apps to get you started

1. Heart Paydays

Heart Payday is a popular loan app in the United States. This site offers all of its loan services online and saves you the hassle of in-store loan applications. You can complete the entire application process in five minutes or less.

They offer various loan services, such as loans for bad credit guaranteed approval $5000which can help you meet your emergency needs.

This application has a user-friendly interface, and practically anyone can easily maneuver it easily. The site is notorious for accepting applicants rejected by other lenders, as its eligibility thresholds are relatively lower than those

in most credit institutions. For example, they accept people with bad credit, the unemployed, and those receiving government benefits.

Typically, Heart Payday loans come with APRs ranging from 5.99% to 35.99%.

Advantages

  • There is no paperwork involved
  • Same day payment
  • Easy application process

The inconvenients

2. Viva Payday Loans

Another great option for a payout when you’re short on cash is the Viva Payday Loan app. The site offers no-collateral loans within hours of completing your application.

Viva Payday Loan has partnered with direct lenders who can meet your loan needs as quickly as possible. Moreover, these direct lenders offer different loan amounts.

Viva Loans does not perform intensive credit checks when evaluating loan applications, and even people with bad credit scores can get loans with them. Other groups, such as the unemployed and recipients of government support programs, can also apply for Viva Payday loans.

Their payday APRs range from 5.99% to 35.99%. This is mainly because every direct lender they partner with imposes their rates. One of their main drawbacks is that their services are not accessible in all states.

Advantages

  • Same day payments
  • The simple and fast application process
  • Flexible loan amounts from $200 to $5,000

The inconvenients

  • Viva Loan services are not available in all US states

3. Credit Clock

Credit Clock Loan is considered best for quick loan approvals. They offer their customers a range of loan products, such as bad credit payday loans, personal loans, emergency loans, and more.

It is the ideal lender if you are in urgent and urgent need of money fast because their fast loan approval process and fast repayment period can save you time.

They offer loans to people with bad credit and even those who receive government benefits. However, you must meet their minimum requirements; you must be over 18, prove you earn at least $1,000, and be a US citizen. In some cases, you may need to prove that you are employed by submitting your payslip.

Advantages

  • Fast application process
  • Same day payments
  • People with poor credit history are also allowed to apply

the inconvenients

  • Only people earning $1,000 or more can apply for the loans

Conclusion

Knowing that you have a loan option within reach of your phone can be an amazing feeling. We often find ourselves in difficult situations, and going through the process of applying for a loan in store can be time consuming to try to finance an emergency. Therefore, having loan applications can make our lives much easier.

However, it also exposes us to great temptations. Unlike the traditional loan system, where you have time to think before taking out a loan, the new app option gives you the luxury of completing a loan application with just a few clicks. Some people, especially spendthrifts, might end up in cycles of debt.

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Give credit where it’s due https://sailtheory.com/give-credit-where-its-due/ Sun, 24 Apr 2022 17:58:19 +0000 https://sailtheory.com/give-credit-where-its-due/ The inequality is clear: While only 1 in 19 white Americans has a credit score of 620 or lower – a level considered high-risk by most lenders – 1 in 5 black Americans do. The reasons for these disparities are complex, but they stem from discriminatory policies dating back to before the founding of the […]]]>

The inequality is clear: While only 1 in 19 white Americans has a credit score of 620 or lower – a level considered high-risk by most lenders – 1 in 5 black Americans do.

The reasons for these disparities are complex, but they stem from discriminatory policies dating back to before the founding of the nation that denied black Americans access to wealth-generating assets.

“Credit scores are the perfect example of how structural racism works,” says Chi Chi Wu, an attorney at the National Consumer Law Center and author of “Reparations, Race, and Reputation in Credit: Rethinking the Relationship Between Credit Scores and Reports with black communities.

“You start with black consumers who were denied their human rights and economic rights during slavery and redlining and Jim Crow with legalized discrimination,” says Wu. “Then you deprive their communities of assets. This affects the economic position of these communities, and this is reflected in credit ratings.

With credit scoring, a system developed in the 1970s and implemented in the 1980s ostensibly as a neutral way to assess creditworthiness, its impact on the racial wealth gap is crystal clear. Black Americans are more likely to have a negative payment history against them in credit scoring and much less likely to experience positive benefits from the type of payments they are most likely to make, such as rent and public services. And the credit bureaus don’t have to give a reason.

H. Hopp-Bruce/The Emancipator/Nadia Snopek/Adobe

These factors drive some Black Americans out of traditional credit markets, steering them into less stable forms of credit, such as check cashing, payday loans, rent-to-own systems, and secured credit cards. . These often come with usurious interest rates and exorbitant fees that make borrowers more likely to default, further damaging their credit.

The system discourages some black Americans from trying to access credit markets for fear of being rejected or subjected to predatory conditions. Black Americans are much more likely to be credit blind, with little or no credit history. While only 9% of white Americans fall into this category, 15% of black Americans do.

Credit-Invisible Americans primarily use cash, viewing it as safer than banking, and even promoting the idea among black consumers that paying cash is a virtue.

In addition to the 15% of black Americans who are invisible to credit, an additional 13% have a credit history that does not show up in credit scores, compared to 7% of white Americans, according to data from the Consumer Financial Protection Bureau.

Rep. Ayanna Pressey’s (D-MA) recent push to reform credit reporting practices comes not just from policy documents and data that show the stranglehold these practices place on Americans, especially people of color. On this question, she brings her lived experiences to bear.

“In full transparency, I’m a black woman, growing up in America, who was raised in a red light district,” Pressley said during a congressional hearing last July. “While I was working as a full-time unpaid intern in Congress, working three part-time jobs, collecting various money orders to pay rent, to pay utilities, I cashed my check at a check cashing establishment . And I did it because that’s what I grew up close to.

She says her family “took great pride” in buying things with cash because it was considered the honorable thing to do.

She notes that her majority-minority congressional district in Greater Boston “has 57% of the city’s check-cashing locations, but only 12% of the city’s commercial bank branches.”

“So for my constituents and the roughly 1 in 5 people across America who are unbanked or underbanked, lack of access and broken trust with financial institutions is incredibly costly,” says Pressley. “The cost of cashing checks alone can be as high as $2,400 per household with an annual income of $32,000. Only. Collection. Checks.

Pressley described the very factors that drive the dual credit market to send more black and brown Americans to high-risk, high-cost financial institutions rather than traditional banks: fear of taking on debt, distrust of towards financial institutions and even the idea that cash is king.

“The experience you hear Rep. Pressley talk about is the experience of so many black Americans,” says Lisa Rice, president and CEO of the National Fair Housing Alliance. “They live in a credit desert.”

The American dream will never be accessible to all as long as inequalities are integrated into the credit market. It’s time to revamp it. Here’s how.

Revamp credit scoring to better assess risk. Today, the credit score problem is largely two-fold: First, credit scores are often inaccurate or affected by inherent racial bias. And in most cases, they’re also a terrible predictor of consumers’ ability to pay.

President Joe Biden has proposed the creation of a public credit reporting agency to compete with private entities Equifax, TransUnion and Experian, which have collectively faced a torrent of criticism for everything from data breaches to inaccuracies and racial prejudice.

Biden’s plan is admirable, but the problem isn’t just who scores, it’s how they do it. A public credit reporting system can only provide benefit if it fairly and transparently assesses the factors that actually predict a consumer’s ability to pay, gives consumers a greater ability to challenge and correct inaccurate information and refrains from unequally weighting negative and positive payment activity.

Payment history is one of the major factors affecting credit rating. This in itself creates racially disparate results. For example, timely mortgage payments improve consumer credit scores, but rent payments generally do not. But while the homeownership rate for white Americans is 72%, for black Americans it is only 43%.

“We need to make sure the infrastructure is in place for people to report their housing rental payments to credit repositories so the data can be used,” Rice said.

Weighing rent payments equally on mortgage payments will also help eliminate the low-income credit gap created when low-income Americans are forced to make tough decisions about which bills to pay to try to make ends meet.

“People pay their rent first,” says Wu. credit.”

Other alternative payment data that may serve as more predictors for ability to pay, the researchers say, are utility payments, telecommunications account payments such as cell phone plans, and payment histories from mobile phones. Bank accounts.

Stop using credit scores for non-credit decision making and stop weighing unwilling debt. There is no data – none – showing that a person’s credit rating is predictive of that person’s value as an employee. Yet credit scores are often used for job applications, making it more difficult for people with mild or negative backgrounds to advance in their careers. This inability to earn better wages and pay bills better creates a cycle that causes people to fail.

“Credit scores aren’t as predictive as people think,” Wu says.

In addition to prohibiting the use of credit scores in employment decisions (with narrow exceptions for things like federal security clearances), the use of credit scores should also be prohibited to access coverage. insurance or to open accounts for heating, electricity and other necessary utilities. to keep homes safe and livable.

Additionally, credit reporting agencies should not be allowed to consider involuntary debts, such as debts incurred as a result of medical bills, divorces, or judgments in legal disputes over matters that do not involve the type of payments that would have been reported to the credit reporting agencies in the first place. . Records of collections, missed payments and personal bankruptcy filings remain in the credit system for seven to ten years – a period that is expected to be reduced. The system can’t work if people don’t have the ability to get up if they’ve fallen.

H. Hopp-Bruce/The Emancipator/Nadia Snopek/Adobe

The announcement by the three largest credit bureaus, Experian, Equifax and TransUnion, to voluntarily eliminate 70% of consumer medical debt from credit reports is commendable. However, black Americans are more likely to have medical debt, according to the Consumer Financial Protection Bureau, credit bureaus have poor self-monitoring records, and no one should be less able to buy a home, start a business or to obtain a job because of a previous illness or injury. The only fair solution is a federal mandate prohibiting the consideration of medical debt in any credit rating.

Other measures included in Pressley’s CREDIT (Comprehensive Credit Rating Enhancement, Disclosure, Innovation, and Transparency) bill, which passed the House but has yet to pass the Senate, include banning lenders to charge higher interest rates or otherwise make loans less affordable and riskier for borrowers solely because of lower credit scores. This approach, Wu points out, is what caused the 2008 foreclosures crisis to hit black communities the hardest.

Provide repair loans through special purpose credit programs and other measures. Those who have been unable to access credit markets due to racially disparate biases in credit reporting need an on-ramp to level the playing field.

One way is through special purpose credit programs authorized under the Equal Credit Opportunity Act, which provide low or no interest loans to homebuyers and homeowners. small businesses to fight systemic racism in credit underwriting.

“I call these loans ‘reparation loans’ because that’s really what they are,” says Wu. “They are a form of reparation for centuries of legalized, deliberate and intentional discrimination. And addressing these inequalities will require intentional action. »

Kimberly Atkins Stohr is the senior columnist for The Emancipator, as well as an opinion writer and senior columnist at the Boston Globe. It can be attached to kimberly.atkinsstohr@globe.com. Follow her on Twitter @KimberlyEAtkins.

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Government data suggests First Nations more often affected by CERB reimbursement letters https://sailtheory.com/government-data-suggests-first-nations-more-often-affected-by-cerb-reimbursement-letters/ Fri, 22 Apr 2022 18:58:25 +0000 https://sailtheory.com/government-data-suggests-first-nations-more-often-affected-by-cerb-reimbursement-letters/ The 57-year-old residential school survivor thought the Canada Emergency Response Benefit could be her financial life raft. “I thought the federal government was gracious in granting CERB,” she said in a recent interview from her Winnipeg apartment. “But they are ruthless and relentless in wanting that money back.” Ketchum was one of 441,599 aid recipients […]]]>

The 57-year-old residential school survivor thought the Canada Emergency Response Benefit could be her financial life raft.

“I thought the federal government was gracious in granting CERB,” she said in a recent interview from her Winnipeg apartment. “But they are ruthless and relentless in wanting that money back.”

Ketchum was one of 441,599 aid recipients who, at the end of 2020, received a letter from the Canada Revenue Agency questioning their eligibility and warning they may have to repay some of the payments.

Figures from The Canadian Press on the destination of the letters suggest a disproportionate number landed in First Nations postal codes, including Manitoba and Saskatchewan.

Two regions in northern Manitoba stand out from the data, with more than half of the average number of CERB recipients in each benefit pay period receiving what the CRA called “educational letters.”

Forward sortation areas, or the first three digits of a postal code, are home to two of the largest Aboriginal communities in the province. The local MP notes that there are also high poverty rates.

CRA data shows that the average personal income in the R0B ZIP Code is just over $11,900, which is below the national average of just over $51,000. Nearly 5,000 letters landed in this area.

New Democrat Niki Ashton, who represents the region in the House of Commons, said her office has received calls from residents worried about having to reimburse CERB.

“This whole issue has caused a lot of anxiety and concern for people in our communities,” Ashton said. “But it really speaks to the lack of, well, frankly, the lack of fairness on the part of the federal government stretching significant resources and stalking people in one of the poorest regions of Canada.”

Areas with large numbers of CERB recipients, including in and around the Greater Toronto Area, showed smaller shares of letters in data obtained by The Canadian Press under the Freedom of Information Act. ‘information.

The CRA said no one has been forced to repay any of the aid, no repayment deadline has been set and “no recovery or collection efforts have been made in respect of of any group, including Indigenous candidates”.

That could soon change. Work is progressing this year to verify the eligibility of CERB beneficiaries, as the government has always promised, and efforts will continue over the next few years. Thousands of other letters were also sent to beneficiaries of the now defunct program.

Just under 8.9 million Canadians have used the $500-a-week emergency benefit that the government rolled out quickly at the start of the pandemic, as millions of workers saw their incomes cut.

Eligibility rules were eventually set to require a person to have earned at least $5,000 in the 12 months before applying, which the government noted became easier to verify once tax returns arrived .

Part of the problem with letters sent to Indigenous communities is that tax filing rates are lower among Indigenous families.

The CRA website encourages Indigenous assistance recipients to file their 2019 and 2020 tax returns as a way to prove their eligibility, even though the deadlines for these have long passed.

The agency suggested another problem could be that some claimants have tax-exempt income because it is earned on a reservation under a specific section of the Indian Act.

“If an individual had tax-exempt employment or self-employment income, the CRA may not have the necessary income information on file to confirm their eligibility for the CERB,” the statement said. agency in response to questions from The Canadian Press.

The agency added that it had an email for specific questions about the Covid-19 work restrictions and the impact on the Indigenous income tax exemption.

Ketchum struggled to understand the CRA website and clemency options, if any. She sought help from a tax preparer, but was told she would have to repay the money.

According to a Statistics Canada study, Indigenous workers who met CERB income requirements were more likely than their non-Indigenous counterparts to receive CERB.

Among First Nations workers the rate was 41.5%, among Inuit 40.3% and 36.2% among Métis. The corresponding percentage for non-Aboriginal workers was 33.9%.

The reason they were more likely to receive CERB had to do with their disproportionate ranks in low-wage jobs that have been hardest hit during the pandemic amid rounds of lockdowns and hour reductions, and which don’t have still not rebounded to pre-pandemic levels despite the top tier numbers.

Ketchum shakes his head at the situation. She relies on paying the money back during tax season to help pay her bills, but instead sold her condominium and took out $4,000 in risky payday loans to survive the pandemic.

She said she could barely afford to eat and could not afford the necessary dental work.

“ARC took my teeth, my rent, my food,” Ketchum said.

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Families affected by dangerous payday loans – FOX13 News Memphis https://sailtheory.com/families-affected-by-dangerous-payday-loans-fox13-news-memphis/ Wed, 20 Apr 2022 23:52:57 +0000 https://sailtheory.com/families-affected-by-dangerous-payday-loans-fox13-news-memphis/ MEMPHIS, Tenn. – FOX13 Investigates focuses on what some have said is the dangerous and trapping nature of payday loans. They are used by people who need money quickly, but many find themselves unable to pay them back. They can lead to a cycle of indebtedness that, according to one report, primarily affects blacks and […]]]>

MEMPHIS, Tenn. – FOX13 Investigates focuses on what some have said is the dangerous and trapping nature of payday loans.

They are used by people who need money quickly, but many find themselves unable to pay them back. They can lead to a cycle of indebtedness that, according to one report, primarily affects blacks and browns in Memphis.

A man who was too embarrassed to be publicly identified shared his story with FOX Investigates.

“You have a person reaching out and they’re trying to help you up, but then they put their foot on your shoulder trying to hold you down,” he said. “In this scenario, you will never get out.”

He and his wife said they were stuck in a cycle of financial debt that started with heartbreak and a need for money.

“We had three deaths in the family and we needed time off. And when we left, we were late. So, we thought we had to get it so we could catch up,” he said. He said he and his wife took 15 days off.

He said that was when he saw a TV advert for Advance Financial in Millington.

It’s one of more than 100 so-called high-cost lenders in Memphis and surrounding areas, providing borrowers with quick cash loans at sky-high interest rates of 280 or 460 percent. , amounts permitted by Tennessee state law.

The loan money is recovered by drawing from the borrower’s bank account for regular withdrawals whenever there is money in it, no matter how much money and no matter what other bills he has. requires.

“They didn’t even tell us about the interest rate. They didn’t tell us how much we were going to have to pay back. They didn’t tell us when they were going to start,” he said.

The $1,100 spent on paying off the loan each month was more than his rent.

A new report from the Memphis-based Black Clergy Collaborative and Hope Credit Union, a black-owned bank, sheds light on what the authors call “debt traps.”

The report points out that the loans are, in its view, “marketed as a quick financial solution”, but rather “create a cycle of long-term debt”.

“Just because an individual is poor doesn’t mean you have to exploit that individual,” said Reverend Darrell Harrington, the group’s economic chairman and senior pastor of New Sardis Baptist Church in Memphis.

The study says there are 114 high-cost lenders in Memphis, double the number of McDonald’s and Starbucks combined.

Of the 114 storefronts listed, 65% belong to nine companies located in other states; 51 of them are owned by just two companies.

“Millions of dollars are flowing out of the pockets of those who are more vulnerable than if they weren’t plowed back into the community,” said Bill Bynum, CEO of Hope Credit Union, which offers loans with up to 18% interest. . designed to help borrowers rebuild their credit.

“Unless they’re providing services at a responsible and not 400% affordable rate…they shouldn’t be allowed to operate,” Bynum said.

Visit the Hope Credit Union website here


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