CFPB observer: recent developments from Jan. 5-16, 2015

CFPB and FHFA Issue Report Concerning Mortgage Comparison Shopping by Consumers

On Jan. 13, the CFPB issued a report detailing the results of theNational Survey of Mortgage Borrowers, an ongoing survey of consumers who took out mortgages in 2013. The project is being conducted jointly by the CFPB and the Federal Housing Finance Agency. According to the report, nearly half of mortgage borrowers do not shop for a mortgage when purchasing a home. The report also indicates that informed consumers are twice as likely to shop for a mortgage. However, the CFPB found it troubling that most consumers get their information about mortgages from lenders or brokers because what is best for the lender or broker is not always best for the consumer.

CFPB Releases Owning a Home Toolkit

In conjunction with the release of the National Survey of Mortgage Borrowers report, the CFPB also released itsOwning a Home toolkit, which is a part of its Know Before You Owe mortgage initiative. The toolkit is an online, interactive resource designed to help and encourage more consumers to shop for a mortgage by researching and inquiring with multiple lenders, applying for mortgages with multiple lenders, or applying for different kinds of loans. It includes the beta version of aninterest rate checkerthat shows what interest rates may be available to borrowers based on various credit criteria. The rate checker is based on daily rate data from large banks, regional banks and credit unions covering about 80 percent of the mortgage market.

CFPB Releases Safe Student Account Scorecard

On Jan. 14, the CFPB released arequest for informationregarding its initiative on safe student banking. The CFPB is seeking feedback on its newSafe Student Account Scorecardthat the CFPB intends colleges to use when negotiating agreements with financial institutions for them to market financial products to students. According to the CFPB, the scorecard would help colleges access upfront information about fees, features, and sales tactics before agreeing to a sponsorship [, and] would help create a level-playing field for all financial institutions that offer affordable products, regardless of their ability to pay bonuses to schools.

This is not the first attempt to regulate agreements between colleges and financial institutions. The Credit CARD Act of 2009 (CARD Act) imposed restrictions on how financial institutions may market credit cards on college campuses and required that the partnership agreements between credit card issuers and colleges be made publicly available. However, these CARD Act provisions do not apply to other financial products like prepaid cards and debit cards. The scorecard is an attempt to address this gap. The scorecard, the use of which would be voluntary, would ask for the following types of information from financial institutions that colleges could then use to evaluate the merits of an agreement: (i) a description of product fees and features; (ii) disclosure about the financial institutions marketing practices; (iii) the amount the financial institution earns from the accounts; and (iv) an annual summary of fees.

The CFPB will accept input on the draft scorecard until March 16, 2015.

CFPB Names Anthony Alexis as Assistant Director for Enforcement

On Jan. 7, the CFPB formally named Anthony Alexis as the Assistant Director for Enforcement. Alexis joined the CFPB in February 2012 as Deputy Assistant Director for Enforcement Field Litigation. Kent Markus, the former Assistant Director for Enforcement, has assumed a new role as Senior Counsel to Steve Antonakes, the CFPBs Deputy Director.

CFPB Releases Reports to Congress

Earlier this month, the CFPB released two reports to Congress. The first, required pursuant to section 1017(e)(4) of the Dodd-Frank Act, is the CFPBs annual appropriations report. Covering the period Oct. 1, 2013 through Sept. 30, 2014, it provides information regarding financial operating plans and forecasts, the financial condition of the CFPB and results of its operations, and the sources and application of CFPB funds.

The second report to Congress,Growing Our Human Capital, details the CFPBs training and workforce development, workplace flexibilities, and recruitment and retention.

Can You Earn 8% Investing In P2P Loans?

While P2P loans are potentially risky investments, they have provided investors with exceptional returns over the last six years.  Unless the economy takes a major turn for the worse, I believe that P2P loans should continue to provide investors with high single-digit returns.

What are P2P loans?

Essentially, they are unsecured personal loans to individuals living in the United States. For example, a borrower may want to refinance their credit card debt using a P2P loan. These loans are not secured by any property, like a house or car.  The lender (investor)  is essentially trusting that the borrower will pay the loan back. Investors in P2P loans typically invest in hundreds of loans, buying a small piece of each loan. (See article: Cant Get A Bank Loan?  Turn To Your Neighbor.)

Why are interest rates and investor returns different?

P2P loans usually carry interest rates that are around 2% lower than what the borrower would pay on a credit card. Interest rates on P2P loans typically range from 6% to 30% depending on the credit risk of the borrower. However, it’s very important to understand that the interest rate the borrower pays is not the same as the investor’s returns. There are servicing fees which reduce returns. However, the biggest reason that the returns on these loans are much lower than their interest rates is borrower default. A large number of people who take these loans do not end up paying them back in full. (For related reading, see: FYI on ROI: A Guide To Calculating Return On Investment.)

The Best Tech Tools to make Buying and Selling Homes a Breeze

Buying a home is an exciting yet overwhelming process for all parties involved. Real estate agents, sellers and buyers are all trying to have a positive experience while trying to serve their own interests and meet others needs.

The modern real estate market is changing and evolving. Technology is now a powerful tool that buyers, sellers and realtors can use to their advantage. There are apps you can use to search for homes, calculate costs and gather information on specific housing markets.

Best Apps

Zillow: Available for both Andriod and iOS, this clever app will give you a good idea of the homes available in your market and the average cost. You can also use extra features like mortgage calculator and property estimate.

Sitegeist: This app is a data collecting tool that is helpful to home buyers and realtors. Simply plug in a zip code to find out the demographics, political distribution, popular local sites and other stats that could help you decide whether or not you want to live in that area. This app is available for Android and Apple devices.

Trulia: An app only accessible via iPhone and iOS systems, is a real estate app that will help you find properties for sale. You can also connect with a real estate agent, calculate mortgage rates and locate rentals.

Lovely: Available only for iOS, this app allows you to favorite your local spots and search for places in proximity to the places you work, socialize and frequent. It helps you limit your search by requirements, like being pet-friendly.

Homesnap: This app, available for iOS and Android, is a creative tool that puts a twist on the traditional home search. You can take pictures of homes you like and get feedback on it, such as cost, investment potential and recent sale information. This is a good way to gauge home prices in neighborhoods and to see what you can potentially flip and turn into a good investment.

Best Tech Tools

Save yourself time and energy by weeding out the homes that won’t fit in your budget, desired neighborhood or style. If you are a busy agent or a buyer on the go, there are other ways to use technology to help make the process easier.

Use your Apple device, like the Apple iPad Mini, to efficiently FaceTime directly from properties and give a virtual tour to family members or prospective clients.

Realtors are always snapping photos and capturing videos. Upgrade to a new camera, like the Cannon PowerShot. This camera shoots stunning HD video in 1080p and the lens stabilizer ensures clear photos. Upload the videos to your YouTube channel and post the property listing photos on your website for all to see.

Technology makes life easier. We can use the devices we have to make the home buying and home searching process a peaceful experience. Using technology can enable us to make informed financial decisions. Buying a home is a big step and investment. Make sure you are doing what you can to make the process as smooth and enjoyable as possible.

The dos and-mostly-don’ts of taking 401(k) loans

Taking a loan from your 401(k) is normally a last resort reserved for emergencies, she said, noting those considering such a move must learn to separate wants from needs. We try to work with clients to establish an emergency fund so they never have to use their retirement savings.

We also look at what other sources of savings they have and whether any other, more favorable loans exist elsewhere, she added.

Read MoreUp your Social Security savvy

Home improvement stores, for example, frequently offer zero-interest loans to customers for the purchase of major appliances and renovation projects. Likewise, health-care providers are often willing to work with patients to establish a low-interest payment schedule for overdue medical bills.

Other sources of capital may include home-equity loans and lines of credit for homeowners, which keep your retirement savings intact, said Scottino.

Its worth noting that many 401(k) plans provide for hardship distributions, allowing account holders who can demonstrate proof of need to take a penalty-free withdrawal before age 59½ for costs related to unreimbursed medical expenses, the purchase of a principal residence, payment of college tuition and related educational costs, payments necessary to prevent eviction, funeral expenses and repairs of damage to their principal residence.

Such withdrawals, however, are not considered a loan. Once that money is removed, you do not have the chance to repay it, and you lose forever the tax advantage of those funds. As such, financial advisors typically recommend that retirement savers utilize every other tool available, including personal loans and the 401(k) loan.

Increase Your Web Traffic With a Localized Search Strategy

Consumers and businesses turn to search engines when researching new financial products such as auto loans, mortgages and small business loans. Competition for placement on search results pages is very high, but there are untapped opportunities in targeting geographic search phrases that combine a consumers community preference with specific financial products.

By Mark Ryan, Chief Analytics Officer at Extractable

For many banking websites, the product content is completely separate from content that mentions the bank’s locations–such as the branch finder or a description of the community that the bank serves–in the corporate information section of the site. There is a logical reason for this separation of products and community locations. When User Experience designers are defining the website audience segments and defining the tasks for those audiences, they typically view finding a location and researching a product as completely separate tasks. As a result, the site goes live without any mention of products on the location pages or any mention of locations on the product pages. This gap between two important sets of content leaves a sizable untapped opportunity in the acquisition of both traffic and qualified customer leads for banks and credit unions.

The state of search in the financial industry

Gaining traffic from search engines for financial-based search phrases is one of the hardest things that a website owner has to do. First, the competition is fierce. Banks such as Capital One, Citi and Chase are on top of their game when it comes to search engine optimization. They have internal and external teams of experts focusing all of their time on getting the #1 spot on search results pages for phrases such as credit cards, auto loans and mortgage rates. Second, search results pages for all of these phrases are littered with expensive paid placements. According to reports released year after year over the last decade, the financial industry is in the top three spenders (and is often the top spender) on Adwords for terms such as loan, credit, mortgage and insurance. These terms are also among the top 10 most expensive keywords to purchase. This level of competition makes it very difficult for any but the top 10 banks to gain substantial traffic for these product-based financial phrases.

One of the reasons that paying for search engine traffic for phrases such as auto loans is so expensive is that banks with large advertising budgets understand that prospective customers searching for those phrases are doing product research. These banks know that while some users are searching to find out what an auto loan is or to see if there are favorable rates that might inspire them to buy a new car, some users are doing immediate product research because they are looking to apply for auto loans within the next 30 days. Because there is such a large mix of intent from visitors using these phrases (ie, auto loan) websites do not typically convert visitors into customers at very good ratios. For a phrase like auto loans, while the aggregate number of people searching is in the millions each month, banks are lucky to convert more than 1% of those visitors to paying customers.

5 Wealth-Building Resolutions For 2015

After five long years, the statistics show that average earnings are finally inching ahead of inflation. Which means that in real terms, we’re all starting to get that little bit richer, with a little more purchasing power in our pockets.
But here’s a question for you: how much of that added income do you anticipate being able to turn into wealth? Wealth to sustain you in retirement, for instance? Or wealth to achieve that longed-for transformation in your standard of living?
The fact is, most of us aren’t very good at this. Income gets frittered away, with precious little actually saved.
Worse, what we do manage to save often turns out to do little for us by way of wealth-building. Stick your money in a cash ISA, for instance, and the inflation-adjusted return is either zero or negative.

Make the break

So if this sounds like you, then what can you do about this sorry state of affairs?
Actually, the answer isn’t difficult to find. And it’s this: simply do things differently from how you do them at present.
In other words, if your present wealth-building plans aren’t delivering, then it’s time to ditch them and switch to something else.
Simply put, inertia just isn’t going to deliver on the wealth front. You have to act differently – or yet another year will go by, leaving you only marginally better off.

5 resolutions that could make a difference

So what – specifically – can you do differently? Here are five New Year’s resolutions designed to help make that vital difference.
The good news: you don’t have to join a gym, start jogging or go on a crash diet.
The not-so-good news: if you really want to make a difference to your wealth, you’re going to have to overcome a lifetime’s habits built up by living in our consumerist, instant-gratification society. Which isn’t easy.
It might not be comfortable, but at the end of the year, the figures should speak for themselves. Namely, you could be wealthier than you are now. And, even more importantly, you could be wealthier than you would have otherwise been.
So here we go

1) Spend less, save more

Fairly obviously, wealth-building starts with saving. So save more.
Now, I’m not going to trot out the familiar line about taking sandwiches to the office, and cutting back on indulgences such as take-out coffees. Yes, such things work – but the point is to find things that work for you.
And don’t kid yourself: it isn’t going to be easy. After five or so years of falling real living standards, most of us have cut out a lot of wasteful expenditure and become canny bargain-hunting shoppers.
So it’s a question of making real choices. Which, oddly enough, has the potential to deliver larger savings than the odd missed latte.
A new car this year – or in two years’ time? Holiday abroad, or in the UK? And is that kitchen refurbishment really, really necessary?

2) Harness the power of the stock market

So what to do with the resulting cash? Fairly obviously, cash savings accounts – especially with interest rates at their present level – are largely useless.
It has to be the stock market. Time and again, research shows the long-term wealth-building power of investing in solid businesses that are throwing off decent dividends.
And if those solid businesses happen to the temporarily under-valued, then there’s the prospect of market-beating capital growth, too.
You have to take a long-term view, of course, and accept that your capital is more at risk than if youd stuck the money in a savings account.  That’s what long-term wealth-building is all about. There will be good months, and bad months. And good years, and bad years.

But overall, you should be moving in the right direction.

3) Cut the costs of investing

You work hard for your money. Those savings have been painful. And you’re in it for the long term.
So don’t let fees and charges as act as a brake on that long-term wealth-building. Ditch those high-charging investment funds and fancy ‘wealth management’ brokerage platforms, and head to the no-frills cheaper end of the market.
I’m all for having a solid core of low-cost index trackers. But for active investment in individual businesses, I dont think you can beat managing your own investments.
Pay for advice, by all means – but consider getting out of high-priced funds, and holding your stock market investments via a low-cost execution-only brokerage platform.

4) Create some thinking time

You can’t operate in a vacuum.
Successful investment is about making judgments: judgments as to where the gains could be greatest, judgments as to where the income streams will be most sustainable, and judgments about where the risk will be lowest.
So put aside time to read, research and think. Browse the internet. Set up a different ‘investing-specific’ email address, and subscribe to blogs, newsletters and free opinion and research.

You won’t agree with all of it. You may not understand all of it. But you will learn from it.

5) Measure your progress

As with losing weight, getting fit or cutting back on smoking or drinking, motivation is everything.
Some people keep spreadsheets. Some maintain ‘tracking portfolios’ on services such as Google Finance. And others make a habit of regularly checking their brokerage account.
Frankly, it makes no odds. The important thing is to find something that works for you, and then do it.
What, specifically, are you looking for? Your first share that has ‘double-bagged’, or – even better – triple-bagged, for instance. The first time that a share has paid you more in dividends than you spent on the investment. And your ongoing progress towards that six-figure (or seven-figure) amount of wealth that you’ve been targeting.

Go for it

So there you have it: five wealth-building resolutions for 2015.
Give up in February, and you’ll probably be no richer in 2016 than you were in 2014. But stick with them, and you’ll have laid the foundations that could lead to future prosperity.
What’s not to like about that?

6 things you need to know before buying your first home

Buying a home for the first time is a big step. Realtors Jenny Gura, of Washington Square Realty, and Jeff Plesko, of Caldwell Banker Realty, share their tips on what to do when considering the big purchase.

1. Check your credit score.

2. The most important thing is to know your budget. Talk to a bank and get preapproved before you even talk to a realtor. The loan officer can give you a breakdown of what your payment would be and you can decide on your comfort level.

3. If you can, have a downpayment saved to help reduce the size of the loan.

4. Use a realtor. They are well-versed in the legalities and particulars of selling and buying a home and can save you headaches if you were to try a private sale.

5. Think about your future space needs, such as if you expect your family to grow. This can affect the homes realtors will show you so you wont run out of space within a few years.

6. Have a home inspection done. You need to know what you are buying.

Ginnie Mae securities rally, driving mortgage REITs

Ginnie Mae and the to-be-announced market

The Fannie Mae to-be-announced (or TBA) market represents the usual conforming loan, the plain Fannie Mae 30-year mortgage. Meanwhile, Ginnie Mae TBAs are where government loans go, such as the Federal Housing Administration (or FHA) and Veterans Affairs (or VA) loans.

The biggest difference between a Fannie Mae mortgage-backed security (or MBS) and a Ginnie Mae MBS is that Ginnies have an explicit guarantee from the federal government. Fannies don’t have a guarantee, just a wink-wink, nudge-nudge guarantee. As a result, Ginnie Mae MBS trade at a premium compared to Fannie Mae TBAs.

Military Family Receives Sub for Santa

LINDON, Utah, Dec. 23, 2014 (GLOBE NEWSWIRE) — Christmas will be a little better this year for a Wyoming military family that has endured its fair share of struggles.

The Atchley family was recently selected as the Low VA Rates Sub for Santa recipient and has received many Christmas gifts and an additional $1,500 check from Low VA Rates.

The Atchley family has recently passed through some tough times and needed the extra help during the holiday season to provide a nice Christmas for their family.

The father was recently discharged from the Air Force and has struggled to find employment since. The mother is taking care of their four children and has also not been able to find employment.

After receiving all the applications, Low VA Rates decided the Atchley family was the perfect Sub for Santa Candidate.

You really have no idea how much of a burden Low VA Rates has taken off my husband and I, A. Atchley said. We are so grateful for Low VA Rates making this Christmas a miracle for us.

Low VA Rates has assisted families across the nation with various charitable events and donations, and has provided a Christmas donation to a family in need for the past four years.

President of Low VA Rates, Eric Kandell, loves the holiday season to give back to military families in need.

We have always made it a point to give back during the holiday season to military families in need, Kandell said. This year the Atchley family really stood out as being a wonderful military family that needed some assistance and we were very pleased that we could help out.

The father has strong ties to the military and has been serving our country for the past 5 years until his recent discharge. He joined the military in 2009 and later became a services apprentice after technical school. The family has been stationed across the nation and he also served a tour in Iraq with the 332 Expeditionary FSS during Operation New Dawn.

The Atchley family is everything good we see in military families and we are honored to be able to help them out this Christmas, Kandell said.

The four children of the Atchleys received many gifts from Low VA Rates including: clothes, action figures, speakers, bedding and even a Huffy green machine. The additional $1,500 donated will be used to help make Christmas a wonderful time for the Atchley family this year.

It has been a hard year for us, but we are still keeping our holiday spirit alive! A. Atchley said. We are so grateful to Low VA Rates and it will be nice to give my children the Christmas they deserve.

Low VA Rates has donated over $12,000 in charitable donations in 2014 and plans to continue to give back to the community and military families.

Since Low VA Rates has opened its doors for business we have always made it a point to give back to military families. Kandell said. We love all that have served in the military and give our heartfelt gratitude for sacrificing their lives to preserve our freedoms.


Low VA Rates, NMLS #1109426 is dedicated to serving veteran homeowners. We specialize in providing VA loans to qualified veterans for home purchases and refinances. These loans provide lower interest rates and monthly payments than other traditional loans.

Low VA Rates is one of the nations Leading websites for VA Loan Information and is dedicated to assisting all the men and women of the United States Military, both active and retired. We have built a reputation of serving those that have served us, and doing everything we can to ensure home ownership for all.

VA loans are one of the only programs left that allows no-money-down loans providing a secure mortgage option guaranteed by the Federal Government. Our professional staff and loan officers will assist you to lock in low interest rates and take advantage of the unique opportunity provided through VA loans.

Craig Walton
Director of Public Relations
Office: 801-341-7048

Craig Walton
Director of Public Relations

Office: 801-341-7048