Mortgage brokers go extra mile

Tierney knew another bank had different criteria and would mortgage the house providing the buyers could get insurance cover.

Argue your case: Annette Kann of Roost Mortgages had a client unable to borrow to buy a home because of a joint loan for his ex-wifes business and other debts incurred around the time of the split.

I produced a mound of documentation to show what had happened, the legal tussle and the statements showing where he had repaid debt over time. Eventually the lady at the bank I was dealing with agreed that he was actually a good risk.

Negotiate: Lawrence Diack of Saving Kiwis Financial Solutions was able to negotiate 0.64 per cent off a six-month fixed rate for a client this month.

Im acting on behalf of the client, not the bank, so Im negotiating each and every time for a better deal, without them necessarily having to change banks to get it, he says.

Brokers also know how to limit guarantees on children or other peoples loans. Banks as a matter of course want to take unlimited guarantees.

Get more money: Geoff Bawden of NZ Property Finance points out that banks are not created equal. One client just couldnt borrow enough from his bank. Bawden suggested another bank he knew would lend more, and the client was able to borrow an additional $80,000.

People with a less than stellar financial history may find mortgage brokers can help them.

Get mortgage-ready: Kim Lyons of First Rate Mortgages had a client with good equity who wasnt bankable because of a large number of debts, which had late repayments.

The solution was to go to a non-bank lender and to borrow more to add value by recladding the home. Lyons solution reduced the clients outgoings and improved repayment history. It is expected that we will help clients refinance back to a bank in nine to 12 months, says Kim.

Restructuring advice: Wayne Lawrie of Mortgage Studio deals with clients who need to restructure their debt geared to their circumstances.

Sometimes a principal and interest loan over 30 years with one fixed portion isnt flexible enough. Clients may be able to afford more and manage their risk better by splitting the fixed-rate portion of the debt across different maturities, says Lawrie.

The downside

There are, of course, some disadvantages of using mortgage brokers.

Kiwibank doesnt pay commission to brokers, so isnt included in the line-up to be compared, and BNZ gives commission to only one broking firm.

However, most mortgage advisers use a wide range of lenders, including non-bank lenders.

– NZ Herald

Jimubox Closes $84 Million Series C Funding Round

BEIJING, April 24, 2015 /MILITARY-TECHNOLOGIES.NET/ — Jimubox, a market-leading Chinese P2P lending platform based in Beijing, today announced that it has completed an $84 million Series C funding round, led by Investec Bank plc with co-investment from Haitong Kaiyuan Investment Co., a division of Haitong Securities.

The Series C funding round also included participation from new investors Mandra Capital and Zhong Capital Fund. Existing Jimubox shareholders Matrix China Partners, Xiaomi, Shunwei China Internet Fund, Ventech China, and Magic Stone Alternative each participated in the Series C financing round.

China e-Capital Corporation acted as the exclusive financial advisor to Jimubox for this funding round.

Investec Bank plc is incorporated in the United Kingdom and controlled by Investec PLC (Investec), an international specialist bank and asset manager listed on the London Stock.Exchange (INVP; LN). Investec was founded in South Africa in 1974 and has expanded through a combination of organic growth and strategic acquisitions. Investec has full banking licences in the United Kingdom and South Africa, and is present in a dozen geographies including China, Hong Kong, Australia, Switzerland, Ireland and the US. Investec, which employs about 8,000 people internationally, has as its main businesses, investment banking, capital markets, asset management, private banking, wealth management and property finance. The current market capitalisation of Investec is approximately RMB 48 billion, with assets of RMB 450 billion, and third party funds under management of RMB1.05 trillion.

We have been following the developments of the Chinese financial sector closely, and have looked for ways to participate. Given our banking experience, we were impressed by Jimuboxs understanding and management of credit risk. The Internet finance sector in China has grown rapidly over the last few years, and P2P is one of the most significant growth areas. Jimubox has emerged as a leading P2P platform in a short period of time. We believe that Jimubox has the potential to become the market leader in this new and exciting sector, stated Richard Forlee, CEO and Director of Investec Capital Markets Ltd.

Given Investecs strong track record in risk control, wealth management, and international asset allocation, Jimubox is very excited to have Investec join as a shareholder as we prepare for our next phase of growth, said Dong Jun, Founder and CEO of Jimubox.

Haitong Kaiyuan is a wholly owned subsidiary of Haitong Securities Company Limited, one of the largest securities brokerages in mainland China. Haitong Kaiyuan manages more than RMB 20 billion of capital across multiple investment funds. Haitong Kaiyuan has been activein investing in Internet finance as the industry has rapidly grown over the last few years.

Haitong Kaiyuans Internet finance director Wei Bingfei stated; We are a strong supporter of the Chinese internet finance market. Although this market is still at a relatively early stage and external uncertainties exist, we are fully confident of the long-term prospects. Through our time getting to know Jimubox over the last year, we have been impressed with their professionalism and team cohesion. We appreciate the opportunity to be involved and to support the growth of the Jimubox platform. Our involvement will help facilitate our plan in this important market area.

As part of this financing round, Matrix China Partners increased their shareholding ownership percentage in Jimubox. We will continue to support Jimubox with capital, industry knowledge, and the facilitation of cross-border partnership opportunities. We feel that Jimubox has the potential to be a very large company, said Harry Man, Matrix China Partners Internet partner.

The Jimubox team has built a marketplace-lending platform with an entrenched brand image, industry leading transparency, and a liquid secondary trading market. The Jimubox platform facilitates SME loans and individual consumption loans for under-banked Chinese borrowers by providing direct investment opportunities to RMB investors through an innovative online marketplace. Jimubox has completed almost 6 billion RMB of new issue loans since launching in August of 2013.

Jimubox has developed a multi-layer investor protection scheme that involves third party credit enhancement, cash-based security deposits as first protection against borrower default, and a borrower-funded mutual risk protection mechanism. Additionally, Jimubox has pioneered the concept of investor observation groups — the Jimu Jury — which provides select investors with monthly access to information and documents that are unable to be disclosed directly on the Jimubox website. These innovative measures ensure that Jimubox is a market-leader in providing the highest level of transparency and investor protection.

For more information, please visit www.jimubox.com.

Source: PrNewsWire All
Jimubox Closes Million Series C Funding Round

5 Credit Cards for Teens

When Americans turn 18, they are considered adults under the law. That means that they can vote and be tried as an adult, but its also the first time that they are able to apply for a credit card account in their own name, though theyll have to jump through a few hoops first.

Under the CARD Act of 2009, no credit card may be issued to a consumer under the age of 21, unless they have a co-signer who has the means to repay the debts or they can prove they independently can repay the debt.

The problem is that teenagers by their very nature have little or no credit history. (You can see if youre considered scoreable by checking your credit scores for free on Credit.com.) Nevertheless, some credit card issuers are so eager to acquire new customers in this age group, that they can offer cards specifically tailored to their limited credit profiles. These cards for teens and young adults will have lower requirements, in exchange for fewer rewards and higher interest rates than those offered to the general market.

So here are five credit cards, none of which charge an annual fee, that are just right for teens, students and other young adults.

1. Discover it Chrome for Students

This card offers 2% cash back on all dining and as purchases, on up to $1,000 spent each quarter, and 1% cash back on all other purchases. In addition, Discover will waive a cardholders first late payment fee, and there is never any penalty interest rate applied. New cardholders will also receive 0% APR promotional financing for six months, and a standard rate of 12.99% to 21.99% after that.

Other benefits include a free FICO credit score on monthly statements, online, and in their mobile app. In addition, the Discover card maintains an excellent reputation for customer service.

2. BankAmericard Credit Card for Students

This card offers new applicants 0% APR promotional financing on new purchases for 15 months, and a standard interest rate of 10.99% to 20.99%. Otherwise, this is a fairly simple card from a major retail bank, so young adults have the opportunity to conveniently manage all of their accounts in one place.

3. Wells Fargo Cash Back College Visa Card

Wells Fargo offers this student card that features 3% cash back on gas, grocery, and drugstore purchases for their first six months card membership. After that, cardholders earn 1% cash back on all purchases. An innovative benefit is a cellular telephone protection program which offers up to $600 of coverage against covered damage or theft at no cost except for a $25 deductible. The coverage is effective so long as you use your Wells Fargo credit card to pay for your service bill.

4. Capital One Journey Student Rewards card

This card features 1% cash back on all purchases, plus a 25% bonus on the cash back each month when cardholders pay their balances on time. Further, cardholders receive a higher line of credit after they make their first five monthly payments on time, as part of Capital Ones Credit Step program. There is no a foreign transaction fee on this or any other Capital One credit card.

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5. Citi ThankYou Preferred Card For College Students

New cardholders earn 2,500 bonus ThankYou points after making $500 in purchases within three months of account opening. Cardholders also receive double points for dining and restaurant purchases, plus one point per dollar spent elsewhere. Points are worth about one cent each toward a variety of merchandise, gift card, and travel options. New cardholders also receive seven months of 0% APR promotional financing on new purchases, and a standard rate of 13.99% to 23.99% after that.

Note: Its important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

At publishing time, the Discover it Chrome for Students, Capital One Journey Student Rewards card and Citi ThankYou Preferred Card For College Students are offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards. However, this relationship does not result in any preferential editorial treatment.

More on Credit Cards:

  • The Credit.com Credit Card Learning Center
  • 6 Smart Credit Card Strategies
  • Tips for Paying Off Credit Card Debt

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Note: Its important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

Lehigh Valley Scene: Allentown Art Museum celebrates spring at black-tie gala

More than 150 items were open for bid in Butz Gallery during the Galas Silent Auction, including a print signed by Pop artist Robert Indiana, a sculpture and a drawing by Peter Grippe, and a private tour for 12 through design icon Knoll Inc.s factory in East Greenville. Action artist Barnaby Ruhe roamed the first-floor galleries sketching guests while servers from Sodexo circulated through the crowd offering hors doeuvres. The Sustainers Circle Cocktail Party segued seamlessly into the party proper, then into the evenings program, when the Lyonses were celebrated for their many years of service, support, and friendship to the Museum.

Suzanne Lyons joined SOTA in 1973 and served as a docent for 30 years. She has worked in various capacities on the SOTA Board, and as a Sustainer she was named Volunteer of the Year in 2000. Ted Lyons has been on the Board of Trustees since June 2000 and has served on the Corporate Membership, Property, Finance, Expansion and Modernization, Endowment, and Executive Committees. He was critical in the success of the Museums expansion and modernization that began in 2005 and was completed in 2011. Teds expertise in construction and engineering and his contacts in the industry played a crucial role in bringing the project in on time and within budget.

A Live Auction of bigger-ticket items includes a pair of Bertoia Diamond Chairs and a week in the hills of Tuscany.

Dinner featured a choice of Braised Boneless Korean Beef Short Ribs or Wild Mushroom Risotto Cake with Vegetable Demi-glace. Follwing dinner was dancing to the Ken Battista Band.

Among the more than 300 guests were: Allentown Mayor Ed Pawlowski and his wife Lisa, US Rep. Charlie Dent and wife Pam, Dave and Pam Kennedy, Heather Rodale and Carl Barndt, Alex and Ruth Torok, Dan and Lois Wells, Missy and Sam Saxton, Matthew and Erika Petrozelli, Rick and Michelle Stringer, Pete and Stacey Gray, Jane and David Noel, Judge James Knoll Gardner and Linda Gardner, Ann and David Hohe, Loran and Walt Staehle, Rob and Trisha Debeer, Miriam Huertas and Mike Krisukas, Florence and Anthony Rodale, David and Jackie Jaindl, David Molony and Ming Ming and Elsbeth and Steve Haymon.

Please send items for Scene to Jodi Duckett at jodi.duckett@mcall.com.

Watch Fans Flock To New York For Madison Avenue Watch Week

For high-end watch brands, the chance to better connect with customers in a controlled environment has been an important factor driving a massive expansion of mono-brand boutiques over the past decade. Previously, independent retailers were the main focus of sales distribution. In some cases, the brands had no idea who was actually buying their watches, or if they did, only via ownership registration forms. Entering its fifth year, Madison Avenue Watch Week, that started yesterday, and runs through Saturday, provides top European and American brands a platform to engage enthusiasts within the confines of their own carefully crafted environsand perhaps generate new interest with a series of special events.

Unlike the recently completed New York Auto Show, which drew 1.1 million consumers during its nine day run, registered attendees for the 13 participating boutiques of Watch Week is in the thousands, say organizers. This of course doesn’t include consumers who walk in, however, it speaks to the fact that long a passion in Europe and Asia, enthusiasm for the intricately made machines of the wrist is still in its infancy in the United States. Matthew A. Bauer, President of Madison Avenue Business Improvement District, thinks attendance can grow bigger. According to the Federation of the Swiss Watch Industry, in 2014 the US took nearly $2.5 billion in watches made by the Alpine country, based on today’s exchange rate. More importantly, in Swiss Francs, volume increased by 6.2 percent, whereas China was down 3.1 percent and Hong Kong was flat. Bauer says his groupworks with media partners to promote the event nationally and globally. There is also a program marketing it to the concierges of nearby hotels so they will recommend it to guests.

While organizers couldn’t provide specific numbers, the eventis attracting consumers from out of town. Paul Burgdorf, a retired property finance executive from Albany, is making two trips into Manhattan during Watch Week. The first was for an off-the-record breakfast this morning at The Surrey Hotel, hosted by the Benjamin Clymer, executive editor of watch blog Hodinkee. His panel included the North American CEOs of A. Lange amp; Souml;hne, Chopard and Jaeger-LeCoultre. Collectors were able to ask questions about recently introduced products as well as brand strategies and expectations for the future. On Saturday, Burgdorf will come back, bringing his two grandchildren, ages eleven and seven, for a workshop at the Vacheron Constantin store where they will witness awatchmaker demonstrating how a mechanical watch is assembled. In the afternoon, all three will head to The Bronx to attend Bat Day at Yankee Stadium.

“I think it is terrific. I’ve been coming for three years, and it’s exciting that I can introduce my passion to a new generation,” he says.

Junaid Aziz, who is studying marketing and business at The University of Pennsylvania in Philadelphia, also came to New York specifically for the event. He said, by holding Watch Week, it gives aficionados like himself a way to get more intimately engaged with the brands he likes.

Amy Rosi, a consultant for the organizer, said that each boutique offers something special. Gaetan Guillosson, President North America for A. Lange amp; Souml;hne, said, his company brought for the period all of the novelties that were introduced in January at Salon International de la Haute Horlogerie (SIHH) in Geneva. Watches that are shown at SIHH and last month’s Baselworld typically don’t end up in stores until this fall so attendees are getting a first look at what’s hot. Last night, he had hosted a private event in his store with three top customers speaking to about 50 other fans of the German maker.

Clymer began the proceedings by thanking the watch CEOs for participating, noting that the preference formany watch executives to eschewlargerforums with media for private meetings with customers. Additional brands participating this year include David Yurman, de Grisogono, FP Journe, Faberge, Georg Jensen, Hublot, John Varvatos (which sells Ernst Benz), Montblanc and Panerai.

Larry Summers’ full-throated endorsement of online lending

Its not everyday that a nascent industry gets the endorsement of a figure as prominent and well respected as Larry Summers.

The former Treasury Secretary and world-famous economist has, however, made the online lending industry one of his pet projects since leaving the Obama Administration. He now sits on the board of the Lending Club, Americas largest peer-to-peer lender as well Square Capital, the lending arm of payments company Square.

On Wednesday, he delivered the keynote address at the conference Lend It 2015, outlining the reasons why the industry excites him and why he believes technology based businesses have the opportunity to transform finance over the next generation, and do so in a way that makes the economy more efficient and stable.

Online lending in recent years has gotten a reputation as a good alternative for consumers with good credit who want to consolidate credit card loans at much lower rates. But Summers sees great potential for online lending in the small business sphere. His colleague at Harvard, former Small Business Administrator Karen Millsalso a speaker at the conferenceprovided some numbers from her research that showed just how badly innovation is needed in this area. The following chart shows how small business lending has declined since 2008, and has yet to recover:

And since 2012, lending has basically remained flat. This is in an economy where, according to Mills, half of all workers own or work for small businesses. In so many ways, be it total number of jobs, or total output, the economy has recovered, yet lending to the engine of job growth in America has lagged. One reason for this is that rapid consolidation happening in community banks, the firms most responsible and able to make small loans to small businesses.

What excited folks like Mills and Summers about online lending is that companies from Paypal to Square are able to use their existing base of small business customers, and the bevy of information they have about them, to make smart lending decisions in a way that makes borrowing simple and flexible for small businesses. Online lending only counts for about $10 billion of $700 billion in outstanding loans, but the following chart shows how online lenders are growing quite fast, even as banks retreat from the market:

Its this dynamic that has folks like Summers truly excited about online lending. On Wednesday, he agreed with former Fed Chair Paul Volcker when Volcker said that the only useful innovation in finance in the past generation has been the ATM. Finance has innovated, but the benefits of these innovations have gone to large capital holders and not society more broadly.

With online lending, Summers argued, the information available the information made available makes it easier for borrowers and lenders to make good decisions and will drive up profits for lenders and costs down for borrowers, all the while extending credit to small businesses that banks cant afford to consider lending to because they have less information at their disposal and higher cost structures. Its this logic that leads Summers to believe that online lenders could eventually capture upwards of 70% of the market share in small business lending, and why a Wall Street bigwig like Jamie Dimon said in a recent letter to shareholders that Silicon Valley is coming after the banking industry.

Payday Lending’s Contrasting Cultures of Wealth and Exploitation — and Big …

Payday loans and other abusive high-interest loans targeting the working poor are one of the scourges of our financial system. Last month, the Consumer Financial Protection Bureau proposed new rules for the industry to help families avoid what the CFPB calls Payday Debt Traps.

To understand why payday loans are so noxious, there are a number of great studies (see here, here and here for examples), but I highly recommend people read this in-depth profile of the payday industry in Kansas City written up in the citys alternative paper a while ago. This post will summarize some of the story it tells, but its worth reading the whole thing (although its long and in two parts; Part 2 is here).

What the story highlights is the way the Internet metasized local payday industry players from shady storefront operators into respectable national financial players backed by mainstream financial firms and respectable investors. In many ways, its a story of how the vices of shady exploitation have used the sanitary interface of the Internet to mainstream loansharking among wealthy elites.

The technology of big data became a key to this transformation since it made it easy to both find new victims and largely hide the identities of the payday lenders. As Pitch describes the typical approach:

Say you need a quick loan. You type fast loan online Kansas City into Google and click on one of the sites that pops up. Theres a good chance that the site is not an actual lender but instead is a middleman of sorts that processes your information, evaluates your credit in a matter of seconds, and creates a profile for you.

Such lead generation means theres little accountability in the industry, with so many layers between borrowers and lenders, and borrowers often find their data has been resold multiple times as people get barraged by calls from offshore payday lending companies. As US Senator Jeff Merkley argued in 2012, These websites mask the true identity of the lender, so it is harder to track down and prosecute deceptive lenders.

Two Churches at Each End of the Online Payday Loan Pipeline

The article starts with a story contrasting two Catholic parishes in Kansas City. At the wealthy Prairie Village Catholic Church, wealthy investors in the local online payday lending industry suddenly start showing up, throwing around money:

It was most obvious at the school auctions, says one member of the Prairie Village Catholic church. … Youd see these cliques of people pulling up in limos, acting wild, dropping a lot of money on exotic two-week vacations and the other lavish items up for bidding. … And you see it enough times and you start to go, Where is this money coming from?

That the money was coming from exploiting the poor did not go unnoticed among other parishioners: People on the finance committee and the school board were talking about the morality of taking that money. But in the end, I think they just looked the other way. The local pastor, furiously fundraising, argued that he wasnt about to make a judgment about what constitutes a legitimate interest rate versus what constitutes an exorbitant interest rate.

Across town at a much-poorer Catholic parish where many members had been victims of payday loans, Rev. Ernie Daviswas scornful of just hedging. Theres no justification for it [payday lending] in the faith we share. Anything that oppresses the poor is condemned in both Jewish and Christian Scriptures.

The Kansas City Elite Who Pioneered Online Payday Loan Exploitation

What makes payday loans so oppressive is that while they are advertised as a short-term emergency solution, every credible study has found that the high interest rates and fees end up trapping customers in cycles of new loans and escalating debt.

The Online Lenders Alliance is the Washington, DC, lobbying outfit for the payday industry online and was founded by Mary Curry, a Kansas City native who founded a range of payday-loan-related businesses. His roster of members includes a disproportionate number of Kansas City locals who have often done business with each other in a byzantine web of interlocking relationships — many of which came to legal blows and whose legal filings created much of the window into the industry that Pitch details. Big financial LLCs and financial firms backed up these exploitive companies with large infusions of cash.Many investors came from local Kansas City families, hence the culture of folks getting rich in the industry around Kansas City, with companies promising 25-percent-per-year returns on money invested.

One of the acknowledged pioneers of some of the sleaziest tactics of the industry is another Kansas City native, Scott Tucker, who launched nearly 500 different Internet-based payday lending companies, creating byzantine trails of front companies. To escape state regulation and lawsuits, he also cut deals with Indian tribes to front his businesses, since only the federal government can sue tribal-based businesses. For a payment of 1 to 2 percent of revenues to the Modoc Tribe of Oklahoma, Tucker had virtual immunity from any state regulation for years.

Finally, Tucker was sued by the Federal Trade Commission in 2012 to stop some of his most abusive tactics, but he kept his massive wealth and continued to be celebrated in local Kansas City write-ups for his side hobby as a race car driver, just as the local Home Design magazine did an interior design spread on his brothers palatial home.

For Tuckers and other companies customers, the story is very different. One former employee at a firm described how he regularly saw a customer loan of $300 turn into a $900 debt in a very short period of time, due to interest, rollover and late fees. Another internal document revealed:

The Companys average customer will borrow ~$1200 (~3 loans) and repay ~$2350 over a 4-year timeframe. Margins on loans to repeat customers average 150% higher than loans to new customers.

The most profitable customers were taking out a loan, falling deeper into debt, taking out new loans to service that debt, and falling deeper into poverty.

While the operations have a high-tech sheen, the dirty collection tactics are highlighted by this anecdote. A whole set of front businesses is located at 909 Baltimore Street, but no one knows it:

Not a lot of sunlight finds its way into 908 Baltimore. Workers are prohibited from speaking with the media. No sign hangs outside the building.

Its because the owners are afraid of shootings and retribution for their collection practices, says a former employee.

Targeting Online Payday Lenders Through Bank and Search Engine Intermediaries

An Achilles heel of the online payday lenders is that they usually use the national check cashing system to enforce payments by borrowers. To get a loan, a borrower usually gives the lender access to their bank account to initially drop funds in and then later takes out repayments, fees and interest payments.

In 2013, the Federal Deposit Insurance Corporation (FDIC) began auditing banks to see whether they were assisting payday loan companies in evading state lending laws or otherwise violating consumers rights. Backed by the US Department of Justice issuing subpoenas to banks and processors, many banks stopped accepting lenders as customers. More recently, the Consumer Financial Protection Bureau(CFPB) has been bringing suit against companies and even freezing their assets.

The proposed CFPB regulations overall for the payday lending industry will help as well, but the targeting of bank intermediaries as a tool also raises the issue of the role and responsibility of online platforms providing the lead generation services that allow companies to find their victims in the first place. California actually took the lead this month in announcing an initiative to work with major search engines to stop taking advertisements from unlicensed companies the state has issued cease-and-desist orders against. As California Department of Business Oversight Commissioner Jan Lynn Owen argued in launching the new program:

Unlicensed payday lenders who operate online rank as one of the most significant consumer protection threats the DBO fights. They prey on our most vulnerable consumers and break our laws designed to protect borrowers from paying excessive fees and getting trapped in a debt spiral. Curbing their search engine advertising through this protocol with Microsoft and Google will help us fight the problem.

All of these are encouraging steps in stopping the problem. But the culture of financial exploitation of the poor has been flexible over the years as the range of subprime mortgages, payday lending and other financial weapons targeting low-income families have shown. Targeting the worst offenders who violate the law is only part of the problem. As long as companies have so much data about borrowers, their desperation and their likelihood to accept bad financial terms, we can expect the rising inequality described between the two Kansas City parishes in Pitchs story to continue.

Fitch: Energy Default Rate Likely to Rise in 2015

The energy sector default rate is expected to rise above its long-term average of 1.9% in 2015, according to Fitch Ratings. Low oil prices have pressured cash flows and liquidity of smaller, less competitive exploration and production (EP) companies.

Twenty-one energy and metals/mining companies were identified by a US high yield bond price screen for significant risk of default by Fitch. Many of these flagged companies with deeply discounted bond prices are smaller, less diversified EP companies or drilling service providers that operate in higher production cost regions, and others are coal-mining companies with secular challenges from reduced demand for both steam and metallurgical coal and legacy liabilities.

Fitch Ratings bond price analysis of the energy and coal mining sectors found that market price pressure drove bids on a meaningful number of bonds below the typical market price distress threshold level of $0.80. To segment out the companies among this pool that Fitch considers to have significant default risk, we screened the high yield universe of North American-domiciled energy and metals and mining companies for bond issues with trading bids at a price of $0.55 or lower. The total amount of bonds trading at a price of $0.55 or lower is $20.1 billion as of April 17, 2015, or approximately 8% of the $260 billion of aggregate high yield debt outstanding in the two sectors from North American issuers.

Reconciling the currently adverse sector price dynamics with historical bankruptcy case studies, Fitchs report analyzes the drivers and outcomes of 28 energy and commodities sector bankruptcies and is the seventh installment of our in depth bankruptcy case study series. Fitch provides the bankruptcy filing drivers, reorganization enterprise valuations (or liquidation values), and creditor recoveries for secured and unsecured debt in these cases.

More than one-half of the cases in the group were filed in 2008 and 2009, which was a period of low commodity prices and adverse credit markets. Lender cuts to asset-based loan borrowing bases contributed to the bankruptcy filings of smaller EP companies that relied on asset-based loan (ABL) facilities. In contrast to most other corporate sectors, it was relatively common for EP companies to sell all assets as going concerns or liquidate in bankruptcy. The report also delves into the variability of state laws with respect to mineral rights, which can affect enterprise valuations and lender recoveries.

Wonga report loss of £37.3m

The pay-day loan company Wonga have announced a yearly loss of £37.3m in 2014. This news comes at the time when the company is undergoing a large reorganisation.

This loss represents a massive turn around in the companys fortunes since 2013 – a year that they recorded £39.7m profits.

The company has been a centre of huge controversy in recent years, due to the dubious means by which it seeks to receive its repayments.

In 2014 it sent many of its customers letters from non-existent law firms in an attempt to recall its debts. It has since apologised and agreed to pay out compensation to the customers that were affected. The cost of these compensations ran up to around £2.6m.

Wonga also had to write of about £220m worth of debts lent to over 300,000 customers. This came as a result of them being judged to not have properly assessed whether or not these customers were in a suitable position to repay their loans.

Wonga is currently predicting another loss in 2015.

Falling business

Wongas revenues have dropped by 31% in 2014, since 2013.

It is also lent out around £732m in 2014, this represents a 36% fall from the £1.1bn worth of loans that they made in 2013. Their total number of customers fell from 1 million to around 575,000.

Andy Haste, who has been the chairman of Wonga since the summer of 2014, stated that:

We said Wonga would be smaller and less profitable in the near term as we focus on creating a sustainable business that lends responsibly and transparently to customers who can afford to borrow from us.

We know it will take time to repair our reputation and gain an accepted place in the financial services industry.

Wonga also stated that it had faced 12% rises in their operating costs, due to the new strict regulations that are being imposed upon them by the FCA (Financial Conduct Authority).

Many payday lenders are predicted to be exiting the market as a result of these rising operating costs.

The new regulations include measures that prevent lenders from trying to claim money for a customers bank account more than two times. They also require much more stringent checks on customers; to make sure that they are likely to be in a position to be able to repay their debts.

What does the future hold?

Wonga has stated that it expects to see losses again in 2015, although it claims that it will be launching a new range of products and loans in 2016.

The chairman stated that the company need to diversify what it has to offer. As opposed to the almost exclusive reliance on one product and one price.

They have also begun to undertake cost cutting measures, meaning that they have cut their staff by around 325. This number represents a third of all their staff.

Mr Haste stated that he believed the company still offers a service that can be of value to UK customers but with the requirement of added responsibility:
But only if they put their customers first and lend responsibly. Regrettably, that has not always been the case at Wonga,

Wonga has been accused of attempting to influence children, by making them overly familiar with the idea of a payday loan.

In reaction to this they have cancelled a recent string of adverts that featured a group of elderly puppets. They have also agreed to remove their logo from Newcastle United FCs childrens shirts – they have a sponsorship deal with the Tyneside football club.

Make the most of your money by comparing loans with MoneyExpert.com.

DebtWave Credit Counseling, Inc. Provides Financial Boost to San Diego …

San Diego, California (PRWEB) April 22, 2015

On March 27, 2015, DebtWave Credit Counseling, Inc.’s dba, San Diego Financial Literacy Center (SDFLC) (http://www.sdflc.org), hosted their quarterly Education Luncheon at National University in San Diego, CA.

Kevin Garrett, Southern California Business Unit President at CBIZ, presented to over forty attendees on the impact of Taxes and the Affordable Care Act. Immediately following, a San Diego military member, Danielle Schneider, was awarded a $3,000 boost to help with her family’s financial hardship. Schneider, an E-2 in the United States Navy, needed assistance in managing her debt, moving to off-base housing with her husband, also active duty Navy, as well as preparing for the arrival of their first child. You can watch a video of the event here.

“Working with our military community is very important to our organization,” said Brad Pagano, Co-Founder and Managing Director of the SDFLC. “Providing the complimentary financial education and subsequent quarterly award allows us to effectuate real life change for our constituents.” Ms. Schneider couldn’t agree more, “The Boost For Our Heroes program is important because of the financial help with budgeting and savings that the team is able to supply. They teach life skills that you dont really learn coming straight out of high school and joining the military. I am extremely grateful for the San Diego Financial Literacy Center and all of the help that their wonderful staff has provided to help my husband and I get our financial situation back on track. They have taught us skills that we can continue to use for the rest of our lives. “

Each quarter, the SDFLC awards a military member with $3,000 as a part the Boost For Our Heroes program, a financial assistance and education program geared toward active, transitioning, and veteran military members. If you are an active, transitioning, or veteran military member facing any type of financial hardship, please download and fill out the application, “Boost For Our Heroes Application Form and Rules 2nd Quarter 2015.” All details for eligibility are included in the application.

For more information about all community outreach programs or to access the application, please visit: http://www.debtwave.com/outreach.

About DebtWave Credit Counseling, Inc.

DebtWave Credit Counseling, Inc. is a 501(c)(3), non-profit headquartered in San Diego, CA. Established in 2001 as a nationwide, credit counseling agency with the mission of educating the public on the proper use of credit through budget management, to offer sound counseling, and to assist clients in reducing and eliminating debt, it is DebtWave’s passion to provide the best education and most appropriate program(s) to manage debt. Community outreach has been a cornerstone of our organization since its inception and we are happy to provide complimentary financial education while supporting all facets of our community. For more information, please visit http://www.debtwave.com and http://www.sdflc.org. You can also contact the company at info(at)debtwave(dot)com and info(at)sdflc(dot)org or call (888) 686-4040 and (858) 810-7007.