Capital – JJ 990 http://jj990.info/ Sat, 24 Sep 2022 09:00:39 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://jj990.info/wp-content/uploads/2021/05/default1-150x150.png Capital – JJ 990 http://jj990.info/ 32 32 ‘Bloodbath’: Citrix buyout debt sale casts shadow over ongoing deals https://jj990.info/bloodbath-citrix-buyout-debt-sale-casts-shadow-over-ongoing-deals/ Sat, 24 Sep 2022 09:00:39 +0000 https://jj990.info/bloodbath-citrix-buyout-debt-sale-casts-shadow-over-ongoing-deals/ Banks lost $600 million this week when they completed the biggest junk bond sale of 2022. Yet the financial damage inflicted by underwriting the $16.5 billion leveraged buyout of Citrix may be just getting started. After offloading $8.55 billion in bonds and loans at rock-bottom prices, lenders including Bank of America, Goldman Sachs and Credit […]]]>

Banks lost $600 million this week when they completed the biggest junk bond sale of 2022. Yet the financial damage inflicted by underwriting the $16.5 billion leveraged buyout of Citrix may be just getting started.

After offloading $8.55 billion in bonds and loans at rock-bottom prices, lenders including Bank of America, Goldman Sachs and Credit Suisse still have billions of additional Citrix debt on their books, worth much lower than what they agreed to subscribe to in January. And banks are still holding far more debt from financial packages supporting takeovers of TV valuation group Nielsen, TV broadcaster Tegna, auto parts maker Tenneco and, if completed, the Twitter takeover. by Elon Musk for $44 billion.

The sale of Citrix debt was seen as a test of capital markets which have been reeling since Russia invaded Ukraine, global growth has cooled sharply and central banks from Frankfurt to Washington have began to aggressively raise interest rates. Demand was weak, with fund managers preferring to hold cash or higher quality investments rather than lending to risky businesses and private equity firms. A banker involved in the case said it was a “bloodbath”.

Interest was so low that one of the investors to buy $1 billion worth of bonds was Elliott Management – ​​which, along with Vista Equity Partners, is also one of two private investment groups buying Citrix, according to people informed about it and documents consulted. by the Financial Times.

“We had to put the pig through the python,” said a second banker involved in financing the takeover. “Everyone was getting comfortable in August, but unfortunately Jackson Hole happened and then everything went haywire,” the banker added, alluding to remarks by Federal Reserve Chairman Jay Powell. in Jackson Hole, Wyoming, last month, where he made clear his desire to control inflation with higher interest rates.

Borrowing costs have jumped. When banks were rushing to lend to businesses and private equity firms earlier this year, a US company with a low B debt rating could expect an interest rate of around 4.74% . The rate is 9.2% today. As Citrix has demonstrated, even this level may not be sufficient to attract potential creditors.

The bankers ended up selling $4 billion worth of Citrix covered bonds at a discount price of about 83.6 cents on the dollar for a 10% yield. Another $4.55 billion in loans were sold at 91 cents on the dollar, also to yield 10%. For banks that agreed to lend to Citrix buyers before the Fed began to tighten, the resulting losses have been painful.

“After a period of gluts of liquidity, when rates rise that much, a bubble that has formed somewhere bursts,” said Bob Michele, head of the global fixed income, currencies and commodities unit at JPMorgan Asset Management. “It’s happened every time, and it shows you the Fed has done its job.”

Line chart of ICE BofA single B rated US corporate bond index return (%) showing borrowing costs rising for risky US companies

The Citrix deal captivated the market in part because of its size, but also because of the relatively small equity investments Elliott and Vista made to buy the enterprise software company. To support the sale of the gargantuan debt, Elliott contributed more than $2 billion in cash while Vista merged its already leveraged Tibco software business at a valuation of more than $4 billion.

Banks were so greedy in January that they had no trouble convincing risk managers to sign the giant deal they agreed to sign. Citrix’s high level of debt has become increasingly costly, with some dealmakers privately concerned that rising interest costs could eat up most of its cash flow.

Citrix is ​​not alone. Among the deals causing heartburn on Wall Street is Musk’s takeover of Twitter, a deal he is trying to back out of. But unless a judge sides with the billionaire – or the social media group’s board agrees to end the deal – a group of seven banks that have agreed to lend $13 billion dollars in April for the buyback are still hanging in the balance despite the company’s recent troubles and market downturn. It’s a deal that investors say would result in huge losses for underwriters.

Bankers involved in the Citrix financing told the FT they were relieved they were able to finalize the $8.55 billion debt deal and it did not collapse. While they still hold about $6.45 billion worth of Citrix debt on their balance sheets — including some of the riskiest bonds they couldn’t sell — the fact that the markets weren’t completely closed gave them the hope that they will be able to sell more seated debt. on their books.

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But lackluster demand, including banks’ failed attempt to offload junior debt from Citrix over the summer, will nonetheless hamper Wall Street’s ability to underwrite new low-rated loans. The fact that some of the largest lenders in the United States hold some of the riskiest debt may also worry regulators.

“It feels like even when the banks have the deal, there’s still a surplus,” said a senior executive at a major lender.

Bank of America, Credit Suisse and Goldman Sachs declined to comment.

As banks closed their doors to new business to iron out problematic financings, frustrated private equity buyers turned to direct lenders such as Blackstone, Apollo and Ares, which financed ambitious privatizations like with Zendesk and Avalara this summer.

“Banks have been pretty much on hold,” said the head of a large firm that buys syndicated bank debt. “Direct lenders are upselling into larger deals and taking business away.”

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Green Building Initiative partners with PACE Loan Group to finance sustainability and ESG projects https://jj990.info/green-building-initiative-partners-with-pace-loan-group-to-finance-sustainability-and-esg-projects/ Mon, 19 Sep 2022 14:15:00 +0000 https://jj990.info/green-building-initiative-partners-with-pace-loan-group-to-finance-sustainability-and-esg-projects/ A map of C-PACE programs in the United States PACE Loan Group to finance Green Globes certification for commercial real estate projects. PORTLAND, OREGON, USA, Sept. 19, 2022 /EINPresswire.com/ — The Green Building Initiative, Inc. (GBI) announces its partnership with PACE Loan Group (PLG). PLG is a direct-to-balance sheet lender offering C-PACE financing for commercial […]]]>
Map of C-PACE programs in the continental United States

A map of C-PACE programs in the United States

PACE Loan Group to finance Green Globes certification for commercial real estate projects.

PORTLAND, OREGON, USA, Sept. 19, 2022 /EINPresswire.com/ — The Green Building Initiative, Inc. (GBI) announces its partnership with PACE Loan Group (PLG). PLG is a direct-to-balance sheet lender offering C-PACE financing for commercial real estate projects targeting energy efficient installations or upgrades. This partnership enables PACE Loan Group to finance Green Globes certification, supporting GBI’s vision of making sustainable, healthy and resilient buildings accessible to all.

“Including third-party certification in eligible PACE spend increases the accessibility of Green Globes certification,” said Vicki Worden, President and CEO of GBI. “GBI’s Green Globes certification provides a roadmap for achieving sustainable, healthy and resilient building goals that reduce climate impacts and increase an asset’s value.”

The PACE program offers an alternative form of financing and offers many advantages over traditional financing. PACE legislation has been passed in 38 states plus the District of Columbia for qualifying improvements. GBI and PACE Loan Group are committed to working with their clients to develop customized solutions that help building owners achieve their sustainability and environmental, social and governance (ESG) goals.

“Our partnership with the Green Building Initiative is focused on creating easy access for developers nationwide to integrate sustainability into their commercial real estate projects,” said Rafi Golberstein, CEO of PLG. “As C-PACE lenders, we help make sustainable upgrades affordable and accretive to the capital stack. We believe that using rating systems such as Green Globes helps developers get credit for their work and recognition for their buildings.

Green Globes is a comprehensive science-based building rating system that supports a wide range of new construction project types and existing buildings. Building owners can now obtain PACE funding for eligible project expenses and Green Globes appraisal fees. Certification allows owners to demonstrate their commitment to sustainability by earning Green Globes certification.

GBI is pleased to welcome PACE Loan Group as an organizational member.

***

About GBI

GBI is an international non-profit organization and American National Standards Institute (ANSI) accredited standards developer dedicated to reducing climate impacts by improving the built environment. Founded in 2004, the organization is the global provider of Green Globes® and the federal building guidelines certification and assessment programs. GBI also issues professional designations including Green Globes Professional (GGP), Green Globes Emerging Professional (GGEP) and Guiding Principles Compliance Professional (GPCP). To learn more about opportunities to get involved with GBI, contact info@thegbi.org or visit the GBI website at https://thegbi.org/

About PACE Lending Group

PACE Loan Group (PLG) is a national leader in the C-PACE market, providing direct C-PACE financing to commercial owners for energy efficiency, renewable energy, water conservation and seismic projects. The PLG team has decades of experience in commercial lending and structured finance, providing expertise from top to bottom of the capital stack. To learn more about PLG, visit our website at www.paceloangroup.com.

Megane Baker
Green building initiative
+1 971-256-7174
write to us here
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FirstCash Holdings: counter-cyclical pawnshop business (NASDAQ: FCFS) https://jj990.info/firstcash-holdings-counter-cyclical-pawnshop-business-nasdaq-fcfs/ Fri, 16 Sep 2022 20:14:00 +0000 https://jj990.info/firstcash-holdings-counter-cyclical-pawnshop-business-nasdaq-fcfs/ Marti157900/iStock Editorial via Getty Images FirstCash Holdings, Inc. (NASDAQ: FCFS) has a core pawnbroking business that is countercyclical and can potentially benefit from the current economic downturn. However, investors should keep in mind that the company recently acquired the America First Finance business, which provides Lease-To-Own (“LTO”) retail loans. This is highly cyclical and may […]]]>

Marti157900/iStock Editorial via Getty Images

FirstCash Holdings, Inc. (NASDAQ: FCFS) has a core pawnbroking business that is countercyclical and can potentially benefit from the current economic downturn. However, investors should keep in mind that the company recently acquired the America First Finance business, which provides Lease-To-Own (“LTO”) retail loans. This is highly cyclical and may expose the FCFS to credit losses in an adverse economic environment. I think, for now, the counter-cyclical headwinds in the pawnshop sector outweigh the risks in the payments sector, and FirstCash is worth a speculative buy.

Company presentation

FirstCash Holdings, Inc. is one of the leading pawnshop operators in the United States and Latin America, with more than 2,800 outlets. It also operates in the retail point-of-sale (“POS”) payment solutions business that offers consumers with limited credit LTO loans.

Approximately 80% of FCFS revenue comes from the pawnshop segment and 20% comes from the newly acquired POS Payments business (Figure 1).

Presentation of the FCFS

Figure 1 – FCFS Overview (FCFS Investor Overview)

Pawn is a counter-cyclical business

Pawnshops are local retail stores that buy and sell second-hand consumer goods such as jewelry, electronics, tools, and sporting goods. Pawnbrokers offer a quick and convenient source of small, secured, non-recourse loans to unbanked/underbanked/limited credit consumers.

A typical customer walks into the pawn shop with their personal property and about a quarter of the time sells the item directly to the store. Three-quarters of the time, they obtain a pledge loan, secured by their property. Of the items pawned, about three-quarters are redeemed and the pawnbroker earns monthly returns of 12-13%. A quarter of the pawnbrokers default and the pawnbroker takes possession of the asset. Assets that the pawnbroker takes possession of (either through outright purchase or overdue loans) are resold to consumers at a margin of 35-45%. Figure 2 shows an overview of Pawn activity.

pawn

Figure 2 – Pawn Business Overview (FCFS Investor Overview)

Historically, pawnbroking has performed well in most economic cycles. In particular, the pawnbroking business is countercyclical, as financially stressed consumers tend to use pawnbroking services more in difficult economic conditions. US FirstCash Holdings stores actually saw a 50% increase in pledge receivables from 2007 to 2012 during the “Great Financial Crisis” (“GFC”), and receivables declined during COVID as financially strained consumers been supported by government stimulus checks (Figure 3). .

the pawn is countercyclical

Figure 3 – Pawnbroking is countercyclical (FCFS investor presentation)

As government stimulus measures have ended and inflation eats away at household budgets, we can expect the use of pawnbrokers to increase over the coming quarters. Already, we see that U.S. pawnshop receivables are up 27% year-over-year to July 31 (Figure 4).

American Pawnbrokers

Figure 4 – Statistics of the US pawnbroker FCFS (FCFS investor presentation)

finance

Financially, the pawn business model generates high returns. Unlike payday loans, which are banned in 12 states and capped at 36% in 18 other states, FirstCash’s pawn loans do not fall under these regulations. This has enabled FCFS to achieve total returns of more than 160% of earning assets over the past twelve months in its US pawnbroking segment (Figure 5). The Latin America segment’s rate of return is even higher at 190%.

US Pawn Returns

Figure 5 – Yield of US FCFS pawns (FCFS investor presentation)

On a consolidated basis, this translated to trailing year revenue of $2.2 billion and adjusted EPS of $4.64 (Figure 6).

FCFS consolidated results

Figure 6 – FCFS Consolidated Financial Results (Presentation to FCFS Investors)

Note that although pawnbroking generates fantastic cash returns, it requires a lot of operating expenses to maintain. After deducting operating expenses such as employee compensation and occupancy costs, FirstCash has an LTM adjustment. net margin of 9.2%.

The evaluation is rich

FirstCash is currently trading at a P/E Fwd of 17.3x, which is high compared to the financial sector’s P/E Fwd of 10.5x (Figure 7). However, we need to understand that the FCFS business is counter-cyclical, while investors may be wary of loan losses and therefore grant a lower multiple to banks and alternative lenders, FirstCash’s pawnbroking business actually benefits of a weakening economy as its pledges grow. during difficult times.

Evaluation

Figure 7 – FCFS Valuation (Seeking Alpha)

It is important to note that even during the COVID pandemic, FirstCash has experienced negligible loan losses, as FCFS typically only lends a fraction of an asset’s guaranteed fair value (Figure 8).

pawnbroking losses

Figure 8 – Insignificant FCFS Pawn Loan Losses (FCFS 2021 10-K)

LTO Loans – Opportunity and Risk

While FirstCash’s core pawnbroking business appears to be benefiting from tougher economic conditions, the recently acquired POS payments business raises some questions and concerns.

In December 2017, FirstCash paid $1.17 billion (8 million shares plus $400 million in cash) to acquire America First Finance (“AFF”), a growing retail finance provider. AFF’s payment solutions are available at over 7,600 points of sale.

Similar to the increasingly popular BNPL business model, AFF’s POS payment solutions business allows consumers to apply for credit at the cash register. If credit is given, they can take the items home and pay for the purchase over time with automated installment payments (Figure 9).

LTO financing

Figure 9 – FCFS LTO Financing Overview (FCFS Investor Presentation)

On the positive side, the LTO finance business is somewhat complementary to the core pawnbroking business. It essentially targets the same consumer demographic (underbanked, limited credit) and captures transactions where that consumer purchases new assets from other retail merchants. It is also much easier to grow the productive asset base, as the lever to swing would be lending standards (one of the blows to FCFS in the past had been its lack of growth during good economic times).

However, there are subtle and critical differences between LTO companies and pawns. First, remember that in a typical pawnbroking transaction, the customer brings the pawned asset to the store, and the store retains possession of the collateral asset for the duration of the loan. The loan is usually given at a fraction of market value, so the pawnbroker is relatively protected against credit loss: in the worst case, the store takes ownership and sells the item.

In an LTO transaction, the customer requests a loan at the point of sale and takes the item home. The lender does not take possession of the property as collateral. Also, the loan is made on the “brand new” retail value of the asset (most often furniture), and the asset essentially depreciates as it leaves the door. Therefore, LTO loans have a high credit risk, especially since the customer is credit constrained at the outset.

It could also be difficult to recover defaulted LTO assets (having covered RCII and AAN in the past, I’ve read many stories of angry LTO customers acting violently towards debt collectors or destroying leased assets). FirstCash allows LTO assets to be returned to local pawnshops, however, I don’t know how likely this is to happen or if a piece of furniture like a large sofa can be sold quickly at a small footprint pawnshop.

The balance sheet is also a risk

Another risk for FirstCash is that it incurred significant debt to complete the AFF transaction. As shown in the figure, net debt stood at $1.2 billion at the end of the second quarter and is 3.3x LTM adj. EBITDA. High levels of indebtedness could limit management’s ability to react to various economic scenarios and business conditions.

FCFS balance sheet

Figure 10 – FCFS balance sheet (FCFS investor presentation)

Conclusion

In summary, FirstCash’s core pawnbroking business is countercyclical and can potentially benefit from the current economic downturn. However, investors should keep in mind that the recently acquired POS Payment Solutions business is highly cyclical and may expose FCFS to credit losses in an adverse economic environment. I think, for now, the countercyclical headwinds in the pawnshop sector outweigh the risks in the payments sector, and FirstCash Holdings, Inc. is worth a speculative buy.

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Are student loans canceled after death? https://jj990.info/are-student-loans-canceled-after-death/ Thu, 15 Sep 2022 12:37:10 +0000 https://jj990.info/are-student-loans-canceled-after-death/ Kameleon007 / iStock.com With all the talk surrounding President Joe Biden’s student loan forgiveness plan in the headlines, it’s easy to forget that borrowers and their families have other things on their minds when it comes to their student debt. . Find out: How much money should have hidden at home at all timesSee: 8 […]]]>

Kameleon007 / iStock.com

With all the talk surrounding President Joe Biden’s student loan forgiveness plan in the headlines, it’s easy to forget that borrowers and their families have other things on their minds when it comes to their student debt. .

Find out: How much money should have hidden at home at all times
See: 8 purchases retirees almost always regret

For example, what happens to federal student loans when a beneficiary dies? As dark as the subject is, there was a time not so long ago when this question was asked by more and more borrowers.

In 2020, Betsy Mayotte, president and founder of The Institute of Student Loan Advisors (TISLA), spoke to Money about the growing number of debtors asking her what would happen to their student loans if they contracted COVID-19 and were dying. “That seems to be the theme of the day,” she remarked at the time.

As the threat of the coronavirus has faded, wondering what will happen to your student loan debt if the borrower dies is still a relevant question. According to a 2019 survey by Haven Life Insurance Agency, 73% of student borrowers did not know how their debt would be handled if they died.

The answer, fortunately, is that if a federal student loan holder dies, their debt will be discharged by the US Department of Education (ED).

What happens to federal student loans when a borrower dies?

According to Forbes, a family or spouse can apply for a loan discharge if the deceased borrower has one of the following federal student loans: Subsidized Direct Loans, Unsubsidized Direct Loans, Direct PLUS Loans, and Direct Consolidation Loans.

The same applies to the now discontinued Perkins Loan and Federal Family Education Loan (FFEL) that some borrowers may still have, according to GoodRx Health.

Parent PLUS loans will also be discharged by ED if the borrowing parent or the student to whom the parent provided the loan dies. Because only one parent can be responsible for a Parent PLUS loan, a surviving parent NOT enrolled on the loan will not be responsible for repaying the loan.

To have a loan forgiven (unforgiven; this term is used to indicate the elimination of debt due to job loss or inability to pay), acceptable proof of death (death certificate, a certified copy of the death certificate or one or a complete copy) must be given to the Student Loans Manager.

What about private student loans?

As mentioned above, there are a number of federal student loans available to borrowers, but they are all overseen by the Department of Education and have standard policies, including death discharge regulations. a debtor. However, private student loans are an entirely different matter.

Private loan terms differ “from lender to lender,” according to Forbes, so in the event of the death of a borrower or student loan holder, the lender’s agreement and policy should be carefully checked. before assuming that a discharge will be applied. There is absolutely no guarantee that a private lender will pay off a deceased person’s debt.

“The problem with private lending is that every loan product is different,” Mayotte says. “Historically, for many private loans, the borrower’s estate or co-signer, if there was one, was often still left behind.”

Now, in the case of a co-signed loan, companies will normally discharge a debt if the primary borrower dies, but can require the borrower to continue to repay the loan if the co-signer dies, according to Forbes.

Take our survey: Do you think student loan debt should be forgiven?
Student Loan Repayment: Mark These 4 Dates on Your Calendar Now

Borrowers who have refinanced a federal loan are in a difficult position because their loan has changed from a dischargeable federal student loan to a possibly dischargeable private student loan. Again, in the event of a borrower’s death, the company providing the refinanced loan will need to be contacted and their policy reviewed.

More from GOBankingRates

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The new world of digital lending https://jj990.info/the-new-world-of-digital-lending/ Sun, 11 Sep 2022 11:59:00 +0000 https://jj990.info/the-new-world-of-digital-lending/ Finally, the Reserve Bank of India (RBI) legitimized digital lending. He coined a new term to describe players in this space – Lending Service Provider (LSP). They will not lend from their own balance sheets but act as outsourcing agents for banks and non-bank financial companies (NBFCs). TO READ THE […]]]>


Finally, the Reserve Bank of India (RBI) legitimized digital lending. He coined a new term to describe players in this space – Lending Service Provider (LSP). They will not lend from their own balance sheets but act as outsourcing agents for banks and non-bank financial companies (NBFCs).


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First published: Sunday, September 11, 2022. 5:29 PM IST

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Fintech Milo Unveils Crypto Mortgage Refis https://jj990.info/fintech-milo-unveils-crypto-mortgage-refis/ Tue, 06 Sep 2022 20:46:21 +0000 https://jj990.info/fintech-milo-unveils-crypto-mortgage-refis/ Miami-based fintech Milo has has begun diversifying its portfolio for investors holding digital assets by offering its first crypto-mortgage refinance product, the company announced on Tuesday. The new offering comes five months after the fintech’s 30-year-old crypto-mortgage purchase product hit the market and has reached $10 million in origination volume. HousingWire first reported on the […]]]>

Miami-based fintech Milo has has begun diversifying its portfolio for investors holding digital assets by offering its first crypto-mortgage refinance product, the company announced on Tuesday.

The new offering comes five months after the fintech’s 30-year-old crypto-mortgage purchase product hit the market and has reached $10 million in origination volume. HousingWire first reported on the lender’s plans to launch refinance products in early July.

“Based on the success of our crypto mortgage offering, we are now able to give those who would have liked 100% financing via a crypto mortgage when purchasing their home,” said Josip Rupena , CEO and founder of Milo, in a statement. “Through our crypto refinance, they can benefit from access to the equity in their property when attractive investment opportunities arise.”

Milo offers cash refinance, a product that allows customers to replace their current mortgage with a new one to take advantage of better loan terms, such as lower rates and longer terms, and withdraw some of the value net of the house in one go. sum.

However, with Milo’s product, borrowers can pledge their crypto assets — including Bitcoin, Ethereum, and some stablecoins, such as USD Coin and Gemini Dollars — and their property to cash out up to 100% of the appraised value. of their property. Milo maintains crypto at regulated custodians, platforms Coinbase and Gemini.

It is possible to borrow up to $5 million for investment properties in the refi product, according to the company’s website. The product has a fixed rate starting at 7.95%. Milo does not currently offer mortgage solutions outside of the United States.

“Milo’s crypto refinance offer is a game-changer for those who have already sold their crypto or taken out a short-term crypto loan to buy a home with cash,” the company explains in a press release. “This solution allows them to extend the repayment period to 30 years and to access the financing they would have preferred from the start.”

The fintech also launched an under-secured mortgage on Tuesday.

Borrowers can take 100% of the property value by pledging only 40% of the loan amount in USDC. “Many crypto consumers already earn and spend exclusively in the digital world,” Rupena said. “Our USDC offering simply helps these consumers build a bridge to the real world.”

Milo, a licensed and insured direct lender, also offers non-crypto mortgage products to US and foreign nationals to purchase or refinance a home in the United States.

The company says it has originated $100 million in loans through its more traditional mortgage line — with applicants hailing from more than 90 countries, according to a press release announcing Milo’s crypto mortgage milestone.

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Can you cancel private mortgage insurance? https://jj990.info/can-you-cancel-private-mortgage-insurance/ Mon, 05 Sep 2022 12:32:15 +0000 https://jj990.info/can-you-cancel-private-mortgage-insurance/ Image source: Getty Images It is important to understand the rules surrounding the PMI. Key points Private mortgage insurance is mandatory insurance for many home buyers. You will generally have to pay PMI if you deposit less than 20%. Once your home drops below 80% of the original value when you bought it, you will […]]]>

Image source: Getty Images

It is important to understand the rules surrounding the PMI.


Key points

  • Private mortgage insurance is mandatory insurance for many home buyers.
  • You will generally have to pay PMI if you deposit less than 20%.
  • Once your home drops below 80% of the original value when you bought it, you will be able to have the PMI removed from your loan.

Many homeowners must pay for private mortgage insurance as part of their monthly mortgage payment. Private mortgage insurance, or PMI for short, is generally required for homeowners who put less than 20% down on their home.

Lenders force homeowners to pay PMI when they put down a small down payment, because lenders want to make sure they don’t suffer uncompensated losses. If a borrower defaults on a mortgage, the lender can foreclose. But with a small down payment, the home may not sell enough to pay off the loan and cover the lender’s fees. PMI ensures that lenders do not lose money under these circumstances.

Although homeowners pay for the PMI, they actually receive no direct protection. They can always be seized if they cannot pay their bills. For this reason, many homeowners are eager to cancel PMI so they don’t have to pay hundreds of dollars a year for insurance that only benefits their lender.

But is it possible to cancel the PMI? Here’s what you need to know.

This is how PMI can be removed from a loan

The good news is that it is possible to cancel private mortgage insurance. You are allowed to do this after you reach the date when your mortgage principal balance is expected to fall below 80% of the original value of your home when you paid for it. You can find out the date by looking at your PMI disclosure from your original mortgage documents, by looking at your loan repayment schedule, or by asking your loan officer when it is.

If you make additional payments on your loan, your loan balance will fall below 80% of your home’s value sooner than originally scheduled. If so, you can ask your lender to remove the PMI sooner than expected.

If the value of your home increases, you could also see your loan balance fall below 80% of the running market price of the property, even if it is still more than 80% of the original value of the house when you bought it. Although you will generally need to have an appraisal done to prove the current value of your home if you wish to waive the PMI in these circumstances, it should be possible to have the private mortgage insurance waived if the appraisal is high enough.

If one of these situations applies to you, you must make a written request to your lender to request the cancellation of the PMI. Generally, you should be up to date on your payments and your lender may require proof that your home’s value has not decreased before removing private mortgage insurance from your loan.

PMI will be automatically canceled under certain circumstances

In some cases, you do not have to request that the PMI be removed from your loan. In fact, private mortgage insurance automatically ends on the date your loan balance is expected to fall below 78% of the home’s original value.

While you could technically wait for automatic cancellation, that would mean paying the PMI longer since you are allowed to remove it once your balance drops to 80%. There’s no reason to wait and pay extra mortgage insurance premiums when it’s easy to request withdrawal.

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KB HOME: Entering into a Material Definitive Agreement, Creating a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant (Form 8-K) https://jj990.info/kb-home-entering-into-a-material-definitive-agreement-creating-a-direct-financial-obligation-or-an-obligation-under-an-off-balance-sheet-arrangement-of-a-registrant-form-8-k/ Wed, 31 Aug 2022 20:19:04 +0000 https://jj990.info/kb-home-entering-into-a-material-definitive-agreement-creating-a-direct-financial-obligation-or-an-obligation-under-an-off-balance-sheet-arrangement-of-a-registrant-form-8-k/ Section 1.01 Entering into a Material Definitive Agreement. On August 25, 2022, Knowledge base home (“Company”) has entered into a senior unsecured term loan (“Term Loan”) with the party lenders thereto (“Lenders”), pursuant to which the Lenders have agreed to lend to the Company until $310,000,000. The Company did not draw on the term loan […]]]>

Section 1.01 Entering into a Material Definitive Agreement.

On August 25, 2022, Knowledge base home (“Company”) has entered into a senior unsecured term loan (“Term Loan”) with the party lenders thereto (“Lenders”), pursuant to which the Lenders have agreed to lend to the Company until $310,000,000. The Company did not draw on the term loan at closing and may draw up to this amount at any time by November 23, 2022, subject to the conditions of use. In certain circumstances, the total commitment under the term loan may be increased up to $400,000,000as long as the additional commitments of the lenders that the Company pursues are obtained. Wells Fargo Bank, National Association acts as administrative agent for the term loan and is a lender.

The Company maintains banking relationships in the normal course of business with Wells Fargo Bank, National Association; Wells Fargo Securities, LLCwho acts as lead manager and sole bookrunner for the term loan; West Bank, Fifth Third BankNational Association and National Association of American Banks, each of whom acts as documentation officers; and with some of the other lenders. In addition, subject to the payment of customary fees and reimbursements of expenses, the Company has undertaken and may undertake in the future Wells Fargo Bank, National Association, Wells Fargo Securities, LLC, West Bank,
Fifth Third BankNational Association, National Association of American Banks and certain of the other lenders and their respective affiliates to provide commercial banking, investment banking, underwriting and advisory services for and/or effect transactions with the Company. Bank of Regionsa lender, is a trustee under the Company’s senior note indenture.

The term loan will mature on August 25, 2026 or sooner, if the Company guarantees the loans under its unsecured revolving credit facility without similarly guaranteeing the term loan (subject to certain exceptions).

The term loan contains various covenants, including financial covenants relating to tangible net worth, leverage, cash or interest coverage and borrowing base, and a limitation on investments in joint ventures and non-guaranteeing subsidiaries. In addition, the term loan contains customary events of default, subject to recovery periods in certain circumstances, which would result in the termination of the covenant and allow the lenders to accelerate payment of outstanding amounts, including non- payment of principal, interest and fees or other amounts; breach of covenants; inaccuracy of representations and warranties; cross default of certain other debts; unpaid judgments; and certain bankruptcies and other insolvencies. In the event of a Change of Control (as defined in the Term Loan), the Lenders may terminate the Commitment and require the Company to repay amounts outstanding under the Term Loan. Interest rates will generally be based either on an adjusted forward SOFR rate or on a base rate, plus a spread ranging from 1.35% to 1.90% and from 0.35% to 0.90%, respectively, according to the Company’s debt ratio.

Proceeds drawn under the term loan are to be guaranteed by certain of the Company’s subsidiaries and are intended to be used to redeem, purchase or redeem the Company’s 7.625% Senior Notes due May 15, 2023which may be called par, plus accrued and unpaid interest thereon, six months prior to such date, pay all fees and expenses incurred in connection with the Term Loan and such redemption, purchase or payment, and for working capital and other general business expenses.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under a

Off-balance sheet arrangement of a registrant.

(a) The information set out above in Section 1.01 is incorporated by reference into this Section 2.03.

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Average Auto Loan Interest Rates by Credit Score https://jj990.info/average-auto-loan-interest-rates-by-credit-score/ Mon, 29 Aug 2022 22:19:30 +0000 https://jj990.info/average-auto-loan-interest-rates-by-credit-score/ Auto loan interest rates are determined by your credit score. The lower your score, the higher your interest rate will be. However, you don’t need a perfect score to get a good rate. To find the best auto loan rate, it’s wise to shop around and work to improve your credit score if it’s not […]]]>

Auto loan interest rates are determined by your credit score. The lower your score, the higher your interest rate will be. However, you don’t need a perfect score to get a good rate. To find the best auto loan rate, it’s wise to shop around and work to improve your credit score if it’s not in top shape.

Average auto loan interest rates by credit score

Auto loan interest rates are directly related to your credit score. That said, you can still get a decent rate without having top-notch credit.

To get a better idea of ​​the difference a higher credit score can make, and an idea of ​​where your interest rate might land, it’s worth looking at average rates by credit score.

Credit score Average interest rate for new car loans Average interest rate for used car loans
781 to 850 2.96% 3.68%
661 to 780 4.03% 5.53%
601 to 660 6.57% 10.33%
501 to 600 9.75% 16.85%
300 to 500 12.84% 20.43%

Source: Experian State of the automotive financing market Q2 2022

Factors That Affect Auto Loan Interest Rates

Although your credit score plays an important role in determining how much interest you pay, there are other factors to consider.

Credit score

The two most common scores used when taking out auto loans are FICO and VantageScore. The two represent several measures of financial well-being, including payment history, credit usage, credit mix, and average account age.

There are some differences in the number of metrics used and how they are weighted. But both scores are between 300 and 850.

Lender

Different lenders will have different credit underwriting criteria. Besides the credit score, your income and your debt to income ratio are going to be taken into account. Some may take your education or work experience into account or weigh it more heavily than others.

Apart from qualification and underwriting standards, some lenders also offer lower rates in general than others. Just be aware that the lowest APRs — those typically listed on lenders’ websites — go to borrowers with excellent credit.

Amount borrowed

The price of the vehicle and your down payment are taken into account in the amount borrowed. If you’re not ready to put down more than the required amount, the lender may view it as an increased risk and raise the interest rate to compensate.

term of the loan

The longer your loan term, the more interest you will pay. But, aside from the additional accrued interest, lenders may charge higher interest rates for longer loans.

How to get a better auto loan interest rate

There are several ways to improve your chances of getting a competitive interest rate, regardless of your credit score.

Compare the prices

Shop around with multiple lenders, including banks and credit unions, and compare car loan interest rates. Not all lenders report to the credit bureaus, so if you’re trying to boost your credit, be sure to choose one that does.

Request pre-approval

It’s a good idea to get pre-approved from at least three lenders before choosing a lender. You will be asked to provide personal and professional information, but not all quotes will require a thorough credit check. Because some require a hard pull, it’s best to keep your application window to around two weeks.

Make a larger down payment

A down payment decreases the amount you need to borrow. By reducing the amount borrowed, the lender takes less risk. Less risk translates into lower interest rates.

Get a co-signer

If you have a lower credit score, consider asking a trusted family member or friend who has a great credit score to co-sign your car loan. Your co-signer will assume the debt if you can’t repay it, which means there’s less risk for the lender. Keep in mind that it can strain a relationship if you are unable to pay.

Where to find the best auto loans

There are many different avenues you can use to find the best auto loan.

  • Banks. If you already have a relationship with a bank and have a high credit rating, your bank may offer you one of the most competitive interest rates. But read the entire agreement before signing – some banks write a clause that allows them to draw on your checks or savings.
  • Credit unions. Like a bank, if you are a member of a credit union, they may offer a competitive interest rate. And if you have less than perfect credit, a credit union may be willing to look beyond that and still offer a reasonable rate.
  • Online lenders. There are several online lenders that offer auto loans that you can prequalify for. As with most direct lenders, you’ll likely get a better rate than applying through a dealership.
  • Car dealerships. This is one of the main ways to end up with a higher interest rate. Dealerships add markups to the interest rates provided, which means you will have to pay more than if you went directly to the lender. Check with several different lenders before heading to a dealership to get the best deal possible.

The bottom line

Low auto loan rates are usually reserved for borrowers with near-perfect credit scores. And while it’s good to know the average rates, you’re not guaranteed to get the number for the credit bracket you’re in.

Whether or not you know your credit score, you can prequalify with online and offline lenders to see what kind of rates you qualify for.

Learn more

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Is it difficult for the self-employed to get a mortgage? https://jj990.info/is-it-difficult-for-the-self-employed-to-get-a-mortgage/ Sat, 27 Aug 2022 14:00:00 +0000 https://jj990.info/is-it-difficult-for-the-self-employed-to-get-a-mortgage/ Independent Mortgage Applicants Many people dream of being their own boss. And for good reason, several studies establish a link between self-employment and greater job satisfaction and better physical well-being. In July 2022, 16.4 million out of 158.1 million Americans were self-employed, representing 10% of the workforce, according to the US Bureau of Labor Statistics. […]]]>

Independent Mortgage Applicants

Many people dream of being their own boss. And for good reason, several studies establish a link between self-employment and greater job satisfaction and better physical well-being.

In July 2022, 16.4 million out of 158.1 million Americans were self-employed, representing 10% of the workforce, according to the US Bureau of Labor Statistics. And that percentage is likely to rise as self-employment among Americans has increased over the past decade.

However, self-employment is not without difficulties. Getting loans can be difficult, especially home loans. However, this should not deter self-employed mortgage seekers. Getting a loan can seem daunting, but it’s easier than ever for self-employed people to find mortgages with competitive rates and customizable options.

Here are some steps self-employed people can take to find suitable mortgages.

After: Looking to buy soon? Prepare to get your offer on a home accepted by getting pre-approved for a mortgage before your home search.

Find a lender specializing in self-employment income

With a stable job and a W-2, it is not difficult to qualify for loans, provided the borrower meets income and credit requirements.

Self-employed people may have more difficulty due to the variability of their income.

Using a lender familiar with self-employment is the number one factor in finding a suitable loan, John Ammar, senior executive loan consultant for Caliber Home Loans, said in an interview. Caliber Loans is a direct lender specializing in self-employment income.

“Finding a competent lender to handle self-employment income is probably the most critical thing,” Ammar said. “There are so many things that come into play when it comes to your income, whether or not you provide positive or negative income on tax returns.”

Start here:Check your self-employed mortgage eligibility

Obtain a conventional loan

Self-employed borrowers can get conventional loans with the lowest rates when the adjusted gross income (AGI) on their federal tax return meets the lender’s requirements. Mortgage lenders like Caliber qualify borrowers for loans based on their AGI.

But with the prevalence of business deductions, many borrowers will not show a high AGI.

“What your bank statements show and what your tax return shows is going to be very different for people claiming small business exemptions on their tax return,” Ammar said. “It’s not what you bring into the bank account, it’s what you file and pay taxes, and that’s why taxable income is what we use to qualify borrowers for our self-employment loans. .”

Self-employed people with higher taxable income are eligible for conventional loans, provided they have a well-established history of self-employment income. For W-2 employees, lenders can look at past three months’ income to assess a borrower’s credit risk. On the other hand, for the independents, they go back much further.

“We average your income over two years to qualify you for your purchase,” Ammar said. “If you’ve been self-employed for seven years, you only have to submit one year of tax returns.”

Seek non-traditional financing

To benefit from the lower rates, some self-employed workers could increase their taxable income by refusing the available deductions. But these deductions help many businesses grow efficiently, so leaving that money on the table can hinder small business growth.

Instead, entrepreneurs can leverage unconventional lending options to secure a mortgage.

Self-employed people can get mortgages based on cash flow instead of AGI on their tax returns, Ray Williams, president of Mortgage Maestro Group, said in an interview. Williams said her company routinely finds loans for the self-employed with payments that are several times their taxable income.

Generally, small business owners can use bank statements to prove their income. Others might use 1099 forms, profit and loss statements, or other business documents to prove what Williams called “verified income.”

Pay higher rates

Granted, there’s a trade-off with bank statement mortgages: you don’t have to give up lucrative tax deductions, but you’ll pay higher rates.

“The tax code is written to reduce what we pay to the IRS, not increase it,” Williams said. “Business owners are not doing anything wrong using the tax code, but they are being penalized by the traditional mortgage industry for buying a home.”

But pricing isn’t everything, and as Wiliams points out, this trade-off makes sense for many entrepreneurs.

“You might pay a higher interest rate for a fix, but it allows you to continue running your business the way you always have,” Williams said.

But is paying that higher interest rate worth it?

“For many business owners, it comes down to determination,” Williams said. “Am I putting money into marketing, growing, and hiring someone? Or do I claim the income, forgo deductions, pay lots of money to the IRS in taxes and not growing my business?”

And even when self-employed borrowers pay a higher rate, they may not be paying as much as they think.

“Those who use these programs understand one thing: higher interest rates mean bigger mortgage deductions,” Williams said.

Business owners can also deduct certain other housing expenses when using their home for business purposes.

After:Check your self-employed mortgage options

Keep your debt low

So how much revenue do lenders want to see? As with other mortgages, it depends on the borrower’s recurring monthly debt payments (credit cards, car payments, and house payments) that show up on the borrower’s credit report.

“You definitely want to keep your monthly debt-to-income ratio below 45%, ideally below 40%,” Caliber’s Ammar said. Lenders are more likely to approve mortgage applications within those ranges, he said.

So, if a self-employed person earns $5,000 in monthly income, lenders would like their total monthly debt payments to be less than $2,000 per month.

Low personal debt can help self-employed borrowers qualify for higher monthly mortgage payments.

Hire a mortgage broker

Finding a broker that specializes in self-employed mortgages can also be a big plus when comparing different types of loans. By using a broker, borrowers typically only need to complete one loan application for multiple options, making it easier to select an optimal solution.

Mortgage brokers can increase the closing costs of a loan if they take a commission from the borrower at closing. However, many brokers can access wholesale lending products, which may have lower rates than those offered by retail lenders.

For the self-employed, a broker who understands business ownership is ideal. Self-employed people should seek “a qualified professional who understands business, taxes and cash flow” in addition to mortgage-related topics, said Mr. Williams of Mortgage Maestro.

Don’t miss: Thinking of buying a house, but want to get a good rate? Find a lender that gives you the power to lock in an interest rate for an extended period of time so you can comfortably shop for a home knowing your rate is safe and won’t go up. Find out what you are entitled to today.

More mortgage research news:

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Can cannabis industry workers get mortgages? Surprisingly, yes.

Questions to ask each mortgage broker or lender on your list

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