Tag Archives: student loans

Money Monday: Prioritize bills when you’re short on cash

How to prioritize which bills to pay

If you’re in a tough spot and can’t pay all of your bills, then you need to make a strategic decision on what to pay and what to delay.


Daily Finance gives advice on what “five bills you should always pay on time, each month. Not doing so could damage your credit, leave you with huge financial penalties, or even cause you to lose your home or car.”

1. Your mortgage
2. Student loans
3. Credit card payments
4. Your rent
5. Auto loans

Details on each of these bills to pay and the reasons why you shouldn’t miss payment is covered by Daily Finance. And the bills you need to pay late? They have some tips on dealing with that, too.

Read all of Daily Finance’s article here: “Prioritize These 5 Bills When You’re Short on Cash”.

A closer look to be taken at nonbank mortgage lenders

The Consumer Financial Protection Bureau Wednesday disclosed key details about how its examiners will size up mortgage companies that aren’t banks but still offer home loans to consumers, noting it will be leaning on other regulators for help as it embarks on the enormous task of reviewing thousands of nonbank lenders.

The details are crucial given that the consumer watchdog agency, through a supervision program it launched last week, is preparing to bring many of the nation’s nonbank financial companies under federal supervision for the first time.

Consumer Financial Protection Bureau - CFPBThousands of nonbank financial firms are not chartered as banks but still offer mortgage, student and payday loans, and many have faced only light federal scrutiny. The sector has faced criticism from consumer advocates and other groups who say some home lending practices by the nonbank sector contributed to the recent financial crisis.

The consumer bureau noted Wednesday the sector is indeed “a significant part of the mortgage market” that included many of the largest subprime lenders during the housing bubble.

“The mortgage market cannot work well for consumers if the spotlight shines only on one part of it, while the rest is left in darkness,” said the consumer bureau’s director Richard Cordray. “Our supervision program will illuminate the entire marketplace by making nonbanks play by the same rules as the banks.”

The bureau’s new “Mortgage Origination Examination Procedures” guide released Wednesday makes clear the bureau’s examiners will be conducting broad reviews of nonbank mortgage lenders’ business practices and the agency will be coordinating with state regulators and other federal agencies.

Consumer bureau staffers will be examining the companies’ volume of business as well as the types of products and services the firms are offering. Also, the bureau will be evaluating lenders’ advertisements and marketing practices as well as closing practices, another indication that just about every part of a firms’ business model will be under review.

The goal will be to assess whether nonbank mortgage lenders and brokers are in compliance with financial laws.

But the bureau also made clear that, unlike other banking regulators, the watchdog has another focus: identifying risks to consumers.

The bureau, created by the 2010 Dodd-Frank financial overhaul law to root out fraudulent financial practices thought to have contributed to the recent financial crisis, had already been supervising some of the nation’s largest banks. But its powers to oversee nonbank lenders didn’t kick in until last week, when President Barack Obama recess-appointed Cordray as the bureau’s first director. Cordray has said the agency will move forward on programs and probes despite concerns about how the president bypassed the Senate to install him as the agency’s chief.

This article is by the Wall Street Journal, viewable here: “New Bureau Plans Close Look at Nonbank Mortgage Lenders.”

Top six reasons mortgage applications are rejected

Half of refinance applications are abandoned or rejected, as are 30 percent of purchase mortgage applications, according to the Mortgage Bankers Association. All told, the Federal Financial Institutions Examination Council (FFIEC) says that well over 2 million mortgage applications were rejected last year.

Want to avoid falling into that number? It’s tough — especially in light of the fact that mortgage lenders have become increasingly restrictive in terms of their lending guidelines since the housing market crash.

Here, as a cautionary tale and primer on what to expect, are the top six reasons mortgage lenders reject applications.FFIEC

1. Income issues. Most failed applications falling into this category have income too low for the mortgage amount they are seeking; often, a spouse’s credit issues can create this problem, too, as the income the spouse plans to actually chip in toward the mortgage cannot be considered by a lender.

But increasingly, the recent vagaries of the job market are also causing this issue, as people who have changed their line of work or have changed from salaried employee to freelancer over the last couple of years can also have their home loan applications rejected based on income.

2. Muddled money matters. If the mortgage for which you’re applying plus your monthly payments on credit card, car and student loan debts will comprise more than 45 percent of your total income, you could have problems qualifying for a home loan. You might also run into problems if you rely too heavily on bonuses, overtime, cash wages or rental income — all of these can be difficult or impossible to get a mortgage bank to consider, and if they do, they might not take all of it into account.

3. Credit issues. Today, the mortgage-qualifying FICO score cutoff falls somewhere between 620 and 660, depending on which lender and which loan type you seek. More than one-third of Americans, by some numbers, have credit scores too low to qualify for a home loan. Even if your credit score is high enough to qualify, if you have any late mortgage payments, a short sale, a foreclosure or a bankruptcy in the last two years, loan qualifying could be difficult to impossible.

4. Property didn’t appraise. Since the whole industry had its hand smacked for allowing home values to skyrocket in a very short time, appraisal guidelines have tightened up — some would say, even more than overall mortgage guidelines. So, it is increasingly common to have the property appraise for a price lower than the sale price negotiated between the buyer and seller.

This is especially common in the refinance realm, as well over a quarter of U.S. homes are now upside-down, meaning the mortgage balance owed is greater than the value of the home.

5. Condition problems. With all the distressed properties on the market, and with most non-distressed sellers barely breaking even, more home-sale transactions than ever are falling apart due to condition problems with the property. Many lenders will not extend financing on homes where the appraiser points out problems like cracked or broken windows, missing kitchen appliances, electrical problems, or wood rot.

And in the world of condos and other units that belong to a homeowners association, if more than 25 percent of units are rented (rather than owner-occupied) or more than 15 percent are delinquent on their HOA dues, new applications for refinance or purchase mortgages on units in the development are likely to be rejected.

6. Technical difficulties with application. The days when lenders just took your word for it are long, long gone. Applications with incomplete or unverifiable information are doomed.

If any of these mortgage loan application glitches arise in your homebuying or refinancing process, it’s critical that you connect with your mortgage professional, be it your banker or mortgage broker, to determine what course of action to take.

In some cases, it might be as simple as buying a stove you find at Craigslist and installing it before escrow closes; but with income issues your mortgage pro will need to help you determine whether it makes sense to pay some bills down, get a co-signer, or even wait six months so your income documentation will qualify.

Tara-Nicholle Nelson is an author and the Consumer Ambassador and Educator for real estate listings search site Trulia.com.