Guest post written by Barrett Burns, President and CEO, VantageScore Solutions, LLC.
VantageScore Solutions, LLC is the NAFCU Services Preferred Partner for Credit Scoring.
Times have changed since a promise and handshake were all you needed to get a loan. Now credit scores speak to your character. Most credit unions primarily rely on credit scores to help make consumer lending decisions. Credit scoring models incorporate credit scores with other characteristics related to creditworthiness. In today’s market, there are dozens of different credit scoring models available, from generic models such as the VantageScore 3.0 model, to customized models that are generally expensive to build and maintain.
Even so, it’s a common misconception to think of credit scores as a commodity, or a “one-size-fits-all” risk management tool. A credit score is the numerical representation of the likelihood that a consumer within a specific population will become 90 days or more past due on a debt obligation in a two-year timeframe. It’s important to remember that this propensity to default is assessed within the context of the population being scored. The most effective credit scoring models incorporate other relevant information, such as current economic factors, over a greater population. Choosing the right model for your credit union can help you in ways you might not expect, from saving time and expense to improving accuracy and applicant pools.
Originally posted on CUInsight.com.
Guest post written by Nizar Hashlamon, EVP, Client Relations, Mortgage Cadence.
Mortgage Cadence, formerly Prime Alliance, is the NAFCU Services Preferred Partner for Credit Union Mortgage Solutions.
My colleagues and I talk frequently about the coming changes in mortgage lending. The 100-years refinance (exaggeration intended) cycle will end this year or next. In its place is likely to be the most sustained purchase-money market since the 1950s through the 1960s. There are signs of this already. One headline last week in Housingwire read ’75% of Americans would rather buy now than later’. No doubt they want to take full advantage of the lowest rates in history before home prices rise too much further.
You know this. Everyone knows this. Helping people finance home purchases for the next decade or so is some of the most rewarding work mortgage lenders will undertake during their careers. Many first-time homebuyers will get their homeownership start in the next few years. Our chances to work with them for a lifetime begin now.
There’s a potentially dark side to the coming market changes. Rates will rise. You know this, too. What you might not have thought much about, however, is how much they will rise or for how long, and more importantly, what will the impact be on your secondary marketing pipeline. Start with this fact: rates today are at their lowest point since 1941. Since 1941 rates trended upward until 1985 when the 10-year Treasury rate peaked above 14%. From that point rates began their downward trend, bringing us to where we are today, back to where we were 70 years ago. Read more
Guest post written by Hillary Elder, Director, Money Market Strategies for HighMark Capital Management.
HighMark Capital Management is the fund manager for National Investment Fund for Credit Unions (NIFCU$), the NAFCU Services Preferred Partner for Credit Union Investments.
After just avoiding the “fiscal cliff” as we entered 2013, the U.S. economy has so far defied the odds to grow at a faster pace than first projected. Employment now appears to be increasing steadily, housing is picking up sharply, and the broader stock market has rallied strongly since January. Even the implementation of the dreaded budget “sequestration” on March 1st has not derailed the recovery. Dire warnings of cuts to government programs proved hyperbole as, in reality, sequestration amounts to reductions in the growth rate of spending from the current base. Sensing the public’s exasperation, lawmakers quietly agreed on a spending resolution to continue funding the U.S. Government past March 27th for the six months remaining through the end of the fiscal year.
While long term budget negotiations continue, and there remains the need to increase the U.S. debt ceiling sometime over the summer, other issues such as immigration reform are now being debated.
Originally posted on CUInsight.com.
This article references a study done by Discover, the NAFCU Services Preferred Partner for Debit Card Programs and Debit Networks.
It’s no coincidence that National Financial Literacy Month falls in April, the height of tax season. It seems like there are some teachable moments to be found while scrutinizing every financial decision of the past year. Tax preparation reminds me of holiday get-togethers where the family examines every bad idea everyone has ever had. But doing your taxes shouldn’t be like judgment day at the Santos dinner table. By developing good financial habits, especially at a younger age, managing your money can be a breeze.
National Financial Literacy Month is recognized as an opportunity to promote good financial habits through savings, smart purchases, and long-term personal financial planning to meet one’s life goals. Sound familiar? This is what credit unions do every day, of every month. Credit unions have a long history of helping their members make effective financial choices by offering better service, low fees, and financial education. Tools such as CULookup.com, NAFCU Services’ credit union locator website, offer personal finance calculators covering topics such as home buying, saving, borrowing, retirement and auto financing (also available free of charge for NAFCU Members to use on their websites). The site also includes links to personal financial education resources.
Originally posted on CUInsight.com.
Guest post written by Dennis Zuehlke, Compliance Manager, Ascensus.
Ascensus is the NAFCU Services Preferred Partner for IRA, Retirement Plan, and Health Savings Account (HSA) Solutions Software, Training, Documents and Consulting.
The Obama Administration has proposed a cap of $3 million on IRAs and retirement savings plans in order to raise $9 billion of additional revenue over the next 10 years. This is the first time that the Obama Administration has proposed a cap on the total amount of assets that can be accumulated in IRAs and retirement savings plans held by individuals. It comes on the heels of the Administration’s proposals in last year’s budget to reduce the tax incentives for making retirement plan and IRA contributions.
The Administration released details of the proposal in the Fiscal Year 2014 Revenue Proposals. Under this new proposal, contributions to tax-advantaged retirement savings plans (such as IRAs, 401(a) plans, 403(b) plans, and funded section 457(b) governmental plans) would be prohibited for individuals who have accumulated assets past a certain threshold. That threshold is the amount necessary to provide the maximum annuity permitted for a tax-qualified defined benefit plan (currently $205,000), which, for an individual age 62 in 2013, would be approximately $3.4 million.