Why Haven’t Loan Officers Been Told These Facts?
In Case you missed it, as usual, the GSEs were busy making policy changes last year. See the complete FNMA 2023 seller-servicer changes and corresponding release notes through November.
Here are a few highlights from the release:
- Prohibits an employment offer or contract for future employment from a family member or interested party to the transaction.
- Updated documentation requirements for rental income used towards qualifying.
- Allows less than 24-month history of self-employment and one year of personal and business tax returns if certain criteria are met.
- Updated the Appraiser Independence Requirements and introduced Property Data Collector Independence Requirements.
- Allowed temporary interest rate buydowns for mortgages secured by manufactured homes.
- Allowed the use of a borrower’s earned real estate commission for down payment and closing costs.
In Case You Missed It 2023 List (November)
Do you have a great value proposition you’d like to get in front of thousands of loan officers? Are you looking for talent?
BEHIND THE SCENES – CFPB Report Details Abuse of Trust by U.S. Colleges
Unwary Students May Be Getting Fleeced by College-Endorsed Financial Providers
College-sponsored mortgage financing next?
This article is a little off the mortgage path but deals with a possible fiduciary failure involving financial services. Breach of trust surrounding any financial services is concerning for finance professionals.
Federal and local governments have yet to identify young adults as an at-risk population for financial exploitation. Plenty has been said about the risks of school loans, yet beyond the crippling student debt discussion, there appears to be a novel snake in the grass—predatory colleges.
Who saw that one coming? It is no secret that for many students, getting through the college years is financially burdensome. Compounding this vulnerability is often a general lack of financial savvy, making these persons extra vulnerable to financial missteps involving abuse of trust.
The CFPB report addresses partnerships between colleges and private enterprises offering students various financial services and products. The report does not condemn these partnerships, which somewhat look like ABAs from the mortgage world. However, when a person maintains a position of trust, such as a college administration, there should not be any hint of conflict of interest or abuse of trust concerning vulnerable students.
Here is what the report alleges. Instead of offering products and services that enrich the students by offering discounts or bonuses, the college offers financial products and services with charges that students could avoid if they were to shop around. Why wouldn’t a school use its leverage to get better student deals? No, instead, these schools choose to fleece the lambs. For playing the shill, some colleges are getting kickbacks from banks and other actors.
One should expect these misguided egg-heads to offer personal financial classes or promote best practices when shopping for consumer services. Instead, the schools prey on the fraternity that is part of the college experience.
Should colleges focus on teaching the students to fish rather than fishmongering? Welcome to college. Now, meet the dean of deceit. From Wall Street to academia, corruption has no boundaries. Untrustworthy and unscrupulous, shame on these confused educators turned grifters.
Then I’ll get on my knees and pray
We don’t get fooled again
Don’t get fooled again, no, no
Yeah
Meet the new boss
Same as the old boss
– Won’t Get Fooled Again lyrics: Peter Townshend
See the LOSJ article on asymmetrical marketing to students and schools.
From The CFPB
Many colleges directly offer financial products to students and market other products that are offered by third-party financial service providers. When colleges do this, students trust and rely on their schools’ offering or marketing of these products as financial advice and may be influenced by what they could perceive as their endorsement to sign up for financial products and services that are more expensive than other available options. However, colleges may also have independent interests from those of their students and may not face competitive pressure to lower fees or provide low-cost products. This can lead to students paying more for financial products than they would on the open market in certain cases: for instance, many deposit accounts offered to students still include non-sufficient funds fees and overdraft fees even though accounts without such fees are increasingly available on the open market.
In 2022, credit card issuers paid over $19.6 million to colleges and affiliated organizations for these partnerships, with an average annual payment of roughly $138,000 from the issuer to the college or affiliate.
Policymakers, along with federal auditors, banking regulators, and other agencies, have identified risks associated with marketing practices related to college-sponsored financial products and developed laws and policies to address those risks. However, many colleges continue to offer and market financial products in ways, including through online and email advertisements, that may mislead students under certain circumstances.
This report presents new research and data on certain financial products that colleges market to their students in partnership with third-party financial service providers, including deposit accounts, prepaid cards, and credit cards. This report also serves as the fourteenth annual report to Congress on college credit cards pursuant to the CARD Act.
See the entire report below, and don’t forget to tell your college kids to be wary when dealing with any seller.
CFPB College Banking and Credit Card Agreements Report
LOSJ V3 I31 Asymmetrical Marketing
Tip of the Week – Why Reinvent the Wheel? See the LOSJ Link, Goal Setting
Are you Living Like Alice in Wonderland? Resolve to Power-Up Your Goals.
Well, another year has gone by, and what a doozy. For many, 2023 was rough on the pocketbook but good for the prayer life.
When evaluating what truly matters to you and what you want to be different about 2024, starting with a destination or objective is critical. There is a nexus between goals and motivation. Goals should be balanced, realistic, and achievable. You must dig deep to overcome obstacles that interfere with your vision and what you want in and from life. That takes motivation and grit.
Do the only goals you can think about revolve around making more money? That could be a problem.
Another flag is when our goals revolve around other people’s aspirations for us, such as some “professional” goals. Not that making more money or other professional goals are inappropriate. Yet, should there be more to your life vision? Are your goals in step with an overarching direction and purpose, or are your goals devoid of what is important to you?
Say you don’t need no diamond rings
And I’ll be satisfied
Tell me that you want the kind of things
That money just can’t buy
I don’t care too much for money
Money can’t buy me love – Lennon & McCartney
Money can’t buy love, but providing for one’s household is hardly antithetical to an act of love. The song is more about the misguided passion or endless need for more money and the overreliance on money that gets folks into trouble.
For some, the realization sets in that pursuing money as the means to bring peace and contentment is a fool’s errand. In that calculus, there is never enough money. Nothing wrong with being rich. The love of money is a matter of the heart, not the finances.
That said, money does not guarantee happiness, but neither does poverty. In linking short and long-term financial goals with what matters in life, the money/life nexus emerges. What matters in life is subjective. Comprehend the things that matter to you.
Learn to link your short-term goals to what matters to you. Describe what matters to you in terms of long-term or strategic goals. Understand the price of failure. Failure to achieve short-term goals ultimately impacts what matters to you. This nexus, envisioning the cost of failure, is an often overlooked aspect of goal-setting. Don’t hide away failure. Comprehending failure and its impacts and maintaining the perception of failure’s consequences can drive you to attain your goals.
Don’t wrestle with your psychology. We are more motivated by loss than gain. Deal with it.
Goal-setting can be a powerful means to better yourself for you and those that matter to you. Making 2024 your best year, in a sense, is up to you. Make it count.
See the LOSJ Article on Goal Setting.