NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES ***** Guernsey, 3 December 2013 – The seventh Annual General Meeting (AGM) of Volta Finance Limited (the Company or Volta Finance or Volta) was held on 3 December 2013 . All resolutions (listed below) were passed. 1. To adopt the audited financial statements of the Company for the year ended 31 July 2013 , including the reports of the Directors and the Auditors (the Accounts). 2. To re-appoint KPMG Channel Islands Limited of 20 New Street , St Peter Port, Guernsey as the Companys Auditors to hold office until the conclusion of the next AGM. 3. To authorise the Board to negotiate and fix the remuneration of the Auditors in respect of the year ending 31 July 2014 . 4. To re-elect James Gilligan as Chairman of the Board of Directors of the Company for a term of three years. 5. To re-elect Paul Varotsis as an Independent Director of the Company for a term of two years. 6. To approve a final dividend* for the period ended 31 July 2013 in respect of the Companys ordinary shares, Class B share and Class C shares of ?0.31 per share, with an ex-dividend date of 5 December 2013 , a record date of 9 December 2013 and a payment date of 30 December 2013 . * Provided always that no dividend shall be paid in respect of any shares held by the Company as treasury shares. 7. To renew the authorisation of the Company unconditionally and generally for the purposes of Section 315 of the Companies (Guernsey) Law, 2008 (as amended) to make market purchases** of ordinary shares in the Company provided that: a. the maximum number of ordinary shares in each class authorised to be purchased is 14.99% of each class of the ordinary shares in issue at any time; b. the minimum price payable by the Company for each ordinary share is 1% of the average of the mid-market values of the ordinary shares of that class in the Company for the five business days prior to the date of the market purchase and the maximum price payable by the Company for each ordinary share will not be more than 105% of the average of the mid-market values of the ordinary shares of that class in the Company for the five business days prior to the date of the market purchase; and c. such authority shall expire at the conclusion of the next Annual General Meeting of the Company. ** Provided always that the market purchase will meet the criteria stipulated in the Commission Regulation (EC) of 22 December 2003 implementing the Market Abuse Directive as regards exemptions for buy-back programmes and stabilisation of financial instruments (No 2273/2003) (unless the purchases would not bear the risk of breaching the market manipulation prohibition). In line with the computation mechanism set out in Resolution 6 of the fifth AGM, adopted on 16 December 2011 , the reference price that has been computed is ?5.9430 per share, 19.17 times the dividend payment per share. As a consequence, when considering a more practical figure, every Volta shareholder may choose to receive either ?31 cents per share or to receive one new share for every 19 shares*** (a conversion price of ?5.89 per share) or any combination of both formulas. The default option will be payment in cash. The ex-dividend date is 5 December 2013 , record date 9 December 2013 and payment date 30 December 2013 . *** The payment of dividend in shares in certain jurisdictions may be restricted (for example, such payment may not be offered within the United States or to or for the account of US persons without a public offering duly documented and accepted by the relevant US authorities) or prohibited by law. Shareholders are required to inform themselves about and to observe any such restriction and prohibition. [Nothing contained in this notice constitutes legal advice nor is it to be relied on in making an investment or other decision]. . ***** ABOUT VOLTA FINANCE LIMITED Volta Finance Limited is incorporated in Guernsey under the Companies (Guernsey) Laws, 2008 (as amended) and listed on Euronext Amsterdam . Its investment objectives are to preserve capital and to provide a stable stream of income to its shareholders through dividends. For this purpose, it pursues a multi-asset investment strategy targeting various underlying assets. The assets that the Company may invest in either directly or indirectly include, but are not limited to: corporate credits; sovereign and quasi-sovereign debt; residential mortgage loans; automobile loans. Volta Finance Limiteds basic approach to its underlying assets is through vehicles and arrangements that provide leveraged exposure to some of those underlying assets. Volta Finance Limited has appointed AXA Investment Managers Paris , an investment management company with a division specialised in structured credit, for the investment management of all its assets. ABOUT AXA INVESTMENT MANAGERS AXA Investment Managers ( AXA IM ) is a multi-expert asset management company within the AXA Group, a global leader in financial protection and wealth management. AXA IM is one of the largest European-based asset managers with ?553 billion in assets under management as of the end of December 2012. AXA IM employs approximately 2,450 people around the world and operates out of 21 countries. CONTACTS Company Secretary Sanne Group (Guernsey) Limited [email protected] +44 (0) 1481 739810 Portfolio Administrator Deutsche Bank [email protected] For the Investment Manager AXA Investment Managers Paris Serge Demay [email protected] +33 (0) 1 44 45 84 47 ***** This press release is for information only and does not constitute an invitation or inducement to acquire shares in Volta Finance . Its circulation may be prohibited in certain jurisdictions and no recipient may circulate copies of this document in breach of such limitations or restrictions. This document is not an offer for sale of the securities referred to herein in the United States or to persons who are US persons for purposes of Regulation S under the US Securities Act of 1933, as amended (the Securities Act), or otherwise in circumstances where such offer would be restricted by applicable law. Such securities may not be sold in the United States absent registration or an exemption from registration from the Securities Act. The company does not intend to register any portion of the offer of such securities in the United States or to conduct a public offering of such securities in the United States . ***** This communication is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as relevant persons). The securities referred to herein are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. Past performance cannot be relied on as a guide to future performance. ***** This press release contains statements that are, or may deemed to be, forward- looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms believes, anticipated, expects, intends, is/are expected, may, will or should. They include the statements regarding the level of the dividend, the current market context and its impact on the long-term return of Voltas investments. By their nature, forward-looking statements involve risks and uncertainties and readers are cautioned that any such forward-looking statements are not guarantees of future performance. Volta Finances actual results, portfolio composition and performance may differ materially from the impression created by the forward-looking statements. Volta Finance does not undertake any obligation to publicly update or revise forward-looking statements. Any target information is based on certain assumptions as to future events which may not prove to be realised. Due to the uncertainty surrounding these future events, the targets are not intended to be and should not be regarded as profits or earnings or any other type of forecasts. There can be no assurance that any of these targets will be achieved. In addition, no assurance can be given that the investment objective will be achieved. ***** This announcement is distributed by GlobeNewswire on behalf of GlobeNewswire clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Volta Finance Limited via GlobeNewswire [HUG#1747546]
Some shoppers planning to buy a new home in 2014 will get more scrutiny #x2013; and likely less money.
Here#x2019;s why: A new set of rules for getting a mortgage kicks in. Interest rates are expected to rise. And loan amounts are expected to shrink.
The Consumer Financial Protection Bureau#x2019;s rules, which take effect Jan. 10, establish a national standard for issuing mortgages and are meant to prevent the risky lending practices that led to the housing crash.
The bureau, created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, says the rules mostly codify practices that are already common in today#x2019;s more careful mortgage climate.
Many mortgage experts and consumer advocates alike applaud the bureau#x2019;s requirements. In addition to looking after consumers, the rules provide a safe harbor for lenders, shielding them from lawsuits.
#x201c;Lenders are going to be crossing their t#x2019;s and dotting their i#x2019;s like never before,#x201d; said Bob Walters, chief economist for Quicken Loans. But strict adherence to the rules could result in unintended consequences, he added. #x201c;There#x2019;s going to be circumstances where people who should get mortgages won#x2019;t get mortgages.#x201d;
Two other developments also could make getting a home loan more difficult. Some economists predict interest rates will gradually work their way up to the mid 5 percent range by the end of 2014. And there#x2019;s a good chance that limits on the size of some popular loans will be lowered next year.
Here#x2019;s what#x2019;s on the horizon and how it may affect you.
The rules: The consumer bureau#x2019;s goal makes sense: restrict mortgages that borrowers can#x2019;t afford. The standards are listed in the bureau#x2019;s Ability-to-Repay and Qualified Mortgage Rule.
The Ability-to-Repay standard bans no-documentation loans and requires lenders to verify and document a borrower#x2019;s income, assets, savings and debt.
The Qualified Mortgage grants the creditor greater protection from potential liability. Under this rule, lenders cannot include toxic features such as negative-amortization #x201c;option ARMs#x201d; that increase borrowers#x2019; debt with each monthly payment, or excessive upfront points and fees (these will be limited in most cases to 3 percent of the loan amount).
Qualified Mortgage loans will generally have to be made to borrowers who have debt-to-income ratios less than or equal to 43 percent, though a temporary exception allows Qualified Mortgage status for higher ratios if the loans are eligible for purchase by mortgage giants Fannie Mae, Freddie Mac, the Federal Housing Authority and some other government programs. Another exemption allows certain small lenders to issue Qualified Mortgages with ratios over 43 percent.
The new rules also help speed up the process of getting a mortgage by giving lenders the authority to reject outright credit-report information if a borrower can prove that it#x2019;s wrong. #x201c;That#x2019;s a huge deal,#x201d; said Jeff Lazerson of Mortgage Grader in Laguna Niguel, Calif. #x201c;It#x2019;s monster-good.#x201d;
Richard Cordray, director of the bureau, recently told the Mortgage Bankers Association that most of the home loans granted now would be considered qualified mortgages.
Some in the mortgage industry, however, say that getting a loan could become harder for some borrowers, especially those in lower paying jobs, retirees or entrepreneurs whose income fluctuates.
#x201c;If you#x2019;re trying to stretch to get into a home, it is going to have an effect on you,#x201d; said Ryan Grant, sales manager at Imortgage in Newport Beach, Calif. From the lender#x2019;s perspective, he added, #x201c;You will have to have some really good compensating factors to go outside of that (Qualified Mortgage rule).#x201d;
The rates: While mortgages may be harder to get for some, they#x2019;re expected to cost more for everyone.
The National Association of Realtors predicts the 30-year fixed mortgage rate #x2013; at an average of 4.22 percent last week #x2013; will reach about 5.3 percent by the end of 2014. The Mortgage Bankers Association has said rates likely will increase above 5 percent in 2014 and then rise to 5.5 percent by the end of 2015.
What happens with interest rates, and how soon, hinges on the Federal Reserve#x2019;s bond-buying program. The Fed, which buys $85 billion of mortgage-backed securities and Treasurys each month, is expected to increase rates after paring down the monetary stimulus.
But Janet Yellen, nominated to be the next chairwoman of the Federal Reserve, recently said that the employment picture and the economy must improve before the Fed cuts back on the program.
Earlier this month, a Bloomberg News survey of 32 economists indicated the Fed may begin to slow its bond-buying purchases in March.
Lazerson, however, thinks interest rates will stay the same or could even go down.
#x201c;The economy in general is tepid, at best,#x201d; he said. #x201c;Wages are stagnant, and that#x2019;s a key driver. Things have really slowed down. If there#x2019;s no demand for money, what#x2019;s the point of raising the rates?#x201d;
The limits: The Federal Housing Finance Agency has signaled it likely will lower conforming loan limits in the summer of 2014, according to various reports. This, too, could shut off many homebuyers from getting conventional loans.
The housing industry is urging the agency not to pull the trigger.
Conforming loans are those purchased by Fannie Mae and Freddie Mac. The two federally chartered mortgage finance companies buy the mortgages from lenders and keep them or bundle them into securities that they offer to investors with a guarantee.
Currently, Fannie and Freddie cannot back loans of more than $417,000 in most markets, though the limit ranges as high as $625,500 in some pricier areas.
If the limits are lowered, #x201c;Fewer will qualify for the home they would be able to qualify for today,#x201d; said John Stehle, vice president of mortgage lending for Guaranteed Rate#x2019;s Costa Mesa, Calif., branch.
#x201c;Borrowers that no longer qualify for conforming will have to move to high-balance (loans), and borrowers that no longer qualify for high-balance will now have to go jumbo,#x201d; he said. #x201c;The rates will be higher, and the qualifying tougher, with each higher-limit tier.#x201d;
Many politicians and real estate industry leaders have objected to lowering the limits, a move many worry could impede the housing market, though lowering the limits would fit with the Obama administration#x2019;s goal to wind down Fannie Mae and Freddie Mac. During the economic meltdown, the two enterprises ran into big trouble and were placed under government conservatorship. They have since become profitable.
With its headquarters located in Cleveland, Ohio’s Public Square, KeyBank is one of the most well-known providers of home mortgages. The bank operates as a subsidiary of KeyCorp (NYSE: KEY), which was formed by a merger in New York. The bank offers home purchase and refinance mortgage loans. The lender provides home loans at the following mortgage rates as of December 4, 2013.
Bear in mind, that the home loan conditions demand that a borrower must have a strong credit score and pay origination fees amounting to 1.00% of the total loan value to the lender. In addition, the loan to property value ratio must not exceed 80%.
The 30-year fixed rate conventional home loan can be obtained at 4.625% as of Wednesday and features an annual percentage rate (APR) of 4.675%. The shorter-term and more affordable 15-year fixed rate home purchase loan is advertised by the lender at an interest rate of 3.780% and carries an APR of 3.869%.
Customers who need more flexibility in terms of interest rates may want to use the adjustable rate mortgage (ARM) options from the bank. These come with a fixed interest rate period then the rate is adjusted depending on prevailing interest rates at the reset schedule for the rest of the loan’s duration. KeyBank has several ARM alternatives in its mortgage loan portfolio.
Turning attention to KeyBank’s more flexible, adjustable rate loans, the 10/1 ARM has a daily low at 4.125% and carries an APR figure of 3.698% as of Friday. The 7/1 ARM version of this loan comes with an interest rate of 3.690% and a corresponding APR of 3.304%. KeyBank’s 5/1 adjustable rate mortgage is up for grabs at a rate of 3.290% and it has an APR of 3.069%. The 3/1 ARM home purchase mortgage can be locked in at a rate of 5.250%. The loan packages contains 3.615% by way of APR.
The Cleveland-heaquartered bank’s additional mortgage loan offerings include the 30-year fixed FHA-backed loan, which starts at 4.250% and an APR figure of 4.346%. The shorter-term 15-year fixed FHA loan can be locked in at a rate of 3.750%. The corresponding APR stands at 3.882%.
At this lender, interested customers can find a number of VA mortgage loan options. Currently, the 30-year fixed VA loan is available at a rate of 4.250% and it bears an APR variable of 4.333%. In case of the 15-year version of this fixed VA mortgage, qualified mortgage shoppers can get it locked in at a rate of 3.750%. This loan comes with an annual percentage rate of 3.896%, according to the lender’s latest published rate information.
The mortgage rate quotes given are liable to change without notice and can vary when the loan is approved or the funds are disbursed. The APR calculations were made using closing costs and discount points, assuming that the borrower will conform to the loan conditions, including lock-in periods.
For more information on KeyBank’s current mortgage interest rates, please take a visit to the lender’s website or contact a loan officer in charge.
Bryan Jung is Senior Counsel in the
Fort Lauderdale office
Eileen Bannon is a Partner in the
New York office
James Baker is a Partner in the
The general risk retention requirements mandated under section
15G of the Securities and Exchange Act of 1934 (added by section
941 of the Dodd-Frank Act) will be applicable to all issuers of
asset-backed securities (ABS) once the reproposed rules published
by federal regulators on Aug. 28, 2013, become final and effective.
(See our Holland Knight alert,
Reproposed Credit Risk Retention Rules Will Affect All
Issuers of Asset-Backed Securities, Sept. 27, 2013.)
Notwithstanding the broad application of these rules, an issuer
of ABS backed by commercial real estate loans, commercial loans, or
automobile loans may be permitted to retain less than the otherwise
required level of credit risk provided the loans are
qualifying loans and certain other conditions are
Underwriting Standards Determine Which Loans Are Qualifying
Commercial real estate loans, commercial loans and automobile
loans that meet certain underwriting standards are considered
qualifying loans under the reproposed rules. (Here is a summary of
the underwriting standards:
commercial real estate loans,
commercial loans and
Included in all of the underwriting standards is a condition
that requires the depositor of the related securitization
transaction to certify that it has evaluated the effectiveness of
its internal controls with respect to the process for ensuring that
all qualifying loans included in the underlying pool have met all
of the other underwriting criteria and has concluded that its
internal controls are effective. A copy of this certification must
be delivered to potential investors (and upon request to any
applicable federal regulator) prior to the sale of the related
The underwriting standards are by design set very high to ensure
that qualifying loans pose a low credit risk, making it a potential
challenge to originate sufficient loans of this quality to get the
benefit of the credit risk retention relief.
Remaining Conditions for Reduction of Credit Risk
Assuming that a sponsor of a securitization transaction is able
to assemble a pool of commercial real estate loans, commercial
loans, or automobile loans that have, at least in part, satisfied
the applicable underwriting criteria to be considered qualifying
loans under the reproposed rules, to be eligible for a reduction
(or elimination) of the 5 percent credit risk retention
requirements the following remaining conditions must also be
- the transaction is collateralized solely by loans of the same
asset class and servicing assets (no mixed-asset pools)
- the asset pool must be fixed at closing (no reinvestment
- prior to the sale of the related ABS, the sponsor provides the
following disclosures to potential investors (and upon request to
the SEC and any applicable federal regulator) under the caption
credit risk retention:
- a description of the manner in which the sponsor determined the
aggregate risk retention requirement for the transaction after
taking into account the qualifying loans
- descriptions of the qualifying loans and those loans that are
not qualifying loans and the material differences between those two
groups with respect to the composition of each group#39;s loan
balances, loan terms, interest rates, borrower credit information
and the characteristics of any loan collateral
- a description of the manner in which the sponsor determined the
For eligible transactions collateralized by both qualifying
loans and non-qualifying loans, the amount of required credit risk
retention will be reduced by the ratio (not to exceed 50 percent)
of the unpaid principal balance of qualifying loans in the pool to
the total unpaid principal balance of all the loans in the pool,
resulting in a minimum credit risk retention of 2.5 percent. In
addition, all of the other general risk retention requirements
described in our
Sept. 27, 2013, alert must be met with respect to the
non-qualifying loans in the pool.
For eligible transactions collateralized solely by qualifying
loans, the credit risk retention requirement will be 0 percent. In
addition, none of the other general risk retention requirements
must be met.
Handling Defective Qualifying Loans
If any qualifying loan turns out not to have met the required
underwriting criteria, the sponsor will not lose the risk retention
benefit so long as:
- the failure of the loan to meet the underwriting criteria is
not material, or
- within 90 days after the non-compliance has been determined,
the sponsor either:
- cures the defect, or
- repurchases the loan at a price at least equal to the remaining
principal balance and accrued interest thereon
In addition, the sponsor is required to promptly notify the
holders of the related ABS of its cure or repurchase, including the
principal amount of the loans and the cause for the cure or
The key to obtaining the credit risk retention relief set forth
in the reproposed rules will be satisfying the applicable
underwriting standards. Comments to these rules were due on October
30 and it is anticipated that many commentators will advocate for a
loosening of certain of these standards because of the potential
difficulty in originating sufficient qualifying loans. Whether this
advocacy results in meaningful changes will be known when the final
rules are published (presumably in early 2014).
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
(PRWEB) November 30, 2013 Online Insurance Marketplace has released a new blog explaining how to cover mortgage loans using elderly life insurance . Elderly life insurance can be bought by seniors as a way of covering their mortgage loans. A life insurance policy provides a death benefit after the policyholder passes away. This benefit can be used by the insured?s beneficiary to cover various costs including mortgage loans which will still be active. More than even, seniors can now benefit from life coverage and other advantages that come with purchasing a life insurance plan. Since retired citizens form an important market demographic, insurance companies have adapted their policies to include coverage for seniors. This means that even a retired person can purchase a policy. Some barriers, though, still persists. Seniors older than 65 years old cannot purchase a traditional life insurance policy like term, universal or whole life insurance, all of which require various medical examinations. Instead, seniors older than 65 years have access to what has become to be known as ?elderly life insurance policies? which are plans that do not require medical examinations. These policies are: simplified issue, last expense insurance and guaranteed acceptance plans. Seniors who purchase life insurance with the sole intention of covering mortgage loans should entrust a close family member as their direct beneficiary. Because once the beneficiary receives the insurance payout, he or she can spend the money on anything. Online Insurance Marketplace recommends either opening an insurance trust fund or designating as beneficiary someone who lives in the house and who will be directly affected by the mortgage loans. ?Life insurance can be used by seniors who haven?t managed to pay their mortgage loans to protect their homes! Life insurance is available for seniors at very advantageous prices!? said Russell Rabichev , Marketing Director of Internet Marketing Company . Online Insurance Marketplace is an online provider of life, home, health, and auto insurance quotes. It is unique in that this website does not simply stick to one kind of insurance carrier, but brings the clients the best deals from many different online insurance carriers. This way, clients have offers from multiple carriers all in one place, this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc. For more information, please visit http://www.affordableseniorlifeinsurance.com . Read the full story at http://www.prweb.com/releases/elderlylifeinsurance/onlineinsurancequotes/prweb11380123.htm
A desert resort town in California is reportedly mulling a bankruptcy filing, but it is still considering other options to rescue its sinking finances, according to a recent report from Bloomberg News.
According to sources, the City Council of Desert Hot Springs, California, has been urged by multiple city employees to file for bankruptcy, but the city’s leaders refused to commit to a bankruptcy filing.
The city, which is home to 26,000 residents, is famous for its mineral spas, where vacationers from nearby Palm Springs descend at all times of the year.
But the resort town will run out of cash by March 31, according to the city’s interim finance director, Amy Aguer, who told the City Council that it should promptly declare a fiscal emergency, which is a necessary preliminary step before filing bankruptcy.
The recently elected mayor of the town, however, disagreed. It’s too drastic to consider, said Adam Sanchez, a Democrat. There’s room in this city budget to make the cuts that are necessary without going bankrupt.
Interestingly, the city, which has roughly $18 million in debt, filed for bankruptcy in 2001, after it told the bankruptcy court it was unable to pay a $6 million judgment owed to a property developer who had wrongfully been denied building permits for a mobile home park. The city left this bankruptcy in 2004.
One bankruptcy expert, Matt Fabian, the managing director of Municipal Market Advisors, told sources that multiple filings for one city are relatively common. Cities that file for bankruptcy seem to file for bankruptcy again, more than other cities, said Fabian.
Desert Springs would be the first American city go up in bankruptcy court since Detroit famously did so this July. Of course, two other California cities, San Bernardino and Stockton, are still working through their pending bankruptcy filings.
According to reports, the bankruptcy filings of these cities were mostly due to rising pension and labor costs, as well as plummeting revenues from property taxes after the recent collapse of the housing market.
The problems of Desert Springs, however, stem from overly optimistic budget projections by previous city leaders, according to Aguer.
FlexiGroup Limited (FXL) is by far the largest company by market cap and has had the best track record over the past five years, with total annual average rate of shareholder returns of 85% over five years and 50% over three years. In January 2009 shares of FXL were trading under $0.50 and today the stock is around $4.50 – an increase of close to 1600%! Here is a five year chart for FXL:
Since its inception as a provider of business equipment rental financing, FlexiGroup has diversified into a company serving business to consumer markets; business to business markets; retail to consumer markets; and small business and online markets. Perhaps the most innovative service comes from the acquisition of Certegy, a payment plan operation now being used by consumers to finance solar panel purchases over time. The company offers merchant payment processing systems and manages interest free credit cards for consumers. FlexiGroups FY 2013 Full Year results showed an 18% increase in net profit after tax and company management is forecasting FY 2014 profit growth between 17 and 19%.
Cash Converters International Ltd (CCV) has been under the eye of regulators over fees charged. A potential $40 million dollar class action suit from NSW consumers (alleging the company violated a legal disclosure requirement) sent the stock plummeting in October. Here is a six month chart:
Cash Converters highlights the companys position as a franchise operator of retail stores selling second-hand goods; also offers pawn-broking loans in some of its markets; and personal finance micro-loans, more commonly known as payday loans. Essentially these loans are an advance using a forthcoming paycheque as collateral, but the fees charged are substantial.
The company has announced it will fight the class action suit. Value investors may be excited by its healthy dividend, fully franked, as well as its low Forward P/E and high 2 year earnings growth forecast. Cash Converters recently announced a trial agreement with Emerchants (EML), a provider of pre-paid financial card products. Under the arrangement, Cash Converter customers can receive loan payments on a prepaid debit card in lieu of cash.
Thorn Group Limited (TGA) is another financial services provider with payday and other unsecured loans in its business model that has seen its share price take a hit of late. On 19 November the companys Half Year 2013 results showed a disappointing drop in profit from the $14 million reported a year ago to the current $13.3 million. Despite the companys explanation – saying that the decline was due to store improvements and start-up costs from Thorns new car rental business – the share price plunged. Here is a one month chart:
Thorn Group began in the consumer rental business with electrical appliances and has expanded to include a diverse array of household goods available through its national network of Radio Rental and Rentlo stores. The company has added commercial rentals through its Thorn Business Services and cash loans for consumers through its Cashfirst operation.
Thorns most recent acquisition places it in the category of a company that benefits both from consumer credit spending and consumer credit defaults. In March 2011 Thorn bought National Credit Management Limited, a company that provides debt management services to businesses. Thorn is now able to help businesses collect what they are owed from receivable status to collection status. The company even offers consultancy services focused on training a customers internal staff members to handle collections more effectively.
Money 3 Corporation Ltd (MNY) has had an astounding run year over year yet still has a Forward P/E under 10. Only two analysts cover the stock with earnings projections for FY 2015 only, which explains the absence of a 2 year earnings growth forecast. Earnings per share are forecasted to grow from $0.07 per share in FY 2014 to $0.11 per share in FY 2015. The Full Year 2013 results showed EPS of $0.0616, a 4.9% increase over FY 2012 along with a record Net Profit before Tax of $5.2 million, a 44% increase over 2012.
In November 2012 the company successfully completed a private placement at $0.40 per share and the stock price has remained on an upward trend since. Here is a two year chart for MNY:
Money 3 specialises in personal and automobile loans and automobile leasing for those with less than perfect credit ratings. Money 3 had 39 branches across Australia offering services ranging from fast cash loans and cheque cashing, to vehicle loans, leasing, rental, and insurance, as well as international money transfers. With a successful capital raise in early September the company added 41 new stores through the acquisition of The Cash Store Pty Ltd. On 14 November 2013 the company announced the successful completion of yet another institutional and sophisticated investors capital raise, this one at $1.00 per share.
Thorn Group is the only company in our first table that deals with debt as well as credit. The following table includes Australias largest debt collection companies, along with another small company that, like Thorn, deals in both. Here is the table:
Dear Bankruptcy Adviser,
My parents are in their 80s. My mom and dad took out separate equity loans. My dads was for $100,000 and he is currently paying it off. My moms was for $120,000, but because of her shopping addictions she has not paid hers in nine months. Now she tells us shes receiving letters that theyre going to take the house. The house is paid off and there is no mortgage. What can happen to the house? Should they file Chapter 7 or Chapter 13 in an effort to keep the house? Do they need an attorney, and if so, what type? My dad has stock worth $100,000, which he basically has been living off of because Social Security doesnt cover all his expenses. Should he put stock in my name so he has no assets?
Your parents will be facing an uphill battle to save their home. Unless you or other family members are willing to contribute to their monthly budget, I believe everything I would suggest is my suggestions are nothing more than a finger in a dam with many leaks. Ill answer all your questions below.
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Can the lender foreclose?
Many clients make this similar statement: My house is paid in full, but I have an equity line of credit with a balance. That equity loan means that your parents property is encumbered with two mortgages and it is far from paid in full. The equity lines are secured by the property. Your parents must pay on those lines or the lender will foreclose.
Chapter 7 vs. Chapter 13?
If they do file bankruptcy, it would almost certainly have to be a Chapter 13. A Chapter 13 bankruptcy will allow them to pay back the delinquent mortgage payments over a 3- to 5-year period. They will make the normal payment to the lender along with a payment to the court. The court payment will pay back the delinquent mortgage payments while the normal monthly payment will keep the loan from falling further behind.
Should you hide the money in his account?
Definitely not. Transferring assets out of your fathers name prior to filing bankruptcy is illegal. They should not compound the potential loss of their home with bankruptcy fraud.
It is also possible that this money could be protected even when filing bankruptcy. The funds might be in a retirement account like a 401(k) or pension.
What is their best option?
Unfortunately, without looking over their budget and expenses, this is a difficult question to answer. However, based on everything above, it sounds like they might not be able to keep this house. Unless there is more money to be found somewhere to pay down these bills, these mortgage payments appear to be too much of a burden. It would be prudent to go to a certified credit counselor (try NFCC.org) to see if there is a way to find some extra money in their budget. In the meantime, here are some other options I would suggest they try:
oApply for a loan modification directly with the lender. The lender might be willing to modify the payment to fit their monthly household budget.
oConsolidate the two loans into one 30-year, fixed-rate mortgage loan. This might be difficult because of the recent delinquent payments; however, there might be enough equity to find a lender willing to refinance.
oSell the house. This should dramatically reduce their monthly expenses and protect the stock money for future expenses. Maybe there is enough equity to receive some proceeds from the sale.
It is obviously easy for me to objectively tell them to sell the home. To me, it is a cause of stress that will not be solved by bankruptcy. To them, it is their home and something that they likely will fight to keep until every penny is gone.
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After making no changes to the benchmark 30 year mortgage interest rates for more than a couple of days, JP Morgan Chase Bank (NYSE: JPM) JPM +2.40% published higher rates of interest for its new home purchase and refinancing options on December 4, 2013.
Today, the standard 30 year fixed rate mortgage loans are published at an even higher interest rate of 4.625% and an APR yield of 4.668%. Likewise, borrowers would also have to deal with a higher interest rate if they are to take the shorter route. The 15 year fixed rate mortgages are not quoted at an increased interest charge of 3.750% and an APR yield of 3.860%.
The central bank of the United Kingdom, the Bank of England (BoE), has scaled back a scheme meant to boost mortgage loans, and refocused it instead on business lending amid fears of a housing bubble in Britain.