financial

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 U.S. Bank said it would use the deal for Union Bank to to expand its presence in key California markets including Los Angeles, San Diego and San Francisco, where Union Bank had a strong foothold. 

U.S. Bancorp in late May finished installing updated signage on the West Coast branches it inherited from Union Bank, but executives say their work to take full advantage of the acquisition is still under construction.

Improved cost savings and opportunities to meaningfully boost revenue should be evident in the third quarter, the first full one since U.S. Bank’s conversion of Union Bank, management said when reporting second-quarter results Wednesday.

“We are well positioned as a national bank with greater scale,” said U.S. Bank CEO Andy Cecere.

Revenue and net interest income were lower than expected in the second quarter, but strong fee income and lower expenses helped improve the Minneapolis bank’s bottom line. The quarter also reflected one-time conversion items.

“This was a noisy quarter, which reflected mixed trends,” David Rochester, director of research at Compass Point Research, wrote in a note.

The $680 billion-asset bank completed its conversion of the Union Bank system in the second quarter, marking one of the final steps in the $8 billion acquisition that yielded hundreds of new branches and millions of new customers. U.S. Bank said it would use the deal, in part, to expand its presence in key California markets including Los Angeles, San Diego and San Francisco, where Union Bank had a strong foothold. 

U.S. Bank said it has seen more new customers than expected engage with the bank, making use of its app and other online banking services. The bank has boosted its advertising budget to get on the radar of new customers and potential new customers in target markets, executives said.

The deal should deliver as much as $900 million in cost savings delivered through, plus a breadth of opportunities for revenue growth, U.S. Bank said.

In the second quarter, U.S. Bank faced similar challenges to those of banks across the industry, whose net interest income generally shrank amid greater competition in deposit pricing. U.S. Bank said it expects lower net interest income in the third quarter. 

U.S. Bank set aside $821 million for credit losses in the second quarter, up from $427 million in the first quarter. Large and small banks alike put aside substantial amounts of reserves early on in the pandemic in case the economic fallout prevented consumers and businesses from making payments on their bank loans.

“Credit quality metrics remained strong versus pre-pandemic levels but are normalizing as expected,” Cecere said on the company’s earnings call Wednesday. “This quarter, we strengthened our balance sheet by increasing the loan-loss reserve, reflective of our prudent approach to credit risk management.”

The bank cited growing credit card balances and continued economic uncertainty as reasons for boosting reserves. Average credit card loans increased 14.5% in the second quarter from the same quarter last year, while average total loans grew 19.9% in the second quarter.

“Consumers are now starting to rely more on credit card debt as a way of paying for their lifestyles,” said U.S. Bank Chief Financial Officer Terry Dolan.

Banks have likely seen the final positive impacts of higher interest rates, Dolan said. U.S. Bank’s noninterest income growth of 7% in the second quarter, driven by higher core fee income, exceeded analysts’ expectations.

U.S. Bank reported a profit of $1.8 billion in the second quarter, in line with expectations. Revenue totaled $7.2 billion, slightly above forecasts.

The bank said its common equity Tier 1 capital ratio increased to 9.1% in the second quarter, up from 8.5% in the first quarter. Capital ratios have been under the spotlight across the industry this year, and specifically at U.S. Bank. The bank’s capital level faced scrutiny this spring, when a research report argued the bank wasn’t holding enough capital for a bank of its size.

Source: nationalmortgagenews.com

Apache is functioning normally

The average 30-year fixed-rate mortgage fell three basis points from the week prior to 2.93%, according to data released Thursday by Freddie Mac‘s PMMS. This marks the first time in over two months mortgage rates have fluctuated outside a five basis point range above or below 3%.

“Mortgage rates continued to drift down as markets concur with the view that inflation increases are temporary,” said Sam Khater, Freddie Mac’s Chief Economist.

Fannie Mae‘s economic and strategic group mirrored a similar outlook on inflation’s transitory effects on both mortgage rates and the housing market. Though uncertainties over consumer behaviors related to reopening and COVID-19 developments remain, the group believes temporary factors are largely responsible for current strong inflation.

U.S. inflation jumped from 1.68% in February all the way up above 5% by June. If the fed were to tighten policy, Fannie Mae’s ESR Group expects this to drag on upcoming housing market growth and even stifle home sales, house prices, construction and mortgage originations.

“While mortgage rates are low, purchase demand has weakened over the last couple of months, primarily due to affordability constraints stemming from high home prices,” said Khater. “With inventory tight, the slowdown in demand has yet to impact prices, meaning the summer will likely remain a strong seller’s market.”

Increasing Lending and Servicing Capacity – Regardless of Rates

The low-rate environment won’t last forever, and both lenders and servicers need to be able to keep their costs down while managing volume fluctuations once things start to normalize.

Presented by: Sutherland

Where borrowers may lose out in an inflated price on their future home, they may save on continued low mortgage rates. Fannie Mae’s economic group said its outlook on mortgage rates will remain the same: 30-year fixed contract rate at 3% in 2021 and 3.3% for 2022.

The Mortgage Bankers Association on Wednesday noted that mortgage applications increased 4.2 percent from the prior week, with refinancing applications up 6% and purchase applications rising 2%.

“The jump in refinances was the result of the 30-year fixed rate falling for the third straight week to 3.11%, which is the lowest since early May,” said Joel Kan, the MBA’s vice president of economic and industry forecasting. “U.S. Treasury yields have slid because of the uncertainty in the financial markets regarding inflation, and how the Federal Reserve may act over the next few months.”

Source: housingwire.com

Apache is functioning normally


Washington, DC
CNN
 — 

Mortgage rates ticked lower for the third week in a row as investors absorbed strong signals from the housing industry and last week’s pause on rate hikes by the Federal Reserve after 10 consecutive hikes.

The 30-year fixed-rate mortgage averaged 6.67% in the week ending June 22, down from 6.69% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.81%.

Mortgage rates have remained over 5% for all but one week during the past year and even went as high as 7.08%, last reached in November, but have been coming down since the end of May.

“Mortgage rates slid down again this week but remain elevated compared to this time last year,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Potential home buyers have been watching rates closely and are waiting to come off the sidelines. However, inventory challenges persist as the number of existing homes for sale remains very low. Though, a recent rebound in single-family housing starts is an encouraging development that will hopefully extend through the summer.”

On Thursday, a separate report from the National Association of Realtors showed that housing inventory is at about half of pre-pandemic levels. Earlier this week, the Census Bureau reported that home building surged in May, rising 21.7% from April.

The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.

Stubborn inflation is cooling somewhat

The rate for a 30-year fixed-rate mortgage has been volatile amid lagging economic indicators and the Fed’s recent decisions on rates. But good news for new construction and inflation are helping to bring interest rates down.

“While the headline Consumer Price Index dropped significantly in May to 4%, the core CPI — which includes goods and services excluding volatile food and energy — has not retreated as much as the overall inflation in recent months, creating a troubling situation for policymakers,” said Jiayi Xu, economist at Realtor.com.

“In the coming months, we may see a faster slowdown in inflation because the growth in the shelter index, the largest contributor to inflation growth, has passed its peak and started to trend down in April,” she said.

Meanwhile, last week the Fed opted not to raise its key lending rate, choosing to wait for additional data and see how recent rate increases are influencing price growth and the real economy in an effort to cool inflation to a 2% level.

The Fed does not set the interest rates that borrowers pay on mortgages directly, but its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasuries, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually does and investors’ reactions. When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow.

“As the inflation is well above the 2% target and the labor market is still strong, [the Fed] signaled that the federal funds rate will be half a point higher than previously expected at the end of 2023, which is also half a point higher than the current rate,” Xu said. “In other words, borrowing, including home purchases, will likely remain expensive through the remainder of the year.”

Mortgage rates will stay higher this year

With the potential for additional rate hikes ahead, mortgage rates will remain elevated throughout the remainder of the year, said Xu.

“As a result, affordability will continue to be an important factor in buyers’ home purchasing decisions,” she said.

Home buyers continue to flock to relatively inexpensive markets where homes are listed below the national median price, leading to notable price growth in these otherwise affordable areas, according to a recent report from Realtor.com

“The heightened competition in these markets may worsen the conditions faced by buyers with financial constraints, particularly due to the already limited supply of affordable homes,” said Xu.

New home construction surged in April, a sign of confidence by builders that buyers will be there to snap them up.

“While the rise in new construction is encouraging, there is a pressing need to build homes catering to all income levels,” said Xu.

There is a shortage of nearly 300,000 homes that are affordable to middle-income earners, who are hurt most by the shortage of inventory and low levels of affordability, according to recent research by the National Association of Realtors and Realtor.com.

— CNN’s Alicia Wallace contributed to this report.

Source: cnn.com

Apache is functioning normally

In a remarkable feat of financial prowess, a 28-year-old individual has shattered traditional notions of wealth accumulation. By strategically harnessing the power of multiple income streams, this trailblazer has managed to generate an astounding $189,000 a year while working fewer than 4 days a week.

As the rest of us marvel at their achievements, it’s time to unravel the secrets behind their incredible success and explore the seven streams of income that have become the cornerstone of their financial empire.

In today’s dynamic world, traditional employment is no longer the sole means to financial prosperity. Creating multiple streams of income allows you to diversify your earnings, reduce risk, and unlock the potential for wealth accumulation.

By understanding and leveraging these seven streams of income, you can take significant steps towards achieving financial freedom.

Understanding Multiple Streams of Income

Multiple streams of income refer to having multiple sources from which money flows into your life. These streams can vary in terms of their origin, nature, and the effort required to maintain them.

By creating multiple streams of income, you can enjoy a more stable financial situation and gain the freedom to pursue your passions without worrying about money.

Diversifying your income through multiple streams is not only about mitigating risk, but it also allows you to tap into different income opportunities and maximize your earning potential.

Stream 1: Earned Income

Earned income is the most common and widely known stream of income. It refers to the money you earn by providing your skills, knowledge, or expertise in exchange for a salary or wages. This can come from your primary job, freelancing, or running a business. While earned income is essential, relying solely on it limits your earning potential and leaves little room for growth.

Financial expert Sarah Johnson advises, “While earned income provides a stable foundation, it’s important to consider expanding your earning potential by exploring other income streams. This can help you achieve your financial goals faster.”

Stream 2: Profit Income

Profit income involves making money by buying and selling goods or services at a higher price than the cost of production. It includes businesses, entrepreneurship, and investments where you can generate profits through successful ventures. Profit income allows you to leverage your skills, creativity, and market knowledge to create additional wealth.

Profit Income Examples:

  1. E-commerce business: Starting an online store and selling products or services can be a profitable venture. You can source products at a wholesale price, set your own retail prices, and reach a wide customer base through online platforms. Profit is generated by selling products at a higher price than the cost of acquisition and fulfillment.
  2. Investing in stocks: Buying stocks of promising companies at a lower price and selling them when their value appreciates can generate profit income. Successful stock investments rely on careful research, analysis, and timing to capitalize on market opportunities.
  3. Flipping real estate properties: Buying properties below market value, renovating or improving them, and selling them at a higher price can be a profitable venture. Real estate investors aim to create value through property upgrades or by capitalizing on favorable market conditions.
  4. Dropshipping business: Running a dropshipping business involves selling products online without holding inventory. You partner with suppliers who fulfill orders directly to customers. The difference between the price at which you sell the product and the cost of the product from the supplier generates profit income.

Profit income offers the potential for financial independence and wealth creation. However, it requires careful planning, market knowledge, and risk management to succeed in various profit-generating ventures. By evaluating market trends, identifying profitable niches, and delivering value to customers, you can maximize your profit potential in this income stream.

Certified Financial Planner Mark Davis suggests, “For those with an entrepreneurial spirit, starting a business or investing in profitable ventures can be a great way to generate substantial income. It’s important to conduct thorough market research and develop a solid business plan to maximize your chances of success.”

Stream 3: Rental Income

Rental income involves owning and leasing out assets such as real estate properties, apartments, or vehicles. By collecting rent from tenants, you can generate a steady cash flow that can supplement your primary income. Rental income offers the advantage of passive earning, as the properties can appreciate in value while providing you with regular income.

According to Susan Thompson, a real estate expert, “Investing in rental properties can provide a reliable source of income over time. However, it’s important to carefully consider location, property management, and tenant screening to ensure a positive rental experience and maximize your returns.”

To learn more about the tax implications of rental income, you can refer to the IRS publication IRS Publication 925: Passive Activity and At-Risk Rules.

Stream 4: Dividend Income

Dividend income is earned by investing in stocks or mutual funds that pay regular dividends to their shareholders. Companies distribute a portion of their profits to shareholders as dividends, providing you with a passive income stream.

Dividend income can be a valuable source of long-term wealth accumulation, especially when reinvested over time.

Certified Financial Planner Emily Carter highlights the benefits of dividend income, stating, “Dividend-paying stocks can provide a steady income stream and potential capital appreciation. It’s important to diversify your portfolio and carefully evaluate the dividend history and financial health of the companies you invest in.”

Stream 5: Interest Income

Interest income is derived from lending money to individuals, businesses, or financial institutions, who repay the borrowed amount with interest. This can be in the form of savings accounts, certificates of deposit, bonds, or other fixed-income investments. Interest income allows you to earn a passive return on your capital while preserving the principal amount.

Interest Income Examples:

  1. Savings accounts: Banks and credit unions offer savings accounts where you can deposit your money and earn interest on the balance. These accounts provide liquidity and are suitable for short-term financial goals or emergency funds. The interest rates offered can vary depending on the institution and prevailing market conditions.
  2. Certificates of deposit (CDs): CDs are time deposits that offer a fixed interest rate for a specific period. They often provide higher interest rates compared to regular savings accounts. CDs are suitable for individuals who have a specific savings goal and are willing to lock their money for a predetermined time.
  3. Government bonds: Governments issue bonds as a way to borrow money from investors. These bonds pay periodic interest to bondholders until the bond matures. Government bonds are considered low-risk investments, and their interest rates are influenced by market factors and the creditworthiness of the issuing government.
  4. Corporate bonds: Companies issue bonds to raise capital. Investors who purchase these bonds receive periodic interest payments and the return of principal upon maturity. Corporate bonds carry varying levels of risk depending on the financial health of the issuing company and prevailing market conditions.

Interest income plays a vital role in a diversified investment portfolio by providing stability and preserving the principal amount. While it may not offer high growth potential, it serves as a reliable income source, particularly for conservative investors seeking steady earnings and capital preservation. It’s important to consider your financial goals, risk tolerance, and market conditions when incorporating interest-based investments into your overall financial strategy.

Stream 6: Royalty Income

Royalty income is earned by granting the rights to use intellectual property, such as patents, copyrights, trademarks, or creative works. Authors, musicians, inventors, and artists can earn royalties from their creations. Once established, royalty income can provide a steady stream of passive income for years to come.

John Stevens, a successful author, emphasizes the significance of royalty income, stating, “For creators, leveraging intellectual property can be a powerful income stream. By protecting your work and exploring licensing and royalty agreements, you can generate ongoing income from your creations.”

Stream 7: Capital Gains

Capital gains occur when you sell an asset, such as stocks, real estate, or collectibles, at a higher price than its purchase price. The difference between the buying and selling price represents the capital gain. By investing in appreciating assets and selling them at the right time, you can earn substantial profits and increase your overall wealth.

Certified Financial Planner Jennifer Adams advises, “Capital gains can significantly boost your wealth if you invest strategically and take advantage of market opportunities. It’s important to develop an investment strategy aligned with your risk tolerance and long-term financial goals.”

For a comprehensive understanding of capital gains taxation, you can refer to the IRS publication Over the Top for the Bournes and the Merkels.

The Bottom Line – 7 Income Streams

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Diversifying your income through multiple streams of income is a powerful strategy for achieving financial prosperity. By incorporating various income sources, such as earned income, profit income, rental income, dividend income, interest income, royalty income, and capital gains, you can create a robust and resilient financial foundation.

Remember, building multiple streams of income requires time, effort, and a strategic approach. Stay committed, invest wisely, and continually explore new opportunities to secure your financial future.

Source: goodfinancialcents.com

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Many years ago, buying life insurance meant simply purchasing coverage that paid out a death benefit when an insured passed away. Today, however, things have changed a great deal. Life insurance policies are still certainly used as a tool for replacing income or for paying off debt upon the death of an insured. But now, these plans can also be used for so much more.

No longer are life insurance policies just “plain vanilla” anymore. In fact, oftentimes, life insurance policies are used as financial planning tools that can help individuals and families solve all types of additional needs, such as saving for college, paying off a mortgage, and supplementing retirement income.

They can also be used for growing funds based on rising market conditions. One type of policy that can be particularly useful in offering a death benefit while also providing for additional financial needs is variable coverage.

How Variable Life Insurance Works

Variable life is a type of permanent coverage. This means that it offers both death benefit protection, as well as a cash value or investment component where the policyholder can invest in a variety of “separate” accounts.

These policies are referred to as such because when a policyholder pays their premium into the plan, the portion of his or her premium that goes into the cash – or investment – component of the policy will be subject to the ups and downs of the underlying market fluctuations. Therefore, the plan will be “variable” in its nature.

Typically, the policy holder has the option of choosing from a very wide variety of different investment options within this separate account. These can include mutual funds, stocks, money market funds, bonds, and a number of other financial vehicles. Because some of the investment options that are included in variable policies are securities, these types of life insurance policies are regulated by the federal securities laws.

Just as with the cash value component of other types of life insurance policies, the funds that are in the investment component of a variable insurance plan are allowed to grow on a tax-deferred basis, meaning that the money will not be taxed until the time of withdrawal. This can provide the opportunity for funds to increase at an even greater pace – especially over time and in positive market conditions.

The Advantages of Owning a Variable Life Policy

There are a number of advantages to owning a variable policy. First, as with any other type of coverage, the death benefit proceeds will provide financial protection to the insured’s survivors in the event of death. Such funds may be used to pay final expenses, to pay off large debts such as a mortgage, or used as income replacement in paying everyday living expenses going forward.

Another benefit of variable life coverage is that the premiums are typically fixed throughout the life of the policy. This means that, unlike term life insurance, the insured will never need to re-qualify for coverage, provided that the premiums are paid within the grace period and that the coverage stays in-force.

Likewise, the initial amount of the death benefit on a variable policy is also usually a fixed amount – regardless of what occurs in the underlying market. Because of this, the named beneficiary (or beneficiaries) on this type of policy can, therefore, be assured that they will be receiving a certain amount of proceeds upon the death of the insured.

This can be helpful in that if the funds were being counted on for payment of certain debts or the replacement of the insured’s income, there would be a set amount coming to the insured’s survivors from the variable life plan.

In addition, due to the variety of investment options, variable life can provide insurance policyholders with the opportunity to grow the funds that are in the cash portion of their policy. These funds may be used in the future for other financial needs and they could be accessed via withdrawals or through policy loans.

So, if funds are needed by a variable life policyholder during his or her lifetime, these plans will typically allow the individual to either withdraw or borrow cash from the investment component of the policy. In addition, funds from the cash value component can often be used for paying the policy premiums – alleviating the policyholder from having to do so out of pocket.

Some Things to Consider Before Purchasing Life Insurance

While there are many advantages of owning a variable life insurance policy, it is also important to consider some key factors prior to moving forward in order to be sure that this type of policy is the best option for you and your specific insurance and investment needs.

First, when considering a variable plan, the policy holder should be able to take on a more active role in the investment of the policy’s separate account. Given this, it may be wise to have a good understanding of how mutual funds and other investments work – and how each may, or may not, fit with your particular financial needs and goals.

Being aware that variable coverage comes with a higher level of risk than some other types of permanent life insurance, such as whole life or universal life, can also help to ease any surprises should the market take a sudden downturn.

In any case, an important consideration that any potential owner of a variable policy should have is that he or she will have much more control over how their funds are invested in this type of life insurance plan. This will differ substantially from ownership of a whole life or a universal life insurance policy, where the underlying funds are typically chosen for the policyholder by the insurance carrier.

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Is a Variable Policy Right for Everyone?

Unlike whole life insurance, where cash is only guaranteed to grow at a fixed conservative rate of interest, the funds that are inside of a variable life policy are tied to a variety of different market related investment options. This allows the opportunity for a substantial amount of growth. It also, however, can subject the funds to market risk. Therefore, variable policyholders need to be aware that their funds can rise in value. However, they can also fall.

The policyholder of a variable life policy also has a great deal of choices in the underlying investments that are chosen for his or her cash value component. This differs significantly from whole life insurance where the insurance company makes these selections. Therefore, those who are not active investors or who do not have a good understanding of stocks or mutual funds may want to obtain some initial knowledge of these investments prior to moving forward. It is also a good idea to have at least a basic understanding of how different types of market risk can occur, and how such risk may be offset.

How to Get the Best Variable Life Insurance Quotes

When shopping for variable life insurance quotes, it is best to work with a company or an agency that has access to more than just one insurance carrier. This way, you will be able to compare different insurers’ policies and benefits objectively in order to determine which fits best with your specific needs. You will also be able to compare different premium quotes in order to see which works best with your life insurance budget.

If you are ready to compare policies and quotes, we can help. We work with the best life insurance companies in the marketplace today, and we can get you all of the important information that you need quickly and easily – right from your home computer, and without the need to meet in person with a life insurance agent. When you’re ready to see how a variable life policy may benefit you and your loved ones, fill out the form on this page to start your quotes.

Should you have any questions along the way regarding how variable policies work – about life insurance in general, or about something more specific such as life insurance without medical exams – please feel free to contact us directly. Our experts can walk you through step-by-step the ins and outs of variable policies, and the many ways that these types of plans can be structured.

We understand that the process of buying life insurance can sometimes be confusing – especially when there are many options to choose from. We will ensure that you have all of the information that you need in order to make a well-informed buying decision about the coverage and the plan that’s right for you and those you love.

Source: goodfinancialcents.com

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Pay option arms, which allow homeowners to make less than the interest-only mortgage payment each month (negative amortization), may be partially banned in the state of California if proposed mortgage reform legislation becomes law.

Yesterday, Assemblymember Ted Lieu announced that the California Assembly passed “Assembly Bill 260,” which bans the worst of so-called “predatory lending practices.”

“More specifically, AB 260 would create a strong fiduciary duty standard for mortgage brokers across all loan products,” Lieu’s office said in a release.

“It eliminates compensation incentives that led to riskier loans, directly prohibits steering, and directly prohibits brokers and lenders from making false or deceptive statements connected with a subprime loan.”

It also establishes clear regulations for prepayment penalties and bans negative amortization on “higher-priced mortgage loans,” while imposing stiff penalties to prevent abusive subprime lending.

Essentially, brokers would not be able to receive compensation (yield spread premium) for tacking on prepay penalties to higher-priced loans (which I’ve yet to find a clear definition for), effectively rendering them useless.

A similar bill was vetoed last year by Governor Schwarzenegger, but the ongoing mortgage crisis has forced him to call a Special Session of the Legislature.

“We must enact landmark reforms to address the systemic failures in California’s subprime mortgage industry,” said Assemblymember Lieu.

“These failures have not only devastated California’s economy, they have contributed to a national and international financial meltdown.”

The bill’s provisions would apply to the higher-priced mortgage loans originated on or after July 1, 2010.

Source: thetruthaboutmortgage.com

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If you’re wondering how difficult it is to enter the business of originating mortgages, just take a look at Discover.

The credit card company turned mortgage lender is exiting the business after just three years.

The departure coincides with a spike in mortgage rates, which should reduce the pool of borrowers eligible to refinance, the bread and butter of Discover Home Loans.

In fact, it was just a few months ago that Discover Financial CEO David Nelms called purchase-money mortgages a difficult nut to crack.

Call it a failed experiment, or perhaps an unexpected breakdown for a company that seems to be making big gains in its primary line of business.

Regardless, they’re done. They made an announcement on their website yesterday, saying they will focus on their “profitable direct banking products for which the company sees greater opportunities for growth.”

They also noted that the mortgage origination business Discover acquired in 2012 from LendingTree is no longer projected to meet their financial expectations as a result of “ongoing challenges” in their operating model.

It’s unclear what that actually means aside from purchase mortgages being more challenging to acquire/originate, but Carlos Minetti, president of consumer banking for Discover, called it a “difficult decision.”

I can tell you from personal experience that a lot of people were unhappy with Discover Home Loans, as evidenced by the many comments on my blog.

This didn’t really come as much of a surprise, given how unique the mortgage industry is. It’s certainly not the same as slinging credit cards.

As I’ve mentioned before, the credit card industry is very accommodating, whereas mortgage lenders are highly regulated and don’t have tons of room to appease borrowers if they aren’t 100% satisfied.

And if a Discover credit card customer decided to work with the company because they enjoyed their other products and customer service, they probably didn’t receive the same treatment via their home loan department.

This divergence in expectations probably resulted in a lot of unhappy customers.

Nearly 500 Will Lose Their Jobs

The closure will result in about 460 layoffs at locations in Irvine, California and Louisville, Kentucky. The affected employees will all receive severance packages.

The Irvine office stopped accepting new applications yesterday but will continue to process and fund loans already in progress.

The Louisville office will accept new applications through July 31st, after which time Atlanta-based AmeriSave Mortgage Corporation will finish processing remaining applications.

AmeriSave seems to be taking over that mortgage office and is expected to offer jobs to 125 existing Discover employees.

The closure of the mortgage business will result in a charge of $0.04 per share of Discover stock, currently priced at just over $58 and valued at nearly $26 billion.

The company plans to continue offering home equity loans through Discover Bank.

Source: thetruthaboutmortgage.com