Small Business

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About the series…

When most people talk about money management, they discuss tactics. Occasionally, you’ll encounter someone who elevates the discussion to strategy, rather than simply scattershot tactics.

But what’s missing from both conversations — both tactics and strategy — is a wider-lens look at how to become a better thinker; how to become a crisp, clear decision-maker.

How to think from first principles. How to better your brain. How to cultivate the wisdom to know the next move.

This series is an attempt to bring first principles thinking into the conversation around money. Welcome to the inaugural post.

Welcome back to First Principles, my series with an alternate definition of FIRE — Financial Psychology, Investing, Real Estate and Entrepreneurship.

Today we’ll dive right in with the question on everyone’s mind: is a recession looming?

Financial Psychology

Are we in a recession?

Short answer: Possibly. I may even go as far as to say “probably.”

A recession is defined as two consecutive quarters of negative economic growth, as measured by GDP. (Notice that recessions reflect the state of the economy, not the stock market. We’ll come back to that in a moment.)

By definition, a recession is only visible in hindsight, after two negative-growth quarters have passed. This means it’s possible we’re already in a recession. It’s also possible that one may be looming.

Why now?

What’s behind this (potential) recession? In a word: inflation.

As I’m sure you know, the Federal Reserve has been raising interest rates. (There have already been 5 rate hikes so far in 2022!)

The Fed is tasked with a “dual mandate” to control both inflation and the risk of recession; this “dual mandate” exists because controlling inflation necessarily carries a recessionary risk.

But why?

To control inflation, the Fed must make money more expensive to access. When borrowing becomes more expensive, people and companies do less of it, which slows spending and growth. This could lead to a couple of consecutive negative-growth quarters, which is, by definition, a recession.

What does this mean for you?

Recessions vary along three dimensions:

(1) severity

(2) duration

(3) frequency

It’s tempting to think that a recession will impact us in the same ways as the Great Recession of 2008.

This is due to a few cognitive biases, including:

Recency bias — our tendency to overestimate that an event that occurred recently will re-occur again, or to assign greater importance to things that have happened most recently.

Salience bias — our tendency to focus on events and facts that are remarkable (the headline-grabbers), rather than events and facts that are mundane.

Availability bias — our tendency to think that examples that most easily come to mind are more important or significant than they actually are.

The Great Recession of 2008 was (1) recent; (2) remarkable; and (3) easy to recall.

Its remarkability and ease-of-recall stems from the fact that the Great Recession was both high-severity AND long-duration. It felt personal; millions lost their jobs and homes, which meant that this recession impacted us in the most visceral, tangible ways possible.

For all those reasons, it’s easy to assume that every recession will look, feel and behave similarly to the Great Recession.

But will it?

Let’s turn our attention to 2022, and look at the many factors that are different this time around, including:

(1) Unemployment is at a record low. Despite the occasional warning headline (e.g. Tesla will be reducing its salaried headcount by 10 percent), the unemployment rate remains 3.6 percent as of May 2022, according to the U.S. Bureau of Labor Statistics.

(2) Housing prices continue to rise, despite higher interest rates, due to imbalances in supply-demand fundamentals. The cost of materials (such as lumber) remains high, which increases construction costs and therefore home values.

(3) Consumer spending remains strong, particularly in discretionary areas such as travel and dining. Despite higher fuel prices, airlines are seeing strong demand for flights.

What does this mean?

We may or may not already be in a recession, or enter one in the near future.

But if we do, there’s a chance this might be experienced as an “on-paper” recession, in which the daily lives of the average middle-class worker isn’t strongly affected.

If unemployment remains low, consumer spending stays strong, and inflation gets roped into check, there’s a chance that this recession will be forgotten. It might be long-duration, but low-severity.

Of course, this is one of a range of possibilities, and as you know, I’m not in the business of prognostication.

But it’s worth making the point that we shouldn’t let our cognitive biases lead us astray. Don’t assume that the next recession will resemble the conditions of 2008.

SPOTLIGHT ON…

Have you been interested in real estate investing for years, sitting on the sidelines watching the market go up and wishing you’d gotten in sooner?

I have a secret for you: it’s not too late to find good deals.

Even though parts of the US market are crazy, there are still good deals to be found; you just have to know where to look.

Soon, enrollment for my flagship real estate investing course, Your First Rental Property, will open for the ONLY time this year.

Want to get notified when we open the doors? Join the VIP list.

Join the VIP list

Investing

Recessions reflect the economy, not the stock market.

Let’s return to the definition of a recession: two consecutive quarters of negative economic growth, as measured by GDP. This definition doesn’t directly relate to stock prices.

But investors react in varied ways.

There are two popular styles of investing: growth and value.

Growth investors tend to sell (or not buy) during recessions. When companies expect lower profits, growth investors are usually unwilling to pay a high price for a share of that company, so stocks can fall.

But this is counterbalanced by value investors who pick up shares of the ‘winners,’ the companies and stocks that they believe have been maligned by the market and that will emerge strong during the recovery.

Hence, the volatility.

So let’s zoom out and look at what’s happening now:

Everything (except real estate) is falling.

Stocks are volatile. Crypto is depressed. Bonds are unattractive.

And that’s not surprising, given the liquidity patterns of the past two years.

At the start of the pandemic, $10 trillion in liquidity got pumped into the monetary system. Investors used that liquidity to buy all types of assets — stocks, bonds, crypto, housing — triggering a massive spike in the value of all asset classes across the board. (It’s no surprise that “meme stocks” like GameStop and AMC Theaters became a thing at the exact moment when millions received “stimmy” checks.)

Two years ago, people were already asking the question, “what should I invest in when everything is expensive?”

Last year, that question only became louder and more pronounced.

It’s reasonable that today, as liquidity is getting removed from the system and capital becomes harder to access, the values of these assets will gyrate for awhile, then stabilize at a “new normal,” with valuations that reflect market fundamentals such as earnings and expectations.

What does that mean for you?

Expect that the rest of 2022, perhaps 2023, could be volatile. Stocks, crypto and bonds may swing for awhile as investors try to figure out the “new normal.”

But these types of events are how the market cleans itself.

The poorly-run companies run out of money and fold. Better companies take their place. And the broad market, over the long-term, reflects the growth of the winners.

Many fantastic companies started during the Great Recession; many new companies will be created during the next one.

Real Estate

We created a massive, multi-day email series to deep-dive into recession and inflation in 2022 — and specifically, to talk about how it could impact the housing market.

It’s waaayyyy too detailed to summarize into this post, so I’d suggest signing up to get this multi-day email series.

If you’re even thinking about buying real estate, either as an investor or as an owner-occupant, you’ll find a ton of value in this free email series.

Get the free email series

Entrepreneurship

One of the most interesting stats to watch in coming months relates to the unemployment rate.

Right now, many entrepreneurs are struggling to hire talent. The labor market is tight. Small businesses are having a tough time competing with the salary and benefits packages offered by major corporations.

Many real estate investors (which is a specific subset of entrepreneurship) have spent years lamenting how hard it is to hire contractors — because many contractors are booked, busy, and in high demand.

Given the record-low unemployment, that’s not surprising.

If the labor market loosens, it might become easier to hire. And that will be a blessing for small business owners and real estate investors who are trying to find top talent, especially 1099 contractor talent.

Again, this is why many great companies tend to be launched during recessions:

One of the best times to create a business is when skilled talent is looking for work.

Hope you enjoyed this issue of First Principles.

I’ll see you in the next issue. Until then!

Click here if you want future posts like this straight to your inbox with more thoughts, ideas and insights on a new take on FIRE.

See you soon!

Source: affordanything.com

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Scottsdale Award Program Honors the Achievement

SCOTTSDALE November 20, 2023 — Credit Absolute has been selected for the 2023 Best of Scottsdale Award in the Credit Counseling Service category by the Scottsdale Award Program.

Each year, the Scottsdale Award Program identifies companies we believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and our community. These exceptional companies help make the Scottsdale area a great place to live, work and play.

Various sources of information were gathered and analyzed to choose the winners in each category. The 2023 Scottsdale Award Program focuses on quality, not quantity. Winners are determined based on the information gathered both internally by the Scottsdale Award Program and data provided by third parties.

About Scottsdale Award Program

The Scottsdale Award Program is an annual awards program honoring the achievements and accomplishments of local businesses throughout the Scottsdale area. Recognition is given to those companies that have shown the ability to use their best practices and implemented programs to generate competitive advantages and long-term value.

The Scottsdale Award Program was established to recognize the best of local businesses in our community. Our organization works exclusively with local business owners, trade groups, professional associations, and other business advertising and marketing groups. Our mission is to recognize the small business community’s contributions to the U.S. economy.

Source: creditabsolute.com

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Nashia Baker is a commerce editor at Hearst Magazines; she covers all things home and lifestyle across brands such as Oprah Daily, Cosmopolitan, Delish, and Esquire. Before joining Hearst, she highlighted small business owners, creatives, and the best shoppable content. 

Source: harpersbazaar.com

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Super Jumbo, HELOC, DSCR, CRM Texting, Servicing Rights, QC Products; Fannie/Freddie Updates

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Super Jumbo, HELOC, DSCR, CRM Texting, Servicing Rights, QC Products; Fannie/Freddie Updates

By:
Rob Chrisman

Tue, Dec 12 2023, 10:14 AM

Today I head to Northern California, home of plenty of technology. The other day I went to the doctor and the receptionist handed me a tablet and said, “Please fill out these medical forms on the screen, which are identical to the ones you filled out earlier online, and have the exact same questions your doctor will ask you later in the exam room.” Great. There’s nothing like old-fashioned printed things. I am sure that menu Quick Response (QR) codes are fine, but plenty of other QR codes are not: beware! “The Federal Trade Commission (FTC) warned the public against scanning any old QR code in a consumer alerts blog last week. Naturally, the warning comes down to security and privacy: bad actors can put QR codes in inconspicuous places or send them via text or email, then just sit back and wait for a payday in the form of money, logins, or other sensitive information. Lord knows that the mortgage industry has enough challenges from lousy characters without more of it coming our way! (Today’s podcast can be found here, and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades. Today’s has an interview with Clear Capital’s Kenon Chen putting a bow on the real estate market in 2023 and why 2024 brings reasons for optimism.)

Lender and Broker Products, Programs, and Services

Are you missing out on originating more government-backed loans? A whopping 44 percent of purchase loans for 1–4-unit properties in the top 10 MSAs in the United States would be potentially eligible for down payment assistance. That’s according to a newly released Urban Institute (UI) study. UI partnered with Down Payment Resource (DPR) to analyze 2022 HMDA data and DPA data from the 10 largest MSAs. Among the findings, the report says that across channels, FHA and USDA loans are most likely to be eligible at 80 and 82 percent, respectively and that FHA and USDA loans are generally eligible for a greater number of programs than conventional or VA loans. For more insight into how DPA programs could help you fund more government-insured mortgages, schedule a demo with the DPR team.

TENA Companies, Inc. is your partner for achieving Mortgage Quality Control excellence in 2024 and beyond! In today’s challenging market, Quality Control remains paramount. Protecting the integrity of your firm’s portfolio, maintaining compliance, and reducing risk is critical in the current lending environment. TENA’s industry-leading team of skilled auditors have unmatched experience and knowledge of every facet of Mortgage Quality Control operations, ensuring your firm minimizes risk and stays compliant from Pre-Funding to Post-Closing to Servicing. Our tailored Mortgage QC services and SecondLook Software deliver all the tools needed to ensure loan quality remains high, providing your firm with peace of mind as we enter the New Year. Don’t just adapt; lead with confidence. Contact TENA today to get started and position your firm for Quality Control success in 2024!

“Technology for technology’s sake is useless.” That’s the mindset that drives the mortgage technology experts at ICE as they modernize the American homebuying process via digital solutions built with a purpose. Watch here as HousingWire’s CEO Clayton Collins sits down with Sandra Madigan, EVP of Product Strategy at ICE Mortgage Technology, to discuss the careful consideration it takes to effectively “digitalize” the mortgage industry. You’ll learn how ICE is unifying all parts of the homebuying journey and how that digitalization impacts homeowners, as well as back-office teams who support consumers. Catch the full interview here to hear how ICE is approaching product development and helping to improve the homebuying and homeownership process end-to-end, and which aspects of the mortgage experience the industry needs to digitalize next.

“If Fed fund futures are right, by the time we all meet at next year’s MBA Secondary, the Fed may have already cut once and may even be on their way to a second cut! Right now, MSR valuations are “hanging in there” but Fed cuts will likely erode some of the value from ‘float’ on escrow. Blue Water (“Blue Water Financial Technologies Services, LLC”) can assist lenders to sell bulk MSR, regardless of size. With BlueRATE™, a lender can obtain an instant portfolio valuation and then determine what to sell – whether it be a small geo carve or the entire MSR portfolio. Blue Water can also assist in moving your product quickly with Blue Water’s proprietary SuperTransfer™. With SuperTransfer™, transferring the portfolio to a buyer is easier than ever. Connect with our expert Sales Team to learn more.”

Have you heard about the laws the FCC and the TCPA have implemented for the new A2P 10DLC requirements, to try and stop the junk texting? Hopefully, you have because the fines for noncompliance are serious. Are your salespeople texting their databases? Since ALL texting through mortgage CRMs falls under this federal law, it is imperative that you utilize texting legally and compliantly. What have your CRM providers done to help you navigate this challenging compliance landscape? Usherpa is pioneering the way on this front, making sure they’re texting platform was built to the letter of the law, ensuring that their clients are not exposed and are utilizing texting legally. Click here to learn more about the regulations and what you need to do to be compliant. Share this Infographic with your team.

Correspondent and Wholesale Programs

“Long-term Rental or Vacation Rental? Visio Lending is the nation’s leader in Non-QM Investor DSCR loans for buy and hold SFR rentals with nearly a decade of experience and over $2.5 billion in originations. No-DTI, 30-year terms, rate buy downs, free 45-day rate locks; I/O and Sub-1 DSCR options available. Through our top-notch Broker Program, brokers are able to earn up to 2 points YSP, and 5 points total. Visio Brokers can count on a designated Account Executive and in-house processing.”

Yesterday, December 11, Symmetry Lending launched its new First Lien HELOC! This new solution presents an opportunity for mortgage brokers and loan officers to extend their reach and offerings to even more of their client base, helping to drive new business and extend borrower relationships in a still-challenging market. In addition, brokers will be able to collect 1.5 percent on the draw amount (with no maximum!) for Symmetry’s First Lien HELOCs! This new product launch is a major win for brokers, loan officers, and borrowers alike. Contact your Symmetry Area Manager for more product details and support with presenting this product to your clients.

“Axos Bank’s Wholesale & Correspondent and Warehouse lending teams wish you and yours a happy and prosperous 2024! Our teams are here to help you achieve your goals in the year ahead. Axos’ innovative mortgage solutions include Super Jumbo ($3MM+) loans, buy-before-sell options, and cross-collateralization programs. Check out our rates on our Quick Pricer today or contact J Shoop, National Sales Director, for additional details. And our Warehouse Lending team can help you gain the flexibility and liquidity that’s needed to become a top originator in today’s market. With our expanded product eligibility, investor relationships, and extended cutoff times (6:15 p.m. ET), achieving success has never been easier. Take the opportunity to meet our team at the IMB conference in New Orleans Jan. 22-24. To secure a meeting time, simply reach out to Eric Nelepovitz and Justin Castillo via email, or call 888-764-7080.

Conforming Conventional News

Freddie Mac has launched DPA One® to help mortgage lenders quickly find and match borrowers to down payment assistance programs nationwide. DPA One is an innovative new tool that aggregates and showcases down payment assistance programs in a single, standardized, insights-rich tool so lenders can quickly and efficiently access and compare programs to help make home possible for more families. Loan officers and down payment assistance program providers can visit the DPA One website for more information and to request a demo.

Fannie Mae posted Lender Letter LL-2023-09, confirming Conforming Loan Limit Values for 2024. The new loan limit for most of the country will be $766,550 — a 5.56 percent increase over the 2023 limit and is effective for whole loans delivered to Fannie Mae and loans in MBS pools with issue dates on or after Jan. 1, 2024. View the Loan Limit Look-Up Table.

Fannie Mae is partnering with Freddie Mac to develop standardized subordinate lien documents. This is part of a comprehensive effort to expand access to down payment and closing costs assistance programs. Access down payment assistance information.

Freddie Mac Guide Bulletin 2023-24 announced updates pertaining to 2024 conforming loan limit values, An additional 10-day pre-closing verification type, Cash-out refinance mortgages, Condominium projects, GreenCHOICE Mortgage® enhancements, Market condition adjustments. Watch the Q4 2023 Policy Highlights Video. See highlights from all of the Guide updates this quarter in the Q4 2023 Policy Highlights video.

The Uniform Property Dataset (UPD) was implemented into Fannie Mae’s Property Data API on December 1st and is now available for lenders to use with Fannie Mae’s value acceptance + property data offers. Use of the UPD will be required as of April 1, 2024, when Fannie Mae’s proprietary Property Data Standards v6 will be retired. Visit the UPD page for more information.

Capital Markets

Hasbro, the toy company, is laying off 1,100 of its employees, equal to 20 percent of its workforce. An isolated situation or an indication of the overall economy?

The Fed’s Federal Open Market Committee’s two-day meeting kicks off today in Washington D.C. The Fed is nearly assured to maintain interest rates at current levels of 5.25 percent to 5.50 percent for its last decision of the year. The Fed’s policy statement will likely acknowledge the recent decline of inflation and the bank will release its latest dot plot, which will indicate how many rate cuts the Fed expects next year. Chair Powell will likely emphasize that the Fed is still willing to hike if inflation proves stickier than expected. Forecasts are for the Fed to make the first rate cut of this cycle in June.

Outside of the Fed, there was a 10-year note auction yesterday and there is a 30-year bond auction today. The $37 billion 10-year note auction met underwhelming interest, but the market held its ground. The 10-year Treasury yield has fallen around 80 basis points from its mid-October peak as more confidence that the Fed will start reducing interest rates in the next six months has been priced into the markets. Agency MBS have followed to some extent, but prepayment fears are not helping MBS investor appetites.

Prior to the start of the FOMC’s two-day meeting, today’s economic calendar kicked off with the NFIB Small Business Optimism Index for November. More importantly, the consumer price index for November is also out. Headline CPI came in +.1 percent, +3.1 percent year over year, versus 0.0 percent month-over-month and 3.2 percent year-over-year previously. Core CPI increased .3 percent as expected month-over-month and 4.0 percent year-over-year expectations. Later today brings the aforementioned $21 billion reopened 30-year bond auction and the Federal budget for November. Remember that the last 30-year bond auction was weak, so this one will be closely watched. We begin the day with Agency MBS prices better than Monday afternoon by a solid .250, the 10-year yielding 4.16 after closing yesterday at 4.24 percent, and the 2-year at 4.65.

Employment

Movement Mortgage is looking ahead to more in 2024! Movement is investing in LOs through its More in ’24 bootcamp, a ground-breaking curriculum designed to help build momentum in business and drive new levels of success in 2024. Weekly coaching call topics include mining for gold in your database, setting a strategy for your 2024 business plan, creating stellar follow-up systems, building referral partnerships that last and more. More in ’24 is just one of the ways Movement is helping LOs close out 2023 strong and set a plan to jump start 2024. Are YOU ready for more in ’24? Reach out to Sarah Middleton, Movement’s Chief Growth Officer, today to learn more about Movement! Plus, Movement offers new loan officer hires 90 days of free one-on-one coaching with Movement top producers. Reach out today and join the Movement!

A veteran group of mortgage bankers is interested in purchasing a small wholesaler in good standing and that has its “tickets” with Fannie, Freddie, and Ginnie. Loan production volume is not a priority. Interested parties should send me a confidential note for forwarding.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

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NEW ALBANY — Sisters Kathy Proctor and Becky Sleith have incorporated their shared love of home decorating into a new small business in downtown New Albany.

Re-Homed Decor opened Nov. 1 at 151 E. Spring St. The consignment shop sells gently used and new home decorations.

“It’s actually something that we’ve always wanted to do,” Proctor said. “As sisters, we’ve always enjoyed decorating. We shop a lot at home decor stores, so we always said, we need to open something like this. We said it for so long, and finally, we just decided to go for it.”

It is the sisters’ first time as small business owners. Their venture has been challenging but rewarding, Proctor said.

“It hasn’t been real easy. It’s a lot of hard work, so we did put a lot of time and effort into it, but it’s different every day,” Proctor said. “We’ve got a lot of consigners now, and we just keep picking up more.”

Sleith said it has been “scary at times” to start a business, but she has enjoyed working with her sister to make their vision into a reality. She also enjoys meeting new people.

The shop frequently receives new items, so the inventory is constantly changing. The shop focuses on “more current” decor rather than antique items, and the used items must be “like new.”

“Since we are a small space, we have to keep things that are kind of going to move quickly,” Proctor said.

As Christmas approaches, the shop is filled with festive holiday items ranging from ornaments to reindeer decor. Last weekend, the shop participated in Develop New Albany’s Jingle Walk, and the sisters are now preparing for this weekend’s Small Business Saturday and Light Up New Albany events.

The small shop has received support from other downtown New Albany businesses, including Mariposa Consignments and the neighboring Madhouse boutique.

“That is something I’ve always wanted to do — getting involved with Develop New Albany and just reaching out to the other business owners to support each other,” Proctor said.

Proctor said they have received positive feedback since opening the business.

“Everyone has a lot of good feedback,” she said. [There are] a lot of return customers.”

The shop has stayed busy, and lately, it has been “nonstop” business.

“We never anticipated this,’ Proctor said. “It’s been remarkable.”

Re-Home Decor is open Wednesday through Friday from 10 a.m. to 5 p.m. and Saturday from 10 a.m. to 4 p.m.

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Source: newsandtribune.com

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A penalty annual percentage rate (APR) is a heightened interest rate that can be issued if a person doesn’t use their credit card according to the card agreement. Card issuers explain the exact criteria that can lead to a penalty APR in multiple ways, like the terms and conditions section of a credit card application and in cardholder agreement documents. 

A CD rate refers to the interest someone can earn on a certificate of deposit over time.

Key Takeaways: 

  • Banks provide the criteria for issuing penalty APRs in their cardholder agreement documents.
  • APRs only apply to a card’s balance at the end of a statement period.
  • Most penalty APRs last for a minimum of six months.

How Penalty APR Works

Bad credit card habits, such as routinely neglecting a minimum payment, can result in a penalty interest rate. Penalty APR usually maxes out at 29.99 percent, which can still be manageable with the proper know-how.

Let’s say you have a 29.99% penalty APR and a statement balance of $500 on your card. To figure out how much interest you’d have to pay, divide 29.99 by 12 (representing each month of the year). You would get 2.499, which you can then divide by 100 to get 0.02499. Multiply your $500 balance by 0.02499, and you would owe $12.49 in interest for the month. 

Some issuers base things on a daily periodic rate, so you’d divide the APR by 365 instead of 12, then follow the remaining steps.

How to Avoid Paying the Penalty Rate

Remember that you only have to pay interest on a card if you have an outstanding balance by the end of the statement period. If you manage to completely pay off your balance, your 29.99% penalty APR won’t generate any interest. 

How Long Will a Penalty Rate Last?

According to the Consumer Financial Protection Bureau, credit card issuers must reconsider a cardholder’s penalty interest rates after six months. So, as long as you make the minimum payment amount six consecutive times, your interest rate will likely return to normal on existing balances.

These rules apply to consumer credit cards, not those issued to small businesses. With a small business card, several infractions can lead to a penalty interest rate. These can include missing a single payment, spending over the credit limit, or having payment returned for insufficient funds. 

Business credit cards are largely exempted from the CARD Act, so each issuer may have different rules about how and when cardholders may have their penalty interest rates cleared. Small business credit cardholders facing penalty interest rates should contact their card issuer for more information.

Steps to Take If You’re Paying Penalty APR

While it may be disheartening to receive a penalty APR, it’s entirely possible to manage this change. Here are several actionable steps you can take when you’re dealing with a penalty APR:

  • Make your minimum payments: Consistently making your minimum payments will keep your credit score from dropping and display financial responsibility to your card lender.
  • Limit your credit card usage: Only use your credit card for essentials when managing a penalty APR. If your penalized card is linked to any subscriptions, consider canceling them for now. 
  • Use autopay: Use autopay to ensure that you don’t accidentally miss your minimum payments. 
  • Meet with a financial advisor: Financial advisors can offer tailor-made personal finance advice to help you with your unique circumstances.

Do All Credit Cards Have a Penalty APR?

While there’s no such thing as a good credit penalty APR, some cards have much more manageable interest rates than others. Moreover, some cards never impose higher rates on delinquent cardholders.

Examples of cards without a penalty interest rate include the PenFed Promise, the Discover it®, and the Citi Simplicity®. There are no annual fees for these cards. On the other hand, the PenFed Promise and Citi Simplicity® have no . However, Discover it® does have a competitive cashback program.

Does Penalty APR Affect Credit Score?

A penalty APR won’t affect your credit score in and of itself. However, payment history makes up the largest portion of your credit scores, so the fact that you’ve missed multiple payment dates could significantly decrease your credit standing. 

Exceeding your credit limit can incur a penalty APR and increase your credit utilization ratio—which compares your current account balances with your total credit limit. Professionals urge cardholders to stay below a 30% utilization rate, which would be $300 out of a $1,000 credit limit. 

Learn More About Personal Finance at Credit.com

Penalty APRs are just one aspect of credit card usage and personal finance management that consumers should know about. Visit Credit.com today to learn more about other financial topics that may be relevant to you, now or in the future.

Source: credit.com

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Representative Maxine Waters, a Democrat from California, held a town hall meeting on Saturday at Inglewood High School where she pointedly asked executives from City National Bank, PNC Financial Services and Wells Fargo & Co., if they would each open a branch in her district. Photographer: David Paul Morris/Bloomberg

David Paul Morris/Bloomberg

LOS ANGELES – Rep. Maxine Waters held a town hall meeting on Saturday where she pointedly asked executives from City National Bank, PNC Financial Services and Wells Fargo & Co., if they would each open a branch in her district. She said she wanted to hold the banks accountable for promises made in recent merger agreements or consent orders.

The town hall meeting at Inglewood High School got fiery at times as Waters pressed the three bank executives to answer questions from constituents in her 43rd congressional district in South Los Angeles. Waters, the ranking member of the House Financial Services Committee, said she invited all the top banks to attend but was turned down by Bank of America, Citigroup, JPMorgan Chase and U.S. Bancorp. 

Next week, the Senate Banking Committee plans to hold an annual oversight hearing with executives from the nation’s top banks. Waters said she was disappointed that Republicans in the House would not hold a similar hearing. Her town hall, she said, would try to fill in the gap. 

When Jeffrey Martinez, executive vice president and head of branch banking at PNC Bank, described how the Pittsburgh bank was upholding its pledge to invest an eye-popping $88 billion in local communities over four years as part of its 2020 acquisition of BBVA, Waters asked specifically if PNC was coming to her neighborhood. 

“When are you going to open up a branch in my district?” Waters said. “We have a problem with branch banking not being available to us in all of our communities in the way they should be. We call them banking deserts.”

Martinez responded: “That’s a great question, it’s an important one and one of the things we’ve slated even though we’re new to California.” 

“We would like to help you find a location,” Waters said, to thunderous applause and laughter from the crowd of about 300.  “I’m so looking forward to establishing” a branch here, she added.

Waters then described how City National Bank in Los Angeles had agreed in January to pay $31 million to settle redlining allegations brought by the Justice Department. As part of the agreement, City National has promised to open one branch in a majority-Black and Hispanic neighborhood in L.A. County. 

“Can you discuss where you might be opening the branch?” Waters asked. “Where are you with all of this?”

David Cameron, City National’s executive vice president of personal and business banking responded, “That is a great question,” drawing laughter from the audience. 

“I don’t have any announcement on where we’re going to put that branch.”

To which Waters replied: “Oh, we’ll help you,” to further applause from the audience.  

City National plans “to go above and beyond,” the agreement to invest at least $29.5 million in a loan subsidy fund for residents of majority-Black and Hispanic neighborhoods in Los Angeles County, Cameron said. The bank has hired more than 20 loan officers to support the initiative to provide grants of up to $15,000 each to first-time homebuyers.

Waters also questioned why City National did not have a mortgage loan officer at a local branch on Crenshaw Boulevard in Los Angeles. 

“You’ve done well at that branch, are you going to expand that branch and put a loan officer there?” Waters said. “Can you do these things?”

Waters skillfully thanked each of the bankers for showing up to the town hall meeting, while also hitting them hard on consent orders.  

“I really thank you for coming today. I know that you know we have a lot of questions for you, based on the fines that you received and all of that,” she told Cameron, and then asked the audience to give him a round of applause. 

She also asked Colleen Canny, Wells Fargo’s executive vice president and national head of branch banking, why the San Francisco bank has been closing so many branches, which Waters estimated at 2,000 branch closings over many years. She cited the Wells Fargo 2016 fake accounts scandal that led the Federal Reserve to impose an asset cap on the bank.

“First tell us, why did you close those branches?” Waters asked.

Canny said that customer transactions through branches have fallen 50% over the past three years as more banking is done online, through mobile apps or ATMs. 

“We still think branches are important and we continue to look at our branch footprint to ensure we have the proper coverage,” Canny said. 

Waters lamented that banks are closing branches in inner cities where seniors who may not necessarily use a cell phone to bank still prefer to go to a branch in person. 

“I want to tell you something that is a cultural discovery for everybody,” Waters told the bankers and the audience. “We like to go to a teller as we put our money across the counter. We like this kind of interaction with the people that we do service with and this is the kind of cultural consideration that the bank should take into account.”

At the town hall, which lasted for four hours, constituents asked a wide range of questions including why there were long lines at their local branches and why they were not able to get small business loans or even speak directly to the same banker on each visit. CFPB Director Rohit Chopra, who spoke after the bankers, answered a range of questions on reverse mortgages, digital redlining and junk fees.

Waters also lambasted the banking industry generally for Republican-led efforts in the House, which voted on Friday to nullify the Consumer Financial Protection Bureau’s small-business data-collection rule. Despite the bill’s passage in a 221-202 vote, President Joe Biden has vowed to veto the bill and uphold the rule. 

The head organizer for Rise Economy, the consumer group formerly known as the California Community Reinvestment Coalition, asked the bankers generally why they did not support the Consumer Financial Protection Bureau. 

“Your industry trade groups are attacking the CFPB, they’re attacking fundamental consumer protections … and very basic data on small business lending that we fought hard for for nearly 10 years,” said Jyotswaroop Kaur Bawa, chief of organizing and campaigns at Rise Economy. “We want you to tell us specifically how many Black and Hispanic-owned businesses you make loans to and at what rate—that’s what the fight is about.”

The small-business lending rule is expected to be used by the CFPB to identify discrimination, though the bureau exempted more than 2,000 community banks and small businesses from the rule. The coalition sued the CFPB in 2019 for taking so long to issue the rule, which Dodd-Frank’s Section 1071 mandated. 

The 1071 rule was about wealth-building and closing the wealth gap, Waters said. 

“The Senate Republicans put up a great fight against getting the rule, the data that we needed to determine why we can’t get small business loans — they fought us very hard, and they said they represented the banks,” Waters said. “Republicans won on trying to kill that rule that would give us information that would show that Blacks, Latinos, women and LGBTQ would not be getting small business [loans.]”

Water did commend one bank: First Citizens BancShares, which acquired the failed Silicon Valley Bank and last month announced an agreement to invest more than $6.5 billion in California and Massachusetts communities through an updated community benefits plan. The agreement, Waters said, paved the way for a branch to be opened in Watts.

Waters characteristically played to the audience by rattling off the various programs created after the pandemic including loans that banks delivered via the Paycheck Protection Program. 

“You’re wondering, if there’s all this money around, why haven’t we been able to get some of it,” Waters said.

Source: nationalmortgagenews.com