For financial institutions to properly protect consumer loan portfolio collateral, there are four basic options to consider when determining what type of portfolio protection insurance is best for them, as well as, their borrowers.
Insurance rates in every sector have risen substantially in recent years, outpacing inflation by a good margin. Here’s a look at some of the stats:
Health Insurance costs have gone up by over 20% in the last 10 years
Auto Insurance rates have gone up by more than 30% in the last 10 years
Homeowner Insurance premiums have risen over 40% in the last 10 years
Natural disasters, home prices, and the increased cost of construction have affected homeowner insurance pricing the most. Health insurance premiums have risen due to many factors. Why have auto-related premiums gone up so much? Here are the top 5 reasons why auto insurance rates are going up:
There are nearly 270 million vehicles registered in the United States, making the country the second largest vehicle market after China. Despite having 1.2 cars per driver, the US continues to see growth in new and used auto sales and auto loan origination. Lenders know that auto loans today look entirely different than those from the past. Gone are the days of predominantly three- to five-year loan terms. Nowadays, most loans are made with terms of five to seven years. While this may not seem like a significant change at first glance, there are many potential ramifications for drivers and lenders once you look under the hood, so to speak, of these trends. Read on to find out how these factors affect lender risk management.
Golden Eagle Insurance, Inc. announced a new bundle of Blanket Insurance Products designed to cover the risk a lender carries in their collateralized loan portfolio when the borrower's coverage lapses. Blanket 360, the latest product in the company's portfolio protection line for lenders, covers collateral immediately after loan closing, eliminating the need for tracking and making lender operations more efficient. "Blanket Insurance protections are a very simple and cost-effective way to eliminate virtually all internal insurance tracking after a loan is closed," said Bill Jones, President of Golden Eagle Insurance, Inc.
Last month, Santander Consumer USA reached a settlement with the Consumer Financial Protection Bureau (CFPB) over a GAP product that all auto lenders should be aware of. For background, you should know that the Consumer Financial Protection Bureau (CFPB) first took steps to regulate GAP coverage in 2012. Furthermore, the Dodd-Frank Act gave the CFPB supervisory authority over “larger participants” of certain markets for financial products or services, as the CFPB defines by rule.
As reported in USA Today, this month used car payments hit a record $400 per month and used car vehicle values jumped over $20,000 for the first time. Higher demand for used vehicles, along with continued inflation in new car pricing and higher interest rates, have pushed payments to their highest level on record in the used car market. Both factors combined have also increased pressure on loan terms, as they now average 66.9 months according to Edmunds, also the highest ever.
Regulation Z or the Truth in Lending Act (TILA) provides a specific carve-out exemption and special treatment for the Blanket Single Interest (or VSI as its commonly called) product for various reasons. Predominantly we believe the regulators knew that a great majority of US banks already use the coverage and it is a growing product in credit unions and other lending sectors, which has provided a great option to protect the loan portfolios of lenders efficiently while keeping the cost to customers to a minimum.
With the rise of the internet and the wave of online banking that followed, cybersecurity is becoming a hot-button topic. Because most information and financial assets are accessible from online avenues now—or in the case of cryptocurrencies, are entirely digital in nature—practicing good cyber hygiene is essential in keeping information from online hackers, thieves, and scammers.
Yes: October was officially Cybersecurity Month, but this is a year round issue, so it's always a good time to remind employees and consumers to be careful with their data and systems. Let’s dive in to learn more about cybersecurity, understand some of the statistics and terms associated with it, and how much it can cost an agency or institution, should they fall prey.
Are FICO scores overrated when assessing one’s creditworthiness? Probably not, but what about the 67 million people who don’t qualify for mortgage loans or even credit cards because of a lack of traditional credit?
While using alternative credit scoring is not a substitute for bad credit, it can be a vehicle to offer more affordable loans than sub-prime or Alt A programs offer.