Commerce – RPG Blog Fri, 24 Sep 2021 19:49:22 +0000 en-US hourly 1 Commerce – RPG Blog 32 32 Biden relief plan provides $ 83.4 million to UNT in part for debt cancellation – North Texas Daily Wed, 07 Apr 2021 23:17:36 +0000

The university received $ 83.4 million from President Joe Biden’s relief bill, 50% of which is needed to fund student aid scholarships, according to a statement from Kris Muller, associate director of student relations. UNT media.

The law project, The 2021 US bailout law, sets aside $ 40 billion for higher education and includes language suggesting possible loan forgiveness. Congress passed the bill on March 10 along party lines, garnering no support from Republicans in a 220-211 final vote. Denton House of Congress Representative Michael C. Burgess R-26 voted against the bill.

The Department of Education will establish federal guidelines on which students will be eligible for emergency grants, rather than universities adopting individual policies as in the past. Previously, the university used a Emergency response team review applications and determine which students would benefit from assistance.

University officials are uncertain where half of the remaining balance will be spent pending further guidance from the federal government. However, the bill does state that universities must “implement evidence-based practices” to mitigate coronavirus infections and readjust student financial aid rewards based on a recent job loss by one. independent student or parent / guardian.

The bill includes a provision ensuring that any student loan discharged between December 31, 2020 and January 1, 2026 will not be subject to tax. According to a analysis of the Association of Public and Land-Grant Universities bill, “this decision sets up potential efforts to write off student loan debt either through additional legislation or executive action.”

The bill will not retroactively affect loans taken out before the specified window of time, and it will primarily benefit students who have just entered university. Graduate student Adriance Rhoades said while she likely won’t benefit from the new law, she empathizes with new students.

“I hired a new student in the last semester and she asked me ‘Is it always like this?’ and I was like ‘Oh no, normally there are people in the office chatting and there’s just a lot more camaraderie going on,’ Rhoades said. “Hearing my own student employee put in perspective how much this affects them. So even if this only goes for new students, I would be okay with that. “

The tough economy of the previous year put a strain on the finances of the university and students, but in previous years federal and state aid has helped relieve some of these pressures.

Ecology for Environmental Sciences Shannon Wallace said she and her parents benefited from the latest CARES funding provided by the university earlier this semester. Wallace said she was able to cover about two months of rent with the extra help, an expense her parents are helping her with. Graduating in May, Wallace hopes more emergency aid will be available for the students who continue.

“I know there are students who are struggling financially here, and sometimes it’s a lot easier to make ends meet if they can get a little help from college,” Wallace said.

Freshman year in business Kristen Herrera said she had applied for CARES funding before, but was unlucky. Although she now had a job on campus and received financial assistance from her parents, a federal loan was still needed for her to attend college. Herrera was successful in funding her college education, but said challenges persist for others she knows.

“I know some of my other friends like my roommate, for example, she, instead of trying to take out a loan, wanted to make it easier on herself,” Herrera said. “So she took a year off. But even then, she couldn’t save enough money. And she is no longer there.

Herrera’s former roommate could not be reached for comment, but Herrera said she left college in February this year, citing out-of-state tuition fees that were too high.

Featured Image: Students cross the Union on March 3, 2021. Image by John Anderson

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Are reverse mortgages expensive, especially for those who don’t need them? Wed, 07 Apr 2021 23:17:33 +0000

When the subject of reverse mortgages is brought up, one of the objections cited is invariably the perceived high cost of creating a reverse mortgage. Virtually all of the press articles on reverse mortgages mention the high cost and how they eat away at equity. This is why so many advisers recommend using them only as a “loan of last resort” when there is no other option.

The opposite is in fact true. When all the costs are factored in, reverse mortgages have become the loan of first resort. The point is, they actually cost considerably less when used as a source of income compared to a wallet or continue to make payments from a wallet after reaching 62. Let’s take a look at the concerns of consumers and advisers about the actual fees. and closing costs which are of concern.

First, we need to establish that the cost of anything should never be the only issue in any investment or purchase decision. The most important consideration is value. Is $ 10,000 too much for a pill that would cure cancer? Of course, that would be considered a cheap thing compared to other treatments and the value of life itself. In the investment world, the important goal is that the costs of any financial tool are offset by greater value received by using the tool.

First, let’s establish the actual costs. Almost everyone is aware of the costs associated with a traditional “term” mortgage. These costs vary from state to state, but are broken down by lender fees, third party fees such as appraisal and title costs, origination fees, PMI and other miscellaneous fees depending on the ready and location. All of these costs are very similar in a reverse mortgage, with the exception of one difference that gives a reverse mortgage a reputation for being expensive. The difference is a mortgage insurance premium (MIP). This is a 2% fee based on the value of the home that goes to the Federal Housing Administration (FHA) – the entity responsible for insuring the loan.

So if you insure a home for $ 400,000, part of the closing costs, usually just deducted from equity, would add up to $ 8,000 for the cost of the insurance. (If a reverse loan is exclusive and not an FHA loan, these fees are not charged but the interest rates are generally higher). Even if a reverse mortgage only pays around 50-70%, how much do you pay with those insurance costs? Why is it compulsory?

Mortgage insurance on a term mortgage encourages the lender to lend to a borrower with a lower credit score or a small down payment so that they are insured by the mortgage insurance company in the event of default. Reverse MIP is much more powerful than direct PMI. It not only insures the lender, but also the borrower AND the borrower’s heirs. The reverse is a non-recourse loan that requires no payment until the borrower is 150 years old or leaves the house for good. This is a rather generous guarantee and a considerable risk for the fund.

No one really knows the value of the house next year – don’t say anything about 30 years into the future. But, with this PIM, the borrower can live a very long time, and even die in a year like 2009, when home values ​​have fallen and loan balances have continued to depreciate negatively. If the loan balance is greater than the value of the house, the fund pays back the loss and the lender, borrower or borrowers’ heirs are completely released from liability without fear of collection or tax liability.

It is important to note that most of the time there is equity left to pass on to the children because the value of the house has increased faster than the loan balance, and therefore no insurance claims. However, without this insurance, the loan would be quite risky for those who have a lot of longevity in their genes! The mortgage insurance fund is assessed annually and actuarial experts adjust premiums as needed to cover costs. There is no profit motive with this insurance as it is intended to be revenue neutral by the FHA as a government agency. In reality, the borrower only pays the actual cost of the risk on an aggregate basis. And remember that the borrower can actually “pay” for the insurance with their own funds and not in cash, which means that all closing costs can technically be paid a year after death, if there is enough. equity. This is the ultimate benefit of “time value of money”.

Now it is clear that this is a fair nonprofit royalty that really insures against real losses. But is it worth it for the borrower and the owner? What kind of value does a reverse mortgage offer compared to a familiar “term” mortgage that has cheaper costs and sometimes lower interest rates? There are 3 major value propositions when using a reverse mortgage as part of an early retirement financial plan. Remember, a reverse mortgage is available as soon as a borrower turns 62 and can then create cash for around 50% of the value of the home.

The first value is the biggest benefit in most cases – the elimination of a mortgage payment so that cash is freed up to invest or use for other purposes. Currently, 44% of seniors turning 62 are still making a mortgage payment. Most can easily afford it, but it’s not the best use of the money.

When someone thinks about investing money, the ROI always shows up as a measure. It’s astonishing that many financial advisors ignore the very low return on investment of paying off a mortgage. Every dollar deposited to pay off a real estate mortgage yields less than 3% and all dollars are illiquid with no guarantee of future value. This is where the reverse mortgage really shines. If a payment is $ 2,000 per month ($ 24,000 per year), it would require a withdrawal of 4% of investing cash flow on $ 600,000 of total investments. This undermines a huge amount of most clients’ wallets for payment that is not required. Over the past 100+ years, the investment portfolio has outperformed the cost of the mortgage, regardless of the level of the interest rate.

Quite frankly, stopping the withdrawal from the investment compartment is just a wise thing to do, whether there is a small one or a whole heap in the asset compartment. One of the worst rates of return is paying off a low rate mortgage and creating a lot of illiquidity.

The second major value is for those who are wealthy, have “a lot of money” and whose house is paid off. There is always, always a need for cash because there is what is called the “cost of living!” This money must come from active income or from passive income with investment assets. If you think of the reverse mortgage as another source of income, it is usually the most efficient and cheapest income available for someone over the age of 62. reserve is in the reverse home equity line of credit. It eliminates the need for a cash reserve in the investment account which drastically slows down returns. This line of credit, unlike a traditional line of credit with lower closing costs, is guaranteed to never be canceled or closed as long as the borrower pays the HOI and property taxes.

It does not require any payment and is guaranteed to increase with each passing year, even if the value of the home does not. Liquidity is one of the main rules of retirement, and not creating cash for at least half the value of the house is frankly stupid. The cost of not having this source of tax free income available is much higher than simply having the liquid collateral readily available. By being prepared to pay the costs, you may have less equity in the end, but your net worth will be higher and the inheritance larger due to what you have in more versatile and efficient liquid investments. .

The third major value really can’t be measured in dollars and cents. What if some of your clients suddenly had their required mortgage payment wiped out? Some will continue to do so, which is good because every payment they make on a reverse mortgage is available for future spending. This is something that can never be done with a term mortgage or for those who have no mortgage at all. Again, liquidity is a vitally important issue in retirement. But what if you want to give your money away, or spend it on family, or vacations with the grandchildren, or a hundred other uses that create memories to be savored on your deathbed. What is it worth? I have never seen on a gravestone or on a plaque on a casket any reference to death with some home equity.

ROL or Return On Life is perhaps a value worth more than bragging about a “free and clear” home. When planning for the wealth of our homes and the homes of our clients if we are an advisor, we need to consider the high tangible and intangible cost of NOT having a reverse mortgage so that equity can be intentionally and prudently used for. a better retirement, for a better life and for a better inheritance. For questions or comments, please email

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Bruce Power marks first year of refurbishment project: Corporate Wed, 07 Apr 2021 23:17:31 +0000

February 24, 2021

Bruce Power’s major component replacement project remains on track despite a two-month delay caused by the pandemic, the company said yesterday as it marked the first anniversary of the start of work at Bruce 6.

Construction of two retubing platforms on the east and west sides of the Bruce 6 reactor face was completed earlier this month. The multi-component platforms contain hundreds of miles of electrical wiring and were built with the support of ATS Automation and the Shoreline Power Group joint venture of AECOM, Aecon and SNC-Lavalin. (Image: Bruce Power)

“In a year that has presented unforeseen challenges, our workers and nuclear supply chain partners have stepped up to ensure that Bruce Power continues to generate clean, reliable and low-cost electricity for Ontario residents, hospitals, long-term care homes and businesses, while supporting residents of Bruce, Gray and Huron counties, ”said President and CEO Mike Rencheck. “I am extremely proud of the company’s accomplishments over the past year, keeping our 6 RCM unit on track, continuing to operate our units effectively and efficiently, and being there when our communities and the province needed help in the fight against this public health. crisis.”

Bruce units 3 through 8 are to be refurbished as part of the MCR project, which will include the replacement of key reactor components, including steam generators, pressure tubes, calandria tubes, and fuel feed tubes. from unit 6. Work should start on unit 3 in 2023 and unit 4 in 2025, each renovation being planned to be shorter and ultimately more profitable than the previous one. The MCR is part of Bruce Power’s life extension program, which began in January 2016 and includes the phased replacement of old systems across the company’s eight reactors during regular maintenance outages. Life extension work will add approximately 30 to 35 years of operational life to each reactor, while other investments will add a combined 30-year reactor operational life to the units.

To date, 50,000 feet (over 15,000 meters) of feed tube has been removed from the Bruce 6 reactor vault, and the lower feeds have also been removed. All components manufactured for the 6 MCR unit were also completed, and Rencheck acknowledged the efforts of supply chain partners – including Laker Energy / BWXT, Cameco, Nu-tech, Brotech, BCI and Niagara Energy – as well as employees, contractors and trade unions to keep the project on track.

“Having the components on time allows us to complete several important steps in the refurbishment of Unit 6 in 2021,” said Rencheck. “We are grateful to these companies for helping us put us in a position to meet our schedule.”

The online event included contributions from Ontario Associate Energy Minister Bill Walker; Minister of Energy, Mines, Northern Development and Aboriginal Affairs, Greg Rickford; and Paul Lefebvre, Canadian Parliamentary Secretary to the Minister of Natural Resources. It also included the launch of Bruce Power’s annual program Ontario Energy Report.

Nuclear power meets about 60% of the province’s electricity needs, which phased out the use of coal for power generation in 2014. Bruce Power’s nuclear units provide 30% of the province’s total electricity. Province.

Research and writing by World Nuclear News

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MPowered Mortgages’ BTL range added to the L&G Mortgage Club panel Wed, 07 Apr 2021 23:17:29 +0000

MQube’s MPowered Mortgages lease purchase offer has been added to the Legal & General Mortgage Club lender panel.

This is the next step in the lender’s deployment in the broker market, which has already been put in place with TMA and the Mortgage Advice Bureau (MAB).

Members of the Legal & General Mortgage Club and users of its SmartrCriteria tool can now access MPowered Mortgages’ range of unregulated rental products.

This initial offer is available to limited companies, portfolio owners and individual owners and includes two and five year agreements of up to 75 percent loan-to-value (LTV).

Rates start at 2.94 percent for a two-year fix up to 50 percent LTV for individual owners and all offers have a 1.5 percent product charge.

The backer of this £ 2 billion unregulated initial buy-lease offer, one of the world’s top 15 unnamed banks, is demanding a physical appraisal to confirm the loan.

Last month Emma Hollingworth, director of distribution at MPowered Mortgages, Recount Mortgage solutions this range will soon be extended to multiple occupancy houses (HMO).

It has also launched a platform to host its own products and those of other lenders, where it intends to cover “all key areas of lending”, once regulatory clearances allow.

And he’s working on artificial intelligence (AI) technology with MAB which he hopes will eventually allow his system to start underwriting cases as brokers research clients.

‘Shared vision’

Commenting on the latest deal, Hollingworth (Photo) said the lender was delighted to announce its addition to the panel.

“The Legal & General Mortgage Club shares our vision for a technological future and our commitment to provide brokerage services,” she said.

The addition of MPowered Mortgages will bring the total number of lenders available through L & G’s panel to over 110 and follows the addition of Habito, West One Loans and Molo Finance earlier this year.

Danny Belton, head of lender relations at the Legal & General Mortgage Club, said he was very happy to welcome MPowered Mortgages to the panel.

“They are a new entrant in the market but using cutting edge technology to move our market forward,” he said.

“Since the onset of the crisis we’ve seen how technology can help our industry and it’s great to offer these products to advisors because in today’s mortgage market the ability to make lending decisions quickly and efficiently will help counter delays.”

Owain Thomas is Editor-in-Chief and Contributor of Mortgage Solutions and Editor-in-Chief of Specialist Lending Solutions. He also has experience in the areas of protection, pensions, benefits and human resources. Owain won two Headline Money Awards and the Protection Review Journalist of the Year award.

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Cancellation of student debt would mainly benefit high-income families Wed, 07 Apr 2021 23:17:27 +0000
  • JPMorgan found that canceling student debt would primarily benefit middle- and high-income families.
  • However, income thresholds would significantly reduce the amount of debt forgiveness.
  • Any long-term solution for student debt should take into account the tuition and enrollment fees of low-income families.
  • See more stories on the Insider business page.

With student debt in the United States totaling around $ 1.7 trillion, there is no doubt that forgiveness of this debt would be a welcome relief for many Americans. But whether $ 10,000 or $ 50,000 in student debt is forgiven per person, experts have found that middle- and upper-income families would reap most of the benefits.

A new report of JPMorgan Chase looked at four different cancellation scenarios: universal cancellation up to $ 10,000, cancellation up to $ 50,000 for people earning less than $ 125,000, cancellation up to $ 25,000 for people earning less from $ 75,000 and phase-out to $ 100,000, and cancellation up to $ 50,000 with the same phase-out.

The report found that income thresholds would significantly reduce the total amount of debt forgiven and make a cancellation effort less regressive.

“This relative regressivity is due to the fact that high-income households carry higher debts, often resulting from professional degrees or higher education,” the report says. “Conversely, more aggressive income targeting does not necessarily result in a greater amount of forgiveness for borrowers trapped in debt or facing long repayment horizons. “

Here are the main findings of the report:

  • A $ 10,000 write-off would write off 27% of the total outstanding debt, a $ 50,000 write-off with the income limit would write off 50% of the debt, a $ 25,000 write-off with phase-out would write off 28% of the debt. the debt and a $ 50,000 write-off with a phase out would write off 39% of the debt;
  • A disproportionate amount of debt relief would go to middle and upper income families since they tend to have more student debt;
  • More remittances go to borrowers in the debt trap or as part of long-term repayment plans when the cancellation limit is higher;
  • And the breakdown of cancellation benefits by race is fairly unchanged in the scenarios, which means that the scenarios may not be effective in bridging the racial wealth gap.

The report also noted that if people think more debt will be written off in the future, they might change their behavior by taking on more debt or paying it off more slowly than expected. An income threshold for debt cancellation could also reduce incentives to work, while a one-time cancellation could avoid these problems.

Progressive lawmakers have relentlessly called on President Joe Biden to write off up to $ 50,000 in student loan debt. While Biden has said he will consider canceling $ 10,000 in debt, lawmakers like Senator Elizabeth Warren of Massachusetts and Senate Majority Leader Chuck Schumer have repeatedly argued that if the president can legally cancel 10 $ 000 in debt, there was no reason he couldn’t write off $ 50,000.

“If it is legally acceptable to make a small amount, it is legally acceptable to do a larger amount,” Schumer noted during a press call on Monday.

At a CNN town hall meeting on February 16, Biden said he Support a higher amount of debt cancellation through legislation, but Schumer said executive action remained “by far the fastest, best and easiest method.” White House press secretary Jen Psaki told a press briefing on February 17 that the Justice Department would review Biden’s ability to cancel student debt through action by the Justice Department. ‘executive.

But despite calls for the cancellation of $ 50,000 in student debt, even the “most generous” cancellation scenario would not solve the bigger problems that drive the country’s high debt levels.

“All the economic forces that have contributed to the current stock of student debt, such as rising tuition fees and increasing enrollment among low-income families, will continue to push tomorrow’s students into debt. “, says the report. “Any long-term solution to providing relief to students is incomplete without addressing these underlying forces.”

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]]> 0 Female polar bear killed by male bear at Detroit Zoo while trying to breed Wed, 07 Apr 2021 23:17:25 +0000

DETROIT – Staff of Detroit Zoo mourn the loss of a female polar bear. Anana, 20, died while a 16-year-old male, Nuka, attempted to mate her. It happened on Monday February 8th.

According to Scott Carter, director of life sciences for the Detroit Zoological Society, the two bears have lived together all last year without any problems. This is the first murder of an animal at the Detroit Zoo by another animal since the death of another polar bear in 1988.

“It was completely unexpected and the staff at the Detroit Zoo are devastated by the loss of Anana in this sudden and tragic event,” Carter said.

The two polar bears were reintroduced last week after being apart for several months. It is part of the Association of Zoos and Aquariums’ Polar Bear Species Survival Plan, a cooperative population management and conservation program that helps ensure the sustainability of healthy captive animal populations.

This program is crucial to support this endangered species and can lead to successful reproduction. Two twin cubs were recently born at the Detroit Zoo, sired by Nuka. There are currently only about 55 polar bears in 25 AZA accredited zoos and aquariums.

Nuka has lived at the Detroit Zoo since 2011 and has lived and bred with several other female bears without a problem. Anana arrived at the Detroit Zoo in January 2020. The Detroit Zoo’s other adult polar bear, Suka, is in a private maternity hospital with one of her cubs.


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New Braunfels Public Library to Extend Loan Period for Certain Materials Wed, 07 Apr 2021 23:17:23 +0000 The New Braunfels Public Library will extend the loan periods for certain documents. (Ian Pribanic / Community Impact Journal)

As of April 5, the New Braunfels Public Library will extend the loan periods for certain library materials.

Books, Audiobooks, and CDs will have a four-week upfront payment with renewal, up from the previous three-week initial payment period. New books and audiobooks will maintain the existing two-week initial payment period with two renewals.

Blu-ray discs and DVDs will go from an initial purchase period of one to two weeks with two renewals.

“The changes are intended to streamline the time during which different types of documents can be checked out,” Gretchen Pruett, director of the New Braunfels public library, said in a statement.

Library materials eligible for renewal will continue to renew automatically at noon on their due date, and items not eligible for renewal will not be subject to late fees.

Items will not be renewed if the materials are on hold for another library cardholder, Pruett said, and customers are encouraged to return the materials as soon as they are finished using them.

If an overdue item has not been returned two weeks after its final due date, the cardholder’s account will be blocked and no additional items may be removed until the overdue item is returned. or paid. Cardholders can check up to 50 items at a time.

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Loan of related cos land for unsold condos at 15 Hudson Yards Wed, 07 Apr 2021 23:17:21 +0000

Stephen Ross and Jeff Blau (left) with 15 Hudson Yards (Getty, Hudson Yards)

After a difficult year for luxury condo sales in Manhattan, related companies and Oxford Properties Group entered into a loan for unsold condos at 15 Hudson Yards earlier this week, according to records.

Wells Fargo’s $ 107.5 million financing is secured by 102 luxury tower units – 99 residential, two commercial, and one storage. The deal was first reported by PincusCo.

The 285-unit condo has already received a $ 850 million construction loan from the New York State Housing Finance Agency and the London hedge fund, the Children’s investment fund. When sales of a condo project fall short of expectations, developers often take out loans backed by unsold units to repay matured construction loans.

Luxury tower sales launched in September 2016 with Related seeks to reap $ 1.74 billion. Unit prices ranged from $ 3.9 million to $ 32 million. The building’s amenities include a 75-foot indoor pool, spa and fitness center, screening room, golf simulator, and dining room large enough to accommodate over 60 people.

In January 2019, Related announced that the condo was over 60 percent sold. By the end of this year, StreetEasy records showed 54% of the units had been sold and the developer said 6% were under contract, according to the New York Times.

A year later, it appears that the building is only 65% ​​sold. The condo inventory loan covers approximately 35 percent of the tower’s unsold residential units. Corcoran Sunshine Marketing Group has been handling sales for the project since 2016. The company did not immediately respond to a request for comment, nor did Related.

The number of residential sales in Manhattan last year fell dramatically after the start of the pandemic. But sales of new condos have started to accelerate in the fourth quarter of the year and new condo contracts of more than $ 4 million were signed at high levels since the beginning of the year.

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The high cost of betting with house money Wed, 07 Apr 2021 23:17:20 +0000

Action 24/7 boasts of being the only independent local sports betting in Tennessee this “continues to dominate the industry with innovative practices such as same day payment and cash withdrawals. On the surface, it has the makings of an outsider story in which the hometown hero thrives on his ‘buy local’ appeal, despite the competition from industry titans DraftKings, FanDuel, and BetMGM, among others. But it seems that the 24/7 Action story is less of an outsider story and more of a top dog carving out new income-generating opportunities.

[Updated 2/4/21: Editor’s Note: Better Collective Tennessee, LLC owns the website Sports Handle and is a registered vendor in Tennessee. It is an affiliate marketing company that receives commissions when persons sign up for legal sportsbooks that include, among others, BetMGM, DraftKings, and FanDuel.]

Sports betting is an operation of the executives of Advance Financial, the Nashville-based “flexible loan” or colloquially “payday lender” with more than 100 physical locations across Tennessee. At the beginning of January, Advance Financial’s money transfer company became a approved supplier of the Tennessee Education Lottery Corporation. CEO of Action 24/7 and promoter is Tina Hodges, also President and CEO of Advance Financial. Patrick Conroy, Managing Director of Action, is the CFO. Chief Operating Officer Andrew Jacks is a former Senior Director of Advance Financial. Although Action 24/7 flyers appear in Advance Financial storefronts, these dual business interests may or may not be known to the general public.

In addition to shared leadership, Advance Financial has created an apparent overlap between the company high-risk loans and sports betting activities. For several months, Action promoted its “cash deposit and withdrawal services,” for a fee of $ 2 per transaction, to soften the appeal of its brand with a tangible element that was partially absent – the ability to withdraw. money – in Tennessee’s digital-only sports betting market. (Bettors can deposit money into competing sports betting accounts using PayNearMe stations from CVS and other establishments, but not withdraw this way.)

Of course, these deposit and withdrawal features are fully realized through and dependent on the state’s Advance Financial physical locations, which can conveniently take on the role of a sports betting ATM when needed. And while – at least on paper – Hodges can be precise in characterizing Action 24/7 as “a separate and new business enterprise”, on a practical level the advantage of this enterprise is that it creates two avenues of fundraising. : one is as a lender obtaining loan interest, and the other as sports betting profiting from the juice (or “vig”) of its bets in a business where the overwhelming majority of punters are losing money. money over time in return for entertainment value and occasional big winnings.

Choose your poison

While the association between sports betting and financial lender may be the first of its kind, the practice of borrowing money to seek potential profit within the same industry as the lender is not unusual in the capitalist society.

For example, people with a basic knowledge of the stock market have probably heard of buying stocks “on margin”. “Margin” is the money an investor borrows from a broker and, for the hopeful investor, a means of increasing stock purchasing power and returns on investment.

But the risk is double-edged; if stocks accumulate, the money lost can far exceed an investment made up of only personal funds. Conceptually, trading stocks on margin is similar to betting on sports with borrowed funds.

Both involve high-risk investments motivated by (often misguided) ambitions to accelerate financial gains. And each is stamped with a guarantee to the lender – the “house” – of repayment plus interest and fees. While the margin trader bets on his ability to choose profitable investments, the consumer debtor bets on his ability to choose which team wins a game or covers the point spread.

How it differs

However, unlike the beneficiary of a payday loan or flexible loan, an investor who trades on margin does so on a short leash. Margin trading is a highly regulated business. Federal regulations apply uniformly to all states. Federal regulation of the small loan industry has been proposed, but so far an unsuccessful effort, based in part on well-funded lobbying efforts To avoid regulation.

Specifically, investors looking for margin must deposit a minimum of $ 2,000, or 100% of the purchase price, whichever is less, and investors must maintain an equity balance of 50%. the price of the securities they are trying to buy.

For example, someone who wanted to buy 100 shares of a stock at $ 50 a share would need $ 2,500 in personal equity, and the remaining $ 2,500 would be covered by margin. If the stock goes up 10%, the investor benefits from $ 500 instead of the $ 250 if the investment consisted only of personal funds.

The same goes for losses. If the stock price drops 10%, instead of a loss of $ 250, the investor ends up with $ 500 in the red and still has to repay the borrowed amount plus interest. Furthermore, the margin requirement is continuous. If at any time the investor’s equity falls below the margin requirement, the broker can immediately – with or without notice – access and sell as many of the investor’s positions as is necessary to bring the account in. compliance.

As the broker has continuous and immediate access to the borrower’s existing securities, the risk of non-payment or late payment is virtually non-existent. In a typical payday loan transaction, borrowers give lenders access to their deposit account by means of a post-dated check, but this does not guarantee that these funds will be sufficient by the due date. By failing to pay on the due date, the borrower incurs additional costs to pay for a “rollover” period to extend the deadline.

Flexible loans often follow a similar path: by paying the minimum, you will pay off the loan over a long period with interest rates of up to 279.5% per annum. The result is often a never-ending cycle of debt. The payday loan industry generates about $ 400 million per year interest and fees from Tennessee customers, most of whom are low-income and, within months, end up paying more fees than the principal borrowed.

To imagine this already high-risk scenario unfolding as funds are deposited into a sports betting account raises consumer protection concerns in Tennessee. Whether it is more of a sportsbook encouraging bettors to finance their bets through high interest loans, or a high interest lender encouraging borrowers to bet on sports, the most likely outcome is is the same: a high risk that more consumers get stuck in a never-ending cycle of debt.

Local danger

Sports betting charges players a commission – vigorish (or “juice”) – on every bet they take. Usually 10%, the vig is what secures the house’s long-term wins and bettors’ long-term losses. Not surprisingly, most sports bettors lose money in the long run. They are already at a disadvantage by being taxed on each bet; there is no reasonable argument to suggest that betting with funds tied to (up to) a 279.5% APR loan (in the case of flexible loans) will improve the loan repayment outlook. Rather the opposite.

The consumer pays fees and interest on the loan in addition to the vig on a sports bet. Not only will Advance Financial continue to profit from its high-risk loans, but it will also benefit from the strength it garners from sports betting borrowers. Thus, Action 24/7 adds a significant and worrying level of secondary risk to an already high risk transaction.

Tennessee’s transition into the legal sports betting market has been encouraging as it sets a precedent for its neighbors to the south. Certainly, Action 24/7 deserves to be recognized for having become the first and only local bookmaker in the state. But his novelty as a local guy needs to be seen in context: his affiliate business of providing high-risk loans to vulnerable consumers alongside his sports betting business is also novel – and dangerous for Tennesséens.

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What are payday loans used for? Wed, 07 Apr 2021 23:17:17 +0000

Azlinah Tambu, a twenty-two-year-old single mother who lives in Oakland, Calif., Recently found herself in a difficult situation. Her car had broken down and she needed it to drop her daughter off at daycare and get to work. Tambu, an optimistic woman with shiny black hair and dazzling eyes, didn’t have the money for the repairs. She had no savings or credit card; she had no family or friends who could help her. So she did what a growing number of low-income people are doing in such situations: she took out five payday loans from five different payday lenders, ranging from fifty-five dollars to three hundred dollars each. The fees for obtaining the loans were fifteen dollars for every hundred dollars borrowed.

Tambu already knew that she wouldn’t be able to repay the loans on time using her paychecks: she needed every dollar to pay her rent and utilities, and to buy food. Although many states allow lenders to “roll over” and refinance loans, California does not. Tambu repaid the first loans, then took more from the same five lenders, with a second round of fees, thus extending the duration of the former. When lenders tried to withdraw the money she owed from her checking account, she did not have enough funds and was hit with overdraft fees that quickly reached three hundred dollars. Tambu reimbursed the overdraft fee and closed his account.

Consumer advocates argue that lenders take advantage of situations like this, knowing full well that a significant number of borrowers will be unable to repay payday loans as they fall due. Because borrowers renew their old loans, or pay off the first loan and immediately take another, support advocates, they find themselves trapped in a cycle of debt, paying off far more than they borrowed. Those who own and operate payday loan shops support the products they sell, claiming they are lenders of last resort for borrowers like Tambu, who have no other options.

When California borrowers default on their loans, lenders don’t have much recourse to collect the debts. Borrowers sign an arbitration agreement when they apply for a loan; the lender cannot sue them. One of Tambu’s lenders did make harassing phone calls to him, a violation of federal law, but Tambu knew his rights. “I’m not stupid,” she told me. “I knew they couldn’t sue me.

As it turns out, Tambu and I met while working side-by-side as cashiers at the Check Center, a check teller, and a payday lender in a low-income neighborhood in downtown Oakland. As part of a research project designed to better understand why a growing number of Americans are using payday lenders and check tellers, I spent two weeks in October working as a cashier and collection agent, calling them delinquent borrowers at the Check Center. Prior to that, I spent four months as a cashier at a check teller in the South Bronx, and one month as a staff on the predatory loan helpline at the Virginia Poverty Law Center.

Tambu and I would sometimes sit in the sun on the steps outside the building during our lunch and coffee breaks. When I told her about my research, she volunteered to tell me her own story of how she ended up making loans and getting them on her own.

Check Center customers were drawn to Tambu. She knew most of their names and often greeted them when asking about their children or their work. She took her job seriously, and she did it well. But even though his employer paid him more than the minimum wage, Tambu did not earn enough to absorb unforeseen expenses, like car repairs and illnesses.

Some analysts argue that financial literacy will prevent people like Tambu from using payday loans. And, clearly, financial education is important. But understanding your situation does not change your viable options. Tambu, more than most payday customers, understands that these loans can be problematic. Day after day, she deals with clients who pay off one loan and immediately take on another. “I know it’s bad. I knew what a payday loan was, ”she told me. “But I’m on a month-to-month lease, and that was either getting evicted or taking out loans.” Although the neighborhood in which she lives is dangerous, Tambu is currently housed in “the best apartment I have ever had”. She didn’t want to risk losing her house by not paying the rent. “If you think it’s bad,” she said, gesturing to the area around the Check Center, where drug dealers were hanging out in front of the store and bullets riddled through the storefront, “you should see where I am. ‘lives in. It makes this place look like Beverly Hills.

Researchers, journalists, and policymakers routinely demonize companies that offer payday loans, calling them predatory or worse. This is because if you don’t live near the edge, it’s hard to see why a person would pay such a high price to borrow such a small amount of money.

To date, the payday loan debates have focused almost exclusively on the supply side of the problem – the payday lenders – and not enough on the demand side – the borrowers. Lately, however, the body of research on the latter has grown. A recent report by the Center for Financial Services Innovation highlights several categories of low-credit borrowers. Tambu is not representative of the entire payday market, but, according to the center’s research, borrowers seeking loans because of an unexpected expense represent thirty-two percent of the entire market. Policy recommendations, however, focus almost exclusively on regulating the industry, rather than on the terms that lead people to seek out expensive small loans in the first place.

Certainly, some payday lenders engage in abusive practices. During the month, I occupied the predatory loan helpline operated by the Virginia Poverty Law CenterI have heard many stories of people who have been harassed and threatened with legal action by companies that regularly flout existing regulations.

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