Buying Bank Owned Properties (REO)
by Walt HarveyWalt and Arla Harvey are Realtors in Honolulu, Hawaii
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Showing posts with label repo atv. Show all posts
Showing posts with label repo atv. Show all posts
Thursday, March 7, 2013
Buying Bank Owned Properties (REO) - http://www.realestateabc.com/homeguide/reo.htm
Walt and Arla Harvey are Realtors in Honolulu, Hawaii
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Indirect Looks to Lead Again in Lending Dance - http://www.cutimes.com/2013/02/27/indirect-looks-to-lead-again-in-lending-dance?ref=hp
Indirect Looks to Lead Again in Lending Dance
The momentum should have led to programs that helped aid bottom lines across the country. Instead, that rapid growth caused some credit unions’ indirect loans to destruct, brought on by a high concentration, massive defaults, shady incentive programs and poor dealer relationships. The latter likely was the worst culprit, some have argued.
“One thing that all the credit unions that got in trouble have to remember is that it they had no one to blame but themselves,” said Eddie Nevarez, vice president of business development for the National Auto Loan Network, in Newport Beach, Calif., which counts more than a dozen credit unions among its clients.
“It is no secret that auto loans and memberships are the bread and butter for all credit unions, but back then, many were risking their members on plain bad lending practices to satisfy their indirect lending partners,” Nevarez said.
Nearly all–Nevarez estimated 99.99%–of credit unions involved in indirect lending got caught up in the idea that auto loans were the end all and be all of success. As a result, they let the dealers dictate to them their business.
“It is not so shocking to hear what they have to say regarding a few credit unions in Southern California, most of which stopped their indirect programs and recently started back up or are looking to get back in to indirect lending,” Nevarez said. “The one thing that these individuals all say is that there were credit unions that would buy anything and if you could not get approved anywhere else we knew that these credit unions would approve or buy it.”
From firsthand experience with one of these California credit unions, Nevarez said that most of the due diligence needs to be done internally. That can mean ensuring that a credit union is staffed properly to handle an indirect program and keeping the underwriting guidelines consistent with the credit union’s direct program, he advised. Internal controls are a must including audit and compliance procedures, Nevarez noted.
On the other end, providing the indirect partner with clear expectations can prevent surprises. Underwriting guidelines, funding and service levels and turnaround times need to be spelled out.
“Set the criteria of the program and only sign with partners that agree with your terms,” Nevarez said. “Always remember that the members come first.”
After heavy losses, the $582 million Seattle Metropolitan Credit Union shut down its indirect lending program in 2009, said Caleb Cook, vice president of lending.
“The spreads are very thin for all loans in the current environment, and margins must be managed closely. Indirect loans should be looked at as an investment as many of the new members you sign up will be single service,” Cook said. He added that credit unions may want to shoot for a 1% margin considering they can get a 1% return on a risk-free investment.
Indirect lending comes in all shapes and sizes, from small to large programs to in-house operations or through partnerships with a CUSO or for-profit organizations. Because a program can include autos, boats, recreational vehicles or even merchant lending, Cook said a sturdy foundation should be the common goal.
“The level of due diligence required before implementing an indirect lending program depends on the shape and scope of the operation,” Cook said. “Implement prudent risk and portfolio limits and closely monitor performance as your program matures, which generally takes two or more years. Document all of your due diligence as the examiners will ask to review during their next visit.”
Critical strategies to ensure credit union long-term success in indirect lending should begin with having the goal of starting slow and growing steady, said Michael Cochrum, product director of analytic products for CU Direct Corp., a lending service provider in Ontario, Calif., with 1,050 credit union clients.
“When new loan originations are down, it’s tempting to hook up the lending hose to the nearest origination hydrant and turn it on full blast,” Cochrum said. “But the key to long-term success in indirect lending is to set reasonable goals for growth and not be tempted to take on more than your credit union can handle.”
Fast growth can hide performance issues early on, so it’s important to be able to segment risk categories by origination period in order to isolate emerging negative indicators, he pointed out.
Another area where credit unions may get into trouble is weighing relationships over rates, Cochrum said. Because they are not positioned as top-tier lenders at the dealership, the temptation is to compete for business by offering the lowest rate, he noted.
“This can obviously cause profitability issues down the road. Relationship trumps rate in the dealer [finance and insurance] office, especially in the low-rate environment we are in today. An F&I director can sell a 50 basis points difference in rate,” Cochrum said. “It’s what they do. More important than rate is consistent underwriting, timely funding and the ability to share in the profits of closing the loan.”
If credit unions maintain a consistent underwriting standard, eliminate needless delays in funding and provide the opportunity for the dealer to profit from the arrangement, they can sustain long- term relationships with dealers, Cochrum said.
“Remember, the dealer has no reason to protect the lender if they are only doing 1% to 2% of their loans with your credit union,” Cochrum warned.
Meanwhile, as the concentration of financial penetration builds, another lure might be trying to do business with every dealer in town. Cochrum said most credit unions can get the volume required for a solid performing portfolio from 10 to 15 dealer relationships. However, it’s better to get five to 10 loans from 10 to 15 dealers than one loan from 100 dealers, he offered.
“When a credit union has gained penetration in a dealership, they are vested in the relationship and the credit union becomes integral to their success. A dealer is much more reluctant to fracture a relationship in this case,” Cochrum explained. “If your credit union is only doing one or two loans a month with a dealer, then that only represents incremental business. If the relationship is fractured, it is easily replaced by another financial institution.”
Above all else, credit unions have to stay on top of consistently monitoring risk factors. The set it and forget it approach can lead to problems down the road, Cochrum said. For instance, sharp increases in volume can indicate a soft spot in a credit union’s underwriting that may be exploited, he suggested.
Monitoring the mix of paper a credit union is getting and how long members in each credit tier are sticking with can help indicate areas where long-term profitability may also be challenged, Cochrum advised. While there is encouragement to monitor dealer losses and delinquencies, it might be even more telling to monitor a finance director’s performance as they move from dealer to dealer, he noted.
“Credit unions must monitor volume fluctuations, credit quality distribution, lifecycle yields, early payoffs, first payment defaults, finance director portfolio performance, and underwriter and dealer loan pools,” Cochrum said. “These are the areas that can indicate trouble.”
NCUA examiners are reviewing call reports for increasing amounts of repossessed autos or increasing indirect lending delinquency and loan losses, the agency has reminded in several letters to credit unions including an August 2010 on due diligence.
In addition to those danger signs, examiners are also looking for other red flags that may require a credit union to slow down indirect lending. Among them is a high concentration of indirect loans to total loans or net worth without adequate controls in place and incentive programs tying loan officer bonuses to indirect loan volume.
The NCUA said other areas of scrutiny including inadequate analysis of overall indirect loan portfolio performance and high instances of first payment default, payment deferment and account re-aging.
Another key area involves the relationship between the credit union and dealers. The NCUA said poor dealer management can run the gamut from reliance on the dealer to obtain credit reports to accepting loan payments from dealers and dealer-created down payments through dealer incentives to inflated or fraudulent trade-in or purchase price or continuous overdrafts in dealer reserve accounts.
In that August 2010 NCUA letter, NCUA Chairman Debbie Matz issued several warnings for indirect lending programs including rapid growth that can lead to a material shift in a credit union’s balance sheet composition.
“NCUA has seen seemingly healthy credit unions fail in a matter of months due to indirect lending programs that spun out of control. While there are benefits to a well-run indirect lending program, an improperly managed or loosely controlled program can quickly lead to unintended risk exposure. This can increase credit risk, liquidity risk, transaction risk, compliance risk, and reputation risk,” Matz wrote.
Those risks are likely tied to the fierce competition for shelf space with the dealerships. Many large lenders, including captives have gotten very aggressive with rates, particularly in the prime lending arena, said John Flynn, president/CEO of Open Lending LLC/Lenders Protection, an auto loan underwriter in Austin, Texas. Some lenders are also paying the dealers some aggressive rates and reserves to get the deals.
“We doubt they are making any net yield at all on the super-prime loans. Our view is that for the most part, this loan is typically the only relationship the member has with the credit union so they have to make money on this loan,” Flynn said. “They can’t depend on profits from other products to subsidize the yield.”
One of the key reasons that the indirect funding ratio is much lower that direct is simply that the F&I guy has many choices in their lender network, Flynn said.
“Our belief is that a strong relationship is one of, if not the most important ingredients to having a successful indirect program. The dealers are looking for a lender that is consistent rather than fickle. They also prefer full spectrum lenders,” Flynn said.
According to CUNA, in 2012, approximately 84% were involved in some sort of indirect lending. While it has revenue benefits and can generate membership growth, ultimately the credit union has to stay in and maintain the driver’s seat.
“The credit union must be in control of the program at all times and should not be afraid to terminate the program at any time,” Nevarez said. “Do not hand over the keys to the credit union to your partner, they will do what is in their best interest.”
Tips That May Help With Buying Your First Boat - http://www.bassresource.com/bass-fishing-forums/topic/113116-tips-that-may-help-with-buying-your-first-boat/
Tips That May Help With Buying Your First Boat
It seems there are always questions as to what boat is best suited for any given situation we have. There are so many options out there, how do we know which one is right for us?
Here are a few guidelines that may help you with your decision.
First things first when you consider the purchase of a new (or new to you) boat.
1.The first item to consider has to be safety, without a doubt, This is the most important factor when you are considering a boat purchase, used or new. What could be wrong with a new boat? Plenty. Don't overlook the importance of anything when you are out there looking, It could be a boat that has been bought back or repossessed for any number of reasons. Dealers and sellers can be a tricky group of people. You could be getting a great deal or you may be getting shafted. Don't assume anything when you are in the market and leave nothing to chance when it comes to your safety and the safety of others on your vessel.
If this is your first boat, or you have never driven a boat, or have little experience, make sure before you even open the first page of looking for a boat that you have at least a little experience. Even though it's not a requirement, you will find this to be very helpful. It is in your best interest that you have at least some experience on the water. Rough water can be tricky to navigate, especially your first time. Finding out that your boat is under-powered in these conditions is not a fun time to be on the water. It's always a good idea to have your experience be, if at all possible, with someone who knows how to navigate and safely operate a water craft. If not, take a boaters safety course (if you have not already done so) before you make that leap. You can often find them as a hands-on class. Take a boat out on the waters you want to fish,. It's not hard to find someone willing to rent a boat or teach you the responsibilities that go along with ownership. You just have to look, but your very first step should always be to be prepared and know the guidelines, not only for your safety but for others you may have with you as, well as others on the waterways.
While we are on the subject of safety, be sure to look up good qualified marine service centers, they will/can be instrumental in the decision making process, should you have the need for one. Nothing beats a once-over by a good qualified tech.
2. The second guideline is financial. Make sure the boat you are looking at is well within the financial means of your pocket book. If you want the biggest, baddest boat on the water, just make sure you are prepared to cover the cost of what a new engine can cost you for the boat after it is out of warranty, especially if you had to break the bank to get that Ranger you really, really wanted. Think about the long run, don't just think about right now. Look at how well it will hold value. You may want to trade it or sell it, or even upgrade it with lots of electronics in the future. If you want to run it at night, it's going to require navigational lighting if it does not already have it. These kind of expenses can all add up, even though some seem small, they can be more than you wanted to spend on a given project, if you don't know how to do it yourself then you will have to pay someone on top of that. Labor hours are not cheap for marine applications if that may be your only resource. Further, consider the cost of boat insurance. Make sure that you have at least $100,000 of liability. If you plow into someone's tricked-out Ranger, it's going to cost a wad.
3. The third guideline is to ask yourself, "Is Is it the right boat for me?" We have already made ourselves failure with the safety of the waterways and now we have found a boat that looks really good in our price range. Take the time to sit down and figure out what exactly you wish to accomplish with your new boat. Where will you be fishing? Will it be on large or small lakes, ponds, river systems? All of these areas play a key roll in what your craft is able to safely traverse and navigate. Will you be alone? Think about all of the safety equipment you will need. Will you have enough room for all of these things, plus your fishing gear and maybe a friend or two? Trust me, you will have new friends.
Fiberglass or Aluminum? That is a question for the ages. When we members on the forum get this question, we always want to know the specifics of your water ways. Since this is an information highway and not a waterway, it's hard for us to help you with that decision if we can't get a good feel of what hazard lurk in your water system. Take strongly into account what you will be doing with this boat. As above, the right boat for you is going to have to perform and navigate and be durable enough to withstand whatever punishment you have in store for it. If it's mostly rocky waters, of course you need a metal type hull, Fiberglass hulls are not meant for the daily beating of a rocky river system, one bump from a rock on a glass hull and you could be in deep deep trouble in a hurry. It will also be advisable for you to navigate your new waters at a slow pace until you know where all the hazards are located. Not all waterways have everything marked the way they should be. Take your time when exploring new waters and enjoy your new surroundings. Pay close attention while you are on the move.
One big thing to consider with each is stability, not so much with glass boats. Most all glassers are fairly stable to begin with. If you should choose to go with an Aluminum boat, make sure it's as wide as you can possibly get it. The wider the hull and beam the more stability it is going to have. This is particularly important if you wish to want to raise the seating platform or put a fishing deck on the boat. Most standard "V" hulls are not really good for modifications that add any height added to them. They become very unstable and easier to roll over the higher you set your seat, if you should find that a "V" hull is what you want then try to find a deep "V" these are much more stable and will allow some modifications you wish to install should the vessel not already have them. Modifications are based on what the boat can safely handle and still be able to perform. Keep in mind, aluminum boats that are not built with these mods, are not intended for modifications, factors are height, and width primarily, plus the weight of the people fishing from the vessel and the added gear, this also adds to the draft, (how deep the boat sets in the water.) Keep your modifications low. The smaller and more narrow the craft is, the lower you need to keep them. Alll of these things are important when considering your investment.
When you consider a glass boat, or any boat for that matter, be absolutely sure! If the boat has some age on it, there are many hidden areas that could potentially have problems. The transom at the stern is always a potential weak link,. The wood inside the glass could be weak or rotten. It's one area that requires a really good inspection. The floor of the boat may have weak spots or may have been recently replaced. The engine may not be in as good a shape the seller says it is. The steering and shift cables may soon be an issue if they are not already. The electrical wiring may be in poor shape and may need lots of attention. This is why it is so important to know a good marine service center. If you have no experience with fiberglass boats, it's best if you have a good qualified tech or someone who knows what they are doing look it over for or with you. A few bucks spent here will save you big time headaches in the long run.
Once you decide on a boat that you really like, have good relations with the seller if you can, It makes it much easier for both of you. Don't settle for anything. Make sure you get a test drive in the boat and that you get familiar with the settings and how everything is supposed to work. Check it over for leaks. Talk the seller into going fishing with it even if it's only for a brief period of tim. You may find it's just not right for you and there you are stuck with something you can not use or really don't like to use.
Take your time! I just can't stress that enough. There are boats everywhere for sale or trade. Be true to what you want from a boat, "your boat", and get the most bang from your buck you can. Trust your instincts! If for any reason you feel it is not the right one for you, then walk away from the deal and keep looking.
Owning a boat, especially your first boat, should be fun and adventurous. You want to enjoy your time on the water. Problems are going to come about; no ifs, ands or buts about it. Be prepared for bad days and it won't be as difficult to handle. B.O.A.T. (Break Out Another Thousand) or, a hole in the water that we just keep throwing money into. We have all heard that time and time again, but if you make your decisions wisely and keep a close eye on the service of your vessel and it's trailer, boating can be and is a lot of fun and gives you a lot of freedom to enjoy the outdoors.
Hope this helps!!
Good luck and be safe !!!
Friday, December 21, 2012
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