Credit Risk Insurance – European Forum – Family Mediation Sat, 11 Sep 2021 18:20:41 +0000 en-US hourly 1 Credit Risk Insurance – European Forum – Family Mediation 32 32 The Home Title Theft Baloney Sat, 11 Sep 2021 13:47:42 +0000

Ooooo, terrible things can happen. The latest, as you can hear in radio commercials and other places, is that bad niks can rob your house from under your feet. But you can buy insurance against such a fate. Phew. But maybe it’s also a bullet. Rick Kahler, President of Kahler Financial Group in Rapid City, SD, explains:

Larry Lumière: So tell us about this serious problem.

Rick Kahler: I only learned about those frenzied radio commercials warning that your house may be stolen from you. They claim that thieves can take your property and then mortgage it or even sell it without your knowledge. In fact, they may have already done so. You may have lost all of the equity in your home. You will discover fraud when you are evicted by a foreclosure or a new owner.

Of course, after all these alarms, the ads offer a solution: take out their title theft insurance. They promise to protect your title, monitor it 24/7, and alert you when a fraudulent title transfer is filed. A business charges $ 79 per year for $ 1,000,000 of title theft insurance. It is highly unlikely that such a company will ever pay for insurance.

Light: How to come?

Kahler: The claims are so exaggerated that these companies either fail to understand the law or intentionally distort the facts. Like most things, there is some truth to these outlandish claims. It is true that anyone can forge your name on any document, including an act purporting to transfer title to the forger. Such a deed could be filed with the county deeds register.

Light: It sounds worrying.

Kahler: This does not mean that someone has stolen your title. First, a counterfeit act is invalid and does not convey anything. Only you can legally transfer your title to a third party. If a buyer or lender relies on a forgery and doesn’t do due diligence on a property’s title, they’re out of luck. It is they, and not the rightful owner, who will end up losing the money paid to the thief.

Second, a potential forger could easily obtain a blank deed form online and fill out the legal description of your property obtained from the public records. However, the signature must be certified by a notary public, who is required by law to verify your identity.

Third, it is virtually impossible for the thief to mortgage or sell the property to a knowledgeable lender or buyer. Lenders, securities companies and real estate companies have so many collateral in place that there is almost no chance that a fraudulent transfer will not be discovered. Required credit reports, employment and income checks, tax returns, appraisals, and title insurance are all bound to alert you and the lender that something is wrong.

Light: But there are cash transactions in real estate.

Kahler: Even with a cash buyer, a thief’s chances of success are low. Only the most naive buyer will fail to obtain title insurance. Title insurance protects buyers against title defects, including liens, fraud and forgery. It will alert the buyer or lender of any default before closing. If a securities company misses a default, it must pay for any damage. No legitimate lawyer or real estate agency will allow you to buy a property without this insurance.

If a buyer is naive enough to buy a property without a legitimate appraisal or title insurance, they could be duped. If they show up in your driveway with a moving van, they’re the ones, not you, who are at risk of losing their money.

Light: And such movements are against the law.

Kahler: Counterfeiting is a crime in all fifty states, punishable by jail time and heavy fines. The court may also require restitution for damages caused by the infringement, such as the cost of clearing the title.

In the extremely unlikely event that someone goes to the trouble and risks committing all of these crimes, the cost of title clearing is the greatest risk to an owner. This will require the assistance of a lawyer. Wouldn’t that potential expense be worth considering purchasing title theft insurance? Maybe, assuming the police covered such expenses. Unfortunately, none do.

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Mortgage insurance from lenders surges as house prices skyrocket, but most buyers don’t realize it’s only protecting the bank Wed, 08 Sep 2021 18:49:05 +0000

The COVID real estate boom in Australia has pushed more people to pay for expensive mortgage insurance that protects their banks, while only adding to the borrower’s growing debt.

Proprietary data provided to ABC News shows that there has been an increase in the number of mortgage insurance policies (LMI) from lenders written.

LMI has been a controversial financial product for years.

This is a lump sum insurance product that many lenders expect people to pay when they take out a mortgage with a deposit of less than 20%.

Although the borrower pays for it, it does not protect them.

Insurance pays the lender when a mortgage defaults, the property sells for less than the amount owed, and the bank is left out.

Data shows that 70 percent of the people who pay for it are first-time home buyers.

Nitin Chauhan and Priya Verma are among the hundreds of thousands of people who paid for IMT during the last real estate boom.(

ABC News: Michael Clements


Nitin Chauhan and Priya Verma had been saving for several years to buy their first house in Adelaide.

The couple were initially trying to avoid IMT by saving a 20 percent deposit, but as house prices started to soar last year, their goal became less achievable.

“The same type of houses that used to be between $ 700,000 and $ 750,000, they went down to $ 800,000 and $ 850,000 in just a few months,” Ms. Verma said.

CoreLogic data shows house prices in Adelaide have climbed 18% in the past year – a figure replicated in markets across the country.

“We have just lost hope of reaching a 20% deposit,” Mr. Chauhan said.

“Because when we save 20%, real estate prices will go up again. And that would push us out of the market. “

a man and a woman smiling in front of a SOLD sign on a house
Nitin Chauhan and Priya Verma just bought their first house in Adelaide, but reluctantly paid the IMT on their loan.(

Provided: Nitin Chauhan


Rather than lowering their home ownership expectations, the couple made the “tough decision” to increase their entire mortgage, which allowed them to pay for LMI.

The insurance was a lump sum of almost $ 25,000, added to their basic loan.

“It’s not just the cost of $ 25,000. We will pay interest on top of that as it is accrued in the loan,” explained Mr. Chauhan.

“This $ 25,000 is a big amount.

“We could have easily done all of our renovations that we are planning right now. It could have paid for our son’s education.

LMI lines insurers’ pockets during COVID

Data from Digital Finance Analytics shows that the number of LMI policies written in Australia increased by 25%, from 218,593 in 2019 to 273,473 in 2020.

Over 150,000 contracts were taken out in the first six months of this year.

Mansour Soltani is a mortgage broker specializing in loans to first-time buyers.

“We are definitely seeing a spike in LMI applications,” he said.

“There’s a bit of a 50-50 split in terms of understanding about this.”

The two largest external providers of IMT are insurance giant QBE and specialist provider Genworth.

Genworth confirmed to ABC News that it has seen a 15% increase in policies written in the past six months compared to the same period last year.

“This was driven by homeowners and first-time home buyers who took advantage of low interest rates to enter the housing market,” a spokesperson said.

Genworth also posted a profit of $ 60 million in the same six months. This was after recording a loss of $ 90 million in the previous corresponding six months.

Some lenders now also perform LMI in-house, such as ANZ.

This means that people who take loans from these 20% deposit free lenders are essentially paying a premium to their bank to protect their own loan.

“Banks are starting to believe that they can make money with these products,” Soltani said.

a man looking down at the camera lens in front of trees
Mansour Soltani is a mortgage broker who tries to help his clients avoid paying for LMI.(

ABC News: John Gunn


“My problem with that is that they’re then tricked into pushing you down the LMI path, rather than trying to find products or come up with innovative products to help you avoid it.

“The worst way to do it would be to merge the cost of LMI with your loan, because you then spread that cost over 30 years and pay interest on it.

“Banks obviously gain a financial advantage by doing this. “

So why is the financial sector pushing LMI?

QBE, Genworth, the Big Four Banks, the Insurance Council of Australia and the Australian Banking Association all declined to be asked about LMI.

One justification given to ABC News by the industry for the continued prevalence of LMI was that it brought confidence to the loan market.

“LMI is an important component of the Australian real estate market,” the ICA said in a statement.

“[It enables] more Australians to realize the dream of homeownership, or enable them to achieve that goal sooner, by reducing the credit risk of the lender providing the home loan. “

The current housing boom has been helped by low interest rates and subsidies during COVID.

“The question of course becomes what happens in a falling market if prices start to fall? Digital Finance Analytics Director Martin North said.

Mr North said it was difficult to see how many policies like QBE and Genworth are paying because the company’s results do not disclose the percentage.

The debt trap for those who default

Insurance is only paid to the lender if a mortgage defaults and its sale price does not cover what is owed to the bank.

In this case, the insurer pays the missing money from the lender.

The catch for homeowners is that the insurer can then go after the person who defaulted on the mortgage to get back the money they paid into the bank.

This is what happened to Perth couple Helen and Joe Tollan when they defaulted on the mortgage on their cyclone-damaged investment property in Cairns.

an older man and woman looking at debt documents
Helen and Joe Tollan have paid off $ 87,000 in debt after they defaulted on their home loan ten years ago.(

ABC News: Andrew Willesee


The couple didn’t know there was LMI on their mortgage and didn’t understand what it was doing.

After their repossessed home was sold at a loss and their lender was paid LMI by QBE, the insurance company then demanded a refund of $ 87,000 on the Tollans.

The couple avoided bankruptcy by entering into a debt deal to repay the money.

“We paid and we are still paying,” Ms. Tollan said.

This despite the fact that Ms Tollan is now receiving disability assistance and her husband is unemployed to take care of him. She pays $ 290 a fortnight and he pays $ 134.

“It demoralized us,” said Helen.

Almost a decade after their default, the couple hope to pay off their debt next year. They urge everyone who takes out mortgages to educate themselves.

“Be very, very careful,” warned Ms Tollan.

Data from Digital Finance Analytics shows that consumers’ understanding of who LMI actually protects is still very limited.

QBE declined to comment on the Tollans affair.

However, he confirmed that he still had a policy of forcing borrowers to repay overdue costs under certain circumstances, noting that he also had austerity policies.

The business regulator has also confirmed this sectoral policy.

“The customer is still responsible for the remaining debt and this debt can be collected from the customer by the bank, or the insurer or a third party debt collector,” ASIC said in a statement.

Current calls for IMT review

LMI specialist Martin North has long called for a product review.

“I have been asking this for a number of years. So far it has fallen on deaf ears,” he said.

Several large banks have confirmed to ABC News that they sometimes waive LMI on mortgages with less than 20 percent deposit if people have careers deemed stable, such as accounting.

Nitin Chauhan and Priya Verma believe they should have qualified for this waiver because Mr. Chauhan works in business management in the field of technology.

“Our jobs are secure and we earn a high salary,” he said.

“If someone can default 95% of the bank amount, they can also default 80% of the bank amount.

“I am really not very happy to pay such a sum to a third party insurer.

“Insurers are obviously having a honeymoon period because of the real estate boom. They are making a lot of money out of it.”

Are you trying to avoid paying for LMI? Tomorrow we’ll bring you another story about the different ways Australians are already doing it.

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Atlas Financial Holdings enters into an agreement with certain senior bondholders regarding a possible extension of the maturity date; Raise up to $ 3 million through funding agreement Wed, 01 Sep 2021 21:15:00 +0000

CHICAGO–(COMMERCIAL THREAD) –Atlas Financial Holdings, Inc. (OTC: AFHIF) (“we”, “us”, “our”, the “Company” or “Atlas”) announced today that it is pursuing a financial restructuring through an exchange of the Company’s 6.625% senior unsecured notes due April 26, 2022 (the “Notes”) pursuant to an agreement with certain holders tickets which, if successful, for additional financial flexibility in order to continue to pursue its general management agency (MGA) strategy. The deal would allow Atlas to continue a ticket exchange which, if successful, should extend the maturity date of the tickets and provide additional financial flexibility during this important rebuilding period. The Company has secured letters of initial support from seven holders, the largest of which represents more than 50% of the outstanding face value of the Notes and is seeking further support from Noteholders regarding the planned exchange of the Notes. In addition, the completion of the convertible senior secured credit facility is expected to provide significant interim liquidity as we continue to resume and grow our business.

Scott D. Wollney, President and CEO of Atlas, said: “We have worked closely with a number of our most important ticket holders to create what we believe is a fair and equitable proposition that will Atlas to pursue its business plans with the aim of creating value for all stakeholders. The first supports we have received suggest that our main holders are in line with the strategy and objectives of the Company. Our goal has been to successfully transition from a long history as an insurance company to a technology and analytics driven MGA with the ability to deliver EBITDA growth through strategic relationships with partners. at risk. Over the past few months, we have continued to see a substantial growth rate in new quotes and policies issued following the return of drivers to the market in response to continued passenger demand in the public automobile and passenger car segments. carpooling. As noted in our recent second quarter earnings call, current in-force business is only about 5% of what it was in 2018, and we expect the near-term headwinds of drivers subside over time, resulting in a significant increase in demand for the insurance products we offer. We are encouraged that the monthly quotes received for taxi and livery policies continue to be at the highest level seen since the start of the pandemic, with quotes and policies issued in August continuing to exceed previous months. The activities included in today’s announcement give us more time to complete our investment thesis, and we plan to work closely with all of our current note holders and shareholders in the search for a favorable outcome for all parties. ”

The company will continue to extend the maturity of its senior bonds

The Company has worked in recent months to meet the upcoming maturity of its 6.625% senior bonds due April 26, 2022.

On August 31, 2021, Atlas Financial Holdings, Inc. (the “Company”) entered into a Restructuring Support Agreement (the “RSA”) with the holders of approximately 48% of the Notes. Each of such Holders is in favor of a proposed exchange of the Notes. Under the RSA, the exchange of tickets is expected to be completed by March 1, 2022, which will result in a one-for-one ticket exchange with a five-year extension of the stated term and other agreed upon changes, which The Company believes this will enable it to meet its obligations under the new ratings and create value for stakeholders. Holders of additional tickets can join RSA via a membership letter which can be obtained from the Company.

As the Company continued its discussions with noteholders regarding the RSA, Atlas did not make the quarterly interest payment that was due and payable on July 26, 2021, and the 30-day grace period for this payment has expired. expired when the overdue amount has been unpaid on or before August 25, 2021, resulting in an event of default on August 26, 2021 under the Notes. The Company has been in close contact with the Trustee, Wilmington Trust, National Association, and will continue to work with all Noteholders to participate in the proposed exchange of Notes.

The company obtains financing for its operating needs

On September 1, 2021, the Company entered into a deferred drawing senior guaranteed convertible credit agreement. The proceeds of this facility may be used to fund the outstanding exchange of the Notes and to pay for certain normal operating expenses. The facility offers a total available borrowing limit of $ 3 million, consisting of an initial drawdown of $ 2 million shortly after closing and up to $ 1 million of deferred draws, subject to terms. The interest rate is 12% per annum and can be paid in cash or in kind. The term of the facility is 24 months and the amounts borrowed may be prepaid at the discretion of the Company without penalty. The borrowed capital may be converted at any time into common shares of the Company at the discretion of a lender at $ 0.35 per share. As a right of establishment, 2,750,000 ordinary shares were issued upon signing of the final documents relating to this facility. Further terms and conditions are set out in the final agreements filed with our current report on Form 8-K.

Mr. Wollney concluded, “We look forward to continuing to provide shareholders and noteholders with regular updates on our growth prospects and are very pleased to offer a proposed solution that we believe will enable the Company to continue to grow. strategy.”

Additional information

The Company will provide further details in a current report on Form 8-K filed with the Securities and Exchange Commission.

About Atlas

Atlas’s core business is commercial automobile insurance in the United States, with a niche market orientation and a focus on insurance for the “light” commercial automobile sector, including taxis, non-urgent adapted transport, limousines / livery (including full-time company driver transport network) and company automobile. Atlas’s specialized infrastructure is designed to leverage analytics, expertise and technology to efficiently and cost-effectively deliver insurance solutions to independent contractors, owner-operators and others. small accounts.

The Company’s strategy is focused on the operation of its general management agency (“AGMI”) operation and its digital insuretech platform (“optOn”). For more information about Atlas, please visit, and

Forward-looking statements

This press release includes forward-looking statements regarding Atlas and its subsidiaries and insurance businesses. These statements are based on the current expectations of the management of each entity. The words “anticipate”, “expect”, “believe”, “power”, “should”, “estimate”, “project”, “prospects”, “anticipate” or similar words are used to identify these forward-looking information. The forward-looking events and circumstances described in this press release may not occur and could differ materially due to known and unknown risk factors and uncertainties affecting the companies, including risks relating to the insurance industry, economic factors. and the general stock markets and risk factors discussed in the “Risk Factors” section of the Company’s 2020 Annual Report on Form 10-K. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Atlas and its subsidiaries assume no obligation to publicly update or revise any forward-looking statements. whether as a result of new information, future events, or otherwise.

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]]> Ransomware is a game-changer for cyber insurance Mon, 30 Aug 2021 11:26:47 +0000

Anyone who works in cyber insurance knows that the industry is never static. It’s an ever-changing business as risks change all the time, and it has never been more evident than it is now, panelists said on Insurance Journal’s recent webinar – Cyber ​​Insurance: Is This. the Beginning, Middle or End?

“The game changer,” said Justin Herring, deputy executive superintendent in the New York State Department of Financial Services (DFS), “has been ransomware.”

Ransomware attacks accounted for nearly a quarter of all cyber incidents worldwide last year, according to software company Bitdefender.

“I still think of December 2019 as the tipping point of when we started to see ransomware take hold,” said Bob Wice, global head of underwriting management for Cyber ​​& Tech at Beazley.

Indeed, the United States was hit by a barrage of ransomware attacks in 2019 that affected at least 966 government agencies, educational institutions and healthcare providers at a potential cost of over $ 7.5 billion. dollars, Emsisoft reported on his blog.

“And you just see with each passing year, but sometimes it seems like almost with each passing month, we see more and more of these events,” Herring said.

A recent wave of attacks this year has been of particular concern among U.S. government officials, as they have been attributed to cybercriminals operating from Russia, Insurance Journal previously reported. There was the hack last year in which Russian military cybercriminals sabotaged the computer code of software called SolarWinds. Today, a ransomware attack in July found itself at the center of the conversation, in which Florida-based information technology company Kaseya saw its management system hacked. REvil, a cybercrime syndicate linked to Russia, took credit for the breach.

In June, REvil extorted an $ 11 million ransom from meat packer JBS after compromising its supply chain. Earlier this year, in May, an intrusion by another Russian-linked group into U.S. fuel carrier Colonial Pipeline shut down 5,500 miles of critical infrastructure, sparking panic buying and gas shortages. all along the east coast.

“You can also see that we have had recent cyber attacks where an attack that has crossed over widely used technology has accessed or disrupted or potentially disrupted many organizations,” Herring said. “Similar types of attacks on IT or technology vendors or service providers have suddenly disrupted a half-dozen, a dozen or more companies regulated by DFS.

Herring said a growing interdependence on technology, especially during the ongoing COVID-19 pandemic, has made businesses and organizations more vulnerable to the type of cyber attack that can have systemic effects.

“[We’re seeing] attacks effectively against our technology on which we are increasingly dependent, ”he said. “Attacks against a single institution or organization where there is a disruption, and which disrupts a lot of downstream organizations. “

Wice agrees, adding that businesses and individuals are more exposed than ever to computer incidents involving social engineering or cybercrime that capitalize on human error.

“During the pandemic, that was largely about remote access, open ports and phishing,” he said. “People [could be] looking at a map that was sent to them showing where the cases were and the death rates in certain jurisdictions, and voila, there’s a bad link in there. And that’s how a lot of these attacks happened from March 2020. “

Towards education

On a positive note, said Marc Voses, partner at Clyde & Co., all of this has led to greater public awareness of cyber incidents, with more and more companies trying to strengthen their cybersecurity posture.

“Not a day goes by that we don’t see an article or a newscast that basically says companies need to get their homes in order when it comes to cybersecurity,” he said.

And businesses listen widely, Sylvestro agreed.

“I think we are reacting by going towards education, and I think that is a very good thing,” he said. “And I just hope we keep doing it because the cyber risk doesn’t go away. We are not going to stray from the use of computers, the use of e-mail, the processing of data.

Sylvestro said the best way for policyholders to make sure their coverages are as strong as possible is to take a close look at the exposures insurers are asking them to reduce.

“Insurers don’t tell us to do these things just so that we have one more thing to add to our checklist,” he said. “They do it because they don’t want to have to face a loss and our customers don’t want to have to face a loss.”

Without good cyberhygiene, policyholders “will find themselves at the mercy of the market,” he added. “And I can tell you from experience that this is not a fun place to be.”

Herring added that it is important for policyholders to take steps such as using strong passwords, securing poorly configured ports or machines within their network, patching vulnerabilities, and using a minimum number of privileged accounts to manage their network.

“I think the good news is that it is possible to prevent most ransomware attacks, or at least for organizations to significantly reduce their risk of experiencing a ransomware attack,” he said. “And if they do experience a ransomware attack, it is possible to significantly reduce its impact, either by intercepting the attack earlier in the process or by having good backups from which the company can recover.

More questions than ever

For insurance agents, on the other hand, the challenges of cyber coverage are just as critical.

“It’s complex. It is complicated. It’s hard to understand, ”Sylvestro said. “There are more questions now than there ever were.”

For this reason, he said it’s important for brokerage houses and agencies to invest in education and understand what cyber risk really is.

“I would just like to encourage everyone in the industry to take the time to really invest in your education, to invest in finding new ways to find out more about this space, whether it’s reaching out to hand to insurers, “he said. “A lot of insurers do a lot of cyber risk education, and they’re happy to share that because they see a vested interest in it as well. “

Voses added that cyber insurers can protect their own risks in this area by updating policies as necessary with language that reflects current exposures. This can help avoid problems when policyholders do not have coverage in a necessary area or when silent coverage is provided under a cyber policy that was not provided by the insurer.

“A lot of these fonts have been on the market for years now,” he said. “Some of these have not been given a refresh or a review of the covers provided.”

Additionally, it may be important to address the scope of coverage and include any relevant exclusions or sub-limits as part of a policy refresh, Voses said.

“I think it can be easy to feel like trying to fill a cup of water deep in Niagara Falls in this space right now,” Sylvestro added. “And the better equipped we are as brokers, the more symbiotic our relationship will be in placing risk.”

Wice said that for underwriters it’s just as important to react to losses as it is to try to avoid them in the first place.

“It’s about trying to understand where the losses are and yes, it’s somewhat reactive, but it’s the goose that lays the golden eggs to try to understand what the next threat will be,” he said. declared.

Not an insurmountable risk

While Herring said that DFS rated cyber as “the biggest risk to the financial services industry as a whole” right now, it’s not necessarily an insurmountable problem for insurers, especially the big players in the industry. .

“But it’s a difficult problem because it’s an area where change is happening quickly,” he said.

The best thing insurers and policyholders can do is stay vigilant, he explained.

“One of the things I come across is what I see as a feeling of cyber-fatalism,” he said. “If you are not a professional working in this field every day, you are probably learning a lot of what you know about cyber from major current events.”

Herring said this can lead to a biased perspective in which cyber risk seems like an impossible mountain to climb.

“For every Solarwinds-type attack… there are 99 other cyberattacks, the vast majority of which use well-understood and proven hacking methods,” he said.

In fact, in its analysis of cyber incidents affecting DFS regulated entities this year alone, Herring said the regulator found that many hackers were using the same basic manual, with the number one attack method being phishing in which email is generally used to solicit personal information. by claiming to be from a trustworthy sender.

“I think what we hope people take away from this is that despite what you read in the news, you can actually reduce that risk,” he said. “You can protect yourself from most of the attacks that most organizations face most of the time. “

However, that doesn’t mean insurers and their clients can learn about cyber risk just yet, Sylvestro warned.

“I think whenever we feel like we have some sort of control, or we have real compensating controls, the threat actors also keep investing in their craft,” he said. . “So I think it’s important to understand that when we talk about ransomware, we are not talking about this type of static threat. It is something that grows, evolves and changes, and we must continue to be vigilant as we deal with this as an industry. Otherwise, we could easily end up far behind the eight, even further than we are now. “

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Mortgage rates today, August 28 and rate forecasts for next week Sat, 28 Aug 2021 14:14:10 +0000

Today’s Mortgage and Refinance Rates

Average mortgage rates fell yesterday. But the rises and falls of the week canceled each other out. And the average Friday night rate was exactly the same as the previous Friday night, according to figures from the Mortgage News Daily.

And mortgage rates next week can also change very little. Yes, there will be the usual ups and downs. But rates may well go nowhere. Of course, there is always a possibility that an unforeseen event will arise that disrupts that tranquility and disrupts those rates in a decisive way.

Find and lock in a low rate (August 28, 2021)

Current mortgage and refinancing rates

Program Mortgage rate APR* Switch
Conventional 30 years fixed 2.808% 2.808% -0.01%
Conventional 15 years fixed 1.995% 1.996% -0.12%
Conventional 20 years fixed 2,391% 2,391% -0.1%
Conventional 10 years fixed 1.875% 1,922% -0.04%
30-year fixed FHA 2.688% 3.343% Unchanged
15 years fixed FHA 2,431% 3.032% -0.01%
5/1 ARM FHA 2.5% 3,201% Unchanged
Fixed VA over 30 years 2.25% 2,421% -0.07%
VA fixed 15 years 2.25% 2,571% Unchanged
5/1 ARM VA 2.5% 2,379% Unchanged
Prices are provided by our network of partners and may not reflect the market. Your rate may be different. Click here for a personalized quote. See our pricing assumptions here.

Find and lock in a low rate (August 28, 2021)

COVID-19 Mortgage Updates: Mortgage lenders change rates and rules due to COVID-19. To see the latest information on the impact of the coronavirus on your home loan, click here.

Should You Lock In A Mortgage Rate Today?

In the absence of something unexpected, August is likely to end with mortgage rates a little higher than at the start. But the movements of the past few weeks have been smooth and directionless. So you probably haven’t lost or gained much by floating your rate.

But the risks of continuing in this way remain real. Because almost all the experts predict more or less important overall increases. The problem is, no one knows when.

My personal recommendations therefore remain:

  • LOCK if the closure 7 days
  • LOCK if the closure 15 days
  • LOCK if the closure 30 days
  • FLOAT if the closure 45 days
  • FLOAT if the closure 60 days

However, with so much uncertainty right now, your instincts could easily turn out to be as good as mine, if not better. So let your instincts and your personal risk tolerance guide you.

What changes current mortgage rates

Thus, mortgage rates remain calm. They continue to drift up and down but barely move when measured over weeks.

And, this week, they dodged a bullet when Federal Reserve Chairman Jerome Powell’s speech yesterday revealed nothing new. He confirmed that the Fed will start slowing down and later stopping (“cutting”) its efforts to keep mortgage rates artificially low later this year. But everyone already knew that.

And regular readers will be relieved that I can finally stop repeating the reduction every day. However, the problem has not gone away and will return in a few weeks.

Waiting for

In the meantime, mortgage rates will be affected by the economic news. But that too is a less direct relationship than it usually is.

Under normal circumstances, mortgage rates go up on good economic news and fall on bad news. But that’s not always the case right now.

Take, for example, next Friday’s report on the employment situation. It is often the most influential of all monthly economic reports, sometimes rivaled only by those on inflation. And a great report on Friday (many more jobs and higher average hourly earnings) would normally push mortgage rates higher.

But that may not be the case this time around. Because investors always have an eye on the Fed. And great jobs data could bring forward the dates when it stops keeping mortgage rates and Treasury yields low – and accelerate when it starts raising its own interest rates.

Thus, some investors see the good economic news as damaging to their interests because it potentially hastens the end of the Fed’s easy money policies. And they are enjoying this holiday in particular.

The Fed is unlikely to hike rates until much of 2022, or maybe sometime in 23. And it’s important to differentiate between the Fed’s own interest rates and mortgage rates. A change in Fed rates tends to directly influence the rates on variable rate loans, including credit cards, auto loans, and the like. But mortgage rates are determined differently and largely independently of the Fed (see below for more details).

Economic reports next week

Please see the final paragraphs for more information on next week’s major economic report, Friday’s Jobs Report. It is difficult to overestimate the influence this can have.

None of the other economic reports listed below are likely to cause much movement in the markets unless they include some incredibly good or bad data. Plus, regular readers will know that investors have ignored most economic reports in recent months. Thus, the effects of the following may be different from normal:

  • Tuesday – Consumer Confidence Index in August
  • Wednesday – August ADP (Private Sector Jobs) and Manufacturing Index report from the Institute for Supply Management (ISM). Plus July construction expenses
  • Thursday – New weekly unemployment insurance claims until August 28. More factory orders in July
  • Friday – Report on the employment situation in August, including non-farm wages, unemployment rate and average hourly earnings. Plus ISM services index, also for August

Once again, Friday is the big day.

Find and lock in a low rate (August 28, 2021)

Mortgage interest rate forecasts for next week

Now that the tapering is complete (for a few weeks), I see little reason to expect any sharp changes in mortgage rates anytime soon. And I suspect that mortgage rates next week will be unchanged or barely changed.

Mortgage and refinance rates generally move in tandem. And a growing gap between the two has been largely eliminated by the recent removal of unfavorable refinancing fees from the market.

How your mortgage interest rate is determined

Mortgage and refinancing rates are generally determined by prices in a secondary market (similar to stock or bond markets) where mortgage-backed securities are traded.

And it depends heavily on the economy. Mortgage rates therefore tend to be high when things are going well and low when the economy is struggling.

Your part

But you play an important role in determining your own mortgage rate in five ways. And you can significantly affect it by:

  1. Find Your Best Mortgage Rate – They Vary Dramatically From Lender to Lender
  2. Increase Your Credit Score – Even a Small Bump Can Make a Big Difference in Your Rate and Payments
  3. Save the Biggest Down Payment Possible – Lenders love you to have real skin in this game
  4. Keep your other loans small – The lower your other monthly commitments, the larger the mortgage you can afford
  5. Choosing Your Mortgage Carefully – Are you better off with a conventional, FHA, VA, USDA, jumbo or whatever loan?

Time spent lining up these ducks can earn you lower rates.

Remember, it’s not just a mortgage rate

Be sure to count all of your upcoming homeownership costs when determining how much mortgage you can afford. So focus on your “PITI”. It’s your Pmain (reimburses the amount you borrowed), Iinterest (the loan price), (property) Taxes, and (owners) Iassurance. Our mortgage calculator can help.

Depending on the type of mortgage you have and the amount of your down payment, you may also need to pay for mortgage default insurance. And that can easily reach three digits each month.

But there are other potential costs. You will therefore have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repair and maintenance costs. There is no owner to call in case of a problem!

Finally, you will have a hard time forgetting the closing costs. You can see which are reflected in the Annual Percentage Rate (APR) that will be shown to you. Because it effectively spreads them out over the life of your loan, making it higher than your normal mortgage rate.

But you may be able to get help with those closing costs. and your down payment, especially if you are a first-time buyer. Read:

Down payment assistance programs in each state for 2021

Mortgage rate methodology

Mortgage Reports receive daily rates based on selected criteria from multiple lending partners. We arrive at an average rate and an APR for each type of loan to display in our graph. Because we average a range of rates, it gives you a better idea of ​​what you might find in the market. In addition, we average the rates for the same types of loans. For example, fixed FHA with fixed FHA. The result is a good overview of daily rates and how they have changed over time.

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NIRSAL: QUIET DRIVER ON THE WHEEL Mon, 23 Aug 2021 23:59:50 +0000

NIRSAL makes agribusiness lending more attractive and profitable, writes Jackson Obadasha

By far, President Muhammadu Buhari ranks today as the best president of agriculture. Never since the return to democracy in 1999 has Nigeria experienced such a resurgence of agriculture with all its value chain efforts. NIRSAL is the silent driver behind the wheel.

The Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) was launched in 2011 and incorporated in 2013 fully by the Central Bank of Nigeria (CBN). And he fulfilled his mandate with lucid reforms for the renaissance of agriculture as in the past.

The statistics are impressive. Over 12 million Nigerians are now actively engaged in the agricultural value chain. The evidence is clear; at home and in factories. Rice, cassava, palm products and many more, including poultry, which are a staple food in Nigeria, are produced in commercial quantities with added value in a way never seen before. The signs of growth are in our faces. Unfortunately, it seems that a few people are not happy with the progress made in agriculture. They find it difficult to see well-produced local rice become the favorite of Nigerians. They cringe at the sight of local rice taking up huge spaces in department stores, large markets and neighborhood stores across the country. They feel sick when they see locally produced palm and vegetable oil, now beautifully packaged and labeled. They are not happy that Nigeria has saved millions of dollars in foreign exchange by not importing wheat, millet, rice, beans, etc., as before.

Afflicted by a strange unpatriotic spirit, these few talkers turned the heat on NIRSAL. Their intention, obviously, is to slander the agency and question the integrity of its managing director / CEO, Aliyu Abdulhameed. Subtly deploying certain elements in the media space, they recently launched an articulate attack on the agency and its drivers in a way intended to undermine the brilliant feat the Buhari government has achieved in recent years.

However, some of these criticisms can be excused. They act on a false premise of their ignorance of the status of NIRSAL. They think it is yet another agro-industry lending institution. It’s not. Instead, it owns $ 500 million in capital secured through a fully subscribed debenture by CBN. He uses this capital to reduce the risk of the loans farmers get from the banks. In other words, when a farmer obtains a loan from a bank, NIRSAL stands behind to reduce the risk on such a loan for both the lender and the creditor; more like a guarantor than a lender.

But regardless, it is difficult, almost impossible, to erase the milestones and progress made by NIRSAL as it mobilizes to deepen agribusiness in the country. Even the arch enemies of the Buhari government cannot deny the impact of NIRSAL in the rapid development of agribusiness. Except that they are in politics. But no sane mind would play politics with agriculture. It is the path to food security, a source of raw materials for the primary sector and a decisive emblem of the sovereignty of the nation.

Abdulhameed, as a pioneering CEO, was launched a long time ago. Often, the pioneers are encumbered by the novelty, even the strangeness of their function. Some are baffled by the scene they suddenly found themselves on. Not Adbulhamed. Armed with a bachelor’s degree in agricultural economics and rural sociology, a master’s degree in public administration (with public policy bias) from Ahmadu Bello University in Zaria and a master’s certificate in project management from the coveted Project Management College of in the UK, the winner of several awards (local and international) is undoubtedly the right man for the job. And that may explain why he refused to succumb to cheap blackmail.

What is imperative is whether it is fulfilling its duty in accordance with the agency’s mandate with defined deliverables. With that, the answer is a “Yes!”

To fully appreciate the impact of NIRSAL, it is important first to appreciate its objectives, one of which is to reduce the risks of agriculture and facilitate agribusiness by sharing credit risks with lenders (banks) and borrowers (farmers) along the agricultural value chain. It is also about generating an increase in innovative agricultural insurance products available to smallholder farmers and stimulating their uptake.

Other missions include providing technical assistance to actors in agricultural value chains, supporting them throughout the transition from farming as a way of life to farming as a business; incentivize institutions, especially commercial banks, that are responsive to Nigeria’s new agricultural finance paradigm, and assess these institutions based on their responsiveness.

It should be noted that NIRSAL is not a derisory chair. Its officials do not generate data from hotel rooms and offices. They are convenient and travel across the country for on-site assessment. Recently, in response to his Credit Risk Guarantee (CRG) requests from two farmers, a palm kernel processor in Gbelebu, Ovia South-West LGA in Edo State and an integrated farm at Amafor Imeriewe in Ngor Okpala LGA from Imo State, they conducted pre-CRG emission -Visits on the two agro-industries. This is the same on-site verification and assessment process for all agri-food businesses covered by its protective wing. The concept of NIRSAL by the government is laudable. It constitutes a real tool for the promotion and sustainability of the agro-industry with the aim of making it attractive and profitable.

So far, it has facilitated the flow of over N 148 billion from commercial banks and other sources in the agricultural sector since 2015. The key instrument to achieve this is the Credit Risk Guarantee Facility (CRG ) NIRSAL which offers a repayment guarantee to lenders who lend to agriculture in accordance with defined guidelines. And this has come with many benefits, including the creation of a total of 373,752 direct jobs and around 1.8 million indirect jobs in the pre-upstream, upstream, middle and downstream segments of the agricultural value chain. .

More than anything else, it has propelled agriculture from the low level of productivity of subsistence agriculture to the profitable and more productive realm of mechanization, input supply, primary production and processing. This feeds well into the vision of Abdulhameed who continued to insist that the development of the country’s agricultural value chain offers the most reliable path to achieve real socio-economic progress for Nigeria. He believes that the insignificant problems of crime, unemployment and inflation can be solved by integrating more Nigerians, especially young people, into agribusiness. Nigeria has a huge population of young people many of whom are unemployed, some have embarked on the dangerous path of all kinds of crimes including cybercrime. Agribusiness offers a better alternative to wean them off crime and get them off the streets of perdition.

This is the essence of NIRSAL, a CBN initiative that gave life under the Buhari government to make agribusiness lending more attractive to lenders (banks). With nearly 1,000 different agribusinesses helped to access capital so far and a risk crystallization rate of less than 1%, NIRSAL’s $ 300 million risk-sharing facility remains the best option for businesses in the sector. agricultural. The values ​​it has added to the agribusiness and the return on investment it has generated for actors in the agrifood space are invaluable totems that should generate more funding for the agency rather than the proper attempt. market to blackmail his leadership.

Obadasha, an agronomist, wrote from Abeokuta

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Roth IRA and other alternative approaches to emergency savings Mon, 23 Aug 2021 14:10:14 +0000

Having money for these rainy events is crucial for Americans and their financial situation.

But most Americans find it difficult to fund an emergency expense. A recent GOBankingRates survey found that 57.4% of Americans saved less than $ 1,000 on emergencies. A separate survey found that 39% of adults in the United States would not be able to cover an emergency expense of $ 1,000 using their savings, a statistic that has held up since around 2014.

While the past 15 months have led to better savings habits and higher disposable income than before the pandemic among some higher-income adults, those who live paycheck to paycheck don’t are still not saving enough.

For many people, saving for an emergency fund is the first step to financial well-being before saving for retirement. Taking care of this emergency fund is crucial because if you don’t have it and something happens you could get into debt and snowball.

You’ve been told that you should still have around three to six months of living expenses in your savings account in case something happens. But maybe you don’t have enough money to put aside today, or maybe you don’t want six months of cash to stay in an emergency fund.

For these people, there are creative ways to have an emergency fund. The four that I’m going to cover in this article are: Roth IRAs, Health Savings Accounts (HSAs), Using Your Home Equity, and Considering Smart Ways to Use Credit Cards.

The Roth IRA

Roth IRAs are a really interesting emergency fund vehicle because your contributions to a Roth IRA are made after-tax and you can access them at any time without negative tax consequences, both from an income tax perspective. than the tax penalty.

You really have two parts of Roth IRAs: First, you have the tax-free investment growth part (but it is only tax exempt if you meet certain holding period and trigger event requirements) ; Then, if you need to dip into the Roth IRA funds in an emergency, you can dip into the other part – your contributions – without incurring an additional tax penalty.

Some Important Considerations When Using Roth IRAs As Emergency Savings Vehicles: It is not as easy to put money back into a Roth IRA once you have withdrawn it. While you can repay within 60 days as a rollover, you can only do one of these 60-day IRA-to-IRA rollovers per year (every 12 months) on all of your IRAs.

When making a withdrawal, try to withdraw only your contributions – not your income – to avoid penalties. Growth of investments in a Roth IRA could be subject to both income tax and a 10% early withdrawal penalty if it is distributed within five years of the account and you are under 59. and half. In other words, limit the amount you withdraw to cover your emergency to the amount you put in your Roth IRA.

You should also consider your underlying investments in your Roth IRA. If you can make sure that part of your Roth IRA isn’t invested in anything volatile, it can work as a better emergency fund. For example, if you are investing heavily in growth stocks and you have to sell stocks during a volatile time when you also have an emergency, it could have a negative impact on you, or you might not have enough money to spare. meet your emergency needs if stocks pull out. too far back. Instead, you might want some of your investments in bond funds or some other less risky asset if your Roth is also serving as an emergency fund.


For many people, emergencies can often take the form of unexpected medical events. In such cases, you could dip into a Health Savings Account (HSA). Your HSA can serve as a good emergency savings vehicle because the money in it can be invested for the long term, but still accessible if you have eligible health expenses.

First of all, I want to note that many people use HSAs incorrectly – or not in the most efficient way. They use them as Flexible Spending Accounts (FSA), pumping money in and withdrawing it all in the same year to pay their deductible into a high-deductible health plan. In this situation, the HSA provides a tax deduction for the amount you put in, up to the annual limit ($ 7,200 for a family in 2021). However, you forgo the tax-deferred growth because you can invest that money, and the tax-free investment gains you receive if they are spent on qualifying medical expenses in the future.

But if you contribute to an HSA, the biggest benefit is actually obtained by investing inside the HSA and letting your investments grow tax free – not the tax deduction in the first year. Think of your HSA as a health care retirement savings vehicle, not just a way to deduct your deductible for the year.

In reality, HSAs are great vehicles for long-term savings due to the triple taxation: you get an initial deduction, tax-deferred growth, and you can use the money for your health expenses. unforeseen and qualified tax-free.

Use these vehicles more strategically and efficiently as part of your savings plan, both for future health care costs expected in retirement and as a buffer for emergency health care costs.

The equity in your home

Some people might not be comfortable with this one, but tapping into your home equity using a line of credit or other lending strategy can play an important role in your emergency savings plan. .

One strategy is to set up a home equity line of credit (HELOC). Some HELOCs can be set up with little or no upfront costs. Instead, the costs come into play when you actually borrow from HELOC and tap into the line of credit. This strategy gives people the ability to borrow if or when an emergency arises, without negatively impacting their investments or cash flow if they don’t need the money. However, keep in mind that once you borrow from HELOC, you will have to repay the loan and earn interest on the debt – which could snowball if left unmanaged.

A lot of people use lines of credit to renovate their home, such as when a tree falls and damages the house and maybe insurance will cover it, but you still need to find the extra cash. Or you have a $ 500 home insurance deductible that you need to cover.

Think of your home as an asset and how to use it to become a potential vehicle for emergency funds, if needed. But before you start borrowing for your emergency fund, make sure you can pay it off and that you understand the costs of borrowing.

Your credit cards

Another borrowing strategy can ease the amount of money you hold on to in an emergency. Personally I think my emergency fund includes credit cards so I’m probably keeping less money in the short term because I know if I have an emergency using my credit cards is an option. . However, this strategy works best if you have a steady income each month so that you can keep track of your credit card payments.

Obviously, the risk with this option is high: if you have an emergency and for some reason cannot work, it might be difficult to pay off the credit card, which could get out of hand. Interest rates on credit cards are often some of the highest you can incur. In general, it’s best not to carry credit card debt month-to-month, but debt can get you through a rough time or emergency if used wisely.

Concluding thoughts

It is more reasonable for people to have three months rather than six months of spending in cash. However, the downside to saving so much money is that it is not invested and will not work for you in the long run. While it’s a good idea to have a certain amount of money set aside for a rainy day, you need to determine what the right amount of savings is for you.

You also need to figure out how to stack the other savings vehicles mentioned in this article in case something unfortunate happens – you lose your job or have an accident or have health expenses, and you need to find a large amount of savings. money. But some of them – like HELOCs and using credit cards – reiterate the importance of having good credit on your behalf and managing your debts.

If you’re having trouble getting out of this on your own, contact a financial planner who can help you determine the best approach for you.

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Opinion: Climate risk management will be rewarded with better economic results Sun, 22 Aug 2021 22:00:00 +0000

A person walks past a climate change-themed nature mural on Earth Day during the COVID-19 pandemic in Toronto on April 22, 2021.

Nathan Denette / The Canadian Press

Sonia Baxendale is the Managing Director of the Global Risk Institute in financial services

A recent Moody’s report suggested Canada could be a “climate winner” with its GDP increasing by up to 0.3 percent thanks to initiatives such as increasing agricultural production. This optimistic outlook stands in stark contrast to what Western Canada has seen this summer with wildfires, record temperatures and withered crops.

And last week, the United Nations Intergovernmental Panel on Climate Change (IPCC) released its report which clearly points to a narrowing of the path that can be taken to stabilize the planet’s climate.

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What these reports suggest is that countries that manage climate risk more effectively will be rewarded with better economic outcomes. And, as our country proved during the global financial crisis ten years ago, we are good enough at managing risk when industry, academia and government work together.

As a nation, we have an obligation to our stakeholders, shareholders and future generations to drive the innovation needed to create a sustainable, low-carbon economy today, not the distant future. Canadian financial institutions provide capital and leverage to the country’s societal and economic activity and must play their role in managing and mitigating climate risks and accelerating low-carbon opportunities. To do this requires a fundamental change in their business model to assess the risks when deploying capital.

The Global Risk Institute for Financial Services recently released a paper that examines the top five takeaways from the IPCC report that will affect Canada’s financial services industry.

1. Canada is in the crosshairs and the world agrees. An increase in the low-carbon ambition of other countries will have major ramifications for Canada’s energy and resource economy. For example, oil-producing economies face pressure to eliminate fossil fuel subsidies and increase the number of sectors paying a carbon tax in order to accelerate the diversification of the energy sector. The resulting effect on the bottom line is that borrowers in the fossil fuel sector or with a high emissions footprint will find it difficult to to get credit. At the same time, lenders and institutional investors will be forced by their own models of credit risk, as opposed to public opinion alone, to cut credit to high carbon companies.

2. Clearer, data-driven future scenarios are now possible. Recent scientific advances now provide better data to analyze climate risk scenarios. For those who allocate capital and lend, a clearer picture of what will happen if emissions are not reduced to adequate levels can improve the ability to accurately assess the associated risk. On the insurance side, this could lead to higher premiums or restricted access to insurance or reinsurance. Risk-based capital allocation can be better defined and regulators are ready to respond. For example, the EU’s financial markets regulator is already considering additional capital requirements in response to climate risk.

3. The risk of liability is expected to increase as human influence on the climate is now “unequivocal”. Scientists are now able to link specific weather events to man-made climate change, something they had missed in recent decades. As a result, companies will reassess contracts, which may be exposed to climate-related liability. This area could follow a similar trajectory to the evolution of liability in the tobacco industry – more lawsuits for exposed industries, thus having a ripple effect on credit and market risk, and possibly risk. Direct legal for financial companies if they have financed polluting industries that may be linked to damaging weather events.

4. Double transition funding and switch to a low carbon economy. The world’s leading financial institutions have joined the Glasgow Financial Alliance for Net Zero (GFANZ). GFANZ recognizes that it will take an economy-wide transition to achieve net zero emissions and that every company, bank, insurer and investor will need to adjust their business models, develop credible plans for the transition and put them into action. artwork. The report provides a clearer picture of the benefits of reducing emissions, such as reducing floods, fires, droughts and the many benefits of capitalizing on sustainable finance.

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5. Investment in the only entity that can soften the blow: Mother Earth. The IPCC study presents a clearer picture of climate processes which are now irreversible and worsening in an accelerating positive feedback loop. This information will lead to increased demand for funding adaptation, resilience and nature-based solutions to protect or modify existing risky infrastructure. Retrofitting, for example, is expected to become a bigger part of the sustainable finance market. Insurers, lenders and investors will better understand the long-term outlook for physical assets and infrastructure that can support better asset allocation, better underwriting and better pricing.

Canada was a world leader during the financial crisis ten years ago because of its ability to manage financial risk better than most countries. Now is the time for Canada to come together, do the right thing for future generations and move beyond our weight on the climate.

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Essent (ESNT) drops 2.22% in Light Trading on August 19 Fri, 20 Aug 2021 01:39:00 +0000

Shares of Essent Group Ltd (NYSE: ESNT) fell 2.22%, or $ 1.04 per share, to close Thursday at $ 45.84. After opening the day at $ 46.24, Essent’s shares have fluctuated between $ 46.64 and $ 45.65. 443,033 shares traded in the hands, down from their 30-day average of 578,056. Thursday’s activity brought Essent’s market cap to $ 5,128,220,731.

Essent is headquartered at 2 Church Street, Hamilton.

About Groupe Essent Ltée

Essent Group Ltd. is a Bermuda-based holding company (collectively with its subsidiaries, “Essent”) which, through its wholly owned subsidiary, Essent Guaranty, Inc., provides private mortgage insurance for mortgages for a family in the States -United. . Essent provides private equity to mitigate mortgage credit risk, allowing lenders to make additional mortgage financing available to potential homeowners. Based in Radnor, Pa., Essent Guaranty, Inc. is licensed to purchase mortgage insurance in all 50 states and the District of Columbia, and is endorsed by Fannie Mae and Freddie Mac. Essent also provides mortgage insurance, reinsurance and advisory services through its Bermuda-based subsidiary, Essent Reinsurance Ltd. Essent is committed to supporting environmental, social and governance (“ESG”) initiatives that are relevant to the business and align with dedication to a responsible corporate citizen that has a positive impact on the community and the people it serves.

Visit the Essent Group Ltd profile for more information.

About the New York Stock Exchange

The New York Stock Exchange is the world’s largest stock exchange by market value with over $ 26 trillion. It’s also the leader in initial public offerings, with $ 82 billion raised in 2020, including six of the seven biggest tech deals. 63% of PSPC proceeds in 2020 were raised on the NYSE, including the six biggest deals.

To get more information about Essent Group Ltd and keep up with the latest company updates, you can visit the Company Profile page here: Essent Group Ltd. Profile. For more information on the financial markets, be sure to visit Equities News. Also, don’t forget to sign up for the Daily Fix to get the best stories delivered to your inbox 5 days a week.

Sources: The chart is provided by TradingView based on 15 minute lag prices. All other data is provided by IEX Cloud as of 8:05 p.m. ET on the day of publication.

The views and opinions expressed in this article are those of the authors and do not represent the views of Readers should not take the author’s statements as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please visit:

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How would you do in a financial Olympics? Mon, 16 Aug 2021 14:00:00 +0000

Watching the benefits of so much training at the Olympics can be a motivator for our own accomplishments. While you won’t earn medals for your financial accomplishments, you could gain something even more valuable: financial security and independence for you and your family. Still, it helps to have more concrete goals to measure your progress. So here are some “financial” Olympic events, as well as “medals” to aim for.

Event 1: Money management

To participate in this event, you will need to track your income and expenses for at least 3 months to get an average. Most of us know what we bring home each month, but knowing what we spend can be a little trickier. When people try to estimate where their money is going and then compare it to the real thing, they usually end up quite surprised.

One way is to simply look at bank and credit card statements and then record the expenses by category on a spreadsheet like this. Another is to use a website or app like Mint that will monitor your online cash flow for free. Neither approach is necessarily better. Just like the best exercise, the best method is the one you will actually be doing, so go for what you are most comfortable with.

Don’t forget about those non-monthly expenses like vacations and holidays. See what you spent last year and divide that number by 12 to convert it to a monthly expense. Ideally, you could then set that amount aside automatically each month in a separate account so that the money is there when you need it. You might not earn much interest with today’s rates, but it’s certainly better than putting those expenses on a credit card and paying interest on them.

Finally, there are always those unforeseen emergency expenses that we cannot foresee. Since one of the worst is losing your job, a rule of thumb is to have enough savings to cover at least 3-6 months of necessary expenses, and ideally 6-9 months. If your job is high risk, you might even want to have a full year of it.

Bronze: You spend less than what you earn each month. If this is a challenge, see if you can use any of these money saving ideas to cut some of your expenses. If debt is a challenge, you may want to consider negotiating down payments or working with a credit counseling agency to negotiate for you.

Money: You pay all of your credit card bills in full to avoid paying interest. If you have high interest debt like credit card debt, put any additional payments on the debt with the highest interest rate to pay it off as quickly as possible. This calculator can show you how quickly you can get rid of your debt with this strategy.

Gold: You don’t have high interest debt and enough emergency savings. Make sure you keep these savings in a safe and secure place, like a savings account or money market fund, and use them only for real emergencies.

Event 2: Retirement planning

For this event, you will need to start by thinking about your retirement goals. When do you plan to retire? Where would you like to live? What do you see yourself doing

You can then use this retirement budgeting worksheet to estimate how your spending might change. For example, if you plan to retire in 20 years and you have 15 years left on your mortgage, your housing expenses will go down. On the flip side, you can spend more on your travel, and if you retire before you qualify for Medicare at 65, you can spend more on health care as well.

Your next step is to see what resources you will have for retirement. You can get an estimate of your Social Security benefits on their website. You can also ask your current and former employers for a projection of the retirement benefits you may receive. Finally, take a look at all of your retirement accounts (current and former employer plans, IRAs, and retirement investments in regular accounts) and how much you are contributing to them. Once you have this information, you can perform a basic retirement projection to see if you are on track to meet your retirement goals.

Bronze: you save enough to at least get the full amount in your employer’s retirement account. You don’t want to leave that free money on the table.

Money: You save enough to meet your retirement goals. Otherwise, use the calculator to see the effect of retiring later and / or saving more. While going immediately from a 6% contribution rate to 10 or 15% may not be feasible, how about a 1% increase? If your employer’s plan has a contribution rate escalator, it’s a great way to automatically increase your contributions slowly over time until you’re saving enough to be on track. Otherwise, you will have to increase your savings yourself.

Gold: You are on the right track for retirement and your investments are optimally distributed to match your risk tolerance and to minimize taxes and other costs on your investments. Make sure you take full advantage of your employer’s retirement plan (s), IRAs, and HSAs (if you can).

Event 3: Insurance and estate planning

You can do a great job of accumulating your wealth, only to lose it all with some unfortunate event. Here, you will just need to see the insurance policies and estate planning documents that you have. Remember to include employee insurance benefits and beneficiary designations on items such as insurance policies, retirement accounts, and trusts.

Bronze: You have enough medical, life and disability insurance to protect you and your family in case something happens to you.

Money: All of the above and you also have enough long term care insurance to keep your assets from being spent to qualify for Medicaid in case you need long term care.

Gold: All of the above and you have taken the necessary steps to protect your estate against probate and, if applicable, estate taxes.

So how many medals have you won? If you haven’t done so well, don’t be discouraged. The best athletes take years of training with the best advisors, so you may want to consider enlisting expert help. You can ask your employer if they offer free access to financial coaching as part of a workplace financial wellness program or hire a financial planner yourself.

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