Stay away from interest-only mortgages (Dave Ramsey column)

Dear Dave,

Can you explain interest-only mortgages? Are they a good idea?

-- Dale

Dear Dale,

An interest-only mortgage is just what it sounds like. You’re paying only the interest on the loan and none of what you actually owe. It’s a good way to stay in debt for the rest of your life, so they’re not a good idea.

Lots of people look at this product and say, “Wow, I’ll get a lower monthly payment, and then I can throw tons of cash at the principal.”

Guess what, in most cases it doesn’t work out that way. Why not take out a good 15-year fixed rate mortgage and put a bunch of money toward the principal?

Everyone thinks they have a great idea for tricking the system. But the only system that really works is to pay off debt as quickly as you can.

Interest-only mortgages are like adjustable rate mortgages and high fixed rate mortgages — they’re good things to stay away from.

— Dave

Dear Dave,

I’m a senior in college. I’m completely debt-free right now, and I am wondering what I should do to stay this way after graduation.

-- Cary

Dear Cary,

You’re already primed for a great start. Doesn’t it feel great to know you won’t have a bunch of payments hanging over your head when you walk out into the world? I’m really proud of you!

There are three major traps I tell all new graduates to avoid. One, save up and pay cash for your cars for the rest of your life. If you saved the amount of an average car payment — about $485 a month — and put it into a good mutual fund from age 25 to 65, you could easily retire a millionaire. Now that’s something to look forward to.

The second trap to avoid is rushing in to buy a house. The first few years after college will be some of the most volatile in your life in terms of career and relationships. Save up a big pile of cash and be patient. Too many young people today go crazy and buy houses they can’t afford just because their friends bought one or everyone is telling them it’s what they should do.

see more: http://globegazette.com/business/stay-away-from-interest-only-mortgages-dave-ramsey-column/article_c74df946-2253-5762-a639-81b14ac3ea72.html

FTI Consulting Releases 2015 Risk Research Survey & Report: What Companies Do Right (and Wrong) in Emerging Markets

WASHINGTON, June 24, 2015 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE:FCN), the global business advisory firm dedicated to helping organizations protect and enhance their enterprise value, today announced the release of its comprehensive 2015 Risk Research Survey & Report: What Companies Do Right (and Wrong) in Emerging Markets.
FTI Consulting surveyed 150 business leaders of North American- and European-based multinationals with operations in emerging economies, specifically executives involved in risk and compliance, and found that 83 percent of the companies surveyed have suffered major incidents in emerging markets since 2010. The average loss per company was $1.38 billion over that period of time. The average cost per incident was estimated to be $325 million.
In 99 percent of incidents that involve a loss, the cause is either bribery or fraud, regulatory violations or reputational issues. Regulatory issues are the most frequent cause of loss, and bribery and fraud are the most expensive. The very worst incidents, including those that approached or exceeded $1 billion, involved two or three of these issues occurring either together or in quick succession, with reputational issues invariably making a bad situation worse.
Leading companies, which include those that suffer the lowest losses and fewest incidents, protect themselves in three major ways that others do not, including maintaining a consistently good reputation; taking great care to comply with and influence the local regulatory environment; and working with the communities in which they do business in accordance with local cultural norms while maintaining the highest ethical standards.
In these ways, companies guard against all three kinds of risk while preventing any one from magnifying and generating others. In other words, leading companies not only act differently, they think differently about their businesses and their role in emerging economies.
"When companies attempt to do business overseas, they essentially become political as well as economic actors," said Jackson Dunn, Senior Managing Director in the Strategic Communications segment at FTI Consulting. "The company's investment inevitably affects the local economy, and that has spillover effects in the political community. This places companies at reputational risk, which they frequently fail to understand or acknowledge."
The risk, according to Brazil-based Eduardo Sampaio, Senior Managing Director in the Forensic & Litigation Consulting segment at FTI Consulting, is that some companies "are too hungry to make deals in hyped environments; therefore, they're closing deals without an adequate understanding of what they're getting into."
FTI Consulting experts and corporate leaders agree that companies that are most successful in avoiding losses are those that are deeply engaged with the communities in which they operate at both the political and community levels.
- See more at: http://globenewswire.com/news-release/2015/06/24/747085/10139508/en/FTI-Consulting-Releases-2015-Risk-Research-Survey-Report-What-Companies-Do-Right-and-Wrong-in-Emerging-Markets.html#sthash.wYcKfQHS.dpuf

WASHINGTON, June 24, 2015 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE:FCN), the global business advisory firm dedicated to helping organizations protect and enhance their enterprise value, today announced the release of its comprehensive 2015 Risk Research Survey & Report: What Companies Do Right (and Wrong) in Emerging Markets.

 

FTI Consulting surveyed 150 business leaders of North American- and European-based multinationals with operations in emerging economies, specifically executives involved in risk and compliance, and found that 83 percent of the companies surveyed have suffered major incidents in emerging markets since 2010. The average loss per company was $1.38 billion over that period of time. The average cost per incident was estimated to be $325 million.

 

In 99 percent of incidents that involve a loss, the cause is either bribery or fraud, regulatory violations or reputational issues. Regulatory issues are the most frequent cause of loss, and bribery and fraud are the most expensive. The very worst incidents, including those that approached or exceeded $1 billion, involved two or three of these issues occurring either together or in quick succession, with reputational issues invariably making a bad situation worse.

 

Leading companies, which include those that suffer the lowest losses and fewest incidents, protect themselves in three major ways that others do not, including maintaining a consistently good reputation; taking great care to comply with and influence the local regulatory environment; and working with the communities in which they do business in accordance with local cultural norms while maintaining the highest ethical standards.

 

In these ways, companies guard against all three kinds of risk while preventing any one from magnifying and generating others. In other words, leading companies not only act differently, they think differently about their businesses and their role in emerging economies.

 

"When companies attempt to do business overseas, they essentially become political as well as economic actors," said Jackson Dunn, Senior Managing Director in the Strategic Communications segment at FTI Consulting. "The company's investment inevitably affects the local economy, and that has spillover effects in the political community. This places companies at reputational risk, which they frequently fail to understand or acknowledge."

 

The risk, according to Brazil-based Eduardo Sampaio, Senior Managing Director in the Forensic & Litigation Consulting segment at FTI Consulting, is that some companies "are too hungry to make deals in hyped environments; therefore, they're closing deals without an adequate understanding of what they're getting into."

 

FTI Consulting experts and corporate leaders agree that companies that are most successful in avoiding losses are those that are deeply engaged with the communities in which they operate at both the political and community levels.

 

source: http://globenewswire.com/news-release/2015/06/24/747085/10139508/en/FTI-Consulting-Releases-2015-Risk-Research-Survey-Report-What-Companies-Do-Right-and-Wrong-in-Emerging-Markets.html

Dallas consulting firm to lead the search for new chancellor at University of Mississippi

JACKSON, Miss. –  A Dallas-based consulting firm will lead the search for a new chancellor of the University of Mississippi.
The state College Board on Thursday hired the firm, R. William Funk & Associates.
It was not immediately clear how much the firm will be paid or how long the search will take.
Commissioner of Higher Education Glenn Boyce says the firm's CEO, Bill Funk, is "one of the finest search consultants in the nation."
The new chancellor will succeed Dr. Dan Jones, a physician who had led Ole Miss since 2009. The College Board did not renew his contract, which expires in mid-September. Morris Stocks is serving as interim chancellor.

read more http://www.foxnews.com/us/2015/06/18/dallas-consulting-firm-to-lead-search-for-new-chancellor-at-university/

Feds: Beware the Sugar-Coated Reverse Mortgage

If you believe the advertising hype, a reverse mortgage looks like an easy, risk-free way of bridging financial gaps in retirement. But that’s often not the reality, the Consumer Financial Protection Bureau warns.

“While reverse mortgages can help some older homeowners meet financial needs, they can jeopardize retirement security if not used carefully,” the CFPB said in a new report on reverse mortgage advertising.

In a nutshell, a reverse mortgage is a type of loan that allows older homeowners (ages 62 and up) to borrow against the accrued equity in their homes. It’s a way for seniors to convert their home equity into cash, while still keeping their home. It can be a good option for retirees who have a lot of home equity, but little income.

But here’s the deal: Reverse mortgages need to be repaid if the borrower dies, moves or no longer lives in the home. And seniors could lose their homes if they fail to meet the requirements of the loan, such as paying homeowners insurance and property taxes.

Plus, with seniors living longer than ever before, reverse mortgage borrowers risk outliving their loans.

Unfortunately, many ads for reverse mortgages only tout their benefits – cash to help you enjoy your golden years – without mentioning the risks, the CFPB said. What’s worse, some advertising contains inaccurate, incomplete and confusing information about reverse mortgages that misleads consumers and puts them even more at risk.

The CFPB encourages seniors to consider these facts about reverse mortgages:

    Reverse mortgages are not a government benefit. A reverse mortgage is essentially a home loan with fees and compounding interest that need to be repaid.

    You could lose your home. If you fail to meet the requirements of the reverse mortgage, you could trigger a loan default and potentially lose your home.

    You could outlive your loan money. Americans are living longer today than ever before. If you tap into your home equity too early, you risk outliving the loan and draining a potential source of income you may need later in retirement. “It’s important for those considering a reverse mortgage to understand how long their loan proceeds will last them given the loan’s interest rate, their living expenses, home equity balance, and age,” the CFPB said.

source: http://www.moneytalksnews.com/feds-beware-the-sugar-coated-reverse-mortgage/

Lenders: Dodd-Frank Is Choking The Life Out Of The Mortgage Business

The Dodd-Frank rules are choking the life out of the mortgage banking industry, a survey of 182 lenders recently conducted by the American Bankers Association (ABA) reveals.

Nearly 80% of respondents say they expect the Consumer Financial Protection Bureau's (CFPB) new mortgage lending rules, which grew out of the Dodd-Frank Act, to further reduce credit availability.

About 19% characterize the impact from the new rules as "severe" while 78% say there is less credit available as a result.

The survey reveals that about 90% of all mortgages originated last year were qualified mortgages, or QMs. That means they were originated under the CFPB's new ability-to-repay (ATR)/QM rules, which require lenders to more-carefully assess each borrower's credit history and income.

"As expected, the ability-to-repay and QM rules have dampened the housing market recovery," says Robert Davis, executive vice president of the ABA, in a statement. "Combine that with new mortgage disclosures, which are just around the corner, and we'll continue to see a slow down in what should be the ideal time to buy a home."

The most likely reason for a mortgage loan not meeting QM standards was high debt-to-income levels followed by lack of required documentation.

Interestingly, lenders reported the highest percentage of loans to first-time homebuyers in the survey's 22-year history.

Meanwhile, the housing market continues to heal from the effects of the Great Recession - in 2014 foreclosures and delinquencies were down significantly. The survey reveals that foreclosure rates fell to an average of 0.57% of all mortgages in 2014 from an average of 0.78% in 2013. In addition, the average delinquency rate for single-family homes fell to 1.76% from 2.16%.

The survey reveals that mortgage bankers are most concerned about compliance and increasing regulatory burden followed by economic uncertainty, the interest rate environment and community bank challenges. About 87% of respondents say regulation is having a moderate to extreme negative impact on their bank's business.

read more: http://www.mortgageorb.com/e107_plugins/content/content.php?content.16868

Top Weather Service official creates consulting job — then takes it himself with $43,200 raise, watchdog says

A senior National Weather Service official helped write the job description and set the salary for his own post-retirement consulting post– then came back to the office doing the same job with a $43,200 raise, the agency’s watchdog found.

The deputy chief financial officer also demanded that he be paid a $50,000 housing allowance near Weather Service headquarters in downtown Silver Spring in violation of government rules for contractors, one of numerous improprieties in a revolving-door deal sealed with full knowledge of senior agency leaders, according to an investigation by the Commerce Department inspector general’s office.

With his consulting job and housing allowance in place, P. Donald Jiron retired from the Weather Service in early May 2010, then returned to work as a consultant the next day, while collecting his government pension, investigators said. By the time he was fired 21 months later, the government had paid him another $471,875.34.

The investigation made public this week does not name Jiron, who worked as a GS-15 before his retirement and now lives in Williamsburg, Va. But government officials familiar with the case identified him. His lawyer, Matthew Kaiser, said in a statement, “Mr. Jiron has not done anything wrong” because he acted “at the direction of and with the approval of his supervisor at all times.”

The inspector general did not dispute that, and came to an alarming conclusion about the roles of senior officials in the Jiron deal: His procurement of his own post-retirement job appears to be commonplace throughout the National Oceanic and Atmospheric Administration, the Weather Service’s parent agency.

“This contract may be indicative of a routine and troubling practice at NOAA of  hiring former employees as contractors for purposes of carrying out similar duties to those they performed prior to leaving federal service,” investigators wrote.

read more: http://www.washingtonpost.com/blogs/federal-eye/wp/2015/06/05/top-weather-service-official-creates-consulting-job-then-takes-it-himself-with-43200-raise-watchdog-says/

Forget the buzzwords: mind your (IT consulting) Language

Among the many things that irk me about dealing with consultants, the one that tops the list would probably be their penchant for buzzwords. Every industry has its own collection of buzzwords. They are carefully inserted into research papers and proposals, if only to lengthen sentences that could have been understood in half the word count and quarter the time. They are skillfully included in conversation and are so overused or misused that eventually, a carefully constructed sentence makes no sense at all.

There are two functions of consulting buzzwords as far as I can tell

1. To create a distinction between those who know w hat the business is about and the
   outsiders.
   
2. To sometimes act as a cover for when people who are in the consulting business don’t really know what they’re talking about but conveniently pretend like they do (us commoners call this the Style over Substance fallacy ).

And point no 2 is precisely why you need to be careful about not being bowled over by fancy buzzwords. Now don’t get me wrong. There is nothing wrong with spouting some jargon every now and then, but you know when things are off if that’s all you’re hearing.

read more: https://memeburn.com/2015/06/forget-the-buzzwords-mind-your-it-consulting-language/