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UPDATE 3-Monte dei Paschi says cash call is in limbo as losses soar


* Annual losses up by more than 60%, impacted by exceptional provisions

* Net interest income down 14%, fees are maintained

* In talks with EU and ECB on capital increase plans (adds details, CEO comment)

MILAN, Feb. 10 (Reuters) – Plans by Italian bank Monte dei Paschi di Siena to boost its capital reserves remain in limbo, she said on Wednesday after reporting annual losses that climbed to 1, 69 billion euros ($ 2 billion) in 2020. The government had been working on reprivatizing the bailout Tuscan lender, but progress was hampered by the collapse of the ruling coalition in Italy and a change in leadership at the potential buyer UniCredit, the country’s second-largest bank in terms of assets.

Last month, Monte dei Paschi (MPS) said it would work to close a merger with a stronger par before considering a € 2.5 billion cash call to replenish capital reserves with state support.

Italy owns 64% of MPS after a 2017 bailout that cost taxpayers € 5.4 billion.

After reporting his 63.5% increase in annual losses, MPS said plans to raise capital are clouded by uncertainty as it seeks approval from the European Commission and the European Central Bank.

“The priority of our majority shareholder and of the bank is a structural solution which (…) is accompanied by a capital increase,” MPS CEO Guido Bastianini told analysts.

Bastianini said MPS needs to prepare for the possibility of a merger failing to materialize, adding that it would look to institutional investors rather than minority shareholders for any equity beyond the Treasury’s share in the sale of ‘actions.


The bank’s higher quality capital declined only slightly in the quarter to 12.1% despite a debt cleanup deal that eroded its capital but reduced soured debt to 4.3% of total loans and below the industry average.

This seemingly healthy capital ratio, however, has been bolstered by a state-backed guarantee program that provides only temporary relief.

With its recovery first derailed by low interest rates and then the COVID-19 crisis, MPS is ill-equipped for the fallout from a pandemic that is expected to trigger a series of business bankruptcies.

Unable to meet the restructuring targets agreed with Brussels at the time of its bailout, MPS has been asked to take corrective action while the Commission examines the revised restructuring plans.

The losses in 2020 were largely due to provisions for MPS legal claims recorded after the convictions of two former executives. These provisions represented three quarters of 1.3 billion euros in one-off charges.

Provisions related to pandemics against loan losses also weighed.

Turnover fell 11.2% over one year, penalized by a 14% drop in net interest income. Fee income, meanwhile, was the best for two years in the fourth quarter. ($ 1 = 0.8248 euros) (Report by Valentina Za Editing by David Goodman)

Everyone donates money on Instagram


On March 18, as states sent non-essential workers home and businesses prepared to cut costs, fitness influencer Paige Hathaway posted a message to her more than 4 million Instagram followers.

“I know it’s tough with 40s, especially for those who can’t work, so I wanted to give a gift so that someone would get 5,000 DOLLARS. ” she wrote. The post, which was deleted from Instagram shortly after this article was published, featured Ms Hathaway rolling out a stack of $ 100 bills.

His fans started tagging friends and commenting on how desperately they could use the money. “I could use a miracle right now,” wrote one woman. Several users have posted prayer emojis.

As the coronavirus has continued to disrupt the lives and livelihoods of Americans, Instagram has been overrun with cash giveaways like Ms Hathaway’s. Several popular personalities have offered money to their fans in exchange for tags, follows and comments, including Harry jowsey, a star of the new Netflix reality show “Too Hot to Handle”; lifestyle influencers Caitlin Covington and Laura Beverlin; and the rapper and social media star Bhad Bhabie.

To the more than 26 million U.S. residents who have unemployed Over the past five weeks and the millions more struggling to cover unforeseen expenses like medical bills and weeks of food bought all at once, these cash offers can seem like lifesavers. But while often touted as charity, the giveaways are part of a growth agenda that has become ubiquitous on Instagram.

Ms Hathaway, for example, was paid thousands of dollars by the social media marketing company Social position to promote the giveaway on their feed. Potential entrants were asked to follow a list of roughly 70 accounts that Social Stance was following. The company charged $ 900 for a niche on the list. Those who have purchased “sponsor” slots can expect to gain thousands of new subscribers overnight.

“If you tell someone they can get 50,000 subscribers in three days, they will,” said Nathan Johnson, 19, who helps YouTube and TikTok stars orchestrate giveaways. The business he runs with his 16-year-old friend Carter is simple: they pay a big influencer some money up front to “host” a cash giveaway, then turn around and sell watchlist to make a profit.

“Entrepreneurs buy spots to gain subscribers to sell their courses or ebook,” Johnson said. “Models will do this to gain followers to increase engagement and charge more for branded offerings. Doctors do this for their credibility and to develop their personal brand.

Louisa Warwick, founder of Social Acceleration Group, orchestrated seven Instagram giveaways with influencers and actresses, including Tori Spelling and Natalie Halcro. Her company is currently selling spots on the sponsor list for an upcoming cash giveaway from “Teen Mom” ​​star Farrah Abraham. Interested parties can pay only $ 270 to be on the list; in return, Ms Warwick said they can expect to gain thousands of followers.

Instagram giveaways have been around for years. They first emerged around 2016, when small businesses and bloggers started running ‘loop’ giveaways. To participate, you must follow a group of people, or “loop,” then return to the original person’s page and comment. Loop giveaways are often sponsorless and exist as a collaboration between influencers. The giveaway Ms Covington and Ms Beverlin threw with their friends, for example, was a loop giveaway.

But last summer, the first big wave of sponsored giveaways started to crop up. At the time, most of the stars were gift things like Louis Vuitton bags, but now everyone is giving money. “People really need cash more than handbags, and logistically it’s more difficult to take a promotional photo with the celebrity and the bag when everyone is stranded,” Ms. Warwick said.

With many branded offers and sponsored trips suspended due to the virus, giveaways have provided big influencers with a way to make quick cash from home. “Corona has been tough on influencers and if you’re told you can make $ 20,000 to post a giveaway on Instagram, you probably will,” Mr. Johnson said.

Buying sponsorship spots on giveaways has also become the fastest and cheapest way to grow on Instagram. “You suddenly get this wave of followers,” said Dr Thomas Connelly, a cosmetic dentist, who bought seats in the Kardashian gifts. “What these giveaway campaigns do is force exposure to living human beings. Then these people can choose whether they want to continue following. “

Dr Connelly said he was invited daily to be a sponsor. “In advertising, there really isn’t a lot of choice these days,” he said. “With that, you pay between $ 10,000 and $ 20,000, and you become one of those 70 people that Kim Kardashian or Kylie Jenner says, ‘Hey, follow me if you wanna make some money. “”

As for people who buy free sponsor sites, “the biggest buyers are plastic surgeons and contractors,” Johnson said. Mrs Warwick echoed her assertion; each of the giveaways she organized included doctors.

“This is the demographic and age group that we are targeting,” said Dr. Nicole Nemeth, owner of Plastic Surgery of Westchester. “These are the people that we would like to market, they are the people who are looking at these influencers.”

“Giveaways allow you to target a demographic that you wouldn’t normally be able to reach with such precision,” said Dr Neal Blitz, a foot surgeon known online as Bunion King. In his case, he said, it is “women who wear heels and their feet are devastated by heels.”

“There are of course all the different ways of advertising,” said Dr. Blitz, “but the younger generation is more interested in Instagram and who you are.” He has sponsored several great influencer giveaways and said they result in followers who have a much stronger connection than if they simply found your account through a Google or Facebook ad.

Preston Million, founder and CEO of digital marketing agency Influential Management, said emerging artists also frequently buy sponsor seats in influencer giveaways. “It helps with perception when trying to shop for labels,” he said. “The alternative is to buy ads through Instagram, which can be more expensive. Normally, it would cost around $ 10,000 to gain 100,000 followers through Instagram ads. With a gift, you could spend $ 2,000 and grow the same amount. “

Jordan Lintz, founder of HighKey Clout, one of the biggest Instagram giveaways companies, said he didn’t like to portray it as buying followers. “It’s like sponsoring an internet event,” he said. Upcoming giveaways are announced on their verified Instagram page, and past winners and campaign results are highlighted on the company website.

Not all giveaways are handled with the same level of transparency. “A lot of memes pages are giving bogus right now,” Mr Johnson said. “Some influencers are too.” Mr Johnson said a legitimate giveaway will always herald and identify a winner. Liraz Roxy, a social media influencer in Los Angeles, said she refuses to participate in sponsored giveaways. “Everything is very fishy,” she said.

A spokesperson for the Facebook company said that many cash gifts could violate the company’s community guidelines. “It’s not the kind of experience we want to create on Instagram,” the spokesperson said via email. Plus, according to Robert Freund, a lawyer who offers a legal education course for influencers, many of these cash giveaways could violate state raffle laws.

“There are many state, federal, and local laws that regulate the sweepstakes promotional space and there are special considerations when running online promotions with influencers,” he said.

For example, these giveaways require clear terms and conditions and must verify the age and location of attendees, which Mr Freund said he hasn’t seen most influencer giveaways do. Influencers should also disclose that they are paid to promote these giveaways.

“Right now there is a trend where influencers are making these cash giveaways appear out of the kindness of their hearts because of Covid,” Mr. Freund said. “But, if they’re paid, they have to disclose that fact when promoting the giveaway and posting about it. Disclosure in influencer marketing is an area the FTC is paying a lot more attention recently and regulators are watching.

However, some influencers don’t get paid to promote free money – they just give it away. On April 15, Katie Sturino and three other body positive influencers pooled $ 6,000 of their own money for a giveaway. Participants were encouraged to follow all four influencers and the winner was selected at random.

Ms Sturino frequently distributes products on her page, but she thought the money would be better spent at this time.

“The reception has been positive,” said Ms. Sturino. “People were thrilled that we were donating the money and they were thrilled to hear more from other Instagrammers who have a positive message. What we did didn’t seem fishy. It was a really cool positive thing.

5 ways to deposit money into someone else’s account


Several large banks no longer allow you to deposit money and coins in someone else’s current account unless you become a co-owner.

While the adoption of the policy is at the discretion of each bank, there is a reasonable chance that you will be affected. The biggest banks – Bank of America, Wells fargo and JPMorgan Chase – have no-cash policies for unauthorized persons.

In the eyes of banks, the decision to ban cash makes it possible to avoid money laundering and fraud – money is hard to trace after all. It is also expensive to process. For you, politics can interfere with anything you want to do. Now for the good news. If your bank does not allow you to deposit money into someone else’s personal account, you have other options to achieve the same result.

Under the Banking secrecy law, financial institutions must take certain steps to detect and combat money laundering, such as reporting suspicious activity and transactions involving more than $ 10,000. But the adoption of certain policies – such as preventing consumers from depositing money into other people’s accounts – is at the discretion of each bank, said Steve Hudak, spokesperson for the bank. Financial Crime Network.

“It is up to the bank to have policies and procedures in place to be able to file these reports and this is also risk based,” says Hudak. There is no rule that says precisely what transactions banks can accept, but they must base their policies on risk.

Five alternatives to cash deposits

While you may feel awkward, you have alternatives, some of which are faster than depositing physical money into someone else’s account at a branch.

1. Make an electronic transfer

You can easily transfer money to a friend or relative’s account through a service like Venmo, Pay Pal or Square silver. Zelle is also a good option to transfer money to someone else’s account. Bonus: Your bank – and the person you’re sending money to – may already offer Zelle in their mobile app or online banking, so you won’t need to sign up for another account.

However, take care when using any of these digital options. When you send money to someone else through these types of services, the payments are often irrevocable. Send money only to people you know and trust to avoid being scammed.

If your bank does not offer Zelle, you can still send an electronic bank transfer through your online bank account in another way. Instead of entering an email address or phone number like you do through Zelle to send money to someone, you will likely need to enter the recipient’s bank account number and routing number to make a transfer. While Zelle transfers money within minutes, this type of bank-to-bank transfer can take a few days.

2. Write a check

While paper checks are falling out of favor, you can still deposit a personal check in someone else’s personal account.

Of course, check fraud is possible. However, checks are less of a threat to banks than cash deposits because financial institutions can trace the money.

“The key question is always, ‘Where did you get this money? Says Marc Trépanier, Senior Fraud Consultant, ACI Worldwide. “With a check, we know where it comes from. It was from another account.

The person receiving the check could also deposit the money through a mobile banking app to avoid a branch visit.

Unlike cash, the downside is that your bank won’t always make the funds available immediately.

“The check can be cleared and settled within hours depending on the circumstances,” says Bob Meara, senior banking analyst at Celent, a financial services research and consulting firm. “But most banks wait a business day for funds to become available to most customers just so they can see if the check clears.”

Each bank will make a risk management decision to decide its policy.

3. Send a mandate

If you don’t want to use a personal check to deposit money into someone else’s account, sending a money order is an old-fashioned alternative.

You can buy money order at banks and credit unions, a U.S. post office, some big box stores, and more. It will cost you, but the price is relatively cheap. For example, the United States Postal Service (USPS) charges $ 1.25 for the purchase of a money order up to $ 500 (as long as the destination is in the United States).

The method of payment is secure: you will receive a receipt for your money order. Even if a money order is lost or stolen, you can usually replace it.

[READ: How to fill out a money order]

4. Add an additional owner to your account

Giving someone direct access to your bank account is perhaps one of the easiest ways to transfer money between your accounts. But like a joint credit card, joint ownership of a bank account can cause problems, especially if something is wrong with the relationship.

“When opening a joint account, it is important to keep in mind that both parties are equal owners of the funds in the account and have access to them without the consent of the other,” says Luis Rosa , CFP, founder of Build a Better Financial Future, a financial consulting firm in Henderson, Nevada. “If the relationship deteriorates, one party may deplete all funds in the account, leaving the other party without their share of the funds.

5. Find out what other banks are offering

Not all major banks have a policy against depositing money into someone else’s personal account. PNC Bank, for example, still allows this practice.

In addition to the ability to deposit money into someone’s personal account, another bank may offer other benefits, such as better prices on CD, savings accounts and mortgages or even a more useful mobile app.

“Look for the bank known to be the most consumer-centric,” says Ciaran Chu, Cloud Payments Manager at ACI Worldwide.

Learn more:

– The discount rate Amanda Dixon wrote the original version of this story.

Andrew Yang on Record Stress and Student Loan Debt


“Our economy is the envy of the world, and we’re going to keep it that way. So that’s very important,” the president said. Donald trump at December 7 from the South Lawn of the White House. Trump has said he must thank this strong economy, which is one of the main thrusts of his 2020 re-election campaign.

If Democratic presidential candidate Andrew Yang were to debate Trump on the economy, Yang said he would highlight the toxicity of the environment in which the the economy is booming.

“I would just like to tell Americans the facts they already know; that you currently have record levels of corporate profits, but also record highs in the United States of America: stress, anxiety, mental illness, depression, even suicides and drug overdoses. Student loan debt, record high, ”Yang told the Freakonomics podcast in an episode released Wednesday.

“And so you have to ask yourself,” Yang said. “What good are corporate profits if people literally die sooner from increases in suicide and drug overdoses? “

Corporate profits are near record highs. The National Income and Product Accounts (NIPA), prepared by the Bureau of Economic Analysis (BEA), show that corporate profits are slightly below record impacted in the third quarter of 2014. And the profits of companies in the S&P 500 (weighted by their market capitalization and measured by the rating agency Standard and Poor’s) show that at the end of the second quarter, the earnings per share of the index were $ 40.14. The record was $ 41.38, reached in the third quarter of 2018.

As for the other side of the coin, there is a record $ 1.6 trillion in outstanding student loan debt in the USA.

The rate of mental illness among American adults is at the highest level it has been in the past decade, if only slightly, according to the US Department of Health and Human Services. And according to the Center for Disease Control and Prevention, suicide rates have been slightly increasing trend and the rate of drug overdose death has increased sharply in recent decades.

All of this shows that high corporate profits don’t translate into a happy country, Yang says.

“When I campaign across the country, I can’t tell you how many heads are nodding when I talk about the fact that their lived experience has nothing to do with corporate profits, the overall unemployment rate or the GDP, ”Yang told Freakonomics.

Part of Yang’s solution to this problem is his most well-known platform: give people free money.

The entrepreneur and tech executive focused his campaign primarily on giving every US citizen over the age of 18 in the US $ 1,000 a month.

See also:

Andrew Yang: You should receive a check in the mail from Facebook, Amazon, Google for your data

Why everyone is talking about giving away free money – a universal basic income explainer

Billionaire Marc Benioff: Capitalism has “led to horrible inequalities” and must be corrected

Here’s why we’re not too worried about the silver consumption situation of Iovance Biotherapeutics (NASDAQ: IOVA)


Even when a business loses money, it is possible for shareholders to make money if they buy a good business at the right price. For example, although Amazon.com suffered losses for many years after listing, if you had bought and held the shares since 1999, you would have made a fortune. But the harsh reality is that many, many loss-making companies burn all their money and go bankrupt.

So the natural question for Iovance Biotherapeutics (NASDAQ: IOVA) is whether they should be concerned about its rate of cash consumption. In this report, we will consider the company’s annual negative free cash flow, which we now call “cash burn”. The first step is to compare its cash consumption with its cash reserves, to give us its “cash flow track”.

See our latest review for Iovance Biotherapeutics

When could Iovance Biotherapeutics run out of money?

You can calculate a company’s cash flow trail by dividing the amount of cash it has by the rate at which it spends that cash. As of December 2020, Iovance Biotherapeutics had US $ 629 million in cash and was debt free. Looking at last year, the company spent US $ 252 million. This means it had a cash flow trail of around 2.5 years as of December 2020. Importantly, analysts believe that Iovance Biotherapeutics will hit cash flow in 3 years. So there is a very good chance that it will not need more money, considering that the burn rate will decrease during this period. Pictured below, you can see how his cash holdings have changed over time.

NasdaqGM: IOVA History of debt to equity March 16, 2021

How does Iovance Biotherapeutics’ silver consumption change over time?

As Iovance Biotherapeutics does not currently generate any revenue, we consider it to be a start-up company. So while we can’t look at sales to understand growth, we can look at changes in cash consumption to understand changes in expenses over time. In the last twelve months, its cash consumption has actually increased by 52%. Often times, increased cash consumption just means that a business is speeding up its business development, but it should always be kept in mind that this leads to a reduction in the cash flow trail. If the past is always worth studying, it is the future that matters most. Then you might want to take a look at how much the company is expected to grow over the next few years.

Can Iovance Biotherapeutics Easily Raise More Money?

Given its cash-consuming trajectory, Iovance Biotherapeutics shareholders may want to consider how easily it could raise more cash, despite its strong cash trail. In general, a listed company can raise new liquidity by issuing shares or going into debt. Usually, a company will sell new stocks on its own to raise funds and stimulate growth. We can compare a company’s cash consumption to its market capitalization to get an idea of ​​how many new shares a company would need to issue to fund its one-year operations.

Iovance Biotherapeutics has a market capitalization of US $ 5.1 billion and spent US $ 252 million last year, which is 4.9% of the market value of the company. Given that this is a rather small percentage, it would probably be very easy for the company to finance the growth of another year by issuing new shares to investors, or even taking out a loan.

So, should we be worried about the loss of money from Iovance Biotherapeutics?

It may already be obvious to you that we are relatively comfortable with the way Iovance Biotherapeutics burns its money. For example, we think its consumption of cash relative to its market capitalization suggests that the company is on the right track. Although its growing consumption of cash has not been significant, the other factors mentioned in this article more than make up for the weakness of this measure. A real bright spot is that analysts expect the company to break even. Looking at all of the metrics in this article, together, we’re not worried about its rate of cash consumption; the business appears to be well above its medium-term spending needs. It is important for readers to be aware of the risks that can affect business operations, and we have selected 3 warning signs for Iovance Biotherapeutics that investors need to know when investing in stocks.

Of course, you might find a fantastic investment looking elsewhere. So take a look at this free list of interesting companies, and this list of growth stocks (according to analysts’ forecasts)

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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
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How I used an FHA loan to buy my first investment property


For most people interested in rental property investment, the biggest hurdle is the amount of capital it takes to acquire a property. Here’s why it can be so hard to find the money to buy your first investment property – and how I was able to buy my first with only a few thousand dollars down.

With practically all traditional means of financing, investment properties require down payments of 20 to 25% of the purchase price. This is in addition to the typical requirement of at least six months of reserves and the set-up and other closing costs you have to pay. For an investment property of $ 150,000, it is common to need $ 50,000 or more in available cash to close. And that’s not to mention the fact that investment home loans tend to have significantly higher interest rates than the same borrower might get for a primary residence mortgage. In many cases, the difference can be two whole percentage points or more.

The bottom line is that while rental properties can be great ways to build wealth and generate passive income streams over time, capital requirements create a barrier to entry for many investors. potentials. Here’s how I got around that – and how you can too.

Home hacking with an FHA loan

An FHA loan is a popular choice among first-time home buyers, and it’s easy to see why. With as little as a 580 FICO credit score, you can buy a home with as little as 3.5% down. There is just one small problem for investors. FHA loans are exclusively for properties occupied by their owner. In other words, you have to live in the house.

However, there is a big loophole. FHA loans can be done on a property with up to four residential units. As long as you plan to live in one of the units after the purchase closes, you can potentially use an FHA loan to purchase the property. For example, you could buy a triplex, live in one unit, and rent the other two – and with just 3.5% off.

Additionally, FHA rules only require you to live in the property for 12 months after closing. After this period, you can leave the property, rent all units, and repeat the process with a new property if you choose to do so.

My first real estate investment was a house purchased with an FHA loan. At the time, my then-fiancé and I were living in Key West, Florida, a very expensive real estate market, especially for a teacher and nurse in their mid-twenties.

On the advice of my excellent real estate agent, we started looking for a multi-unit property to generate income to offset the high cost of owning a home. We found a great duplex with a two bedroom main unit we could live in comfortably and a one bedroom unit we could rent a few blocks from the school where I was teaching, and we concluded the purchase with an FHA ready a few months later. We quickly found a tenant for the smaller unit and ended up living in the house for less than what we would pay in rent for a typical one bedroom apartment in the area.

Disadvantages of Home Hacking with FHA Loans

To be fair, home hacking isn’t for everyone. Not everyone wants to be a homeowner, and those who don’t feel comfortable with their own the tenants being right next door. And I can tell you firsthand that it can create uncomfortable situations. It is important to have your own backyard and the general privacy that comes with a single unit property.

Plus, there is no such thing as a perfect loan product, and the FHA mortgage is certainly no exception. Although the down payment and credit requirements are low, FHA loans have expensive mortgage insurance premiums (both initial and ongoing) which can make these loans much more expensive than their interest rate. involved.

Is it better to buy a house with cash or a mortgage?


The idea of ​​living without a mortgage can be particularly appealing to people approaching retirement. It is also common today for empty nesters to consider selling the large family home in favor of a smaller property or an easier to maintain condo. Homeowners who have lived in a house for a long time and now have a low mortgage balance or perhaps no mortgage at all may wonder if it pays to buy a new property with the proceeds of the sale in cash. instead of getting a mortgage. Even though early retirees may be reluctant to take on debt until retirement, leverage can pay off.

Use leverage

Leverage is when the expected rate of return on your investment portfolio is greater than the interest rate on a loan. If you can borrow the money for less than what you can reasonably expect to earn by investing the funds instead, then it makes sense to consider the loan. Of course, deciding to buy cash or get a mortgage involves more than the gap between your expectations and current interest rates, but it’s a useful starting point.

Ultra-conservative investors, buyers during periods of high interest rates, or individuals looking for variable rate mortgages may find it more difficult to operate leverage for them with a reasonable level of certainty.

Here is an example :

Suppose the Millers, aged 60, sell their house for $ 700,000 and their mortgage payment is $ 200,000. They plan to buy a condo for $ 500,000 and put 20% into it. The Millers can get a 30-year fixed mortgage at an interest rate of 4.5% and their expected average annual return on their long-term investments is 6%. The couple plan to work until the age of 66.

If they get a mortgage, they will make the mortgage payments out of their income while they are working. Without a mortgage, they will invest the funds instead. If they retire with a mortgage, the Millers will use their investment account for payments after they stop working.

The question is: should they get a mortgage or buy the new home with the cash proceeds from the sale of their old home?

In this example, it is better to use leverage. Thanks to the power of compounding, after 30 years, the Miller’s investment account would be almost $ 260,000 higher if they bought the house with a mortgage than if they paid for the condo in cash, tax-free.

It is useful to note that many variables in this analysis are correlated. If the Millers increased their purchase price, the benefits of getting a mortgage would also increase. However, if the spread between current mortgage interest rates and expected returns on investments narrows, the benefits of getting a loan will diminish.

A complex analysis

Unless you’re comparing a fixed rate mortgage to owning a 30-year bond, homebuyers need to make several key assumptions for the analysis. Since there is no way to know for sure what will happen in the future, it is important to consider all aspects of the decision.

Here are some additional financial considerations:

  • Taxes. Homeownership offers tax benefits and a mortgage plays a key role in realizing these benefits. Taxpayers who itemize their tax deductions can usually deduct mortgage interest on the first $ 750,000 of primary or secondary residence debt, although there are other considerations as a result of the tax reform legislation. of 2017. This can be particularly useful for retirees who have lost many of their other options for reducing their taxable income (eg 401 (k) contributions). While tax implications are an important part of any financial decision, it’s important not to let the tax tail wag the dog – laws can change at any time.
  • Market volatility. Even if an investor makes an average annual return of 6% (as assumed in the example above), the actual return will vary significantly from the average for any given year. The order in which the returns occur can have a huge impact on the result of the scan. For example, in Miller’s case, if their rate of return was -4% in the first year and 6% for the remainder of the 30-year analysis, the benefit of getting a mortgage would be reduced to 56. 000 $, against 260 000 $! Likewise, if the market outperformed the average return in the first year of the simulation, the relative advantage of getting a mortgage versus buying cash would increase.
  • Variable rate mortgages. An ARM alters the analysis a bit as more complexities and unknowns are introduced. An adjustable rate mortgage is generally more beneficial when the owners do not plan to live in the home for much longer than the initial fixed period. In this situation, buyers will also need to consider the likelihood of staying in the home longer than expected, how rate increases are determined, and their expectations for future interest rates. While the risk is heightened, when an ARM is appropriate, this is a great example of using leverage.

Practical Considerations When Buying a Home

Buyers may also face logistical challenges or the pressure of a competitive market. Especially for people who have lived in their homes for a very long time, decluttering, downsizing, and moving can be quite a challenge. Unless you can negotiate a sale-leaseback, or manage to align the two house closings perfectly, cash buyers may be forced to stay in a hotel or rent during the interval.

Obtaining a mortgage loan may ease the transition for some buyers who already have a down payment and are still eligible for their loan while carrying both homes, as they may be able to buy a new house before selling the old one. Convenience comes at a price though, and there is a risk that the home won’t sell as quickly or at the price you expect.

All cash offers are the preferred tool of buyers in competitive markets. If a mortgage is preferable but you are struggling to compete with unconditional offers, one option might be to buy the new home or condo with the cash proceeds from the sale of your old home and apply for a loan afterwards. fence.

While buying or selling a home is an emotional decision, it’s important not to let your personal feelings cloud your better judgment. Buying too many homes or deciding to buy cash just because you can could slow down your retirement lifestyle in the long run.

Chinese court blacklists cash-strapped apartment rental startup Danke – TechCrunch


As financial woes intensify in Danke, Chinese authorities are stepping in to hold the once promising apartment rental and sharing company to account.

In recent weeks, landlords who haven’t received payments from Danke, who works as a sub-lessor, have started evicting tenants. After a flurry of local reports exposing the company’s massive debt, which is said to be as high as $ 520 million, a district court in Shanghai put Ziwutong Beijing Asset Management, Danke’s parent organization, is on the country’s “social credit” blacklist.

The Chinese government’s social credit system is a set of mechanisms aimed at improving the enforcement of existing laws and violators may face restrictions in their daily activities. In Danke’s case, founder and CEO Gao Jing was barred from “heavy expenses,” which include everything from flying first class, taking a high-speed train, buying property and going on vacation, to registering. of children in “expensive” private schools, according to a court notice.

The move came after a senior judge at China’s Supreme People’s Court told the press that Danke was under investigation by the relevant authorities for his cash flow problems.

Danke – founded in 2015 and backed by leading investors like Ant Financial, Tiger Global, and former Chinese director of LinkedIn, Derek Shen, are committed to making urban housing affordable and enjoyable for Chinese white-collar workers. The catch is that it is progressing through aggressive debt-fueled expansion.

Instead of the traditional rental model, Danke relies on an elaborate financing plan to maintain its cash flow. Tenants are offered incentive prices to pay up front for one year and are encouraged to cover the sums by taking out loans, which are provided by Danke’s partner banks. Tenants who refuse to take out the loans are asked to pay more.

With the capital financed by the loans, Danke then pays the owners, but only on a monthly or quarterly basis. This gives the startup great financial flexibility to rent to owners and spend on renovating apartments, which are then sublet to tenants for a mark-up.

Danke’s model embodies the promises of internet platforms or the so-called sharing economy – a small asset, rapidly evolving, but it also creates huge risks for the providers and consumers it engages in. to serve. When the COVID-19 pandemic hit, the rental market in China cooled, straining Danke’s finance vehicle.

When TechCrunch spoke to angel investor and Danke chairman Derek Shen last year about the company’s financial risks, he had this to say: “There is nothing wrong with the financial instrument itself. The real problem is when the real estate operator is struggling to repay, so the key is to make sure the business is running smoothly.

“What is needed is tighter market surveillance to prevent such cases from happening again,” said one opinion piece published in the public newspaper China Daily. “The involvement of banks and loans made the risks even higher. Given the unsustainable nature of Danke’s business model, it is time for financial supervision departments to consider putting in place stricter financial rules prohibiting such risky practices.

Listed in New York, Danke saw its shares dip to $ 2 last month, from $ 13.5 when it went public in January. So far this year, the company has only released its first quarter earnings report, which posted a net loss of $ 174.3 million.

The financial turmoil is also putting WeBank, Danke’s main partner bank, in the spotlight for its stake in a highly leveraged rental business in exchange for handsome interest. Online banking supported by Tencent ad on social media that he would transfer tenant loan obligations to Danke, who was already subsidizing tenant loan interest at WeBank. In the three months ended in March, Danke paid a total of $ 7.9 million in interest related to “rent finance.”

Danke cannot be immediately reached for comment on the story.

How Much Are All-Cash Home Buyers Saving?


When Shermika Bennett entered a bidding war for her dream house last month, she didn’t expect to win, especially at $ 25,000 less than other bidders. But she won, and now Bennett and his family are the proud owners of a six-bedroom, three-fireplace home in the heart of Atlanta.

“I was surprised and amazed when I was told my offer was successful,” Bennett says. “I certainly didn’t think a lower bid would win. Everyone always goes with the highest bid.

The secret to Bennett’s good deal? His offer was not dependent on mortgage financing. With the help of an emerging new home buying solution, Bennett was able to make a cash offer. And the cash offers, well, they usually mean big savings.

According to a new study from researchers at the University of California at San Diego, stories like Bennett’s are not that uncommon. Over the past 40 years, cash buyers have paid about 12% less than those who use a mortgage. This is the difference between a prize of $ 200,000 and a prize of $ 176,000.

There are many reasons for the discount, but the main driver is the certainty that the money provides to sellers. On mortgaged offers, there is always a chance the deal will fail – either due to appraisal, an inspection issue, or the buyer’s failure to qualify for the loan itself. .

“Many sellers are willing to accept a lower offer in return for the certainty that the deal will be done,” said Kristina Morales, real estate agent in Cleveland. “With a cash offer, there is no funding contingency and, most often, no valuation contingency. Without these contingencies, sellers are more confident in the conclusion of the transaction. “

It seems, however, that sellers are more suspicious than warranted. According to the National Association of Realtors, only about 6% of all contracts fail – and funding issues are only a small part of those.

“Vendors leave a lot of money on the table,” says Michael Reher, one of the report’s authors and assistant professor of finance at UCSD. “They are more worried that the funding will fail than they should be.”

Why do sellers prefer cash?

Whether the data supports it or not, experts say sellers do fear mortgage problems, and this fear plays a big role in why buyers like Bennett win.

When funding fails, sellers are forced to go back to square one, often delaying their sale for weeks or even months. This can be especially difficult if they are trying to buy a new home at the same time.

It also hurts the market value of the home, which could delay the sale even longer.

“If that happens, they will have to relist their home on the market, which could drastically reduce the amount they can get for the home,” says Vanessa Famulener, vice president of HomeLight’s Cash Close program. “A house put back on the market is like damaged property.

But that’s not the only attraction of cash offers for sellers. According to Shaival Shah, CEO and co-founder of the Ribbon cash offer solution, cash offers are also faster. With cash offers, closings can take as little as 14 days. A typical mortgage closing takes between 30 and 60 days in most cases.

This speed, coupled with the added certainty these offers bring, can often give cash buyers the edge in bidding wars – a common occurrence in today’s short-supply market. According to real estate broker Redfin, around 56% of its listings were the subject of a bidding war in January.

“My teams like to say money is king,” says Keli James, real estate agent at eXp Realty in Las Vegas. “Cash offers will usually make your bid the strongest on the table and make it more likely that you walk away with the keys to your new home. “

Even more savings for buyers

As if 12% off and an edge in the bidding wars weren’t enough, cash offers also come with additional savings. These arise from all kinds of mortgage related costs, the most important of which is interest.

If you were to finance a $ 200,000 house today (using a 30-year fixed rate mortgage at Freddie Mac’s current average rate of 3.02%), you would end up spending $ 104,332 in interest over the course of over the next three decades. With a cash offer? You would have no interest charges.

Cash buyers also avoid certain closing costs – which typically add up to 2-5% of the loan amount – as well as mortgage insurance, which can range from $ 30 to $ 70 per month on a conventional loan.

“Cash offers don’t have to deal with the costs of working with a bank, including appraisal fees, processing fees, mortgage interest over time and more,” notes Tony Rodriguez- Tellaheche, co-founder of Prestige Realty Group in Miami. “Depending on the property, this could represent tens of thousands of dollars in savings.”

To be fair, a cash offer does not entirely remove all closing costs. According to Paul Buege, president of Atlanta Mortgage in Menomonee Falls, Wisc., Cash buyers will still need to cover things like title insurance and registration fees to transfer title to the home. These fees vary by location, but you can generally expect to pay between $ 1,000 and $ 2,000.

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No money? no problem

The cash offers probably seem a little intimidating to most buyers, especially with the average home price close to $ 304,000. But thanks to a few creative solutions, you actually don’t need an empty bank account or tons of savings to get a lot of benefits.

Programs like Ribbon, HomeLight’s Cash Close, and the Opendoor-backed offers – which Bennett used to save $ 25,000 – are just a few of the options that allow you to make cash offers without paying the bill yourself.

With these programs, the company makes a cash offer on your behalf and you mortgage the property in a separate transaction without involving the seller. This allows you to take advantage of those cash price discounts, set yourself apart from other buyers, and potentially win a bidding war, all without dipping into that emergency fund or dipping into your savings. (Although, of course, you still end up paying the closing costs and interest payments associated with your eventual loan.)

As Famulener says, “It’s the best of both worlds, especially in a competitive market where money is king for sellers.”

According to Tom Willerer, product manager at Opendoor, buyers who use his company’s cash offer program see their offers winning 50% more often than those with traditional mortgage offers. Bennett is just one example among many.

“For buyers right now, the real benefit of making an all-cash offer is having a leg up on other interested parties when competing for the home,” said Willerer. “With low interest rates, limited inventory and high demand, buyers need to find ways to make their offer as attractive as possible to the seller. In this case, the cash component made it even stronger and our buyer won the house.

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To start

The downside of paying in cash

Despite its advantages, there are some drawbacks to buying with cash. More specifically, it immobilizes your money.

Real estate is what is called illiquid. It can help you build wealth, but it is not as easy to access it as it is with other investments, like stocks or money market accounts. If you find yourself in a financial bind down the line, it could cause a problem, especially if you’ve put all your savings in the house.

Paying everything in cash also takes money away from other potential investments – those that may equal higher returns in the long run.

“With interest rates currently so low, borrowers can get better interest rates by investing their money instead of spending it all on buying their home,” says Buege. “Yes, homeowners with a mortgage will have to pay interest on the money owed, but if they can get a higher rate of return by investing the funds, it might be in their best financial interest to take out a mortgage.”

Still, there is something to be said about life without a mortgage. Take Rick Patterson, for example. Patterson bought his home in Tulsa, Oklahoma, using all of his cash in December 2019, and now, he says, he has “virtually no debt of any kind and minimal bills to pay each month.”

As he says, “The real benefit is peace of mind and a stress free lifestyle. I will always have a home no matter what.

More money :

Thinking of using your 401 (k) for a down payment on a house? Read this first

Low rates put 15-year mortgages – and big savings – within reach of millions of homeowners

The new rules for buying a house while selling your old one

Taking on Schwab, Robinhood and Wealthfront, the VCs continue to throw money – now $ 153 million – at M1 Finance that it doesn’t need to burn


Latest $ 75 million venture capital comes after spike in growth, M1 says, correlates with weary Robinhood investors after GameStop fiasco

Brooke’s Note: All PR is good PR. It’s a journalist’s selfish spiel to get editorial attention. But it also has its plausible points of proof. No sooner had M1 risen to prominence for a crash with Wealthfront (we had never heard of it before at RIABiz), than he raised $ 75 million in a D round. barely touched his turn B. Do the math. It’s a big change. Of course, there’s more to the story, hence the article below, although Coatue and other VCs love them. M1 is growing, and, yes, he says internally that he sees a strong correlation in the timing of his peak growth with Robinhood’s GameStop struggles. As the most prominent online broker on the planet decides who he is and when to stop the game of insane trading on his platform, M1 says he’s ready to eat his lunch. See: Robinhood allegedly implied a fiduciary duty to newbie investors in marketing its ‘game type’ trading app, even though it is a FINRA regulated securities broker, new class action charges.

M1 Finance just raised $ 75 million shortly after raising the thorns of Wealthfront and – he claims – is doing a land office business with disgruntled Robinhood investors fleeing after the GameStop controversy. See: Wealthfront calls on M1 Finance.

David Goldstone: This increase will put pressure on M1 to maintain rapid growth.

Chicago’s robo-advisor, which allows investors to drive in the background, announced its latest raise on March 9 and quickly outlined plans to double its workforce to 300, after tripling it in 2020.

“[M1’s] the vision is to dominate the self-directed space with an application positioned like the super SoFi [a burgeoning neo-bank] and as the antithesis of Robinhood, ”said Will Trout, director of wealth management at Pleasanton, Calif., consultant, Javelin Strategy & Research, via email.

M1’s goal, say its executives, is to be the Charles Schwab & Co. of the next generation – making it all cheaper and silkier.

“M1 believes it can do better with lower costs, a more modern platform and integrated tools for all of the clients’ financial needs. No one is saying it’s a five-year vision – it’s a very long term, everything was, and is, with Schwab, ”said Bob Armor, chief marketing officer.

“We can be a next generation Charles Schwab,” Brian Barnes, founder and CEO of M1, told BusinessInsider. “We want to go after the banks. We don’t want you to mess around with the JPMorgans, the Wells Fargos, the Bank of Americas.”


What M1 hopes to capture is the desire for a forward-thinking brand and mobile technology, but without the aura of an online casino sometimes attributed to Robinhood, says Trout.

Will Trout: ‘[M1’s] the vision is to dominate the self-directed space. ‘

“This [goal] will mean discouraging day traders and ensuring a seamless user experience, defined by the absence of crashes or outages, hence the need to hire an army of engineers and marketers, ”he explains.

The company’s decision to double its workforce is also tied to its attempt to become anti-Robinhood, Trout continues.

Software engineers and product management positions will make up the majority of M1’s new hires, though it will also join its customer support team, according to the company.

M1 will likely add cryptocurrency trading at a future date, Trout predicts.

David Goldstone, head of research for Backend Benchmarking, an analytics company in Martinsville, NJ, also expects M1 to add new robot-like managed accounts and financial advice.

Barnes, in a Release, has played a lot on its online competitor.

“Our goal is to improve our clients’ finances, as opposed to their financial entertainment,” he says. “Wealth is built through long-term ownership, not playing on short-term price movements.”

$ 10 billion goal

Client M1 has grown its assets nearly five times since the start of 2020, from $ 800 million in January to nearly $ 4 billion by year-end. The goal is to reach $ 10 billion in customer assets by the end of 2021

“We are growing in all areas of our business,” said Amour.

But if M1 hopes to reach $ 10 billion in client assets by January 2022, it is expected to triple its monthly asset inflow, Goldstone says.

The feat is made all the more difficult by the fact that its 12 months of mind-blowing asset gains may soon recede.

“M1 may very well have a hard time sustaining this growth rate. It is easier to go from 100,000 users to 500,000 users than it is to go from one million users to five million,” he said via e- mail.

For now, the company is only seeing growth. “There is no evidence of a cap anytime soon,” Armor retorts.

Slice the apple

M1 has already gained a huge advantage over Robinhood, which is that he is untouched by the GameStop controversy.

Bob Armor
Bob Armor: M1 thinks he can do better [than Schwab].

Robinhood faces lawsuits and regulatory review after briefly banning outraged customers from trading GameStop and other actions in February.

“The growth schedule mentioned in the [latest] the version reflects that, ”says Armor.

M1 advertises itself as “no charge” to customers as it does not charge any commissions or fees based on assets under management for its basic service.

But it takes two bites of apple on the back.

Like Robinhood, he is paid by market makers for order flow, and like Schwab, it lends securities to short sellers (limited to 5% of its assets), collects spreads on deposits, collects debit card transaction fees from traders and earns interest from investors who borrow using their securities as collateral.

The free service includes one trading window per day, access to portfolios to build your own or rebalance, a debit account, and the ability to get personal loans.

Up to the task

For a Schwab-like annual subscription of $ 125, M1 customers also get a second daily trading window, lower loan rates, and 1% interest on cash.

Daniel Senft
Daniel Senft, who will serve on M1’s board of directors, expects the company to reach a market cap of $ 10 billion.

In contrast, Robinhood offers its customers standard and extended market hours.

Wealthfront’s automated investment service is discretionary, meaning that account holders cannot influence specific investment decisions or the execution of trades, according to his website blog.

Today, the company manages $ 23 billion, six and a half times the amount M1 oversees. New York robo-rival Betterment manages $ 27 billion.

M1 administers $ 3.5 billion in client assets, up from $ 3 billion in January and $ 1 billion last February, an increase of 350% in just 12 months, which equates to an average of $ 208 million. dollars of monthly asset growth.

All three offer banking services, but Wealthfront’s introduction of custom wallets and its potential offer for a banking charter have put it on a much closer collision course with M1. See: Wealthfront’s unlikely exploitation of signals from Sheila Bair and Tom Curry will likely push for bank charter, analysts say.

Wealthfront offers planning services. M1 has “no plan” to introduce consulting or planning services, Armor says. See: Wealthfront calls M1 Finance on pretext, but some experts see its damnation as low praise for a growing competitor

Big things

The company’s latest increase also brings its ‘barely touched’ war fund to nearly $ 153 million – an amount M1 has brought in on three rounds of funding in the past 12 months for a total of $ 173.2 million. dollars over the six rounds of funding.

Michel gilroy
Michael Gilroy: We research and invest in companies that we believe to be innovative, impactful and built for the long term.

Coatue Management, based in New York, led the $ 75 million Series D funding round. Clocktower Technology Ventures in Santa Monica, Calif., And Left Lane Capital in New York increased their holdings in the towers M1 series B and C series financing.

Oddly enough, M1 says he has no intention of dipping into the funds he just raised on his D turn – or even his C turn. Round B is practically intact.

“We had no intention of raising new capital. The D-series funding sets M1 up for big things,” he says.

The ultra-surplus capital fills a need in the high-stakes hiring process to show that resources are not objective, Barnes said.

M1 will also soon become a unicorn, or a company valued at over $ 1 billion, according to Barnes. “[We’re] get closer “, he said Business intern.

But even tons of uninvested capital is increasing the pressure, according to Goldstone.

“This increase will put pressure on M1 to maintain rapid growth,” he says.

IPO dream

Coatue’s decision to back M1 is the belief that it will eventually trade in the public markets with a market capitalization of at least $ 10 billion.

Indeed, Coatue’s senior managing partner, Daniel Senft, who will soon be joining M1’s board, insisted he had no interest in supporting a start-up that has not reached this market capitalization target, Barnes told BusinessInsider.

“A partner who supports this vision and who has a big portfolio to fund this vision over long periods of time… is a perfect partner,” he said.

“We research and invest in companies that we believe to be innovative, impactful and built on the long term … [and] M1 Finance has all of these characteristics, ”adds Michael Gilroy, general partner of Coatue, in a press release.

Led by billionaire investor and company founder Phillip Laffont, Coatue declined a request for comment.

Coatue may also have had a bonus look under the hood of the M1.

He recently participated in a $ 850 million investment led by SPAC in custodian Apex Clearing, the custodian of M1. See: After Reaching Nearly $ 100 Billion In Hold, Apex Clearing Closes “IPO” Deal To Raise “Up To” $ 1 Billion To Disrupt Existing RIA Guard.

Trump’s student loan interest hiatus makes no sense


In response to the coronavirus pandemic, President Trump announced that he would waive interest on student loans held by federal government agencies. The reason for such a waiver is to put extra money in the pockets of student loan borrowers. But the way the policy is structured, it will provide little immediate relief to borrowers, while potentially increasing costs after the pandemic ends.

The Ministry of Education had not issued any official guidelines regarding the student loan policy of interest at time of writing. But Ron Lieber, New York Times Financial Columnist reports that monthly student loan payments will not decrease at all due to the policy, according to conversations with ministry spokespersons. The president of an association of student loan managers said the same thing in a interview with Kery Murakami from Inside Higher Ed.

The interest relief will prevent student loan interest from accruing while the policy is in effect, but the monthly payments will remain the same. This will prevent balances from increasing while the waiver is in place, but most borrowers will only see a benefit once they are about to repay their loans.

How would that work? Let’s say you have $ 15,000 left on your student loan, which carries an interest rate of 5%. You make payments of $ 283 per month. About $ 60 of this goes to interest, while the rest goes to principal. At this rate, you will fully repay this loan over five years and your payments will total $ 16,984.

Now imagine that the federal government waives your interest for the next three months due to the coronavirus pandemic. You still make a monthly payment of $ 283, but for three months it will all be used to pay off the principal rather than the interest. Due to the reduced interest charges, your payments will total $ 16,750.

This equates to a saving of $ 234, which does not make sense for many households. But the borrower will not realize these savings for five years, when he repays the loan. It doesn’t help much for borrowers facing a cash shortage due to the pandemic. But it will cost the federal government money later, hopefully once the pandemic is over.

The interest exemption on student loans could make borrowers who are facing financial difficulties feel better about suspending their loans. In forbearance, borrowers do not have to make payments, but regularly scheduled interest continues to accumulate. Watching your balance increase can be overwhelming, so waiving interest could lead borrowers to make this choice. But the policy still provides no cash relief today, as most borrowers were still eligible for forbearance, pandemic, or no pandemic.

The interest exemption on student loans fails to help distressed borrowers today, although the federal government will still incur costs related to lost interest income in the future. This makes it a poor response to the financial pressures the coronavirus pandemic has placed on American households.

Even if the Trump administration found a way to cut monthly payments today, it would still be a poorly targeted response to the pandemic. Student debt is concentrated among high-income households; rich families hold about $ 3 in student debt for every dollar held by poor families. But low-income people, who are more likely to have service-sector jobs affected by the pandemic, are most in need of financial assistance.

A better way to help people who have been hurt financially by the pandemic is to send money directly to them, rather than providing delayed and inconsistent relief through the student loan system. Fortunately, the White House announced Tuesday afternoon that he was working on a plan to do just that. President Trump should reconsider his flawed student loan interest waiver and instead spend the money in direct relief for families who need it most.

No student loan payments for 60 days


President Donald Trump says there will be no federal government student loan payments for 60 days.

Here’s what you need to know.

Student loans

In the wake of the coronavirus outbreak, President Trump today announced that federal student loan payments will be suspended without penalty for the next two months. Trump also said, following up on his previous announcement, that interest on federal student loans will be waived as well as. Details of how Trump’s plan for your student loans the work should be unveiled soon.

According to the US Department of Education, all borrowers with federally held student loans will automatically have their interest rates set at 0% for a period of at least 60 days starting March 13. Borrowers have the option of suspending payment to their federal students without penalty. , and can contact their student loan manager to request administrative forbearance. Education Secretary Betsy DeVos has also automatically suspended federal student loan payments for any borrower overdue for more than 31 days as of March 13, 2020. What if you want to keep paying your monthly student loan in full and you don’t want forfeiture? During the 60-day period, you can still pay your monthly federal student loan payment in full, and your payment in full will be applied to your principal balance only (after all student loan interest by the 13th. March have been paid).

Earlier this week, Senate Democrats proposed suspend student loan payments and cancel student loans of at least $ 10,000. Representative Alexandria Ocasio-Cortez (D-NY) tweeted last week that student loan payments should be suspended. The goal is to help borrowers “incur additional fees, compound interest, or negative incidents reflected in their credit scores.”

Student loans: proposals

US public leaders have stepped up to help borrowers get economic relief. New York Andrew Cuomo temporarily suspension of student loan debt collection and also suspended mortgage payments for those who encounter financial difficulties. Senator Bernie Sanders (I-VT), for example, has offered to forgive the $ 1.6 trillion in student loan debt, including federal and private student loans. Former Vice President Joe Biden has his $ 750 billion student loan plan, which he opposed to the Sanders plan. Biden and Sanders both Support the civil service loan forgiveness program. Last month Trump called for the end of the civil service loan forgiveness program in his annual budget in favor of a simplified income-based repayment plan which would offer the same student loan discount plan for undergraduate borrowers, for example. U.S. Education Secretary Betsy DeVos explained why she thinks it’s a good idea to end this student loan forgiveness program.

Next steps

Remember, this announcement only applies to federal student loans (not private student loans). Regular payments for private student loans, at this point, would still be due. This upcoming waiver period is a good time to assess your federal and private student loans and determine your best path. Here are four starting points, all free:

Illegal loan of $ 590,000 will buy you a charger, 2 climbs, a Hummer, jail time


There must be a special place in hell for people who take advantage of the misery of others, especially in the difficult times we are going through right now, but at least this man has merit in thinking about his family as well.

A 51-year-old Detroit man is under investigation for wire fraud, after applying for and getting a payroll protection loan, and using the money to buy expensive cars. As stated above, he was not entirely selfish: he bought a few cars for his own enjoyment, and two for his family members.

The Payroll Protection Program is a program that provides loans to small businesses affected by the ongoing health crisis, needing help paying staff and utilities. This man with a passion for quality cars claimed that a company he once owned that went out of business in July 2019, Motorcity Solar Energy Inc., was still operational and as such was in need of a additional cash flow to cover staff costs.

He applied for and got a loan of $ 590,900, and within two days he owned a new Dodge charger, a few Cadillac Escalade and one Hummer. Subtlety is not his forte, we can assume.

He kept two of the cars, gave another to his sister, and the fourth was a gift for his brother-in-law, US Attorney Matthew Schneider said. Special Agent in Charge Steven M. D’Antuono of the FBI helped investigate the case.

“Hitting banks for loans is never acceptable, and doing so during our current national emergency is unreasonable” Schneider said.

“The Paycheck Protection Program is designed as a lifeline for businesses struggling to survive the current crisis. Instead of using these loans to save a legitimate business, the defendant allegedly bought expensive personal items for himself and his family ”, SAC D’Antuono adds. “These actions have hurt hard-working Americans and deserving small businesses. “

The man has been charged with wire fraud, but the FBI investigation is still ongoing.

Blockchain Bites: Ripple’s MoneyGram Pump, OKEx’s Bitcoin Cash Plan, Bitcoin Anniversary


Ripple has invested over $ 50 million in money transfer company MoneyGram during the companies’ working relationship. Forbes published an investigation detailing the Byzantine corporate structure Binance may have created to circumvent U.S. regulations. Ether has grown as a share of Genesis Capital’s total loan portfolio.

Top shelf

No violation
Investors who say they lost around £ 100,000 ($ 130,000) in an alleged cryptocurrency Ponzi scheme will not see any compensation after filing their claims with the police. According to a Metro newspaper survey released on Tuesday, a number of investors said they invested in a cryptocurrency project called Lyfcoin on promises of large returns, but had not received their money. However, West Midlands Police closed the case, saying none of the evidence provided advanced the case “further” and, according to the Metro, “no offense was committed”.

Money transfer company
MoneyGram received over $ 52 million to provide “market development fees” for blockchain payment company Ripple, since the companies have entered into a working relationship. In the third quarter of 2020, Ripple invested more than $ 9.3 million in the money transfer company, after an injection of $ 15.1 million made in the previous quarter, according to Moneygram’s latest financial report. MoneyGram described the Market Development Fee as compensation for providing liquidity to Ripple’s on-demand liquidity network (ODL) – its payment product using the XRP cryptocurrency to send money beyond borders.

Byzantine Binance
Binance Holdings Limited has created a business plan to profit from the U.S. market while avoiding regulatory oversight of the country, Forbes reported Thursday, citing a 2018 document it obtained. The leaked presentation describes a network of compliant entities in the United States that would channel income to Binance, which is currently not regulated to operate in the United States. The Forbes article included a screenshot of a slide but not the entire game. Binance CEO Changpeng “CZ” Zhao disputes the report, saying the project came from a third-party affiliate. U.S. subsidiary Binance.US operates under a corporate structure similar to the proposed network, according to Forbes. Binance.US CEO Catherine Cooley has long refused to discuss ownership of Binance.US.

Huawei’s DC / EP Hardware War
The Chinese digital yuan looks closer than ever to launch with the announcement that Huawei will support the central bank’s digital currency (CBDC) on an upcoming line of phones. Announced on Huawei’s Weibo channel on Friday, the Mate 40 line of devices will feature an integrated hardware wallet with “hardware-grade security, controllable anonymous protection and two offline transactions,” the tech giant said. In recent weeks, a public lawsuit in the city of Shenzhen saw digital 10 million yuan distributed to residents in a sort of lottery. The Mate 40 was announced in October and will be Huawei’s last flagship, along with the Pro and Pro Plus models, according to TechRadar.

Ether Actions
Genesis Capital saw the share of bitcoin in its loan portfolio plummet as the share of ether loans rose to 12.4% of its total loan portfolio this quarter. According to the lender’s report, this was mainly due to the extraction of cash on DeFi protocols such as Compound, Aave and Uniswap. DeFi interest rate arbitrage prompted Genesis – which is 100% owned by CoinDesk’s parent company, Digital Currency Group – to borrow ETH and stablecoins to “take advantage of cash-extraction strategies,” wrote the company. Total transaction volume in the third quarter was $ 4.5 billion, up from $ 5.25 billion in the second quarter, but up 285% from the third quarter of last year.

Quick bites

“That most people still hate bitcoin is not a bad thing,” writes Dylan Grice of Calderwood Capital. The Economist gives an introduction to bitcoin by comparing it to a posh London club known primarily for pushing Mick Jagger out the door.

Citing high gas costs and slow block times, Audius said it will be migrating part of its system to Solana’s blockchain from an Ethereum side chain. The staking and governance features will remain on Ethereum. (CoinDesk)

A change in margin in FTX’s TRUMP futures contract indicates traders are taking into account the diminishing chances of President Donald Trump’s re-election on November 3. (CoinDesk)

OKEx, still paralyzed by the arrest of the founder, details the plans for a hard fork bitcoin cash. (CoinDesk)

Market information

Hash rate and fees
The average price of a transaction on the Bitcoin blockchain is now 0.00086764 BTC (~ $ 11.66), the highest since June 2018. This represents an increase of 573% over the past 12 days. The surge in fees comes amid a rally to annual highs of $ 13,800, and as the number of unconfirmed trade networks has risen 1,800%, reaching highs not seen since December 2018. “In in other words, the mining power dedicated to approving transactions and mining blocks has declined amid rising prices, increasing wait times and network congestion, ”reports Omkar Godbole of CoinDesk.


Happy birthday, Bitcoin
Tomorrow marks the 12th anniversary of the Bitcoin White Paper.

Posted by pseudonymous developer Satoshi Nakamoto to a small group of cryptographers, the eight-page proof of concept for a fully decentralized peer-to-peer electronic payment system has since sparked a monetary revolution.

In the years since, Bitcoin has been called many things: a scam, a Ponzi scheme, death on arrival, a joke, a tool for criminals, squared rat poison, currency for geeks – and did we mention dead?

While experts are accustomed to predicting the death of Bitcoin, the simple ledger has stuck and even breathed new life into the way companies think about money, financial access and the nebulous concept of ‘trust’. .

Heads are turning. Yesterday, The Economist published an ode to Bitcoin saying, “Even people hostile to Bitcoin will concede that its technology is devilishly smart. It’s basically a way of keeping track of who spent what. Instead of a central exchange to keep score and verify payments and receipts, it uses an electronic ledger that is distributed across the system of bitcoin users.

Wishing Bitcoin a Happy Birthday, cybersecurity firm Halborn produced a video with a number of celebrities wishing him good luck. (It’s a little weird, but well-intentioned.)

In a brief appearance, Wu-Tang Clan’s RZA said, “You know Bitcoin was created by anonymous Satoshi Nakamoto doing his thing. I wanna say one thing about it – If you don’t know, you better know, because yo … at the end of the day scientists can create something, son, but the value of everything is this that we put there. The Bitcoin revolution has begun.

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46% of small businesses worry about lack of liquidity when reopening


As businesses across the country are getting ready to reopen, they worry about doing it. This according to a survey by Loan tree. Nearly half of small business owners (46%) fear they won’t be able to afford to resume normal activities after mandatory shutdowns to slow the spread of COVID-19.

According to them, a key challenge that could prevent them from opening is the lack of funding to maintain operations. Some 39% of small business owners say they are concerned that they are not generating enough sales to make the opening worthwhile.

LendingTree reopening small business survey

Their fears stem from compliance with safety instructions which would limit their capacity to 25% or 50%. This, they say, would affect their bottom line. Moreover, fears that their staff will return (5%) will also limit their ability to serve enough customers to make a decent profit. While a majority (52%) expect their entire workforce to return to open, nearly a quarter (23%) say they will do so with fewer staff working fewer people. hours.

Those who plan to get all engines running (54%) plan to notify customers of their reopening by email. To further encourage business, 43% plan to offer promotions or special sales. Another 31% plan to use paid social media ads to promote their business in the first month after reopening. 35% expect to profit from unpaid organic social media content. Less than 9% of businesses say they will withdraw from promoting their business after reopening.

Concerns about a second wave

Despite optimism about the reopening, there are fears of a second wave of infections. More than a quarter of those surveyed (30%) are nervous about having to shut down again if there is another spike in infections.

Despite this, nearly six in ten small businesses are expected to reopen as soon as they are licensed. With 15% saying they’re willing to wait and see before opening, while 26% aren’t sure they’ll ever open.

Only 17% of small businesses say they will get the same number of customers spending the same amount as before the coronavirus outbreak. Even more surprisingly, only 11% of those polled say they are not afraid of reopening.

The challenges of reopening for small business owners

As the outbreak unfolded, businesses were forced to shut down as global supply chains collapsed and closures were imposed. In an effort to help businesses withstand the impact of the covid19 pandemic, business support has come through the Small Business Administration’s Paycheck Protection Program (PPP) and the Federal unemployment pandemic program.

The nation has also seen its unemployment rate rise 14.7% in April. Some states are posting unprecedented unemployment records. Nevada had the highest unemployment rate of 28.2%, followed by Michigan, 22.7%, and Hawaii, 22.3%. Some are hoping that a quick reopening would help get people back to work, but will face the challenge of many businesses operating at partial capacity.

This has led about 63% of small businesses to apply for funding through the Paycheck Protection Program (P3). Of those surveyed, only 44% have received funding while 28% are still waiting to see if their application has been approved.

Even those who have received P3 funding say they still face challenges ahead of the reopening and would need additional cash infusions. In addition, fears remain as to their eligibility for the delivery of the PPP.

Concern over PPP forgiveness

According to the program, borrowers are required to spend at least 75% of the PPP loan funds on salary expenses and no more than 25% on mortgage interest, rent and utilities to qualify for a discount. The terms of remission are based on their ability to spend those funds within eight weeks of receiving their loan.

In addition, any reduction in employees during the eight week period; reduction in salary for any employee beyond 25% of the salary year; compensation exceeding $ 100,000 in wages for individual employees could also affect pardon.

Unless Congress passes a law that would extend that eight-week period, many fear it will not meet the requirement given the uncertain business environment.

Despite financial worries and the lifting of restrictions. Companies will always need to allay the concerns of customers and employees being inside their places of business.


Image: Depositphotos.com

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Here’s Washington’s new fight over small business coronavirus bailout: what to do with the leftover money


Congress just found over $ 100 billion in extra cash in its paycheck protection program and a Republican senator already has an idea of ​​how to spend it: fixing businesses damaged by riots sparked by the murder of George Floyd by Minneapolis Police.

Senator John Kennedy, a Republican from Louisiana, raised the idea Wednesday with Treasury Secretary Steven Mnuchin during a Senate hearing. As of June 6, the program had 4.53 million loans outstanding, worth $ 511.4 billion. But the loan limit is capped at $ 659 billion and authorization to grant new loans expires at the end of this month, making the full amount unlikely to be needed.

“I am going to present a bill that I would like you and your very capable, and I mean sincerely, that my colleagues at the Treasury consider taking some of this money and making it available to businesses, mainly to companies. small businesses, but businesses that have been lost as a result of fires, looting and criminal riots, ”Kennedy said. “I think they’re going to need some help.

Read also :Small businesses are becoming more optimistic, according to the NFIB, and expect a “short-lived” recession.

Mnuchin said lawmakers gave the Treasury $ 60 billion more than it asked for when the PPP authority was restored in April.

“We hadn’t planned to use some of this extra money, but we would like to work with you to reuse it,” Mnuchin said.

Kennedy said he planned to include a provision in his bill that would require authorities to seek civil damages against looters to help offset the costs of the aid.

Senator Chris Coons, a Democrat from Delaware, had his own ideas of what to do with the surplus: allow companies that had paid off one P3 loan to be able to take on another.

As of mid-May, PPP loans have stalled at just over $ 500 billion as some companies have paid off their loans, others have paid off the money, and new demands have stopped coming in. As of May 30, there was $ 510.2 billion in arrears against 4.48 million loans and as of May 16, $ 513.3 billion had been loaned.

Now see:Some Americans who have been made redundant are returning to work – here are which sectors are rehiring.

The stagnation of PPP loans came as a surprise, given that the initial $ 350 billion tranche was used up in 13 days, prompting Congress to top up the lending authority with an additional $ 310 billion. Although the loan program is an authorization, meaning that there is no real money that will still be available if the authorization is not renewed, the turnaround came as a surprise to lawmakers and d ‘others who were initially concerned that another replenishment might be necessary.

The easing of loan conditions included in a new law signed last week by President Donald Trump could increase the number of loans a bit, but probably only marginally.

Thomas Wade, director of financial services policy at the conservative American Action Forum, said he was “baffled” by the lack of new loans.

He said there were three potential reasons: companies feared potential public relations problems, as has been the case with some publicly traded companies that have taken out and repaid PPP loans; “Fear and uncertainty” about loan terms that might make debt forgiveness less likely and hope that businesses might qualify for the Federal Reserve’s “Main Street” loan programs instead.

While Wade said he believes demand for the program was unlikely to have been exhausted, a recent survey by the National Federation of Independent Businesses indicated that a large majority of its members had already taken out loans. .

The survey, released on June 2, found that 77% of members surveyed had applied for a PPP loan, and of those, 93% had received their money. About a quarter, 24%, of respondents were still in the early stages of their loans, with the program’s initial eight-week lending period ending in July. Under the new law, businesses can now take up to 24 weeks to use the money.

Also see:Who can get a loan through the Paycheck Protection Program?