Subprime Crisis & Its Wider Effects Explored
RIVERWOODS, Ill.–CCH, part of Wolters Kluwer Law Business, has published a white paper titled, “The Subprime Lending Crisis: Causes and Effects of the Mortgage Meltdown,” by CCH banking law analyst Katalina Bianco, JD.
In the white paper, Bianco traces the current situation from its origins, showing how historically low interest rates, low risk premiums, risky mortgage products, lax lending standards, securitization and a number of other factors all contributed to the collapse of the subprime mortgage industry. The paper notes how the collapse in turn impacted stock markets and other industries, with a continuing fall in home prices hitting hard even at prime borrowers.
“As recently as mid-2007, many experts believed that the crisis would be contained within the area of mortgage issuers who had overloaded on subprime loans,” Bianco said. “Instead, the crisis has impacted a wide range of financial institutions, businesses, creditors, borrowers and government agencies.”
For info: www.wolterskluwer.com
Biometrics Growth Expected To Increase Across Globe
PALO ALTO, Calif.–The use of biometrics in financial institutions will continue to grow as banks worldwide strive to offer a combination of enhanced security and convenience to their customers, according to a new study.
New analysis from Frost & Sullivan titled, World Financial Biometrics Markets, finds the markets earned revenues of $117.3 million in 2006 and estimates this to reach $2.07 billion in 2013.
In North America and Europe, regulatory compliance is driving the increasing adoption of biometrics, the study notes. In the Asia Pacific and Latin America, a key driver is the competitive advantage offered by self-service banking solutions. Biometrically enabled ATMs have become immensely popular in Japan and have seen widespread adoption in India, Latin America, and the Middle East.
“With the Federal Financial Institutions Examination Council (FFIEC) and the Sarbanes-Oxley Act pushing for stronger guidelines in multi-factor authentication and access to customer data and employee audit trails, financial institutions look to adopt biometrics to maintain regulatory compliance,” said research analyst Imran Khan. “These end users are beginning to realize the advantages that biometrics offer which enhances security, time efficiency and convenience.”
For info: www.frost.com
Study Says Auto Lenders Must Rethink ‘Status Quo’
NEEDHAM, Mass.–A study says change will be mandatory to help automotive lenders survive current market conditions that are creating a sharp increase in collections volume.
As in other areas of U.S. consumer lending, delinquency rates for automotive loans are on the rise, with the 60 days past due (DPD) category rising 25% between the second and fourth quarters of 2007. Research from TowerGroup finds that maintaining the “status quo” in current collections practices no longer is an option for automotive lenders.
Despite rising delinquencies and stories of doom in the credit markets filling the media, TowerGroup says the reality remains that lenders do not want to repossess cars–and automobile owners want to keep their cars. Unlike real estate investors, auto buyers don’t speculate on auto purchases hoping for appreciation in value, and they don’t try to “flip” the car to make fast money.
Because auto loans typically are based on a fixed interest rate and a fixed monthly payment, a delinquent payment is most often a sign of trouble in other aspects of a consumer’s financial health.
TowerGroup says auto lenders must take care not to ignore these trouble signs, but instead dive right in to address delinquency problems on a number of fronts immediately if they want to avoid increased delinquency rates matching those of the mortgage industry, illiquid loan portfolios, and a diminished overall market.
The research report, titled Stay in Your Car Ma’am: Best Practices in Automotive Finance Collections, is authored by Bobbie Britting, a senior analyst in the consumer lending practice at TowerGroup. TowerGroup is a research and advisory services firm focused exclusively on the financial services industry.
For info: www.towergroup.com
