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In the Pandemic, Complaints Against Financial Institutions Rise – Business – The Times-News

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Consumer complaints to the Consumer Financial Protection Bureau were up 31% in the first five months of 2020, compared with the same period last year, and many of these new

Consumer complaints to the Consumer Financial Protection Bureau were up 31% in the first five months of 2020, compared with the same period last year, and many of these new complaints specifically mention the coronavirus crisis.

The CFPB relays consumer complaints about loans, credit cards, bank accounts and other financial products to financial institutions. For people who are dissatisfied or otherwise frustrated with their direct interaction with a financial company, this complaint process can offer recourse, often within a few weeks. During a nationwide financial crisis, it stands to reason, these frustrations would run high.

On March 4, the CFPB received its first complaint mentioning the COVID-19 pandemic. That first complaint was about canceled travel and the inability to get a refund despite global travel warnings. Over roughly the next three months, through May 31, the cutoff date used in this analysis, the agency received 1,309 complaints mentioning the pandemic.

Our analysis looked at all complaints filed with the CFPB from Jan. 1 through May 31, 2020, and posted to its database by June 1 at 9 a.m. EDT. These complaints are not necessarily representative of consumer experiences as a whole, but they tell interesting stories of hardship in uncharted financial territory.

In the first five months of 2020, the CFPB received 142,782 complaints, 31% more than in the first five months of 2019.

Complaint narratives hint at financial strain causes

When someone files a complaint with the CFPB, they go through a series of multiple-choice selections and enter a narrative describing their gripe. That narrative can be made public, if the complainant consents, giving us the opportunity to mine those narratives for certain words, sentiments and overall trends. If they don’t consent, the complaint basics ” such as financial product, issue and associated company ” are still published, minus the detailed description. Of the complaints filed through May 31, 2020, just 33% were published with a narrative.

By searching those narratives for words including “covid,” “coronavirus” and a handful of related terms, we found 1,309 complaints specifically mentioning the pandemic. Although only a small portion of published complaints included a public narrative, considering the rise in overall complaints, it’s likely many of the others were also related to the financial impacts of the pandemic.

Among all complaints with narratives, those mentioning job loss, unemployment or a related set of synonyms were up 34% when compared with the same period last year.

Mortgage, credit card and credit reporting complaints most common

Having “incorrect information on your credit report” was the most commonly cited complaint issue in the first five months of 2020 and 2019. But among 2020 complaints explicitly mentioning “covid” or related terms, “struggling to pay mortgage” is the top issue ” accounting for 16% of that subset.

Mortgages

Among pandemic-related complaints, more than one-quarter (26%) are tagged with “mortgage” as the primary financial product. In reading through those labeled as mortgage complaints, we found many consumers frustrated with the lack of relief provided by mortgage forbearance offers. Namely, the consumers were unhappy that lenders required full repayments of delayed installments ” known as a balloon payment ” at the conclusion of the forbearance period.

Take action: Borrowers seeking mortgage forbearance may be able to negotiate different terms with their lender if a balloon payment isn’t feasible. Some lenders may allow repayment of the forbearance amount across several months or tack it onto the end of the loan term, though this isn’t always the case. Loan modification is another relief tool. It restructures your mortgage terms entirely.

Credit cards

The second most commonly cited financial product in coronavirus-related complaints are credit or prepaid cards, accounting for 23%. Combing through complaints tagged with credit cards we found many people frustrated by credit card issuers closing inactive accounts with no warning.

Take action: Having a credit card canceled unexpectedly can eliminate one source of emergency funding in tough financial times. Unfortunately, credit card issuers aren’t required to notify account holders before closing an inactive account. Occasionally using a credit card for a tank of gas or a trip to the grocery store can be enough to keep the account open and available when you need it most.

Credit reports

“Credit reporting, credit repair services or other personal consumer reports” is the third most common financial product category complained about in coronavirus-related narratives. Generally, these products are the most commonly complained about throughout the year, and while they account for just 20% of those explicitly citing the pandemic, they are 60% of the total complaints filed so far in 2020.

Reading through the narratives, we found many complaints centered on accounts being reported delinquent to credit bureaus despite being in forbearance or another payment modification program. Delinquent accounts on your credit report can make it more difficult to access new or increased lines of credit. Under the terms of the coronavirus relief package passed by Congress in March, participation in loan forbearances or other creditor hardship programs should not negatively impact the credit of someone whose account is otherwise in good standing.

Take action: When working with financial institutions, it’s important to ask explicitly whether suspended or late payments will be reported to the credit bureaus and to keep an eye on your credit reports for errors in the months afterward. Because of the pandemic, the CFPB has extended the time credit bureaus have to resolve such errors from 30 to 45 days.

METHODOLOGY

Using the statistical programming language R and Google Sheets, we analyzed consumer complaints received by the Consumer Financial Protection Bureau by the date a complaint was received. The full complaint database was downloaded at 9 a.m. EDT on June 1, 2020. Because complaints aren’t published on the database until a company responds (or 15 days after initial receipt, whichever comes first), complaints received before our cutoff date of May 31, 2020, will continue to be added to the database in months to come, so the totals will change.

Single complaint records could be duplicate issues, filed by a single consumer more than once. Because the complaints are anonymized, we did not account for this.

When searching for complaints specifically related to the coronavirus pandemic, we searched for the following terms: “coronavirus,” “covid,” “pandemic” and “quarantine.” When searching for complaints specifically related to job loss, we searched for the following terms: “unemployment,” “unemployed,” “job loss,” “laid off” and “lost job.” All searches ignored letter case.

More From NerdWallet

COVID-19 and Your Money: A Guide Mortgage Relief Programs During the Coronavirus Crisis How to Get Student Loan Relief During the Pandemic and Beyond

Elizabeth Renter is a writer at NerdWallet. Email: elizabeth@nerdwallet.com. Twitter: @elizabethrenter.

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Are Sallie Mae Student Loans Federal or Private?

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When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances

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Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit

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Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.

 

 

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