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Justice Department and Office of the Comptroller of the Currency Announce Actions to Resolve Lending Discrimination Claims Against Cadence Bank | OPA

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The Justice Department and the Office of the Comptroller of the Currency (OCC) today announced coordinated actions to address allegations of lending discrimination by Cadence Bank N.A.

The department’s Civil Rights Division and the U.S. Attorney’s Office for the Northern District of Georgia announced an agreement to resolve allegations that Cadence Bank, which is headquartered in Atlanta, engaged in lending discrimination by “redlining” predominantly Black and Hispanic neighborhoods in the Houston, metro area. Under the department’s settlement, Cadence will invest over $5.5 million to increase credit opportunities for residents of those neighborhoods. “Redlining” is an illegal practice in which lenders avoid providing services to individuals living in communities of color because of the race, color or national origin of the people who live in those communities.

Additionally, Cadence’s prudential regulator, the OCC, announced today that it has assessed penalties against the bank in the amount of $3 million related to the violations alleged in the department’s complaint. The department opened its investigation after the OCC referred the matter.

The Justice Department’s settlement will resolve a lawsuit filed today in the U.S. District Court for the Northern District of Georgia. In its complaint, the department alleges that Cadence Bank violated the Fair Housing Act and the Equal Credit Opportunity Act, which prohibit financial institutions from discriminating on the basis of race, color or national origin in their mortgage lending services. Specifically, the complaint alleges that, from 2013 to 2017, Cadence engaged in unlawful redlining in the Houston area by avoiding predominantly Black and Hispanic neighborhoods because of the race, color and national origin of the people living in those neighborhoods. The department also alleges that Cadence’s branches were concentrated in majority-white neighborhoods, that the bank’s loan officers did not serve the credit needs of majority-Black and Hispanic neighborhoods and that the bank’s outreach and marketing avoided those neighborhoods.

“When banks fail to provide equal access to credit in communities of color, they violate our civil rights laws and they deprive people in those communities of the opportunity to build wealth,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Redlining is an illegal practice that has far-reaching consequences for people of color, their families and for the neighborhoods where they live. The Civil Rights Division will continue to enforce our nation’s fair lending laws to ensure that qualified applicants and borrowers can access credit and invest in their financial futures without facing unlawful barriers.”  

“There is no place for discrimination in the federal banking system,” said Acting Comptroller of the Currency Michael J. Hsu. “The OCC will use the full force of our authority to correct fair lending violations with our supervisory and enforcement tools, including civil money penalties, cease and desist orders, and requiring restitution for customers harmed as a result of any discriminatory practices.”

“The Fair Housing Act and Equal Credit Opportunity Act are intended to provide equal treatment for all people in their pursuit of home ownership and financing,” said Acting U.S. Attorney Kurt R. Erskine for the Northern District of Georgia. “This case highlights the need for vigilance in addressing practices which treat certain communities unfairly and has led to an agreement with Cadence Bank intended to improve the fairness of its business practices and to make remedial financial investments in the negatively impacted communities. This office will continue in its efforts to eliminate housing and credit discrimination.”

Under the department’s settlement, which is subject to approval by the District Court, Cadence will invest $4.17 million in a loan subsidy fund for residents of predominantly Black and Hispanic neighborhoods in the Houston area, $750,000 for development of community partnerships to provide services that increase access to residential mortgage credit in those neighborhoods, and at least $625,000 for advertising, outreach, consumer financial education, and credit repair initiatives. The bank will dedicate at least four mortgage loan officers to majority-Black and Hispanic neighborhoods in Houston and open a new branch in one of those neighborhoods. Cadence will employ a director of community lending and development who will oversee these efforts and work in close consultation with the bank’s leadership. The bank will take these steps in addition to other fair lending measures it has already put in place.   

Cadence Bank’s assets total over $18 billion. In addition to Texas, the bank has branches in Alabama, Florida, Georgia, Mississippi and Tennessee. Its mortgage lending in the Houston area accounts for approximately 40 percent of its total home mortgage business.

The department’s Civil Rights Division and the OCC have long been engaged in work that seeks to make mortgage credit and homeownership accessible to all Americans on the same terms, regardless of race or national origin, and regardless of the neighborhood where they live. In January 2021, President Biden reaffirmed the critical role of the federal government in addressing legacies of housing segregation and discrimination, declaring that it is the policy of this Administration to eliminate “racial bias and other forms of discrimination in all stages of home-buying and renting.” See Memorandum on Redressing Our Nation’s and the Federal Government’s History of Discriminatory Housing Practices and Policies, The White House (Jan. 26, 2021).

The Justice Department’s enforcement of fair lending laws is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section. Additional information about the Section’s fair lending enforcement can be found at www.justice.gov/fairhousing. Individuals may report lending discrimination by calling the Justice Department’s Housing Discrimination Tip Line at 1-833-591-0291, or submitting a report online.

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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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