Quote of the Month:
"New data from the Federal Reserve Board confirm that household wealth fell by 4.5% in the third quarter of 2002 to its lowest level since 1995."
| Forecasts & Statistics |
| Product Trends |
| Industry Trends |
| Issue Archive |
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| Household Net Worth Declines |
| New data from the Federal Reserve Board confirm that household wealth fell by 4.5% in the third quarter of 2002 to its lowest level since 1995. Total U.S. household net worth was approximately $38 trillion. Assets fell 3.4% to $47 trillion, while liabilities rose 2.2% to $8.5 trillion. |
| Consumers' Debt Burden |
| The Federal Reserve Board has just released data showing the percentage of consumers' total payments on consumer credit and residential mortgage obligations. In spite of the downturn in the economy, households' payments are only slightly higher than they were in the third quarter of 2000. |
| Delinquency Rates at Commercial Banks |
| It seems logical that even a modest increase in consumers' debt burden should lead to rising delinquencies. This does not seem to be the case. |
| Housing Starts Down |
| Data just released by the U.S. Department of Housing and Urban Development show that privately owned housing starts in October were at a seasonally adjusted annual level of 1,603,000 units. This rate was about 11.4 percent below the revised September level. |
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| Paperless Credit Card Statements |
| An interesting editorial in the American Banker by consultant Diogo Teixeira forecasts a paperless future for credit issuers. His company estimates that card issuers could save about $2 billion a year by suppressing the printing and mailing of paper credit card statements. |
| Fed Proposes New Rules for Distributing Credit Cards |
| The Federal Reserve Board has proposed to modify its rules that limit the distribution of unsolicited credit cards. As part of its revised commentary to Regulation Z (Truth in Lending Act), the Fed backed away from its "one-for-one" rule which prohibited lenders from issuing more than one renewal or substitute card to customers. |
| Cross-Border Credit Card Fraud |
| We hope that this is not a "trend" but felt it was worthwhile to report. According to a news release from the American Collectors Association, the Federal Trade Commission has charged a company based in Toronto, Canada with promising U.S. consumers that it could obtain a major bank credit card for them, regardless of their credit histories. |
| Fast Food on Credit |
| Beginning this year, McDonald Corp. will be accepting credit and debit cards for their burgers and fries. Other fast-food chains are expected to follow suit. |
| E-Commerce Update |
| The following items reflect continued growth in e-commerce activity and the importance of the Internet in our daily lives. |
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| Automated Underwriting of Residential Mortgage Applications |
| Which is the better way to appraise applications for residential mortgages: human judgment or computer programs? In a recent issue of Housing Policy Debate, three authors examine the question: "Automated Underwriting in Mortgage Lending: Good News for the Underserved?" |
| Security Precautions |
| We hope that this is not an "Industry Trend," but cite it as a possible warning sign. From the "Metropolitan Diary" in the New York Times... |
| "Free" Down Payments |
| In response to the slowing housing starts, homebuilders have founded an organization to help consumers finance new homes. In their article in the Wall Street Journal, Patrick Barta and Queena Sook Kim describe how a single woman who was a postal worker was able to obtain the $4,400 down payment required on a new $148,000 house. |
| More Consumers Tap Home Equity |
| Not only are consumers borrowing to finance new homes, but homeowners are also tapping into their equity in existing homes. According to a study by the Consumer Bankers Association, the average size of new home equity loans fell to $55,307 in 2002, down from $58,832 the previous year. |
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| Privacy and FCRA Are Top Legislative Priorities for 2003 |
| Back in 1996, financial services firms won the right to pool credit history information collected from affiliates into a central database, so long as consumers were given the right to opt-out of such aggregation. The amendments to the Fair Credit Reporting Act (FCRA) which made this possible . . . took effect on September 30, 1997 but were also slated to expire on December 31, 2003. |
| Class Action Suit Filed Against Fannie Mae |
| Kenneth Harney reported in a recent column that Safiyyah Rahmaan has filed a national class-action suit in federal court against Fannie Mae's automated underwriting system. . . . Her basic charge was that "the system itself is biased against minorities." |
| Credit Bureaus Lose Privacy Challenge |
| Matt Johnson, ACA International Compliance Attorney, reports in Credalert that a federal appeals court has upheld a decision of a lower court involving the financial data privacy provisions of the Gramm-Leach-Bililey Act (GLBA). Trans Union brought the suit in an attempt to protect its use of "credit header" information. |