TRID Leads to Better-Informed Homebuyers

Tabitha Roach, First Vice President—Residential Lending Operations

RoachT_BUS0036qcThe Consumer Financial Protection Bureau revised the closing procedure for residential mortgages last October. The result: the TRID (TILA/RESPA Integrated Disclosure) rule. Also called “Know Before You Owe,” this rule is intended to:

  • Make shopping and comparing borrowing options and costs easier across lenders.
  • Present information in a more easily understood way, with less legalese and simpler wording.
  • Provide borrowers with enough time to review loan terms before agreeing to them.

While buyers will receive two new disclosure documents as a result of TRID, these replace four of the old forms. The first of these forms is the loan estimate. It will be provided within three days of a lender receiving a potential borrower’s information. This includes the borrower’s name and social security number, the property value and address, and with the amount of the loan request. This disclosure will then allow borrowers to make apples-to-apples cost comparisons among all the lenders they are considering using before proceeding with their application.

Objective: No More Surprises

The second document is the closing disclosure. This replaces the old settlement statement, which was not previously given to borrowers until after the loan was final.

Under TRID, homebuyers now have three days to review their loan’s final terms—and the associated dollar amounts—before committing to them.

The closing disclosure will also provide borrowers with a thorough list of any fees that were incurred with the transaction. This means lender fees will be itemized, as well as inspection fees, title fees, seller fees, etc.

By “knowing before owing,” borrowers arrive at the closing table better informed.

Timing Is Everything

There’s no denying TRID was a big deal for the mortgage industry. Frankly, it required substantial procedural changes for closing mortgages. But for those of us who were prepared, it has been a plus for our customers.

The only additional request being made of borrowers is one most were doing anyway: getting their fully executed contract to their loan officer immediately upon acceptance of their purchase offer.

Because TRID extended the closing process by six days, the sooner we can begin the loan review, the sooner we can gather the information needed to approve the loan request, prepare the necessary TRID disclosures, and keep the closing on schedule.

Should you have any questions about TRID, your mortgage request, the closing procedure or any other matter related to your home loans, call us. We’ve always worked hard to keep our borrowers informed; TRID has simply incorporated it into the federally required forms.

Wealth Management Economic Update January 25, 2016

U.S. and World News

  • switzerland_000008031742_320At the World Economic Forum in Davos, Switzerland this week, European Central Bank President Mario Draghi hinted at more stimulus for the Eurozone which has struggled to produce growth and inflation close to their 2% target. This action helped to stabilize global markets that had been in freefall early in the week. Draghi stated, “We have plenty of instruments and especially we have the determination and willingness and capacity of the Governing Council to act and deploy these instruments.”
  • The ECB wasn’t the only central bank suggesting additional easing. China’s Vice President Li Yuanchao signaled that Beijing would keep intervening in its stock market in an attempt to stabilize prices. Additionally, there is wide speculation that the Bank of Japan will opt for extra stimulus at its policy meeting next week.
  • This past summer’s landmark nuclear deal between Iran and six world powers came into effect this week. The result was an end of years of sanctions and the unfreezing of $100 billion of Iranian assets. Secretary of State John Kerry said in Vienna, “Today marks the first day of a safer world. We are really reminded once again of diplomacy’s power to tackle significant challenges.”

Markets

  • Markets rebounded midway through the holiday shortened week. The S&P 500 gained 1.46% and closed at 1,907. Likewise, the Dow Jones rose 0.69% and closed at 16,093. So far in 2016, the S&P is down 6.61% and the Dow is down 7.53%.
  • Interest rates ended the week relatively unchanged from where they began; however, there was plenty of volatility in between. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.48% and 2.05%, respectively.
  • The spot price of WTI Crude Oil began to rally midweek, much like the stock markets, gaining 9.62% to close at $32.25 per barrel. WTI Crude has fallen 12.93% in 2016.
  • The spot price of Gold advanced 0.83% this week, closing at $1097.95 per ounce. Year to date, gold prices are up 3.47%.

Economic Data

  • Initial jobless claims came in at 293,000 which was an increase from last week’s reading of 284,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 285,000.
  • The Consumer Price Index (measure of inflation) declined 0.1% in December, reflecting another 2.4% decline in energy prices. Core CPI (excludes food and energy) increased by 0.1%, below expectations of 0.2%. Over the last 12 months, core CPI has risen 2.1%.
  • Housing starts unexpectedly declined by 2.5% in December, much lower than expectations of a 2.3% gain following an unseasonably warm December. Multi-family starts declined by 1.0% and single-family starts were also soft, falling 3.3%.
  • Existing home sales increased 14.7% in December, beating expectations of 9.2%. The rise follows a 10.5% decline in November. Single family unit sales increased 16.1%, while multi-family unit sales rose 4.9%.

Fact of the Week

  • The U.S. economy has been expanding since July 2009 and the expansion reached 78 months as of the end of 2015. This duration of expansion has been exceeded by just 4 other U.S. expansions since 1854 or 162 years ago. (Source: National Bureau of Economic Research)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

Wealth Management Economic Update January 19, 2016

U.S. and World News

  • Poor economic data and further currency devaluation in China continued this week and sent global stocks lower.
  • President Obama delivered his 7th and final State of the Union address this week. Among the topics he discussed was ensuring opportunity for everyone, harnessing technological change and keeping the country safe. Obama lauded the economic progress the country has made since he took office but mentioned that one of his few regrets during his Presidency has been “that the rancor and suspicion between the parties has gotten worse instead of better.”
    Embed from Getty Images

Markets

  • Markets continued their downward start to 2016 highlighted by a large down move to end the week. The S&P 500 declined 2.18% and closed at 1,880. Likewise, the Dow Jones fell 2.19% and closed at 15,988. So far in 2016, the S&P is down 7.96% and the Dow is down 8.19%.
  • Interest rates fell during this week, reflecting the weakness in the stock markets. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.46% and 2.04%, respectively.
  • The spot price of WTI Crude Oil plunged again this week, dropping 10.62% to a new 52 week low of $29.64 per barrel. WTI Crude has fallen 20.00% in 2016.
  • The spot price of Gold dipped 1.31% this week, closing at $1089.70 per ounce. Year to date, gold prices are up 2.70%.

Economic Data

  • Initial jobless claims came in at 284,000 which was an increase from last week’s reading of 277,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 279,000.
  • Headline retail sales declined by 0.1% in December, in line with expectations. However, core retail sales (excluding auto and gasoline sales) declined by 0.3%, much weaker than the estimated 0.3% increase.
  • The University of Michigan consumer sentiment index improved in the initial January estimate to 93.3 from 92.6 in December. Consumers’ expectations of the future improved, however their assessment of current economic conditions declined in the month.

Fact of the Week

  • According to the Social Security Administration, in 1994 there was 2.8% of America’s working-age population that was receiving Social Security disability benefits. This has increased to 5.1% of the working-age population in 2015.

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

Safe Filing: Keeping Your Identity Secure During Tax Season

Julie Perez, Vice President—Operations

January_PerezJ_BUS014qcWhether you’re already busy collecting your tax information or a last-minute filer, you’ll need to be more proactive than ever this year. Identity thieves have upped their game, which means you need to be on top of yours.

Be Preventive
Beyond keeping tabs on the whereabouts of the information and statements that will be coming your way—both via mail and electronically—to ensure they reach you, consider filing as soon as you are able to this year.

Scammers may have obtained your Social Security number during one of the recent retailer, employer or health insurance security breaches—or by other means. They may try to file a phony return and claim a refund using your tax identification number before you ever file.

The Internal Revenue Service (IRS) actively monitors for this type of fraud, but it can take months before it’s caught. Filing early can be preventive, since the first return filed essentially “wins.” But, also consider filing electronically or using a tax preparer who files electronically. You may not prevent the fraudulent return from being filed, but you’ll find out about it sooner and be able to alert the IRS so it can initiate an investigation.

Here are some other preventive actions that can help keep your identity and money safe during tax season.

  1. Know your preparer. You are literally trusting this person—or service—with the keys to your financial kingdom. Be wary and get referrals before handing over your information to someone new, especially someone working out of a temporary office.
  2. Practice safe computing. Update security software and scan for viruses before you begin downloading tax information or preparing your return online. Also, avoid working on your return or accessing personal information through public Wi-Fi. As an added precaution, if you are filing online, verify the site you are on is the one you intended. It’s easy to mistype addresses and end up on a phishing site. And, make sure the address starts with “https” to ensure it is secure.
  3. OSB-0046_Perez-Infographic_FINALDon’t link from emails. If you receive a message that asks you to verify financial or account information, don’t click on the links provided. Look at the full address—emails from phishers are typically one letter off from the legitimate site address or have added extensions on them, such as “.ru.” If you aren’t sure whether or not to take the email seriously, look up the sender’s customer service phone number and call to verify the message is authentic.
  4. The IRS doesn’t call, text or email. It sends official notifications and doesn’t ask for personal information—it has it already. If you are contacted by someone claiming to be from the IRS, ask for the case number and then call the IRS on your own.
  5. Choose direct deposit. Electing to have your refund sent via direct deposit is more secure than having it mailed. But, verify that your account information is correct. If your refund were to be sent to a closed account, the bank is legally obligated to return the money to the IRS.

As your bank, we also keep an eye out for unusual activity in your accounts. And, if you need to investigate or report any suspicious activity, call us. We’ll help you get in touch with the right resources for addressing it.

Wealth Management Economic Update January 11, 2016

U.S. and World News

  • Global tensions rose over the weekend when Saudi Arabia cut off diplomatic relations with Iran and gave diplomats 48 hours to leave the country as a result of protestors storming and destroying the Saudi Arabian Embassy in Tehran. The destruction of the embassy was in response to Saudi Arabia’s execution of 47 prisoners, including a prominent Shiite cleric. The two sides are also fighting in the oil markets as Iran is poised to re-enter the global oil markets following the nuclear deal signed over the Summer.
    Embed from Getty Images
  • China’s unstable economy and markets are again sending shockwaves throughout the globe. Following weak manufacturing and economic data, Chinese shares plummeted and the Chinese government attempted to stop the bleeding through intervention. Newly implemented, and since suspended, market circuit breakers were tripped twice as the markets were shut down following declines breaching the 7% threshold. The ban on selling by major shareholders was also kept in place indefinitely and further currency devaluation methods were deployed in an attempt to boost exports and maintain the country’s growth targets.
  • Initially detected as a 5.1 magnitude earthquake by various agencies, North Korea has claimed to have successfully test detonated its first hydrogen bomb, the fourth nuclear device that the country has detonated. According to North Korean news, the country wanted an ‘H-bomb of justice’ in order to protect from the ‘ever-growing nuclear threat and blackmail by the U.S.-led hostile forces.” In addition to condemning the tests, some U.S. officials are skeptical that the bomb tested was a hydrogen bomb, which is 1,000 times stronger than a typical atomic bomb.

Markets

  • Markets started the year in the red rather dramtically. The S&P 500 declined 5.96% and closed at 1922. The Dow Jones fell 6.19% and closed at 16346.
  • Interest rates declined slightly this week and the 5 year and 10 year U.S. Treasury Notes are now yielding 1.56% and 2.11%, respectively.
  • The spot price of WTI Crude Oil dropped 11.12% this week, closing at $32.88 per barrel.
  • The spot price of Gold rose 4.05% this week, closing at $1104.16 per ounce.

Economic Data

  • Initial jobless claims came in at 277,000 which was an decrease from last week’s reading of 287,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 276,000.
  • The monthly non-farm payrolls report showed a strong increase of 292,000 jobs in December, beating consensus estimates of 200,000. There were also upward revisions to the prior two months’ figures totaling 50,000. This brings the three month average of job gains to 284,000.
    • Average hourly earnings were flat for the month, behind forecasts of 0.2% growth. Wages increased by 2.5% in calendar year 2015.
    • The headline unemployment rate held steady at 5.0% which was in line with forecasts. The labor force participation rate rose 0.1% to 62.6%.

Fact of the Week

  • The total return for the S&P 500 in 2015 was a gain of 1.4%. If an investor in the index was able to avoid the worst three trading days during the year, that return would have risen to 12.3%. Conversely, if the investor missed the three best trading days, the 1.4% gain falls to a 7.1% loss. (Source: By The Numbers Research)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

Wealth Management Economic Update January 4, 2016

U.S. and World News

  • iStock_000011948408_320The Obama administration is planning to impose its first financial sanctions on Iran since the landmark nuclear agreement reached in July. This will present the first major test of whether Iran will remain committed to the deal. The penalties will target around a dozen companies and individuals who are believed to be involved in Iran’s ballistic missile program, which has conducted two test firings in recent months. It remains to be seen how Supreme Leader Khamenei will react to the U.S. sanctions, which were outlined for in the nuclear deal.
  • Debt-laden Puerto Rico will not be making two of its 13 debt payments due on January 1st, including a payment to the territory’s Infrastructure Financing Authority and to its Public Finance Corporation. The rest of the nearly $1 billion in payments will be made, including to its general obligation bondholders. In order to pay off the GO bonds, Puerto Rico was forced to raise half of the funds by clawing back revenues from other bonds.

Markets

  • Markets were down a bit to close out 2015 in a holiday shortened week. The S&P 500 fell 0.81% and closed at 2,044. Likewise, the Dow Jones dropped 0.73% closing at 17,424. In 2015, the S&P gained 1.40% and the Dow is gained 0.23%.
  • Interest rates rose a bit this week and the 5 year and 10 year U.S. Treasury Notes are now yielding 1.77% and 2.28%, respectively.
  • The spot price of WTI Crude Oil fell 2.73% this week, closing at $37.06 per barrel. In 2015, Oil prices were down 38.72%.
  • The spot price of Gold decreased by 1.44% this week, closing at $1060.60 per ounce. During 2015, Gold prices fell 10.45%.

Economic Data

  • Initial jobless claims came in at 287,000 which was an increase from last week’s reading of 267,000. The Labor Department noted no special factors in the data though there may have been some effect from seasonal adjustment around the Christmas holiday. The four week moving average for claims now stands at 277,000.
  • The Case-Shiller home price index rose by 0.8% in November, beating expectations of a 0.6% increase. All 20 cities in the index saw home prices increase during the month. Over the past 12 months, home prices as measured by the index have risen 5.5%.
  • Pending home sales (track contract signings rather than closings) unexpectedly declined in November by -0.9%. Sales declined in the West (-5.5%) and Northeast (-3.0%) regions but rose modestly in the South (1.3%) and Midwest (1.0%) regions. Over the last year, pending home sales have risen by 5.1%.

Fact of the Week

  • According to the Federal Reserve Bank of New York, as of 9/30, outstanding student loan debt is $1.2 trillion. Of that, 11.6% of student debt, or $139 billion, is at least 90 days delinquent or is in default. This figure may actually understate the actual delinquency rate since loans that are currently in deferment are treated as if they are ‘current’.

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.