Talking with Danielle Rodabaugh on How Sureties Work with the Financial Industry

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We're shifting to the mortgage industry today, a topic I've covered here and there over the last 2 years. After having some neighbors of mine go through problems with their mortgage provider, I reached out to Danielle Rodabaugh, a journalist / surety expert who covers the industry. My question to her: "How does your industry deal with mortgage brokers and companies that act illegally? How does the surety protect the consumer?" Here's what she laid out for me, posted here in full. Thanks Danielle!

How to make a claim on mortgage professional's surety bond

Countless instances of unethical lending practices in the past decade have motivated government agencies to strengthen mortgage industry regulations across the country. A crucial aspect of the crackdown has been stricter surety bond requirements for mortgage professionals.If a bonded mortgage originator, broker or lender performs dishonestly when helping clients with their mortgages, injured parties might qualify for reparation paid out from professionals surety bond funds. Those who are adversely affected by a violation of the professional's performance can make a claim against the bond. This includes consumers, third-party providers and state authorities in charge of mortgage industry licensing.When it comes to the mortgage industry, the surety claims process varies greatly depending on

   
• the obligations outlined in the bond
   
• the jurisdiction in which the bond is active
   
• the parties bound to the contract's terms

To collect reparation, though, the injured party must make a valid claim against the professional's surety bond. To do so, injured parities should follow these three steps.

1. Verify that the mortgage professional actually violated the bond's terms.

If you believe a licensed mortgage professional you've been working with has violated industry regulations, you might be able to gain reparation. For a valid claim to be made against a bond, however, the mortgage professional must have violated its terms.  Some problematic practices that could result in a claim against a mortgage professional's bond include:

   
• intentionally targeting vulnerable or at-risk borrowers
   
• pressuring clients to buy certain loan products such as high-risk loans or loans with higher interest rates
   
• basing clients' interest rates on anything other than credit history
   
• approving clients for loans they cannot afford to repay
   
• charging clients unnecessary or additional fees
   
• encouraging clients to use fraud when applying for a mortgage

Before you try to make a claim against a surety bond, you or your lawyer should verify whether the mortgage professional actually broke the bond's terms.

2. Get in touch with your attorney.

A number of legal issues could arise during your attempt to make a claim on a bond. The best way to handle potential problems is to get in touch with your lawyer right away and explain the situation. Not to mention the fact that mitigation is typically handled better with the help of a lawyer.You should always discuss your claim with an attorney before taking legal action because, unfortunately,  the amount you'll be able to collect might not be worth the time, money and effort that will be required to make a successful claim.

3. Contact the mortgage professional's surety.

Effective communication is crucial when trying to make a claim against a bond. To find out who the surety is, contact whatever state agency regulates mortgage professionals. The department can provide you with the name of the licensed mortgage professional's surety bond provider.Then contact the surety underwriter and follow its required procedures to make your claim. Oftentimes surety underwriters have personnel that deal exclusively with the claims process. Bond claims against mortgage surety bonds must typically be filed within one year of the date of the act that causes the claim. The duration of the surety bond claims process varies among underwriters.The surety underwriter will have to verify the claim is valid before paying reparation to injured parties. Sometimes mortgage bond language requires a court ruling against the principal for a claim to be considered valid. Whether or not you have to take legal action against the mortgage professional to gain reparation depends on the bond's contractual language.Too many people have learned the hard way that the housing market and mortgage industry can be extremely risky to get involved with. Armed with an understanding of surety bonds, however, current and future homeowners can protect future investments from fraudulent mortgage professionals.

. . . A little more about Danielle:Danielle Rodabaugh is the chief editor for SuretyBonds.com, a nationwide surety bond producer. As a part of the company's educational outreach program, Danielle writes about mortgage industry developments since they're often intertwined with the surety market.

5 Growth Sectors Worth Investing In

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One of the hardest parts of investing is finding a growth sector that you can believe in. Talk to any stock market 'specialist' and he or she will tell you about buying in early to an industry that is about to take off. The Internet and financial circles are full of tips and premonitions regarding stocks and markets that are about to fly into the stratosphere, but the truth is most of this is thinly disguised guesswork, deductions based on smatterings of evidence and hearsay. Sometimes the best investing guide is to look at macroscopic trends in society, over-arcing patterns that are effecting the economy in multiple ways. What industries are actually growing and what factors are there that could impede this growth? If you can find no logical roadblock to stop an industry that's growing by leaps and bounds, it could make for a lucrative investment. That's why the following industries are considered by many to be extremely promising growth sectors:Life sciencesThe advances in the life sciences field have been nothing short of remarkable in recent years. Improved micro-arrays have increased our ability to study the human genome and fashion new pharmaceuticals. So has microfluidics and gene therapy. Biotechnology applications have also used artificial selection and hybridization in order to improve the domestication of animals and the cultivation of plants. The growth of life sciences has seen the evolution of findings that used to be contained in Ivory Towers leak down to have extremely valuable real-world applications in everything from agriculture to health care. The government has even invested in life sciences in order to ramp up its efforts to protect against bioterrorism. As advances continue to be made in the pharmaceutical, biotechnology, agrochemical and industrial chemical fields entrepreneurs who make a considerable life sciences investment are likely to see good to great returns if they are prudent and look for smart value plays.Green engineeringGreen engineering jobs are expected to see meteoric growth in the coming years as more and more homeowners and businesses renovate and upgrade their houses and office buildings in order to be more energy-efficient. Alternative energy is also expected to be a major growth sector, but picking out specific companies in this field will be a harder to do because of the political uncertainties inherent in the industry. On the other hand, green engineering projects don't require an entirely new infrastructure and are likely to be heavily invested in by both private firms and federal agencies because of their ability to both produce jobs and save money. Additionally, new regulations mandating certain CO2 emission levels will force many businesses to commission new installations. Many engineering education programs are now focusing intensely on green engineering, attempting to train a new generation of engineers to take seriously the challenge of energy efficiency and sustainable city planning.Digital informationYou don't have to look far to see the wide-ranging impact of digital information technology. Smartphones, high-speed Internet, GPS, and cloud services are now taking over our professional landscapes, changing the way businesses operate and the way people communicate with each other. It's no longer necessary for some colleagues to even be in the same room in order to have business meetings anymore; students can earn their degrees remotely; investors can organize their portfolios and move their money around while in transit. While a long term investment may be difficult in the digital information field—due to its ever-changing nature—short term goals could reap a significant harvest. Augmented reality, VoiP services, open source online education tools, and place-based messaging apps are all popular right now and are expected to grow in the near future. In particular, mobile Internet use is expected to continue to flourish, adding to the lure of companies who are building up 4G LTE network connections and other high-speed broadband systems.Clean technologyClean technology has seen a considerable uptick in funding since President Barack Obama was elected and we can expect that trend to continue if is he is reelected. Even before Obama was elected, the clean tech train was in motion. In 2007, $148 billion was invested in clean technology. This includes federal subsidies for renewable energy, information technology, green transportation, electric motors, and a wide range of projects attempting to reduce environmental pollution. By 2018, biofuels, wind power and solar photovoltaics will be $325+ billion dollar industries, making it one of the more promising fields for venture capitalists. Clean technology stocks in China and India have grown steadily for years now because of considerably federal investments. If similar efforts are made here, it is possible that clean technology could become one of the most promising investments on the market.Advanced technologyAdvanced technology is generally defined as the use of innovative technology to upgrade or improve a product or commercial process. In recent years this has included advances in computer technologies, high performance computing, high precision technologies, robotics, automation control systems, sustainable technologies, and new industrial technologies. Advanced technology can be hard to pin down, which at first could make it an unattractive investment. But the government, including the White House, has been enthusiastic about this field. Obama even put forth a $1 billion dollar proposal for the National Network for Manufacturing Innovation, which would create a network of institutes all across the country working on advanced manufacturing projects. The President has also recently submitted a budget for the National Institute of Standards and Technology that would significantly increase funding for the research facilities working on these projects.While no investor can be 100% certain that a particular company's stock will rise exponentially, following the trends in a particular growth sector can be a worthwhile strategy. It will also be necessary to track a company's financials over the course of many seasons, assessing the way it adapts to change. It may behoove you to invest in a mutual fund, which encompasses a wide-ranging portfolio of stocks in a certain industry. Therefore, your money is not dependent on the performance of any one company, but rather the overall growth of a network of technologies and processes. A mutual fund in any of the preceding industries would be highly likely to accrue value over the course of time and is much safer than buying a single stock. But this requires the investor being able to keep the money in the market over many years, possibly even a decade or more. If you're looking for short-term earnings, you will have to wing it like the rest of us. But at least you'll be starting in a verdant field that is primed for growth.

Tricky Times for Baby Boomers

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The Baby Boomer generation is known for their careful financial planning, frugal savings and determination to experience a relaxing retirement that is free from financial worry. However, the current financial situation has introduced new concerns regarding a boomer’s financial planning. While many people have already retired, others are just entering retirement and discovering that several common life events can suddenly pose a challenge to their financial plans. For this reason, it is important to be aware of several major life events that can cause a boomer to need to make changes in their financial strategy so that they can continue to live out their retirement in peace.
Selling a Business 
Self-employed Baby Boomers who are entering retirement must first contend with selling their business. This can be particularly tricky as the legalities of business sales are often complicated. However, legal fees are often expensive and can easily take a large chunk out of the profits that can be gained from selling a business. For this reason, boomers are encouraged to learn as much as they can about the selling process and carefully research real estate agents and lawyers before making any major decisions. Staying involved throughout the selling process is vital to emerging from a business sale with a substantial profit.
Divorce
No one ever wants to imagine that divorce can happen to them, but after the kids leave the nest many boomers are discovering that their marriage has come to an end. Splitting assets during a divorce, coupled with legal fees, can wreak havoc on a person’s retirement plans. For this reason, it is important to seek out the advice of people such as Walter Wisniewski Paragon Capital financial planner who have dedicated their careers to helping people to plan for their financial future. Because divorce is often an emotional time, it can be difficult for a boomer to think clearly about their financial plans. Therefore, a qualified financial planner can be an important asset to ensure that a person’s financial affairs are in order throughout the entire divorce process.
Losing a Spouse 
Divorce is not the only hardship that can occur within a person’s relationship during retirement. Baby Boomers must also face the concern of losing a spouse. When a spouse dies, grief can cloud financial judgment. If the surviving spouse was financially dependent upon their other half, then there is also the concern about how the estate will be divided. For this reason, boomers are encouraged to plan for their estates before a crisis has occurred. A qualified financial planner can help to ensure that a legal will has been established that will designate how possessions should be distributed in the event of the loss of a spouse.
Medical Bills and Lawsuits 
Finally, as boomers begin to make their way into retirement age, health can become a major concern. Even in the event of a minor illness or injury, medical bills can quickly skyrocket and begin to deplete a person’s savings. In order to avoid a person’s retirement funds being depleted by medical bills and lawsuits, boomers should look into purchasing the best insurance plans that they can afford. Long-term insurance plans can offer excellent packages that will ensure that unexpected problems do not become a financial burden.While Baby Boomers have planned their entire lives for their retirement, it is possible that they may need to make a few changes to their financial plans if they experience a major life event. Because medical mishaps, divorce or the loss of a spouse could occur to anyone without warning, it is best to be prepared before they ever happen. For this reason, a qualified financial planner can be a Baby Boomer’s best ally when planning for their post-retirement financial future.

Festival of Frugality

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Welcome to a Festival of Frugality. This is a blog carnival that shares financial resources so what better place to share it than here.
Here are my favorite articles:
JP presents No. You Don't Need to Buy Life Insurance for Your Children posted at My Family Finances.
Daisy presents Planning For Homebuying posted at Add Vodka.
Suba presents Brown Bag It: Tips For Making Cheap Lunch posted at Broke Professionals.
Aloysa presents How Much Money Are We Supposed to Spend on Friends? posted at My Broken Coin.
Miranda Marquit presents Four Extreme Lifestyle Choices That Save Money posted at Bargaineering.
Evan presents Increasing My Annual Income 10% posted at My Journey to Millions.
Steve presents Is it OK to get a discount if you are good looking? posted at Canadian Personal Finance.
CF presents Fiverr should be called fourer posted at The Outlier Model.
Best of the rest:
A Blinkin presents The Ideal Budget for a Single Guy Age 24 posted at Funancials.
Eddie presents The Cold Hard Truth On Being a Personal Finance Blogger - What I Learned In Less Than 2 Years! posted at Finance Fox.
MR presents Is A Roth IRA One Of The Best Protection Against High Future Tax Rates? posted at Money Reasons.
Passive Income Earner presents Is RIM a Good Investment? posted at The Passive Income Earner.
Jon the Saver presents Lack of Liquidity May Be Why You Don't Feel Rich posted at Free Money Wisdom.
Jen presents Preparing Our Finances 4 Home Ownership posted at Master the Art of Saving.
Amanda L Grossman presents My Advice to a Person Budgeting for the First Time posted at Frugal Confessions.
YFS presents 2 Home Buying Tips That People Never Tell You! posted at Your Finances Simplified.
SBB presents Is Budgeting Worth Your Time? posted at Simple Budget Blog.
Miss T. presents 8 Ways to Save Money on Groceries without Coupons posted at Prairie Eco Thrifter.
Beating Broke presents Take an Off Season Fall Vacation and Save Big posted at Beating Broke.
Peter presents Spend Money to Slash Your Budget posted at Bible Money Matters.
Paul Vachon presents Deciding When to Retire posted at The Frugal Toad.
Melissa presents The Best Things to Buy at Garage Sales (and What to Skip) posted at Bargaineering.
Echo presents 35 Ways To Save Money posted at Boomer & Echo.
SB presents How to Manage financial Accounts posted at One Cent at a Time.
Rebecca presents Frugal ways to give back posted at Doggone Thrifty.
Jim presents The Best Things to Buy at Garage Sales (and What to Skip) posted at Bargaineering.
Mama Squirrel presents Funky Doll Sofa, Almost Free (Tutorial) posted at Dewey's Treehouse.
Thanks to everyone that submitted their posts. Maybe I will do this again sometime.

Rare New Boon for Investors

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Lynas scores Malaysia plant license is the just the latest among a host of news regarding the mining of rare earths elements. While many investors have focused on the benefits offered by investing in gold and silver in an economy that remains anything but certain, rare earths are beginning to attract attention around the world as a possible new avenue for safe haven investing.

Rare Earths Mining Background 

Although many people may not realize it, rare earths elements play a significant role in modern industry and technology. Numerous rare earths elements can be found in a host of products modern consumers use every day. Uses of rare earths elements include everything from hybrid cars to smartphones. Despite their widespread and ever increasing use, the supply of rare earths elements has remained significantly uncertain for many years.

This has largely been due to the stronghold China has held on the rare earths mining industry for decades. Until Lynas received the temporary operating license to mine rare earths elements in Malaysia, China accounted for 95% of the production of rare earths elements in the world. Lynas has estimated it will be able to reach a 22,000 metric ton production capacity by the end of 2013.

Although the demand for rare earths elements has continued to increase during the last few years due to amplified industrial use, the supply of these essential elements has remained stagnant. In fact, China even began to reduce export quotas two years ago. Following a diplomatic dispute with Japan, the export of rare earths from China to Japan was even temporarily suspended. The continued tightening of production by China instigated increased concern in the industry and eventually led to the entrance of several mining companies, including Lynas, into the rare earths processing sector.

Increased Production Offers New Investment Opportunities 

In light of increased production, a number of investors are now beginning to view the potential of rare earths as financial tools. Gold and silver have long served as a hedge against inflation and as tools for asset protection and growth. It is now widely believed that the new investment opportunities in rare metals and earths could serve investors in the same regard. The demand for rare earths is expected to continue climbing each year as much as 12%. Investors looking for a safe haven investment opportunity could well find that rare earths elements are just the investment tool they are seeking.

Trading CMO

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Collateralized Mortgage Obligations differ from pass through securities in that they have different types of paying bonds within the CMO. There are many types and tranches to evaluate - each with it's own bond risk.

A CMO has different payment timing risk depending on the type of bond you own. Some offer more protection than others from prepayment or extension risk. These bonds have a more predicatable duration to the bondholder vs. a pass through agency bond. Some CMO's can pay off faster than others.

Learn much more on investing and trading these bonds. Free Info through American Investment Training

CMO INVESTING PAGE

Yiled to Maturity

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This is a bond's total rate of return during the full life of the investment. The yield to maturity factors in the nominal rate or coupon, the price paid and the length of the maturity.
The YTM is the most important yield indicator for a bond investment. It factors in the nominal yield, bond price and length of maturity held.

When investors buy bonds, the coupon rate is important, but if the bond price is higher than par - the yield to maturity will be lower. If the bond is bought at a discount, the yield to maturity will be higher.

The nominal yield (coupon) is a fixed rate that is only paid to par value. All bonds redeem at par as well. So, if the investment is purchased below or above par, the yield will be different.

The YTM is actually the current interest rate on a particular bond or similar bonds. If a 7% bond is availale, but interest rates are actually only 5%, the broker or the market will price that bond higher (premium) - to reflect the current interest rate environment. The broker is not going to sell a 7% bond at par when interest rates are 200 basis points lower. A premium will be the market.

If the interest rate climate on these bonds is 5%, the security will be priced for a yield to maturity of around 5%. So, the investor is really getting a 5% overall rate of return on this bond, if held to maturity - even though the nominal yield is 7%. Interest is never paid to a premium or discount. It is only paid to par.

From American Investment Training. More on the link below

Bond Yield