Category "Mortgage"

ASIC Advises Dover Clients To Find New Adviser

The Australian Securities and Investments Commissions has advised the clients of Dover Financial Advisers to go find financial advisor, as the major Australian company will be shutting down soon. They’ve also advised companies scooping up Dover’s planners to be careful.

According to a watchdog from the ASIC, Dover has advised the corporate regulator that it will soon be ceasing operations, meaning it will stop providing financial services. ASIC says that, even before Dover officially shuts down, its clients should go and find financial advisor, and, should they do so, to make sure that the adviser they turn to is authorized by an Australian financial services licensee.

On the 8th of June, Dover owner Terry McMaster told the firm’s 400 advisers that the Dover Financial Advisers’ licence would be terminated come July, which would result in said advisers, and about 50,000 of the firm’s clients, in limbo, as the advisers need licensing in order to offer advice.

The ASIC’s release pretty much dashes the hopes of the clients and advisers that there would be a lifeline of sorts, in the form of a transition agreement following the cancellation. This development was caused by intense scrutiny from the banking Royal Commission in May.

Mr. McMaster came under heavy questioning from the Royal Commission, which was investigating whether or not the firm was a licensee of last resort for financial advisors with less than pristine histories. The inquiry was started by ASIC back in 2017, and has refused to divulge information on the matter, only saying that inquiries on the firm was ongoing. The regulatory body has issued a warning to financial groups looking on scooping up ex-Dover advisers to be careful.

According ASIC, they have already warned Australian Financial Services licensees to ensure that they have safety measures set for their recruitment and monitoring processes when taking in advisers from a licensee with a poor history of compliance. They add that, with ex-Dover advisers, these measures need to be taken up a notch. Background checks, mandatory audit reports and reference checks are some of the precautions the ASIC has advised, on top of having arrangements for rectifying deficiencies in advice from ex-Dover advisers.

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How Reverse Mortgage Loans Can Help In Credit Card Debts

Many seniors aged 70 and older own credit cards that they can’t pay off the balance in full every month. The best solution to this problem is availing reverse mortgage loans to settle these balances. In a working paper funded by the government and published in September 2016, the researchers say credit card debts suddenly drop when seniors avail the reverse mortgages.

There is also a decrease in debt payment delinquencies and foreclosures once the reverse mortgage is considered. Seniors with bad credit for the first two years of the reverse mortgage are benefited the most. These seniors may have failed to avail another type of home equity loan due to bad credit history, but there are some lenders of reverse mortgage loans who don’t rely on the senior’s credit score.

The study found out that senior borrowers minimized their credit card debt more than those who borrowed other types of home equity loans. The retirees are provided with monthly cash flows to help them pay off their credit card debt.

According to the study, retirees who initially withdrew $10,000 through a reverse mortgage minimized their credit card debt up to $2,400 in the first year after borrowing the money. Additional borrowing proved a smaller additional debt paydowns.

The study is worth noting that it covers borrowers who availed the reverse mortgage loans between 2008 and 2011. This financial history was truly a unique bad period especially with the recession. A similar study performed during such period of economic prosperity may have led to a varied finding.

Seniors who are planning to avail reverse mortgage loans may find solutions to the credit card debt, especially when they have their home equity as an asset to pay off fees and interest of reverse mortgage. They will actually be saved from the financial burdens offered by bad credit card debts. Only an accountant or financial planner can perform this complex calculation. A reverse mortgage lawyer may not be knowledgeable when it comes to this concern. However, they can provide advice to the senior if the reverse mortgage is worth availing to save them from more future problems.

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