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[ad_1] In an epochal event, India’s flag carrier Air India on Thursday returned to the hands of Tata Group, which founded it close to 90 years ago. The diversified conglomerate had won the race for full ownership of the state-owned airline in October last year, by offering Rs 18,000 crore as enterprise value (EV) consideration. The debt-laden, loss-making airline has long guzzled taxpayers’ money, but still holds considerable brand strength and repute, with its iconic Maharaja tag. Air India will be the third airline brand in the Tatas’ stable; it already owns 84% in AirAsia India and 51% in Vistara. The deal will add as many 141 wide-body and narrow-body planes to Tata Group’s fleet, a significant number of which owned by AI. Besides, the Tatas would also get thousands of trained pilots and crew, lucrative landing and parking slots — 1,800 at domestic airports and half that number at airports overseas — and privileged bilateral rights across Europe, North America and West Asia. The AI sale will be the first incidence of outright privatisation of a state-owned firm in the country after a gap of 17 years. The Centre ‘nationalised’ AI in 1953. “The Air India strategic disinvestment transaction has been completed today with the government receiving a consideration of Rs 2,700 crore from the strategic partner (Talace, a wholly-owned arm of Tata Sons), retaining debt of Rs 15,300 crore in Air India and AIXL and transferring shares of Air India (100% shares of Air India and its subsidiary AIXL and 50% shares of AISATS) to the strategic partner,” the finance ministry said in a statement. Earlier in the day, Tata Sons chairman N Chandrasekaran met Prime Minister Narendra Modi. “We are excited to have Air India back in the Tata Group and are committed to making this a world-class airline. I warmly welcome all the employees of Air India, to our Group, and look forward to working together,” Chandrasekaran said in a statement. After the government announced the approval of the highest price bid of Talace on October 8, 2021, it issued the Letter of Intent to the winning bidder on October 11. The share purchase agreement (SPA) was signed on October 25, 2021. Thereafter, Talace, Air India and the government worked towards satisfying a set of conditions precedent defined in the SPA, including approvals from anti-trust bodies, regulators, lenders, third parties, etc. The total debt and assorted liabilities of AI absorbed by the government were around Rs 67,000 crore. Given the total debt and liabilities of the airline is estimated at nearly Rs 1 lakh crore, the deal allows the government to recover around Rs 33,000 crore (Rs 18,000 crore from Tatas’ offer and around Rs 15,000 crore from non-core assets kept by it). Tatas will have to retain all employees of Air India for one year from the close of the transaction and could offer VRS in the second year. The new owner of the airline cannot transfer Air India brand or logo for five years and even thereafter, can transfer these only to an Indian entity. Air India has over 12,000 employees — two-thirds of which are permanent and the balance, hired on a contractual basis; Air India Express (AIXL) has a staff strength of over 1,400. In the next five years, about 5,000 permanent employees will be retiring. AI plunged into losses following its amalgamation with Indian Airlines in 2007. In recent years, the government has been making all-round efforts to privatise the airline. The process for disinvestment of AI and its arms started in June 2017 with the ‘in-principle’ approval of the Cabinet Committee on Economic Affairs. The first round did not elicit any expression of interest. The process resumed in January 2020. [ad_2] Source link

[ad_1] Two of the most powerful U.S. housing entities are at odds over the future of the federal government’s cash-strapped flood insurance program. The National Association of Realtors, which represents real estate agents, brokerages and consumers, wants the Federal Emergency Management Agency to carve out a privacy law exception, and require that the history of a property’s flood claims be disclosed to “buyers and renters, as well as owners before real estate transactions are completed,” according to a letter NAR fired off to FEMA this week. But Fannie Mae, the government-sponsored entity that backstops a significant portion of the country’s mortgages, does not seek an exception to the 1974 Federal Privacy Act. Instead, Fannie seeks, “continuing to protect the personal privacy of individual policyholders consistent with the Privacy Act,” in a letter the GSE wrote to FEMA in January 2022.  Fannie also wants FEMA and perhaps Congress to create uniform flood risk disclosure rules. NAR, meanwhile, no longer wants to see states excluded from the federal government’s flood insurance program due to not meeting FEMA standards. The trade group wants states and localities to set their own rules. Sources close to NAR question if Fannie Mae truly understands how flood insurance works. They wonder if states might pull out of the federal plan entirely if faced with more onerous requirements. Meanwhile, Fannie Mae did not respond to requests for comment.  The differences emerged as FEMA seeks public input on revisiting the National Flood Insurance Program, or NFIP, the federally administered program to make flood insurance and federal relief available to homeowners. NFIP has been around since 1968, and there have been periodic attempts to update it the last 20 years amid a fast-growing number of household claims. After Hurricane Sandy in 2012, Congress increased NFIP’s borrowing limit to $30.5 billion, according to the Congressional Research Service. As of December, NFIP’s borrowing authority had dwindled to $9.9 billion, per Congress’s research arm, while still being on the hook for $2.9 billion in reinsurance payments. NFIP provides over five million policies, according to CRS, in jurisdictions that meet federal criteria on building, design standards, and risk index.  Despite the NFIP servicing a significant chunk of homeowners, the program has struggled with its financial wherewithal, partially due to the fact that Congress requires NFIP to charge discounted premium rates to policyholders.  A report published by the Government Accountability Office in July 2021, found that as of August 2020, FEMA’s debt was $20.5 billion, despite Congress having canceled $16 billion in debt in October 2017. Both NAR and Fannie Mae seek a policy that requires more disclosure – especially amid a real estate or mortgage transaction – about a home’s flood history and future risk assessment.  But the key ideological difference is that Fannie Mae wants the federal government to establish laws mandating flood-risk disclosures at the time of the property sale. NAR, meanwhile, believes that state and local government should set requirements. As for mandatory disclosure, the trade group sees work around: Simply allow prospective homebuyers to see a home’s Comprehensive Loss Underwriting Exchange, or CLUE report, which would require a Federal Privacy Act exception.  The public comment period ends Thursday. Unclear is FEMA’s timetable to adopt recommendations, but a spokesperson told HousingWire that FEMA will review all of the comments and publish a summary “in the future.” The post Fannie Mae and NAR at odds over flood-risk disclosures appeared first on HousingWire. [ad_2] Source link

[ad_1] Biden commits to nominating nation’s first Black female Supreme Court justice as he honors retiring Breyer  CNN Biden considers choices to replace retiring Supreme Court Justice Stephen Breyer  CBS News Editorial: Justice Stephen Breyer’s retirement is good for the stability of our democracy  Chicago Tribune Justice Breyer’s retirement highlights what’s wrong with the Supreme Court  NBC News Biden’s Supreme Court pledge is not Reagan’s nor Trump’s—it’s unfair  Fox News View Full Coverage on Google News [ad_2]

[ad_1] It has been a good while since we’ve done a reader case study here on MMM, but that hasn’t stopped them from arriving in my inbox. And since 2022 is becoming a year of interesting financial changes, it’s time to spark things up again, go back to our roots, and start covering some of the many subjects that are cropping up in this latest incarnation of our economic world. Today’s case study deals with family wealth, rapidly rising house prices, and a desire to be generous. What would you do in the following situation? Dear MMM, As long-time readers, we have seen quite a few case studies written up here, but never one addressing the rather common issue of helping out family members. I am a retired, married Navy veteran living in beautiful (but expensive) San Diego. While we are no great example of financial success, we do own a nice home, have a reasonably sized investment portfolio and receive a solid pension income. We are also fortunate to have our grown kids (and grandkids) living nearby. Which also brings up the problem/question: Our eldest son is married with two very young children. He and his spouse both work in demanding careers that can sometimes lead to 12-hour days, which means that paid childcare is part of the equation, on top of the child care we are able to contribute as grandparents. They were living in a very small condo and wanted to upgrade with the arrival of the second child. With house prices in this area skyrocketing, this was an impossibility for them. That’s where we came in.  My spouse and I offered to co-sign a mortgage and contribute a portion of the mortgage payment ($500 per month) until they can manage on their own. Fortunately, that small condo had almost doubled in value such that there would be equity to help with the purchase. So far, so good. What we didn’t know was:  1. They had taken out a line of credit and spent a good portion of the home equity over these past few years. 2. Instead of transferring their equity from house one to house two, they were planning to spend the rest of it on renovations to the new house. Which means their new place will be almost 100% borrowed money, leaving them vulnerable or even underwater if we see another housing market correction. Here is the main problem: their lifestyle is pretty much an exact opposite of the MMM way. They consume restaurant food, on average, 7 days a week. They spend thousands per month on daycare. They buy new stuff almost every day for the adults and children alike. I could go on, but in short, for the last few years they have probably been spending even more than they make. I have tried to speak with them about financial planning, but they really do not want unsolicited advice – particularly from their parents. I should also mention that they are very intelligent, kind and wonderful people. So, are we crazy to try and help? Thoughts? Concerned Captain  . Dear CC, First of all I hear you! I can imagine your situation perfectly and I can see how frustrating that would feel.  If it’s any consolation at all, you are in very good company because a similar story plays out across the world thousands of times every day. In fact, it’s so common that there are several age-old pieces of wisdom which address it: “Never Lend Money To A Friend (or Family Member)“ “If you do lend money to someone, think of it in your mind as a gift and kiss that money goodbye in advance.” You can still structure it as a loan and encourage repayment, but this way you won’t throw away the relationship along with the money in the event it doesn’t happen. “Did you ever notice how banks will only lend you money after they carefully verify that you don’t really need it?“ . With all that in mind, let’s dig into your situation a bit more. First of all, as Mr. Money Mustache I may need to set aside my own opinions because they won’t help in this situation. But just to get them out of my system: “WHAT?!? I can’t believe these people are buying anything other than potatoes, let alone doing $100,000 of renovations and living like multimillionaires in a situation where they are in multiple layers of debt and getting help from retired parents to pay the monthly bills!? and AAAUUUUGGGHH!!! With all due respect CC, why did you get into this arrangement in the first place? Adult children don’t need money from their parents except maybe in the case of severe medical emergencies!!!” Okay, whew. That’s just me, and it’s one of many reasons I don’t even talk about money with friends and family members unless I know they already have the same philosophy as I do: that debt is an emergency, and thus you don’t spend money until you’ve actually got it. On top of that, I’m a big fan of the idea of preparing for parenthood in advance, if you are young enough to have this luxury. In other words, do the 12-hour days and buckling down and hardcore saving in your 20s as a gift to your future self. That way, when you start a family around 30, both parents can afford to work part-time and share the burden of the real hard work: babies. With all that off my chest, now for some more practical ideas: In reality, your situation is not the end of the world, because everybody is going to be just fine in the long run, and family relationships are much more important than a few dollars here and there. On top of that, you’ve made this gesture from a position of love and generosity, which is the best reason to do anything. What it really sounds like is that the two sides have a

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[ad_1] Tesla forecasts 2022 growth above 50%, despite supply chain challenges [ad_2] Source link

[ad_1] The National Restaurant Association of India (NRAI) welcomed the decision to lift the weekend curfew in Delhi and said it will provide much-needed survival support to the restaurant industry in the national capital. However, it urged the Delhi government to lift the night curfew and allow full operating hours to revive the beleaguered restaurant sector and reduce overcrowding while preventing further job losses. “On behalf of the industry, I profusely thank Delhi Chief Minister Arvind Kejriwal and Lieutenant Governor Anil Baijal for allowing restaurants to reopen with 50 per cent capacity and lifting the weekend curfew in Delhi. “This will definitely provide the much-needed oxygen support to the restaurant industry in Delhi for survival,” NRAI President Kabir Suri said. He also urged the Delhi government to lift the night curfew and allow full operating hours “which would not only revive the beleaguered sector but also reduce overcrowding and prevent further job losses”. The Delhi Disaster Management Authority (DDMA) on Thursday decided to lift weekend curfew and the odd-even system of opening non-essential shops in the city besides allowing restaurants, bars, cinema halls and theatres to reopen with 50 per cent capacity, given the improving COVID-19 situation. The decisions were made at a DDMA meeting headed by Lieutenant Governor Anil Baijal. [ad_2] Source link

[ad_1] Use of the cash window for delivering mortgages to Fannie Mae and Freddie Mac was disrupted in a big way over the course of last year as lenders reacted to expectations that a cap on cash transactions was slated to go into effect by the start of 2022. Even though the cap was suspended in September of 2021, the wheels were already set in motion for larger lenders, particularly nonbanks, to convert their agency loan-sale pipelines to favor swap transactions with government-sponsored enterprises (GSEs) Fannie and Freddie. The volume of mortgage deliveries switching from the cash window to security swaps last year is huge, according to data provided by mortgage-data analytics firm Recursion. And it’s not likely to reverse course any time soon, predict market observers, such Brian Landy, managing director of Amherst Pierpont Securities. As far as implications for the broader mortgage market, Landy said the shift from the cash window to swaps might be an overall plus, given price execution is generally better for larger lenders engaging in swap transactions. He also said lenders utilizing swaps may have more freedom to pursue loan-related innovation.  Landy explained that lenders selling their loans through the cash window can become “reliant on what the GSEs recognize as being worth a pay-up.” By contrast, a lender selling loans to the GSEs via securities swaps has more freedom to “identify collateral they might think will perform better.” “You just need to find a particular investor that agrees with that and is willing to pay a little bit extra,” Landy said. “So, I think that is where not going to the cash window should be better for innovation.” Landy added that the cash window still serves as a great loan-delivery platform for many smaller lenders who don’t have the volume to justify setting up the infrastructure to handle securities swaps. It also will continue to serve as a “backstop” liquidity channel for all lenders, he said, in the event of a future market crisis “like we had two years ago” during the onset of the pandemic. Fannie and Freddie provide two vehicles to lenders for delivering loans to the agencies. They can sell the loans for cash through the so-called cash window, or they can swap the loans for agency securities backed by the loans. The cash window works well for lenders who have not set up the backroom operations to deal with swap transactions and the sale of those securities to investors. The  Federal Housing Finance Agency (FHFA) last January announced plans to cap the volume of loans sold to the GSEs through the cash window. That cap was set at $1.5 billion per lender over a trailing four-quarter period — or $3 billion on a combined basis across both agencies.  The cap wasn’t supposed to become fully effective until January of this year, and it was suspended months prior to that effective date. Still, many larger lenders who feared breaching the pending cap were forced to react well in advance of the announced deadline in order to prepare adequately for the changes required, according to Landy and Ron Haynie, senior vice president of mortgage finance police for the Independent Community Bankers of America (ICBA).  “The GSEs were pretty aggressive in telling their sellers [the lenders] that they were going to enforce the cap, so they had to put things in motion because it’s not like flipping a switch,” Haynie said. “You’ve got to set up trading lines. If you’re a nonbank, you have to get approvals from your warehouse lender.  “You’ve got to get approvals from the GSEs themselves. You have to get a different kind of contract. There’s a lot of things that go into play when you decide to utilize an MBS [mortgage-backed securities swap] execution versus cash.” Haynie added that the move away from the cash window as a primary loan-delivery tool can be beneficial for larger lenders “doing over a billion dollars a year in production.” For smaller lenders, however, the price execution may work better via the cash window. “Bigger producers are going to gravitate toward utilizing swap execution,” he said. “That’s the most efficient for them, and they get the best price execution by doing that,” Haynie explained. FHFA’s announcement of the planned cash-window cap simply accelerated that shift. “When a [lender] makes an investment like they had to make, to be able to sell securities versus selling loans for cash for the bulk of their pipeline, they’re not going to flip back and forth,” Haynie added. Although Fannie’s cash-window volume is eclipsed by Freddie’s volume, both GSE’s have experienced similar declines in cash-window use since the cash-window cap was announced by FHFA in January last year and later suspended, according to Landy and Recursion’s analysis. “Unfortunately, only Freddie releases this information [in full],” said Richard Koss, chief research officer at Recursion. “Fannie does not. …We have some data from Fannie on cash loans, but it is incomplete.” What the Freddie data shows is clear, however. Mortgage lenders, particularly larger nonbanks whose loan production was likely to exceed the proposed cash-window caps, have retooled their operations and infrastructure to engage in swap transactions. “We have seen the [overall] cash share [compared with swap transactions] experience a dramatic decline in deliveries from 60% at the end of 2020 to 30% in Q4 2021,” states a January blog post on Recursion’s website. Recursion’s data reveals that starting around June to July of 2021, the share of loan deliveries through Freddie’s cash window declined drastically, mirrored by a large increase in loans delivered via swap transactions. This trend was most pronounced among nonbanks. Recursion’s analysis of loan-selling activity across both the cash window and swaps shows that in January 2021, the month the FHFA announced it would be imposing a cash-window cap, the share of deliveries to Freddie Mac by nonbanks via the cash window, versus swaps, was nearly 70%, compared with banks at 39%. As of December 2021, the nonbank cash-window share had plummeted to 29%, while the share of cash window deliveries by banks stood at 27%. — again, compared with the share

[ad_1] The post The Debt Snowball Method: How Does It Work? appeared first on Millennial Money. The debt snowball method is a debt repayment strategy popularized by Dave Ramsey. It uses psychology to motivate you into paying off your debt faster.  If you need a kick in the butt to get saving and pay off what you owe, the debt snowball method might be an effective solution for you. But it can end up costing you money in the long run. If you’re already motivated to pay off your debt and want to get on with achieving financial freedom, you’re better off using another strategy, such as the debt avalanche method. In this guide to the debt snowball method, we’ll explain how it works, its benefits, and its drawbacks. How Does the Debt Snowball Method Work? With the debt snowball method, you focus on paying down your debt balances in order of size, starting with the smallest. This helps you build momentum. While using the debt snowball method, it’s important to keep making the minimum payment on all of your other debts at the same time. Once you pay off your smallest debt, you put the money you had been allocating to it toward the next-smallest balance. You repeat this process until all of your debt is paid off. Because you keep rolling your money to pay off larger and larger amounts of debt, it’s like rolling a snowball—hence the name. The joy of eliminating debt balances one by one keeps you motivated to use this method until you have a clean balance sheet. However, there’s a big problem with the debt snowball method. Because you’re prioritizing your lowest balance first, rather than your high interest debt, you lose money to interest charges. How Do You Use the Debt Snowball Method? Before you figure out how much money you want to put toward paying down your first balance, make sure that you have enough money in your budget to cover the minimum payment for each of your debt accounts. Then, break down your debts. Go through all of your debts and rank them from the smallest balance owed to the highest. The smallest debt will be your first target. We recommend keeping track of your balances either in a notebook or—if you’re an Excel lover—in a spreadsheet. Every month, make your minimum payment for every debt, regardless of size (after all, the last thing you need is a dip in your credit score).  Figure out how much extra money you can allocate each month toward paying down debt. To pay your balances off even faster, you might want to pick up a side hustle or two and put your earnings toward the cause. Now, pay that extra amount toward the smallest debt until it’s paid off. Once you’ve kissed that balance goodbye, make sure to draw a big red line through it in your notebook or delete that spreadsheet row. Feels so good! Next month, just roll the extra money you were putting toward the smallest debt (including the minimum payment) into the next balance on the list. Keep on going until you’re debt-free. An Example of the Debt Snowball in Motion To give you an example of how you’d work the debt snowball method, let’s use my imaginary friend Lolly. Here are Lolly’s debt accounts: Credit Card A: $500 (with a $50 minimum payment) Credit Card B: $2,000 (with a $100 minimum payment) Car Loan: $5,000 (with a $300 minimum payment) Student Loan: $30,000 (with a $400 minimum payment) After checking out her budget, Lolly decides she can afford to allocate $1,200 to a total monthly payment toward her debt. At the start of the debt snowball process Lolly owes $850 toward minimum payments. That would leave her with $350 to put in extra. The first month, she pays off all of her minimums and applies that $350 to Credit Card A, her lowest balance. Because she has also paid the credit card issuer $50 for the monthly minimum payment, she now owes only $100 on that card. The next month, she pays Credit Card A off and puts the $300 left over into Credit Card B.  The month after that, because she no longer owes money on Credit Card A, she can allocate the $50 she was paying every month as a minimum to paying off Credit Card B.  Rinse and repeat. Debt Snowball Method Advantages This biggest advantage to this method of debt repayment is the motivation you receive from crossing debts off your list. Because it’s easy to see the progress you’re making, you’ll get a huge psychological boost. You’ll be confident that you’re capable of paying off debt.  And because you’ll feel like you have more control over your financial situation, you’ll eliminate stress and worry. That makes the debt snowball method a good choice for those of us who stay up at night worrying how we’ll ever pay all our credit card debts off. (I’ve been there.) It may even motivate you to find additional ways to earn money—either by picking up a side hustle or by finding a steady stream of passive income. Debt Snowball Method Disadvantages Hands down, the biggest disadvantage of using the snowball method is that you could end up paying extra money in interest over time.  That’s because this method of debt repayment involves starting with your smaller balances first, rather than with the credit card or personal loan with the highest interest rate. Your most expensive debts might drag out, accruing extra income charges you might not have had to pay if you had tackled them first. If you carry high interest rate credit card debt, the debt snowball method may not be an efficient way to pay off what you owe. Instead, you might want to consider using the debt avalanche method. How Does the Debt Avalanche Method Work? In contrast to the debt snowball method, which prioritizes small debt, the debt avalanche method involves paying

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