FINRA Investor News
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Investor Alert
Betting the Ranch: Risking Your Home To Buy Securities With a rising stock market, record low interest rates, and large gains in home value, some investors have taken out new mortgages, refinanced, or obtained line-of-credits secured by their homes for the specific purpose of investing in securities. The hope is that the investment will not only pay the mortgage, but also generate additional income. Unfortunately, it doesn't always work out that way. Learn about the risks involved in playing the market with the equity in your home and why investors who bet the ranch could lose it.
News Dispatch
NASD Charges Three Brokers with Suitability Violations for Recommending Investment Purchases Using Mortgage Proceeds NASD announced that it has taken separate enforcement actions against three brokers for making unsuitable recommendations to customers, urging them to purchase investments using proceeds obtained from cash-out home mortgage refinancing. Read the News Release.
Past Issues of Investor News Available
In response to numerous requests, previous issues of Investor News are now available.
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Investor Alert
100% Mortgage: The Low Down on No Money Down Don't have the cash for the down payment on your dream house? At some brokerage firms that offer up to 100% loan-to-value ratio mortgages or pledged-asset mortgages, that's not a problem. In lieu of a down payment for a mortgage, customers can pledge their stocks, bonds, mutual funds, and other securities. While brokerage firm Web sites and brochures often tout the advantages of 100% mortgages, such as allowing investors to avoid private mortgage insurance or liquidating their securities, they may overlook or consign to the fine print the risks associated with these mortgages. Before you decide to apply for a 100% mortgage, make sure you understand the risks.
Tools You Can Use
Mutual Fund Expense Analyzer Now Available for Securities Firms NASD is making its mutual fund expense analyzer available without charge to securities firms for use on their intranets as a tool for brokers or on their public Web sites for use by their customers. Because fees and expenses can vary widely from fund to fund, NASD developed this expense analyzer to help investors and brokers compare how sales loads, fees, and other expenses can impact returns depending on the investment amount, holding period, and characteristics of specific funds and share classes. The expense analyzer is easy to set up. Firms do not need to download any software to install the analyzer and minimal IT support is needed. To register or learn more please visit our Web site.
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