The safe-deposit box makes a comeback
Here are three of the week's top pieces of financial insight, gathered from around the web:
Beware of the cash-out refi
"Cash-out refinances are gaining popularity again — and are still dangerous," said Keith Jurow at MarketWatch. These modified mortgages are when "the borrower pulls out some of the equity in the house by taking out a new mortgage larger than the previous one," and keeps the cash — essentially using the home as a piggy bank. Between 2005 and 2007, "$3.1 trillion in cash-out refis was handed to homeowners." When the bubble burst, "droves of borrowers defaulted," and cash-out refis largely disappeared. Now they've suddenly skyrocketed, and 82 percent of homeowners who refinanced in the last quarter of 2018 took cash out. "Lenders and borrowers alike have apparently learned little from the bubble-era excesses and subsequent crash."
Government impersonation scams
A con artist posing as an FBI agent for 50 hours of phone calls over three days got a woman to part with her life savings of $340,000, said Sarah Krause at The Wall Street Journal. The scammer gave Nina Belis, a nurse in her 60s, "his badge number and a story about how her identity had been compromised." Having gotten her to listen, he spun his story in three days of almost nonstop phone calls and texts, convincing Belis that she would need to get a new Social Security number, cooperate with the "investigation," and move her savings into "government-protected accounts." While Belis lost an unusual amount of money, experts say that "government impersonation scams" routinely snare thousands of people. In just the first nine months of this year, regulators received "more than 139,000 reports of fraud in which people claimed to be from the Social Security Administration."
Safe-deposit boxes back in vogue
Anxious wealthy investors are turning to old-fashioned safe-deposit boxes, said Benjamin Stupples at Bloomberg. "For some, it's the threat of a global recession." Others "are concerned about natural disasters." The rich are scrambling to secure "metals, cash, and cryptocurrency," even as banks in the U.S. are closing branches and opting not to install safe-deposit boxes in many new ones. Some have turned to nonbanks offering vaults, such as Sincona Trading AG, "with more than 1,000 safe-deposit boxes for rent in central Zurich." Another stronghold in central London "resembles a private club, with wood-paneled walls and an ornate fireplace." An "apartment-size" storage space there costs $3.2 million a year.