Paperwork Issues Have Halted Foreclosures In Only 23 States

You may have heard about the Ally Bank employee who admitted that he signed off on foreclosures without actually verifying who owns the mortgage and the amounts owed. As a result, thousands of foreclosures have been stalled until the mess can get sorted out.

There were similar happenings at Wells Fargo and JP Morgan Chase which have resulted in the mortgage giants having to stop the foreclosure process until the documents can be sorted out. Furthermore,  recent news about so-called “foreclosure mill law-firms” who regularly submit false documents on behalf of the banks to “speed up the process” has also come to light.

It is clear that the fraud that precipitated the foreclosure crisis is now rife within the foreclosure process itself. There has been little accountability pressed on the banks and so far, they’ve gotten away with hundreds of thousands of foreclosures, of which a significant percentage may have been completed fraudulently.

To their credit, many state governments have acted quickly to enact laws that demand the lender make sure it has the right to foreclose and even if it does, that foreclosure must be the last resort step. However, some Federal action to impose at least a 90 day moratorium on foreclosures nation wide would help in making sure that more fraudulent foreclosures take place and that more borrowers have the time to try and save their homes.

How Many Credit Cards Are Too Many?

There is no hard and fast answer for this question. It is true that lenders look at open credit lines as a temptation to get into more debt, but it is far more important to look at your debt-to-income ratio than just your total number of credit cards. In fact, your debt- to- income ratio can tell you if you, as an individual, are carrying too many credit cards.

Your debt-to-income ratio is your total amount of debt divided by your income. To be safe, this number should never be greater than 25%. When you apply for a loan, the lender may look at your credit file and take all of your available credit, even if you haven’t used it, and do this calculation to see what your debt-to-income ratio could become should you max out all of your credit cards. If the number is greater than 30%, then the lender will likely consider you a higher risk.

You can do this calculation yourself and if your debt-to-income ratio, with all of your credit lines maxed out is greater than 30%, then you probably are carrying too much plastic. You should consider closing some of your open accounts. Be careful, though, not to close your oldest credit accounts. Doing this will negatively affect your FICO score since account age is one of the influencing factors.

Walking Away To Better Times

Much ado has been made about “walking away” from your mortgage by the financial services industry and the government. They say that it is wrong, that you signed a contract when you bought your home and you should honor it. They promise dire consequences ahead for you if you just walk away and hand your lender the keys to your home.

Homeowners walking away from their homes certainly is a problem for the banks: it causes them to have to face some serious losses and is a gigantic reality check. Banks don’t like reality checks much…they love playing with their funny money.

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Warning To All Capital One Customers

Capital One will apparently charge you a late fee if your payment is made past the payment cutoff time, regardless of time zone differences. For example, one lady was charged a late fee because she made her payment 45 minutes after the cutoff time, which was 5PM. However, she’s on the West Coast and Capital One’s payment center is on the East Coast.  Going by her time zone, her payment was on time.

It appears that Capital One is taking advantage of a major loophole in the CARD Act, which does allow credit card companies to set a 5 PM cutoff time for accepting payments, but fails to specify that the cutoff time must be time zone neutral, meaning that payments will be counted as being made on time according to the time zone of the customer.

It should be noted that the government had to make it a law that the credit card companies must give you enough time to pay your bill, and that the amount of time had to be spelled out to the letter. The government should have therefore known that it would need to specify time zone issues as well.

Once again, you can count on the credit card companies to interpret the law in any way that best increases their profits. Fee income in the giant unregulated world that existed prior to the CARD Act’s passage has left the banks and credit card companies feeling entitled to screw their customers and make big bucks doing so.

Until the government acts, if it even will, to amend the law for these situations, be sure to make your payments in the morning that they are due, or if possible the day before, to avoid any chance that you’ll be screwed into paying a late charge.

When Five Days Late Equals Thirty Days Late

American Express apparently starts counting the days you’re past due from the date your billing statement is printed instead of the date your payment is due. This policy seems to fly in the face of the CARD act rules which state that credit card companies must give you at least 21 days from the time you receive your bill to make your payment.

One reason they might be getting away with this is because, according to Latoya Irby:

Fortunately, this is just an issue of phrasing and doesn’t impact late payment penalties or credit bureau reporting. It can just scare you into thinking your balance is seriously delinquent when it’s only mildly delinquent.

Another reason might be that American Express is a “charge” card rather than a credit card. There may be loopholes in the law that allow this.

Still, this policy smacks of operating in bad faith and, really, I do not see how a company can expect payment on the day the bill is printed when you haven’t even had a chance to receive your bill!

Perhaps AMEX customers ought to complain to the FTC.  American Express is clearly violating the spirit of the CARD Act, which aims to restore fairness to credit card company policies.

Avoiding The Debt Trap

Not all debt is bad and most people can’t avoid accumulating some debt, unless they’re heir to some massive fortune. Having said that, some debt is just plain toxic and should be avoided like the plague.

Payday Loans/Cash Advances

Payday loans let you borrow money from your next paycheck. They’re meant to act as a stop-gap when you have an emergency expense that is outside your budget. However, payday loans are a deadly trap because of the way they’re structured and the expensive costs associated with them. For one thing, they’re extremely short term and must be paid back, in full in one to two weeks.  If you’re already living paycheck to paycheck,  you’re almost certain to be short after paying back the payday lender and need another advance from your next check, plus an additional fee to last you until your next pay day. This is how payday lenders make their money and how the payday debt trap closes.

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Moving For A Chance At Prosperity

Well, my husband and I moved 2,300 miles, from Lancaster, CA, to Winnipeg, Manitoba, Canada for the chance at a better life.  It is difficult for me, as an American, to say this, because I was always taught that people came to America to look for a better life.  For a long while, that was primarily true: many immigrants came for the promise of the American Dream, and many have achieved it.

However, times have changed. The last forty years have seen a weakening in strong labor, the rise of outsourcing, and the big box stores that crowd out the smaller competition. Wall Street has been given free reign to pursue astronomical profits as their due. All of these things, in combination, have made the American Dream nothing more than a myth. Today’s generation will be less prosperous than were their parents, for the first time in decades.

The pundits and politicians alike tell us that this is the “new normal” and we’re just going to have to live with diminished expectations. I hear this and wonder where the America I grew up in went? Where is that can-do spirit that allowed us to put a man on the moon in a single decade? Where did the strong leaders like FDR go, who regularly went before the nation to remind us that “we have nothing to fear but fear itself?”

Well, my husband and I have had enough of it. We’ve had enough of watching our savings and hard work go down the drain as we struggle to make ends meet without work. We’re sick of the politicians playing games with the unemployment lifeline that so many Americans depend on today, and we’re sick of the giveaways to the banks and other vested interests who ruined the economy in one fell swoop.

So, yes, I moved out of the United States to Canada in search for a better life. And guess what? We are on our way there. My husband found work not three weeks after we arrived and we are looking at buying a house here. The economy is thriving…no dearth of jobs…and healthcare that you don’t have to mortgage your firstborn to use.

I’d like to hear from you. How many of you have moved elsewhere (even just to another state) in search of a better future? How many of you are considering it?

If Banks Can’t Do Subprime, They Won’t Lend At All

A full third of Americans cannot qualify for a mortgage these days, recent data from Zillow.com and MyFico reveals. Would-be homeowners with credit scores at 620 or below are not being approved for traditional 30 year mortgage, even when they come with a healthy down payment of 25% or more.

In the days of glory before the housing bubble burst, these folks would have been steered into dangerous subprime loans that we know today were doomed to fail. Despite the fact that in most cases, this same group of people would have done fine with a conventional loan,  the banks wanted to increase their profits to extreme proportions.

Today, with foreclosures at record numbers and some banks being left holding the bag, most banks do not want to risk lending to people with low credit scores, all other things being equal. This is particularly troubling since many Americans have seen their credit scores take a hit from the bad economy. The housing market is weak enough, and banks not lending is a major factor in the continuing sluggish growth of the economy.

Bank Of America Lagging Behind In HAMP Modifications

Recent data released by the government reveal that Bank of America, for all its touting as a loan modification leader,  is the least responsive to beleaguered homeowners in need of mortgage assistance.

The numbers show that Bank of America has offered only 24% of homeowners whose HAMP modifications were cancelled alternative modifications while the big eight servicers have offered 44.5 % of this group alternative modifications. Further, where trial modifications have been denied, the big eight have offered 33% of these folks alternative modifications while Bank of America has offered only 11% of this group alternative modifications.

As for HAMP modifications, fifty percent of Bank of America’s trial modifications are still ongoing after six months even though the government specifically has ordered the banks to either convert the trials to permanent modifications or cancel them in three months. Only 26% of all Bank of America’s trial modifications have been converted to permanent ones.

Bank of America talks a good game and releases its own figures just prior to the time when the government releases its numbers. While Bank of America does have the greatest number of permanent modifications, this figure is misleading since it has the largest number of eligible loans out of any other servicer.

Elizabeth Warren Appointed Interim Head Of CFPA and More!

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President Obama has finally done something that makes sense! He’s given Elizabeth Warren the job as interim head to establish the agency. He has also made her a special advisor answerable only to him to set this up properly. What this means is that ole Timmy Geithner, the bankers’ best buddy, won’t have too much say over the agency or Ms. Warren’s stewardship.

I’ve been hoping for this, as so many other Americans have across the United States. Ms. Warren is a tireless consumer advocate with a pragmatic no-nonsense approach to finance. The banks don’t like her because she wants to close the loopholes in the laws that allow them to take advantage of those least able to cope with financial difficulties.

To be sure, Ms. Warren does not advocate reckless spending and living above one’s means. All she wants to do is bring back the concept of fairness to consumer finance.  She also understands that what has happened to most Americans in the last thirty years is not that we’ve spent our way crazy, buying big screen TVs and McMansions. She understands that the average middle class family has slowly been leveraged out of the American dream by the fixed expenses, those expenses which cannot be budgeted away.

She wants to do away with credit card and mortgage contracts that are hundreds of pages long. She wants consumers to be educated about what they’re signing when they get a credit card or a home loan. She wants them to understand and truly be able to compare between financial products and make educated decisions for themselves. Right now, there is no way they can do that, because really, who is going to read through pages and pages of a credit card contract that even the credit card company representatives can’t understand let alone explain?

So, hurray to Elizabeth Warren!

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