Credit card borrowers will see minimum repayments double under new proposals

posted by Shawn Gao

The move is part of a package of measures announced by the Government to tackle consumer debt amid the recession.
It said forcing credit card companies to raise the minimum monthly repayments would encourage people to focus on paying off their debt.
The minimum amount that the majority of companies currently require card holders to repay should be raised from just 2 per cent of the amount owed, to 5 per cent, it suggested.
The increase could cut the time a borrower takes to repay a £1,800 credit card debt to ten years – compared with 40 years at 2 per cent. It could also reduce the amount repaid by almost £4,000, according to the Department for Business, Innovation and Skills.
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How to Build Your Credit Score in College

Posted by Mary Clare McGraw

First, a good way to get started is to open a checking and savings account. If you are going to take out a small loan, while still in college, try to co-sign on the loan with someone who has great credit. You basically get to piggyback on their good credit. The thinking is that if someone with great credit is willing to cosign with you, and you pay your bills on time each month, you’re probably very credit worthy. It’s like getting someone to vouch for you. It’s an excellent way to build credit extremely fast. You can try a student credit card but make sure to be careful about the card you sign up for. Don’t take a credit card offer that you get in the mail because they can charge as high as 21% interest! Signing up for a store credit card at your favorite store could be a way to ease into building your credit by only having to pay a bill when you shop at that one store. It minimizes the amount of bills you will have to deal with at first and it is more difficult to rack up a large amount of debt at one store than at various stores you may shop at in one day even. Getting a loan is a good way to build credit in college, even if it is subsidized and there is a grace period until after you graduate. Lastly, if you have a credit card, be sure to use it every month but try not to charge more than 30% of your credit limit. Keeping your balance below this amount shows creditors that you are responsible with credit and are not very likely to overextend yourself financially.

GoCollege.com

Rising Tuition Cost and How To Handle It

By Leah Gorham

According to a survey released by the College Board Tuesday, tuition and fees at private 4-year schools rose 4.4% in the current school year to $26,273. Charges at public 4-year universities spiked as well, over 6% for both in-state and out-of state students. There are several reasons why tuition costs are going up. Private schools have seen their endowments shrink and public schools are suffering from a drop in state funding, which decreased 5.7% per student this year. Moreover, the availability of financial aid isn't keeping up with these climbing costs. Grant funding grew only 4.7% in the 2008-2009 academic year. As a result, student loans are also up, with total borrowing increasing by 5% between the 2007-2008 and 2008-2009 school years.

Looking at these numbers we may wonder, why even during a recession do college tuition rates continue to rise and where does all the money we pay for tuition really go? At many colleges with tuition rates on the rise, management is more similar to a political environment then that of a private corporation. In other words, colleges are not good at cutting programs when they add. For example, it is hard to cut faculty members because of tenure and many colleges also spend more on nonfaculty salaries than it does on pay for the teachers.

There are several strategies one can use to make paying for college a little bit easier on the wallet. It is important to use savings strategically, such as pulling money out of a 529 savings account before borrowing, even if the account has been devalued over the past year. It is also important to borrow smart by using Stafford loans and PLUS loans and check for available tax breaks for paying college tuition. Also, always encourage someone applying to college to apply to several safety schools and to apply to two or three schools with average GPA and SAT scores lower than theirs. They may be able to get more financial aid from these schools, who are looking to boost their reputation by attracting smarter students.

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Americans expect to focus on personal finance in short term

Posted By: Sara Sindelar

A new survey finds that Americans plan on continuing to increase their savings and investments for the near future.

The survey from First Command found that Americans have less money in their savings accounts and are still paying down their debts at about the same rate as in previous months.

The average amount of money in a short term savings account was said to be $860 in September, down from $1,169 in July but up from $787 in August.

The financial institution noted that more consumers have been applying for debt consolidation loans recently, further adding to the widespread emphasis on personal finance.

In a potential warning sign to the retail industry, the survey also found that 57 percent of consumers plan to scale back their holiday shopping activities this year. This could tie in with a trend where the pace of the economic recovery is held back even as Americans continue to improve their overall personal finances.

By Bill Laforme

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Financial games: It can pay to play

Posted by: Nicole Nelson

Written by:Eileen Ambrose

One of the big hurdles to teaching personal finance to children and young adults is how to do so without boring or confusing them with talk of compound interest and annual percentage rates.

Now, there's a growing effort to reach kids on their own turf: online games.

More than 70 percent of people play some form of games, a percentage far higher among teens. Gaming experts see this as an opportunity to pack critical lessons into a fun activity.

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The good and bad of chapter 13 bankruptcy

by Michael Rivezzo


Filing Chapter 13 bankruptcy can actually be beneficial to you if you have failed redundantly to pay off debt . Chapter 13 can help people that still make a income and who want to avoid a foreclosure, while still being able to pay off some of their debts. This is why Chapter 13 is also called the reorganization bankruptcy.

Some of the positives of Chapter 13: you can still be able to keep real estate and some personal property. You can pay back some or all of your debt with a payment plan. This usually take 3-5 years to completely pay back the creditor. Creditors also stop calling and any legal action brought against you is nullified.

There are still some bad parts of Chapter 13. Your credit score will drop 200-250 points. The bankruptcy will stay on your report for 7 years. There is also fees that need to be paid regularly.Most people will not even qualify for Chapter 13 because there strict criteria for eligibility. You must have a regular source of income, while your gross income should be greater then the State median for your family size.



http://www.brainerddispatch.com/stories/101709/new_20091017032.shtml

http://blogs.wsj.com/economics/2009/10/23/qa-what-the-middle-class-recession-means-for-bankruptcies/

http://toledoblade.com/apps/pbcs.dll/article?AID=/20091002/BUSINESS07/910020354/-1/BUSINESS05

Bankruptcy Options - 7, 11, and 13

By Joseph Devine
Posted By Rico K Setyo

Bankruptcy: the word alone may send chills up your spine. But so should the words "debt", "foreclosure", and "repossession". While bankruptcy may seem undesirable, intimidating, or downright embarrassing, in some instances bankruptcy can be a useful tool and may save you from a life mired in debt. Bankruptcy under chapters 7, 11, and 13 are available to both individuals and businesses, each with its own advantages and disadvantages.

Chapter 7

Chapter 7 is a liquidation bankruptcy. This means that, as an individual or business, when you file for Chapter 7 you agree to have some of your property liquidated to pay off your debts. Businesses that file for Chapter 7 will be dissolved and the assets liquidated to creditors. For individuals, some assets may be exempt, such as your home, tools of your trade, and retirement accounts.

The laws for exempt assets vary from state to state. All nonexempt items, however, are at risk of being liquidated under Chapter 7. While you may lose a significant amount of property, your debts will be immediately resolved and you can quickly begin to restructure your finances without the burden of debt.

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Personal Bankruptcies

Written by Jane Birnbaum

Posted by Stefanie Marty

Bankruptcy is a procedure allowing debtors, both households and businesses, to eliminate some bills and repay others over time.

While bankruptcy is generally seen today as a protective measure for debtors, its ancient roots are punitive, a remedy on behalf of creditors. Early United States bankruptcy laws did not provide for a discharge of debts by debtors, only a liquidation of their assets. The roots of modern American bankruptcy are found in Congress’ Bankruptcy Act of 1898.

The Department of Justice’s United States Trustee Program oversees administration of bankruptcy law. There are five chapters of United States bankruptcy law, which apply to different situations:

Chapter 7: Used by consumers and businesses, it eliminates many debts such as credit card and medical bills not secured by collateral, in exchange for the liquidation of assets not protected by federal or state exemption laws.

Chapter 13: A debt reorganization plan chiefly used by individuals who want to keep possession of assets such as homes and cars by becoming current on delinquent loans and repaying unsecured debts according to their means.

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Corporate Bankruptcy

By Adam Lindheim

With the crashing of the American economy more and more corporate companies are filing for bankruptcy. In the first 5 months of this year 100 public companies filed for bankruptcy, the highest number since 2002. A company or individual files for bankruptcy when they pay their bills to their creditors in a timely fashion. Their debts outweigh their assets, and in these cases they turn to bankruptcy courts for protection. The courts will either liquidate their company or reorganize their business.

Bankruptcy is a legal procedure that is used by the U.S. bankruptcy code when a debtor is not able to make payments to its creditors. Bankruptcy is used as a safety net as it gives companies protection from their creditors which can no longer demand to be paid once bankruptcy is declared. The majority of corporate bankruptcies filed are either under chapter or chapter 11 of the bankruptcy code.

A chapter 7 filing typically leads to a liquidation of its business. This implies that the company has no intention of continuing to operate and is planning to sell off all of its assets. Proceeds from the sale are distributed to creditors in the order of their priority. A chapter 11 filing usually involves company reorganizing its business through the bankruptcy process with the hope that it will survive. When a company files chapter 11 it shields them from a creditors demands for payments and from lawsuits while it restructures it finances. Contract terms between the debtor and creditor can also be rewritten under the bankruptcy codes, something that is not as easily done without a bankruptcy filing. During a chapter 11 proceedings, the debtors reorganization plan must be accepted by a majority of its creditors.

General Motors the nations largest automaker had 172.81 million dollars in debt and 82.29 billion dollars in assets, according to their recent bankruptcy filling. They are currently trying to restructure their company so they can eventually prosper once again. They hired the consulting firm AP Services LLC who charged GM 23 million dollars for 90 days of consulting work. Bankruptcy laws have allowed GM to protect itself from its creditors and try to bring back their company.

As the number of corporate companies in the U.S. that are filing for bankruptcy continues to rise and reach record numbers, investors need to be aware of where and how they invest their money. Companies need to be more ethical with their operations, and conscious of how their operations are going in order to avoid bankruptcy.

Source 1

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Fixing the College Credit-Card Mess

Posted by Nicholas Vanikiotis

Every year for the past six years, Representative Louise Slaughter (D-N.Y.) has introduced a bill designed to prevent students from taking on unmanageable amounts of credit. For six years, she has tried to alert Congress to the dangers of college student debt. And for six years, she has failed.

But this year may be different. With a Democrat majority in Congress and a growing number of college kids piling up debt that could haunt them long after college, credit-card companies are coming under increasing scrutiny, and Slaughter thinks she just might have the critical mass to succeed this time. "This Congress finally cares more about the interests of students than the interests of credit-card companies," says Slaughter.

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Obtaining a Loan without a Credit Check: Is it Possible?

Posted by: Laura Reginelli

Everyday commuting through bus or cab sounds little tougher and this Christmas, if you have decided to own a new car despite your bad credit history then car loans for credit check is considered as the best option. This alternative is much better than getting approved for a credit card with adverse, bad or no credit check. So, with easy monthly installment you can feel free to enjoy the Christmas in your own way.

The reason behind the approval of car loans no credit check is that lender uses borrower's car as collateral against the loan amount. On other hand, the unsecured option for availing a car with no credit check is little tougher to avail by the no credit check status borrower. The down payment by the borrower against the car loan gives a sigh of relief to the lender. This helps the lender to evaluate your repaying ability for paying the money back. So, it is recommended that borrower must pay as much as he can because it lower-down the stress of loan installment.

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How Far Is Too Far When It Comes To Collecting Debt?

Article by Katelyn Hayes

Post by Shawn Chandok

The grief of losing a child is unbearable enough, but as one New York couple found, keeping their dead son’s creditor’s at bay is ever more burdensome. According to this report on FoxNews.com, Roco and Laurie Crimeni are forced to relive the same pain they felt burying their 27-year-old son Vincent — who collapsed and died of a heart attack while playing softball almost a year ago — nearly every time the phone rings.

Why? Because creditors are demanding payment for the debts he left behind. Legally, though, these creditors have no right to do so. If there aren’t any assets left behind, and debts are in the deceased’s name only, family members are not required to pay. Yet this couple is being straight-up harassed over their dead son’s outstanding bills!

My heart goes out to them. They’re just trying to pick up the pieces of their lives, but they aren’t being given the opportunity to move on. Roco had this to say to MYFOXNY.com:

I’m afraid to pick up the phone in my own home,” he said. “That’s the hard part, to tell them my son is dead. How many times do I have to repeat it?”

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What happens to credit card debt after death?

By Dana Dratch

Posted by Ahmed Al-Salem

You can't take it with you, but do credit card bills follow you into the grave? Does that debt die with you? Or can it come back to haunt those left behind?

What happens to your credit card when you die?There's no one-size-fits-all answer. A number of factors, including where you live and who applied for the card, can radically alter the situation.

Here's the simple part: If the card was yours alone, with no joint account holders, the debt is yours alone, too.

When you die, your estate is responsible for paying off the balance. If the estate goes through probate, your administrator or executor will look at your assets and debts and, guided by law, determine in what order bills should be paid. Remaining assets will be distributed to heirs by following your will (if you have one), or state law (if you don't).

Read On

Housing Market Still Tough But There is Hope

Posted by Kenny Hernandez

Even though there has been a lot done to try and remedy the housing market, there are still impediments for potential home buyers. One big impediment is college loans. With skyrocketing cost of higher education, debt for young Americans is also seeing an increase. Furthermore, more and more students are seeking graduate degrees which also adds to the quantity of college loans accrued. With this amount of outstanding debt, many college graduates will refuse to take on more debt by taking out a mortgage.

However, there is still hope. There have been measures taken by the government to try and remedy the situation. Unfortunately, some of these measures have not been beneficial to everyone. There is a 3.5% down payment for most of the affordable government-backed home loans and a lot of people can not afford to make this payment due to the turbulent economic times. Nevertheless , there are certain areas in the country that have affordable housing. In the Detroit, Michigan area there are many places that are very affordable and in some cases selling at 10% of their appraised value.

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This weekend could be last hurrah for homebuyers' tax credit

Posted by: Scott Graulich

The federal government's first-time homebuyer tax credit is set to expire Nov. 30, but potential buyers hoping to take advantage of the $8,000 incentive who haven't already started the purchasing process might be out of luck.

"After this weekend you're pretty much toast unless you have a really good lender," said Kevin Doran, an agent with Windermere Real Estate.

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FTC Seeking Comments for 2010 Changes on Free Credit Reports

By Faye Mergel
Posted by Jonathan Tse



The Federal Trade Commission (FTC) is changing the way “free” credit reports are marketed. Federal regulators say changes will be in line with the new Credit Card Responsibility and Disclosure (CARD) Act of 2009. The bill was first signed by President Barack Obama on May 22, 2009 with the aim of protecting consumers from onerous fees imposed by creditors. CARD Act also aims at assuring that consumers fully enjoy their rights, including the right to a free credit report once in every twelve months.

Fair Credit Reporting Act (FCRA) entitles every consumer free access to his records with the three major credit reporting agencies (CRAs). The CRAs, Equifax, Experian, and TransUnion, are mandated by federal law to give consumers their free report once a year so they can assess their debt standings. This would help them make better financial decisions since it lets consumers know how well they are doing with their debt management.

However, FTC received several complaints from consumers who are misdirected from the FTC-backed Annualcreditreport.com. As noted by complainants, they were misdirected from Annualcreditreport.com and ended up in commercial sites which claim to offer free credit reports. But it is only after engaging in irreversible deals that they found out about fees charged along their records.

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Buying Your First Home

By Quang Nguyen



Buying your first home is the ultimate American dream for everyone. Many look at it as a financial decision, however, I suggest you to look at it as a lifestyle decision. If you picture yourself handling the responsibility of taking care of your lawn every week or if you picture yourself as just leaving the condo every night to hang out with friends will result in different housing options. Moreover, mortgage payments require you to save money for at least couple of years so your personality is definitely important when coming to rent or buy. In addition, real estate is immobile, so if you are the type of person who moves every year or the type who stays at one location for many year also counts toward the decision of buying a new home. The neighborhood is also very important since you would not live happily if you live in the wrong neighborhood and has to deal with issues everyday. The goal of owning a home should be for a happy lifestyle instead of a strong financial status.

So when you decide that buying a home is definitely your thing, please think twice on when to buy. Many people think that the real estate market is at the bottom and now is the best time to buy. However, that might not be the case, as the housing market is expected to be much lower. For example, in Miami, it is expected that price would continue to drop 29.9% by next June after it has already fallen 48% for the past three years. The same go for others locations, such as Las Vegas 23.9% and Phoenix 23.4% by June 2010.

When you do decide to buy a home, you really want to buy something special, something that would give your guests an awww when they visit. With the low price on real estate market, it is possible to get yourself that amazing house that you have seen on TV. In Redwood City, CA, a home with elevator and cliff-side setting and bended-roof bamboo originally costed $1.4 million; now you can get it for $1.2 million. In East Hampton, NY, with homes described as "synthesis or architecture, art and science" will take you $4 million. Or do you want to live in a castle? A 1930s cottage and stone castle in California is now on the market for $1.8 million. You want something exotic? How about a house on top of the volcano? With $750,000 and this baby in Newberry Springs, CA, will be yours. How about a lighthouse somewhere in New England like that movie? You can spend $2,873,000 to live in one of those in Deer Isla, ME.

References:

http://finance.yahoo.com/how-to-guide/personal-finance/12819;_ylt=AohAexNh03hSajStj2FjdhUJo9IF;_ylu=X3oDMTE2MzM2N29zBHBvcwMyBHNlYwNob3dUb0d1aWRlcwRzbGsDYnV5aW5neW91cmZp

http://finance.yahoo.com/news/Homes-About-to-get-much-cnnm-699910894.html?x=0

http://finance.yahoo.com/loans/article/107967/strange-homes-for-sale?mod=realestate-buy

Changes in the Banking Industry

Posted by Scarlett Lu

During a financial crisis it is important for banks to retain capital so they do not have to depend solely on the government when a financial crisis occurs. Government and central banks have put alot of money in keeping the financial system work. Retaining capital will reduce large bank's risk of becoming illiquid during a financial crisis.This will improve banks capital levels. Regulatory reforms and re-evaluation of the monetary, regulatory, and supervisory policy is needed to prevent another financial crisis. An authority should be created to help sustain the economy and dealing with failing financial firms. Financial institutions should discover the problems earlier before they mature over time.Global regulators state that banks have to improve their risk management and internal controls following the financial crisis. The report, called "Risk Management Lessons from the Global Banking Crisis of 2008" was created by global regulators to repost the progress of reducing financial risk.Regulators want to phase out programs that guarantee debt issued by banks so banks will be relying less on the government. The less banks reply on the government the more careful they will be in loaning out to risky customers. Regulators want to set up a 6 month safety net facility, even though it will be more costly. Under the 6-month facility, subject to approval, a bank's senior unsecured debt issued after October 31 would be guaranteed through April 30, 2010.

http://www.reuters.com/article/ousivMolt/idUSTRE59J3YR20091020

http://online.wsj.com/article/BT-CO-20091021-717400.html

http://www.reuters.com/article/companyNewsAndPR/idUSN2148823220091021

Home Buyer Credit Fraud

By: Zachary Pienkowski

Everyone knows that over the last year and a half the United States has gone through one of its most trying economic downturns in its history. One of the worst areas of commerce, and culprits of the problem, was the residential housing market. In an attempt to jump-start the residential housing market and encourage people to purchase homes, the government established a first time home buyers tax credit program. A program that has been seen as a success has hit its first snag. Congress is concerned that more than 19,000 people filed for the tax credit on their 2008 returns for homes that they had not yet purchased. This resulted in a potential loss of nearly $130 million in fraudulent tax credits. In addition to this the IRS has discovered claims of $500 million from 74,000 tax payers that had indications of prior home ownership. Due to the inability to electronically check the validity of any documentation, the IRS did not require tax payers to provide any documentation at all to verify the purchase of a home. Since the IRS has found out of the fraudulent claims they have tightened oversight of this process and will hopefully alleviate the problem of any unwarranted claims. Its of concern to Congress that this issue be resolved as quickly as possible because the program is scheduled to end within the next month and the housing market remains shaky. In an effort to continue to rebuild the economy there is talk to expand and extend the program, but concerns of cost remain the hurdle and it will be difficult enough to finance, let alone have to worry about fraudulent claims.

http://news.yahoo.com/s/ap/20091022/ap_on_go_co/us_homebuyers_tax_credit
http://news.yahoo.com/s/ap/20091022/ap_on_bi_ge/us_mortgage_rates_3
http://money.cnn.com/2009/10/21/real_estate/commercial_real_estate_bubble.fortune/index.htm?postversion=2009102210

S&P Cuts MBIA Unit To Junk On Structured-Finance Losses >MBI

Posted By Pete Hill

Standard & Poor's Ratings Services cut its ratings on MBIA Inc.'s (MBI) insurance unit to junk status, saying the weak economy continues to contribute to losses on the group's structured finance products.
Shares fell 3.5% to $7.95 in after-hours trading. The stock has doubled this year but is still down 40% from a year ago.
Credit analyst Damien Magarelli said losses on MBIA's residential mortgage-based securities and collateralized debt obligations of asset-backed securities issued from 2005 through 2007 could be higher than S&P had expected.
"However, the downgrade also reflects potentially increased losses in other asset classes, including but not limited to CMBS (commercial mortgage-backed securities) and - for other years prior to 2005 - within RMBS," he added.

Click here to read more

Your Powerpoint slides and Other important links – 10/20/09

 

Hello to the students of Finance 378!  Here are links to the powerpoint slides for chapters 7, 8 and 9.  Also, here are links to the material you should be familiar with regarding credit reports and bill collectors.  Make sure you download everything and study it.

Power point chapter 7

Power Point chapter 8

Power Point Chapter 9

Fair Debt Collection Practices Act

Fair Credit Reporting Act

How to dispute a credit report

Free Credit Report Scams Increase As Credit Crisis Gets Worse

By: Zachary Pienkowski

As the worlds economic crisis deepens more and more people are for the first time in their lives, having to deal with bad credit. And like a lot of average consumers, many of these people have never seen real copies of their credit report before. Once someone decides to try to increase their credit rating one of the first things they usually do is try to find out how to get copies of their credit reports.

This is where a lot of companies who are out to take advantage of the average consumer come into play. Just because you see advertisements all over the Internet, T.V., and radio about getting free copies of your credit reports doesn’t mean that there isn’t some sort of catch to it. Over 99% of the time when searching for a company that can offer you your 3 major credit bureau credit reports for free you will be asked to purchase some other kind of product or sign up for a credit monitoring service in order to receive your free credit reports.

But if you are being asked to pay for something else before you get to see your “free” credit reports than is it really free? That is the question that many people are asking themselves after signing up for a credit monitoring trial just to see their credit reports. Only to find themselves paying a monthly fee for a service they never really wanted just because they forgot to cancel their membership in time.

To continue reading more on this topic click here

Is CIT Next in the Line of Bankruptcy?

By: Sara Sindelar

CIT Group, Inc. is “a large American commercial and consumer finance company included in the Fortune 500 and the S&P 500 index. CIT's Commercial Finance business offers secured lending, leasing and factoring products.”

CIT is on the brink of declaring bankruptcy if they do not get bondholders approval for the $29 Billion debt exchange/swap. This is a swap of “unsecured obligations for new secured debt and preferred shares”, in effort to avoid bankruptcy.

There is a prepackage Bankrupt plan where bondholders will “receive 70 cents on the dollar in form of new 7% notes and 83.4 % of equity in reorganization” of the company. CIT has $75 million in assets which contributes to many small and medium sized businesses. CIT is a critical part of the supply chain of the retail industry and will have harsh affects on it if it declares bankruptcy. “A Collapse would ripple the ‘small and medium sized business who rely on the finance company to operate,” speaker from CIT.

It is stated that if CIT goes bankrupt it could be the 5th largest bankruptcy to date. Though, if bondholders approve the swap their $29 million debt could be reduced by 30%. The now CEO, Jeffrey Peek, has declared he will resign at the end of the year and there is a board in place to find his replacement. This bankruptcy could cause a major stir up in the economy and it is up to the bondholders to make the choice of the swap.


http://www.bloomberg.com/apps/news?pid=20601103&sid=adkNpcgSTTeo

http://www.boston.com/business/articles/2009/10/14/chief_of_troubled_cit_plans_to_resign/

http://www.bloomberg.com/apps/news?pid=20601103&sid=agRAQzb5M3cg

http://www.washingtonpost.com/wp-dyn/content/article/2009/09/30/AR2009093004993.html

American Real Estate Loses Appeal Globally

Posted by: Laura Reginelli

Despite plummeting prices, international interest in United States property cooled in the last year, according to an annual survey by the National Association of Realtors, a U.S. organization of property agents.

From May 2008 to May 2009 foreign nationals purchased an estimated 154,000 homes in the United States, down from 170,000 in the previous 12 months, the survey found. Twenty-three percent of the agents questioned reported at least one contact with an international client, down from 26 percent in 2008 and 32 percent in 2007.

But the study also reflected the continued importance of overseas buyers to the U.S. market. International transactions accounted for 9 percent of total business, unchanged from the previous year.

Click here to read more!

Real Estate Short Sales

Posted by: Janielle Viggiano

A real estate short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of buying the home from a seller, you purchase the property directly from the lender for a discount. Not all lenders will accept short sales, especially if it would make more financial sense to foreclose, therefore not all sellers or properties qualify for short sales. According to about.com, “The best properties to perform a short sale on are the houses that need lots of work and repairs because lenders will give you a bigger discount if they see they are "don't wanters" (2009).”

When considering purchasing a short sale, there could be potential drawbacks. For buyers protection, they should consider the following: obtaining legal advice from a real estate lawyer and to call a tax accountant to discuss short sale tax ramifications.

Many short sales do not get approved or fall through for numerous reasons. According to about.com, “Learn the step-by-step process to initiate a short sale, starting with the homeowner-borrower and moving through lender negotiations to the closing (2009).”

1. The property valuation analysis for a short sale
2. Contacting the lender for a short sale application
3. Writing the hardship letter for a short sale
4. Backing up the numbers with the short sale package
5. Elements of a short sale purchase agreement
6. What the lender does with the short sale package
7. Negotiating the short sale with the lender and going to closing

Sources:

http://homebuying.about.com/od/4closureshortsales/a/shortsalebasics.htm

http://www.foreclosureuniversity.com/studycenter/freereports/what_is_a_short_sale.php

http://realestate.about.com/od/realestateinvesting/tp/short_sale_go.htm

Coming Soon: Your Very Own AIG Condo

By: Jessie Bruyn

Why didn’t Geithner think of this?

The headquarters of American International Group is being turned into luxury housing. And the real-estate developer who bought AIG’s headquarters is about to make a killing on the project, says Fox-Pitt Kelton real estate analyst Robert Stevenson in a research note this morning.

The developer, Young Woo, is planning to turn the top 40 floors of AIG’s 66-story headquarters near Wall Street into pricey condominiums. Woo bought the building from AIG in May for $150 million. That translates into a per- square-foot cost of $105. Stevenson estimates Woo could sell condos in the building for at least $1,000 square foot. (Woo says he can sell the units for $2,000-a-square foot, but that seems high for all but the top floor units, which would command spectacular Manhattan views)

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Miami Insurance Agent Accused of $14 Million in Premium Finance Fraud

A Miami insurance agent was arrested for the second time in less than a month for stealing more than $14 million by submitting thousands of fraudulent premium finance contracts for fictitious policyholders, according to state officials.

Florida CFO Alex Sink said that her Division of Insurance Fraud (DIF) arrested Jose V. Peris, 52, of Miami, the owner and president of Insurance Force Corp., d/b/a FED USA Insurance Agency.

Officials allege that Peris submitted more thn 3,800 bogus premium finance contracts to numerous premium finance companies. Currently, they said, more than $7 million remains unrecovered and Peris is facing multiple counts of first degree organized scheme to defraud.

click here to read more...

The insurance companies may be evil, but are they right?

Posted by: Scott Graulich

On the eve of the vote on the Senate Finance Committee's health care reform bill, the insurance industry released a report saying that it would increase premiums.

The report, and the reaction to it, reveals a great deal – about health care reform and the state of political discussion in the United States.

The analysis was done by PricewaterhouseCoopers for America's Health Insurance plans, a trade group. It looked at the effect of several provisions of the Senate Finance bill on premiums. Two are of particular note: requiring insurance companies to cover everyone without any medical underwriting, coupled with a weak mandate that all individuals purchase insurance; and the 40 percent tax on high-value plans.

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Car Insurance Could Provide A Roadmap to Health Care Reform

Posted by: Lisa Matthys

Written by: Shamara Riley

One of the arguments that has been made by supporters of President Obama's health care reform plan is that a government requirement for individuals to have health care coverage is comparable to state requirements that drivers have car insurance. One must possess insurance to drive on the nation's roads, they say, so should it be for health insurance.

However, the analogy does not quite work. Nowhere in the Constitution does the federal government have an enumerated power or responsibility to mandate health care insurance. It's not outlined in Article I, Section VIII of the Constitution, nor in any subsequent amendments. Thus, the health care coverage issue belongs to the states and the people, as per our 10th Amendment, which states: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

Aside from the potential unconstitutionality of a health care mandate on individual liberty, an individual can opt out of paying for car insurance by not driving a vehicle. Living in a big city like Chicago, I find that public transportation pretty much handles my daily travel needs. I prefer to spend my money on other priorities. In addition, the priorities of health insurance and car insurance are different. Unlike health insurance, the often-standard liability insurance is designed to protect other people from negative results of your driving actions.

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FDIC Running Out of Money?

By Rico K. Setyo

The Federal Deposit Insurance Corporation (FDIC) was created by Congress to maintain stability and public confidence in the nation's financial system by: insuring deposits,examining and supervising financial institutions for safety and soundness and consumer protection, and managing receiverships (FDIC.gov). However, in these recent tough economic times where financial institutions are failing at a rapid rate, the FDIC is having trouble managing their organization to assist such issues. Sheila C. Bair, the FDIC chairman, states that despite the economic recovery, many banks are still expected to fail. As of this year, about 100 banks have failed and the FDIC has estimated the cost of failures to be $100 Billion for the next few years. FDIC uses their deposit insurance fund to bail out all these financial institutions. However, recently, the FDIC has claimed that the funds are decreasing at such a rapid rate that the net worth has become negative. Blair, has some recommendations to solve such issues but the causes have been analyzed by other experts.

One of the causes that many experts say is that the FDIC has been poorly managed because it was not able to generate enough revenue to cover such emergencies. Another issue might have been Congress because of a limitation to how the FDIC can raise funds but in 2006 Congress has changed the law. However, FDIC did not act quickly by charging banks premiums for the insurance fund. Now that the fund is at a negative net worth, Blair mentions that she will charge banks higher premiums to replenish the funds. Another way to solve the negative net worth might be to borrow from the Department of Treasury but many people are not in support of such drastic actions.

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Swine Flu: Health Risk or Financial Killer?

By Andrew Lipsitz

America’s most talked about epidemic, the H1N1 Virus, also known as the Swine Flu Virus, has affected over 33,000 Americans and has taken about 170 lives. While many American families have been concerning themselves with the health risk related to the virus, many overlook the financial and economic cost of dealing with the flu. Nobody likes to be “kicked while they’re already down,” but the H1N1 Virus does just that.

In one case, the Ramirez family was hit extremely hard by the costs associated with the virus. The father, Dr. Maurice Ramirez, was working with patients infected by the flu when he realized that he had caught it himself. As it turned out, once he got better after missing work for a week, his son caught the virus and his daughter, who was away at college, was sent home after being infected as well. While each of the family members had a quick recovery, by the end of the month, the loss of work hours, the prescription co-payments and the doctor visits had cost the Martinez family about $14,000. While the family was thrilled to have survived the troublesome month, they still had to bear the pain of watching their credit card bills inflate.

All we can do is hope to stay healthy by washing our hands and not sharing water bottles if we want this pandemic to pass. The economic effects worldwide could be disastrous if the virus continues to spread. “Reuters pointed out in 2008 that the IMF said a flu pandemic could cost $3 trillion and cause a 5% drop in global GDP. In other words, it would almost certainly turn the current deep recession into a worldwide depression.” Fortunately, the swine flu virus is only fatal to about .5% of all U.S. citizens who are affected. However, as we have seen, there are still serious financial consequences to only being infected for a week.

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How To Handle Money in your 20's

Posted by: Matthew Maillet

Article by: MSN Money Staff

Spend the money for a new suit, shoes and a haircut so you're ready for interviews. (See "A survival guide for college grads.")
•Don't spend money for a résumé kit; find a free tutorial online.
•Find out if your university has an alumni chapter nearby. Alumni are a wealth of information and are often eager to help new graduates.
•Be careful about accepting a job in an unrelated field simply because it pays more. This could delay your career progress or trap you in a field that may not make you happy.


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Save Green When You Go Green

Posted By: Shea McCabe

By ANNA PRIOR

You don't need to spend a lot of green to embark on a "greener" lifestyle.

Sure, buying a hybrid car or installing solar panels on the roof of your house are big ways to be more eco-friendly. But you also can make a difference with easy, lower-cost changes, whose savings can add up over time. Here are some steps to consider:

Your Home

The average home is responsible for twice the greenhouse-gas emissions as the average car, says Maria Tikoff Vargas, spokeswoman for the Environmental Protection Agency's Energy Star program. And the average household spends $2,200 a year on energy bills.

"You can save about 30% of that energy use," she says, and make your living space more comfortable by making your home more energy efficient.

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College Savings Plan

By Eric Gursky

June 16 (Bloomberg) -- If you are saving for college in a 529 plan, you probably took a bigger hit than you expected during the 2008 market crash.

What should you do now? Keep the plan or dump it?

My opinion: Stay in the 529 world but in a smarter way. These plans, run by the states, can be a great, tax-saving way to put aside money for college. You invest with after-tax dollars but the earnings are tax-free if they are used to pay for higher education.

Thirty-four states and the District of Columbia encourage contributions by giving you credits or deductions on your state tax return. You can buy a 529 from the state, at a low cost. Or buy at a high cost from stockbrokers and financial planners.

Smart idea No. 1: Buy through the state. When you open a 529, you have a wide variety of investment choices. The most popular are the age-based plans. They buy stocks while a child is young and promise to grow more conservative in the years just before college entry. Good age-based funds keep their promise. You have plenty of cash on hand when the tuition comes due.

Irresponsible age-based funds gamble on earning higher returns. They continue to hold a large proportion of stocks and risky bonds, even for 19- and 20-year-olds. These are the funds that get parents into trouble. If you are paying tuition this year, 20 percent or more of your college money might be gone.

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Race Playing a Factor In Health Care In Hospitals

Race Playing a Factor In Health Care In Hospitals

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By Adam Lindheim group 6A

John Reid who is a retired businessman had just returned from a cruise to the Caribbean with an infected toe. As a diabetic he knew it was something he needed to have checked out immediately. The first doctor he saw in the emergency room told him he had to have the toe amputated right then, and scheduled him for surgery instantly. Reid was not content with the doctors recommendation and demanded he see a more senior doctor for a second opinion. The head doctor recommended a treatment plan of intravenous antibiotics and physical therapy. This treatment plan was more expensive and time consuming than the amputation, but Reid firmly believes because he is an African American the junior doctor was quicker to recommend a cheaper and more drastic treatment. Dr. Norm Oliver, director or the University of Virginia Center on Health Disparities as well as numerous studies have proven that white physicians carry unconscious biases against Latinos and African Americans. This is issue have proven even more controversial with child care.

Cincinnati Children’s Hospital Medical Center, researchers analyzed data on 818 chest-pain related emergency department visits made by children and teens included in the National Hospital Ambulatory Medical Care survey between 2002 and 2006. They found that 71 percent of white children were given either an EKG, chest x-ray, or a complete blood count, compared with 59 percent of black children. This translated into white children being 1.6 times more likely than black children to recieve testing for chest pain. This not the first time studies about this kid of behavior has been done.

In a landmark study by Schulman et al, African American patietns are less likely than white patietns to recieve life-saving therapy for a heart attack, even if the presentation of the African American patient is the same as a caucasion patient expect for the skin color. Schulman et al study has been replicated numerous times of the past 10 years, and most recently by Green et al. Green et al supported Schulman's findings, and did by using the Implicit Association Test (IAT) to measure the unconscious biases of dcotors. This test is a well validated instrument which has beeb used in more than 400 studies and on more than 10 million subjects.

These studies open a very important question when it comes to new healthcare reform. As the government continues to attempt to create a comprehnsive plan that covers every U.S. citizen, the question remains will patient care for all races be the same. If citizens are going to pay some sort of fee to the government for healthcare, the government needs to make sure they regulate the type of care given to patients and insure that it is equal no more what race the patient is.

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Travel Insurance and Swine Flu

Travel Insurance and Swine Flu

By Minjune Kim group 6A

Are you making travel plans for the holidays? Or are you planning a winter ski trip or a cruise? Have you had your swine flu shot? If not, you’d better check out the fine print on your travel insurance to see if you will be covered if you get sick.

Sir Liam Donaldson, chief medical officer of the NHS, said: "Everything suggests that we're starting to see a second wave [of swine flu] to follow on from the July peak.
"We don't know how big that wave is going to be but we're reaching the starting line."
The ABI advises swine flu victims that all they require in order to claim on their travel insurance policy is written confirmation from a doctor or, if this is not available, a certification of swine flu diagnosis from the National Pandemic Flu service.
Did you know that the UIA offers competitive rates on home insurance? Great deals also available on car insurance, travel insurance and pet insurance too. Up to 15% discount when you apply online.

You can hedge your bet by purchasing travel insurance. But experts warn that you need to know what different policies do and don't cover.
First, a little background. Travel insurance packages cost 4 to 10 percent of a trip's total price. At SquareMouth.com, a Web site based in St. Pete Beach that lets you compare travel insurance, the typical policy runs around $200 for a $3,000 trip, CEO Chris Harvey says.
That should cover nonrefundable travel expenses if you cancel a trip or need to leave early, plus emergency medical costs and reimbursement for lost baggage.
The swine flu throws a few wrinkles into the deal. A handful of companies have pandemic exemptions that won't let you collect if you catch H1N1 before you leave or during your trip. Ask before buying and stay away from those policies, Harvey says.
None of the regular package policies will cover financial losses for hotels, airlines or cruises for canceling a trip because you're worried about catching swine flu at your destination. For that, travelers must upgrade to "cancel for any reason" coverage.

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Is the Recession Helping Us Live Longer?

posted by Jameel Murray

Last week I posted an article discussing the effects of the recession, which are forcing citizens to work through retirement. Because employees do not have the proper savings to retire due to the recession, many are forced to work past the retirement age minimum. Even though it may sound a bit difficult, it may actually be a great thing for most. Recent studies have shown that those who work temporary or part time jobs after the retirement age are physically and mentally healthier than those that are fully retired. Researchers interviewed an estimated amount of 12,200 people every two years over a six-year period. This may not seem surprising for most but can we actually give credit to a grueling recession for keeping our citizens healthy?
Retirees who continue to work past the retirement age function better daily and suffer 17 percent fewer diseases than those who actually retire. Studies have also discovered that those who do tend to fully retire often die sooner. According to Professor Cary Cooper, an occupational psychologists at the University of Lancaster, if one’s mental wellbeing is depleted it will affect you physically. In conclusion, the recession has condensed our wealth, however it has proven to complement our health.

Sources: http://www.themedguru.com/20091014/newsfeature/employment-post-retirement-leads-better-health-study-86129713.html

http://www.stuff.co.nz/life-style/2969037/Retirement-is-not-the-healthy-option

http://www.nepalnews.net/story/554409

The right way to unretire

Posted by Quang Nguyen



Tom Wogan loves working with his hands, especially building fishing rods and restoring World War II Army knives. So when he retired in June 2006 at age 60 from his $110,000-a-year job as a shift manager at the Florida City nuclear power plant near his home in Palmetto Bay, Fla., he looked forward to spending carefree days puttering around his garage working on his hobbies. With a retirement portfolio worth $1.1 million, Wogan thought he was all set.

Then the bottom fell out of the stock market. Wogan's cool million plummeted 36% in a matter of months; since then, as he's tapped savings to meet living expenses, his portfolio has dropped further and is now worth just $630,000. That's hardly enough to last Wogan and his wife, Pamela, 55, into ripe old age -- especially since her job as a graphic designer pays only $32,000 a year and the Wogans still pay a mortgage and aren't done with college tuition for three of their four children yet.

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King Siblings Settle Estate Lawsuit

Post by David Held
By SARAH WHEATON

The children of Martin Luther King Jr. settled a longstanding and bitter dispute over the slain civil rights leaders’ estate late Monday night.

A lawsuit pitted two of Mr. King’s children, Bernice King and Martin Luther King III, against a third child, Dexter King, the president of King, Inc., which runs their father’s estate. They had accused Dexter King of cutting them out of the decisions about the corporation, withholding documents and refusing to hold shareholder meetings since 2004. A jury trial was set to begin soon, threatening to reveal details about the inner workings of King Inc.

“All of the siblings are very pleased that the matter was amicably resolved, and they are committed to looking toward the future, to beginning the process of working on their family’s relationship,” said Lin Wood, the lawyer for King Inc. He said the siblings agreed not to discuss the details of the settlement.

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Paul Anka to Get Half the Royalties for the New Michael Jackson Song

By BEN SISARIO

Posted by Ahmed Al-Salem


Michael Jackson’s new song “This Is It” could prove a significant payday for Paul Anka. Although the song had been advertised as an unheard recording left behind by Mr. Jackson — and written by him alone — it became clear after it was released on Sunday night that “This Is It” was not new at all: it had been written by Mr. Jackson and Mr. Anka 26 years ago, and recorded by the singer Safire in 1991 as “I Never Heard.” Late Monday afternoon, the Jackson estate acknowledged Mr. Anka’s role and said he would be given credit. On Tuesday, the estate also confirmed that Mr. Anka would receive half of all due royalties for the song, which could be substantial. The song will play over the end credits of the film “This Is It” and feature prominently on its soundtrack. In addition, Mr. Anka would be owed fees for any licensed use of the song to commercials or other films. The Jackson estate is said to be in talks with Coca-Cola about possible use of “This Is It” in a large ad campaign, according to people with knowledge of the discussion who were not authorized to speak about it.

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Explaining the Financial Crisis

This is a funny video explaining the financial crisis
Posted By: Michael Herscovici

Is the US becoming a Socialist State

By: Michael Herscovici

Many believe that the US as we knew it is over. The days of pure capitalism as well as huge financial companies running free have come to an end. But is the US losing its identity and becoming more and more like a socialist state by the day? According to several sources they are.
According to one report:"The American Heritage Dictionary defines socialism as a system of social organization in which the means of producing and distributing goods are owned by a centralized government that plans and controls the economy.Socialism requires a totalitarian system -- that gives the ruling gang the power to distribute the fruits of other people's labor to its political pals. That is what is happening to the United States as President Obama proceeds with his goal of 'remaking America.'"
But what does this mean? Many feel that the Obama administration is taking control of many of the financial institutions is a move to socialism and one that violates the very core of this country. Obama believes that to restore the ecomony the government needs to step in and make sure that things are done right. There are many people that disagree but one thing remains certain, is the US losing its identity as a captialist state by continuing to take over more and more banks and financial organization. Only time will tell if the move is a perminate one.

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Capmark Financial Group To File For Bankruptcy

By: Amy Nightingale

Capmark Financial Group In c. is a commercial real estate company which was created through a leveraged buyout of  few GMAC assets in 2006. They are now preparing to file for bankruptcy possibly by the end of next week, or at the end of the month according to a source.

Capmark owns a bank that will continue to operate while it is in court. It is currently in negotiations with lenders, bondholders and the Federal Deposit Insurance Company that will result in a filing by the end of October.

They are working on details of a debt-for-equity swap that will take place to bring the company back out of bankruptcy, he said. It is not certain how long the court process could take.

Capmark is held privately and has three core businesses. They include lending and mortgage banking, investments and funds management, and servicing. It was created in 2006 when General Motors Acceptance Corp. sold a subsidiary, which was known as GMAC Commercial Holding Corp. Kohlberg Kravis Roberts & Co., Goldman Sachs Group and Five Mile Capital led GMAC for $1.5 billion in cash plus more than $7 billion in debt at the peak of the housing market. Reuters reported that investors will not receive payments through the bankruptcy and that the company will belong to its creditor group, which is led by Citigroup and JPMorgan Chase. 

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Congress Debates Health Insurance

Posted By Pete Hill
A big challenge facing the White House and Congress is the debate on reforming health insurance. New bills are being addressed in Congress to try to resolve these problems and cover more Americans. The complication is that keeping costs low and improving coverage is just one of many challenges facing Congress in the effort to pass health care legislation.
Under the committee’s bill, there would be four levels of benefits, bronze, silver, gold and platinum, and all insurers would be required to offer, at a minimum, silver and gold. “We have more than 46 million people who are uninsured,” Mr. Bingaman said. “We also have a substantial number who are underinsured. Although they have coverage, it is so bad or so inadequate that if they really get sick, they find they cannot afford the health care they need.”
But policy experts say few lawmakers have yet paid enough attention to what that new marketplace should look like and whether it would actually work as promised. It is an ongoing compromise that the Democrats and Republicans are currently trying to agree on.

Sources:

http://www.nytimes.com/2009/10/06/health/policy/06health.html?_r=1&ref=healthhttp://www.nytimes.com/2009/10/06/business/06exchange.html?ref=healthhttp://www.nytimes.com/2009/10/06/health/policy/06cong.html?ref=health