Decline in Real Estate Investment Trust Prices Expected to Continue

Written By: Lisa Matthys

With the commercial real estate market facing its own crisis, investors are wary of plunging into commercial property debt. Two real estate investment trusts (REIT), Apollo Commercial and Colony Financial, reduced the size of their initial public offerings by half. Apollo Commercial, a New York-based REIT set up by Leon Black’s Apollo Management LP, cut its stock sale from 20 million to 10 million and Colony Financial, a Los Angeles-based REIT set up by Thomas Barrack’s Colony Capital LLC, reduced its stock sales from 25 million to 12.5 million shares.

Many investors are hoping to capitalize on forecasts that banks will sell commercial and real estate loans at distressed prices. However, the initial public offerings have hit numerous obstacles from too many deals in the market to changing federal tax laws and investor skepticism.

Consequently, Colony Financial stocks began trading in the red on September 24th at $19.50. Analysts say that some anticipated funds were lost to rivals who were raising money for the same type of vulture fund. Similarly, Apollo Commercial shares traded at $19.20 at the start of the day but by midday fell $1.14 to $18.86. The market, according to some analysts, is becoming temporarily glutted.

The results of these two initial public offerings show that trying to invest in the distressed commercial real estate market may be more difficult than companies anticipate.

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Short Sales In The Real Estate Market

By Rico K. Setyo

Generally, when people sell, they sell for some type of profit, whether it is big or small. However, the real estate market has not been looking good for a lot of homeowners lately. During these tough economic times, many people have been forced to put their homes on sale. Even though their real estate is for sale, it does not necessarily mean that someone will buy it once it hits the market. Because of the buyer’s unwillingness to purchase homes for their listing price, many homeowners have desperately agreed to short sale their homes. Short sale is “a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold” (Lara Jr.) No one really wants to sell their homes for less than what it’s worth but the recession has pushed many families to such decisions.

Short selling homes have been quite common in today’s market but it is debatable whether it is the best choice for homeowners. One issue that always comes up in short selling real estate is the duration of the process. Many buyers are not willing to wait out the short sale approval duration because sometimes it gives the buyer a sense of uncertainty. The duration of approval from the lenders of the mortgage is undeterminable because of the fact that it is all up to the lender. Another issue is the Short Sale Debt, which is the idea that getting debt relieved may not be as easy as it seems. Even though many lenders verbally say that you are approved of the short sale, an article by Benny Kass mentions that “no lender has ever expressly released the borrower from liability on the note in writing”. This can be a problem because to legally prove anything in the United States it requires proper documentation. It is advisable that short sales should not be your first alternative, it should be one of your last choices.

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$1 million going further in many housing markets

Posted by Adam Lindheim group 6a
Written by ADRIAN SAINZ

A million dollars doesn't buy you what it once did. In most U.S. neighborhoods, it now gets you a lot more.

During the housing boom, prices rose so high and so fast that even cookie-cutter homes in the paved suburbs of South Florida and California could cost a cool million. In Santa Clara, Calif., a high-tech hot spot, the median price hit $836,780 in 2007.

That was a long way from the days when a million-dollar home evoked images of marble columns and swimming pools with vanishing edges. Subprime loans allowed more people than ever to buy houses that were once above their means. Higher demand fueled ever-higher prices until the spigot of cheap money was turned off and the housing bubble burst. The recession forced many well-heeled buyers into unemployment lines. And sales of homes over $1 million cratered by more than 50 percent from the peak four years ago.

"Everyone has less money than they once had," said Amy Wright, an agent with The Real Estate Office in Rancho Santa Fe, Calif. "That has certainly affected the nouveau riche, and that's definitely in that $1 million price point."

For people who do have the money, however, it's the best time in years to buy luxury real estate.

Rancho Santa Fe is a luxury enclave in San Diego County that has over the years lured the likes of Howard Hughes and Bill Gates. Equestrian trails border golf courses, and the most expensive home on the market is listed for $29.9 million.

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Real Estate in Hong Kong. Expensive??

By Minjune Kim

Hong Kong is the world’s fifth-most expensive residential real estate market, after Monte Carlo, Moscow, London and Tokyo, according to Global Property Guide.

Hong Kong home prices are up 26 percent this year, erasing losses posted between the Sept. 15, 2008, demise of Lehman Brothers and Dec. 31, 2008, according to the weekly Centa-City Leading Index. Mainland Chinese buyers and record mortgage rates lower than London and New York enabled Hong Kong to recover while the other financial centers struggle.

Hong Kong property recovered faster because its banks are healthy and residents save money, said Khiem Do, head of the multi-asset group at Baring Asset Management (Asia) Ltd., which holds $7 billion in assets, including shares of Hong Kong and China developers.

In another demonstration of how the recession is shaking up the global financial order, two luxury Hong Kong apartments have just gone on the market for a stunning $38.7 million each. If the developer, Sun Hung Kai, finds buyers at that price, the three-level penthouse dwellings, perched atop the 93-storey Cullinan towers with sweeping views of Hong Kong's harbor, could well qualify as the world's most expensive apartments. More than 4,000 sq. ft. in size, the apartments, which are still under construction, are selling for $9,677 per sq. ft. That's considerably above the $6,000-per-sq.-ft. price that top-end London flats were fetching in early 2007, when that city was reputed to be the world's priciest housing market.

With the boom in Hong Kong's property market, luxury apartments in the once-unglamorous Kowloon district have suddenly become some of the most expensive properties on the planet, thanks in part to strong interest from mainland Chinese investors.

Peter Churchouse, a director at a Hong Kong investment research and advisory firm, says he doesn't think Hong Kong's housing market is a bubble. But some analysts worry that low interest rates, high liquidity and a tight supply of new apartments could fuel irrational exuberance. Churchouse says: "I could easily see this market developing into a bubble, but it's not a bubble yet." That should be of some comfort for the buyer who just paid $3.16 million for a 590 sq. ft. apartment.

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Invest into your prosperous future!

By Alma Zhumagulova

A study done by College Board in 2007, Education Pays, found out that “people with a bachelor's degree earn over 60% more than those with only a high school diploma.” And later on this difference gets even wider – the “earning potential between a high school diploma and a B.A. [exceeds] $800,000”. Therefore, even though these times might not seem as the most conducive for going to college, students should still consider the long-term advantages that it will provide. There are plenty of ways to get the education you want at a much lower price than you expect.
According to bankrate.com, even average students should never give up on scholarships, and search for scholarship sources on sites such as FastWeb, College Board, Wiredscholar.com and ScholarshipCoach.com. If you did well in high school then most likely you will have more options to consider and more chances to get scholarships. As I read on the usnews.com, “some of the most expensive schools by sticker price also give out huge scholarships and can actually be cheaper, in the long run, than public schools for many students.” So study hard in high school!
In addition, there are many colleges that offer accelerated degree programs, so that you can have your bachelor degree in 3 years, or receive your master’s degree along with your bachelors at no additional cost. You should also consider transferring from a cheaper college or a community college to your dream college in your junior year, which will definitely save you a lot. There are even some tuition-free colleges where you need to work in your major-related area 10-15 hours per week to compensate. By going into the public service sector after you graduate or by volunteering you can cancel a significant amount of your federal education loans.
Overall, whatever the times are, education is a huge investment that will well pay off in the long run, keeping in mind you make wise decisions!

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Students Get Creative to Pay Off Tuition

by Jameel Murray

Because of the rising tuition costs, students are forced to take out loans that can have them in debt for the majority of their lives. However, some students are becoming increasingly creative in order to pay off the large tuition bill. Students like Corey Walker, an aspiring anesthesiologist who attends Palm Balm Atlantic University, started a blog that asks sponsors to help pay off his college tuition. The blog, helppay4college.blogspot.com offers visitors the opportunity to donate money and also gives Walker the opportunity to do something in his free time.
Many students like Corey Walker are discovering new and creative ways to paying off their huge tuition bill. Tuition has skyrocketed out of control, often leaving students with limited options. According to Krista Walker, a student attending Idaho State University, students are sharing books so they don’t have to buy them. Other students are simply working part time jobs to help purchase food supplies and other necessities. Some students are even selling their sporting event tickets, cashing in on money that can possibly help pay off some tuition or debt. According to Rachel Klosterman, a senior at The Ohio State University, she got $475 for selling her Michigan-OSU game ticket.
We are all aware that college tuition has gone out of control but there are solutions. Students are needed to begin their own ventures that will assist in paying off tuition.

Sources: http://uweekly.com/newsmag/09-23-2009/12370
http://www.localnews8.com/global/story.asp?S=10989269
http://www.wpbf.com/money/21092791/detail.html

Tavern on the Green Files for Bankruptcy

Posted by Pete Hill

On September 8, 2009, Tavern on the Green filed for Chapter 11 bankruptcy. The CEO of Tavern on the Green stated that the decision came as a result of the extreme financial distress during this economic crisis and the city of New York not to renew their lease.

Tavern on the Green is one of the largest independently owned restaurants in the United States. It is located in Central Park and has been a landmark since it opened in 1934. The restaurant never desired to be anything more than a spectacle, which makes its bankruptcy a little more understandable.

Tavern on the Green is still open until its lease ends at the end of the year. As a result, there are determined to honor all of their obligations to employees and customers. Just four months before it was supposed to yield its license to another operator, one of the highest grossing independent restaurants has to unexpectedly file for bankruptcy.

With the United States starting to get a foot hold on this downward spiraling economy, hopefully Tavern on the Green will continue to do what it has since 1934.

References:

http://www.tavernonthegreen.com/tavernNews.asp?headinfo=news&subhead=tavern_news&ctr=0

http://www.nytimes.com/2009/09/10/nyregion/10tavern.html?_r=1&scp=4&sq=bankruptcy&st=cse

http://www.nytimes.com/2009/09/16/dining/16note.html

Bankruptcy Laws

Posted by: Lindsey Connell

There are 94 financial judicial districts and they all handle bankruptcy matters, seeing how bankruptcy cases cannot be filed in state court. Bankruptcy laws are meant to give those in extreme debt a second chance by liquidating their assets or creating a plan for the person to repay their debt. These laws not only protect individuals, but also large companies as seen in today’s society with many companies choosing to go bankrupt due to the bad economy. In the past, bankruptcy laws were only temporary and were lifted when the economy was booming but today, these laws are set in stone. As of 2001, laws are in the works to make it more difficult to file for Ch 7 bankruptcy (complete dismissal) which would force people to create a repayment plan as stated in Ch 13. The Ch 7 laws deal with liquidation and are the most common type of bankruptcy filing because it liquidates a debtor’s assets and repays this way. Ch 11, 12, and 13 deal with rehabilitation and through this, the debtor’s future earnings are used to pay back creditors. People tend to choose to file for Ch 7 because it allows them to be out of debt quickly whereas with the rehabilitation route, they must pay back with their income over a longer period of time.

References:

http://www.uscourts.gov/bankruptcycourts.html

http://www.bankruptcy-courts.net/

http://topics.law.cornell.edu/wex/Bankruptcy

Government & The Financial Crisis

By, Amy Nightingale

While Sarah Palin was at a conference in Hong Kong, she gave a speech where she spoke about her thoughts on the causes behind the current financial crisis to a group of executives and bankers. She said, “ We got into this mess because of government interference in the first place. We’re not interested in government fixes, we’re interested in freedom.”Palin attacked the Federal Reserve’s low interest rates as the main reason why the U.S. is in its current financial position. She feels that the low rates caused people to buy homes, which they were unable to afford. Sarah Palin was speaking against the Obama administration, and wasn’t taking into account the progresss that they have made.Obama spoke this week at this year’s Group of 20 Summit. The Pittsburgh Summit is a conference where leaders can meet to discuss the hard work that the government has done in confronting the global economic crisis. At the summit, the leaders will be attempting to create an exit strategy for the programs that were necessary in the financial crisis which have resulted in additional government debt.

References: http://edition.cnn.com/2009/WORLD/americas/09/23/economic.summit/http://www.americanbankingnews.com/2009/09/23/sarah-palin-government-cause-of-financial-crisis/http://topics.nytimes.com/top/reference/timestopics/organizations/g/group_of_20/index.html?scp=1-spot&sq=group%20of%2020&st=cse

Sould we Worry about the Shrinking Dollar?

By: Lily Mei

The dollar has been shrinking since March 2008, and at the end of last week the dollar was only 0.65 euro down from 0.80 from last month. The underlining question is should we be worried?The answer is yes and no. Yes, because the shrinking dollar is a problem for investors especially if all your assets are in dollars and most of your goods and services are priced in other currencies. Luckily, most investors can protect their assets from further erosion of the dollar in three simple ways.Essentially you would want to diversify your assets in foreign currency, gold, and/or a range of different sustainable commodities. There are risks in reinvesting your assets in any of these three ways. In general, if you are trading in foreign currencies you can faced hefty tax rates.Gold may be the safest way because in history whenever there was a recession the price of gold usually increase. Furthermore, if the dollar keeps dropping, you may want to think of stocks and bonds in euro, yen, or rubles because they will tend to become more valuable than buying in dollar.Overall, in time the dollar may strengthen once again, but in a scenario of a long-term decline in dollar it may not be bad to rethink and plan ahead of diversifying your dollar valued assets so you wouldn’t suffer as much of a loss.

Sources:http://articles.moneycentral.msn.com/Investing/Dispatch/061128.aspxhttp://www.bloomberg.com/apps/news?pid=20601100&sid=apvyWkjStAL0http://online.wsj.com/article/SB125271048869905007.htmlhttp://www.economist.com/opinion/displayStory.cfm?story_id=2404984

Skyrocketing Auto Insurance

Post by David Held

Many parents are frustrated in regards to why automobile insurance for their children is so expensive. It is a fact that young drivers are inexperienced and more likely, than an adult, to get into a fender bender or even something worse. However, not all insurance companies have the same rates for the same insurance coverage; one must get competing quotes before buying. Questions that parents are asked include; what is the driver’s gender, age, address, purpose of driving, and type of vehicle. The answers impact the quoted rate you receive. For example, statistically males have a greater tendency to speed and a higher accident rate than females, thus warranting the insurer to give you a higher quote. In order to find the cheapest rate you must be online comparing each and every company’s rates and coverage limits.

One way to reduce rates for young drivers is to have them take their states driver’s education course. Showing a driver’s education completion certificate to your insurer helps reduce your rate! Also, defensive driving can deduct up to 10% off your annual auto insurance bill. Even if you do not have points on your license, from “run ins” with the police, defensive driving shows insurance companies you are taking a step in the right direction in trying to become a safe driver.

All in all, there are definitely ways to keep your auto insurance bills to a minimum. You just have to be willing to take the time and to do the research!

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The Baucus Plan

By Shawn Chandok

On Monday September 20th President Obama gave a speech on how healthcare bills will place a new burden on the middle class American family. One of the controversial issues republicans are criticizing the president for is the fact or not whether providing auto insurance throughout the United States is worth the additional tax increase. Although the president has yet to declare or pass any law increasing taxes, the government’s strategy is to “provide subsidies — in the form of tax credits — to help people buy coverage through new insurance exchanges.” These subsidies are still being questioned about what is considered affordable to the middle classed American due to their large expense. “The subsidies are the biggest single cost in the health care proposals. In the Baucus bill, it is $463 billion over 10 years; the cost is $773 billion in the House bill.” The plan intends to families on the poverty line no more than 3% of their gross income on health insurance, however “this percentage would rise linearly to 13 percent up to 300 of the federal poverty level, and stay at that level up to 400 percent of the poverty level.” Lastly, one of the other issues combating this plan is whether or not illegal immigrants and their children would be covered in health insurance? The President stated that illegal immigrants should not be covered; however the children of the immigrants who were born within the United States should and will be. He also mentioned once the plan is implemented and successful, families who refuse to buy insurance or simply don’t have it will be charged a fine up to $3,800.

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JPMorgan: Financial Winners and Losers

Posted by Andrew Lipsitz
Written by Robert Holmes

NEW YORK (TheStreet) -- Most bank stocks, including JPMorgan Chase (JPM Quote) and Wells Fargo (WFC Quote), traded lower Friday, continuing the recent slide spurred by Treasury Secretary Timothy Geithner's remarks on the creation of a consumer finance protection agency. On Thursday, Geithner told Congress that he supports a plan by Rep. Barney Frank (D., Mass.) that would pare back some of the original plan presented by President Obama but would still retain the consumer protection agency despite heavy pressure from banking industry and some lawmakers to eliminate it from the legislation.
Rochdale Securities analyst Dick Bove argued that the proposed plan raises the possibility that the banking system will now be dominated by government edicts. He said this will lower bank profitability and inhibit industry growth.
"The government is surging into the banking industry under the theory that it better understands banking than the private sector does," Bove wrote in his research note. "The result is likely to be fewer bank services provided at higher prices and ironically lower banking profits. Consumer finance could easily become a set of products banks may not want to provide to large sectors of the population. This will create a number of opportunities for everyone but the banks."

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Get the whole Family involved in Finances

Get the whole Family involved in Finances

Posted by: Scarlett Lu

Several problems may arise if only one person in the family is in control of the families finance. The rest of the family would be dependent on that person; if the person dies, or if the couple splits up, then the rest of the family would have absolutely no idea how to manage their financial matters.

Therefore, everyone in the family should take part in financial decision making; each family member should be aware of their family's finances. Your partner should be involved in knowing the basic information like income and expenses, net worth, investments, estate planning, and a summary of expenses you pay.

Kids should also be involved in your families financial matters. You can start by teaching them the difference between needs and wants. As your child gets older you can talk to them about credit cards, bank interest, and budgeting.

Get your child interested in saving and investing money. Parents can create activities at home that gets their children involved in looking at stocks. For example you can have your kids make a list of twenty companies they are interested in write down their ticker symbols, stock prices, and today's date. Every week or so have them record the latest prices and calculate the gains and loses. Children can also follow the companies with you by reading news and magazine articles about the company, they will learn how the news effects the company's stock prices.

http://life.familyeducation.com/parenting/money-and-kids/45319.html
http://www.fool.com/personal-finance/retirement/2006/04/13/get-your-kids-investing.aspx
www.fool.com/personal-finance/saving/2009/09/15/make-finances-a-family-affair.aspx

Where'd My Money Go???

Where'd My Money Go???

By: Zachary Pienkowski

Have you ever wondered exactly where your money goes? As a working college student I have quickly found that out that money comes hard and goes easy. On an average day the morning starts with a cup of coffee and maybe a bagel. There goes $4.00. After class I am starving so I head out to get lunch and grab a sandwich and a drink. There goes $8.00. Then after my evening close it is close to dinner time and I decide I deserve to go out to eat at a sit down restaurant. There goes $20.00. After simply eating breakfast, lunch, and dinner I have spent a total of $32.00 and have absolutely nothing to show for it. Now this does not happen every day to every student, myself included, but I am sure that it does happens often. If someone kept up this pace for even a week they would have food expenses alone of over $200! Depending on what kind of job you have that might be pretty darn close to a weeks paycheck. Some expenses can not be avoided like rent, mortgage, utilities, gas etc. However, if you started with $100 in your pocket and counted how much you had at the end of the day, you would be surprised how quickly it goes and sometimes left to wonder where you actually spent it. It is also not realistic to completely cut off any extra expenses because most people do not have the will power to do that cold turkey. Instead a better solution is to set up a budget for food or other expenses. For example, set aside $25 a week that is allowed to be spent on food other than groceries. Whether it be coffee, drinks, lunch, snacks, or dinner. That way once the amount of budgeted money is spent, there is no more to use for that purpose. This is one way that I was able to get myself out of credit card debt and able to save a lot of money along the way.

Sources:

http://life.familyeducation.com/money-management/personal-finance/47211.html?detoured=1
http://life.familyeducation.com/saving/spending/59348.html?detoured=1
http://www.azstarnet.com/sn/byauthor/237210

Tax Friendly Places to Retire

Posted by: Janielle Viggiano

No matter where you live, the federal taxes will be about the same. But you'd be amazed at how much your state and local tax burden may vary. And if you itemize deductions, how much you pay -- and deduct -- in local property taxes could affect the bottom line of your federal return, too.

People planning to retire "often use the presence or absence of a state income tax as a litmus test for a retirement destination," says Tom Wetzel, president of the Retirement Living Information Center. "But higher sales and property taxes can more than offset the lack of a state income tax."

Seven states -- Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming -- have no state income tax. Two states -- New Hampshire and Tennessee -- tax only dividend and interest income that exceeds certain limits. But many of the remaining 41 states (and the District of Columbia) that impose an income tax offer generous incentives for retirees. If you qualify, moving to one of these retiree-friendly areas could be cheaper than relocating to a state with no income tax.

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Trust vs. Wills

By Jessie Bruyn

A trust is an agreement between two people in which one person manages the property and assets of another person - the beneficiary. There can also exist a living trust in which the specified person manages the assets of the other person in the event that they are disabled and cannot manage their property by themselves. When the person dies, the trustee becomes responsible for the assets and allocates them to desired individuals.

A will, on the other hand, is a legal tool used only after the individual is deceased. The only say in the division of assets with a will is the creator, whereas with a trust the trustees have access and rights as well. When creating a will, the person appoints an Executor to handle the business and distribute the assets. Wills usually require Probate, or court involvement. However, having a responsible Executor helps eliminate the court's involvement in distribution after the death of a loved one.Initially, a will is less expensive but can require more expenses after the death. On the otherhand, a trust is more expensive at first, but requires less expenses after death.

Sources: http://www.premack.com/columns/2003/2003-03-04.htm

http://legal-dictionary.thefreedictionary.com/will

http://legal-dictionary.thefreedictionary.com/living%20trust

Ignore Stock Price, Focus on Value

Posted by: Matthew Maillet
Article by: Pat Dorsey

It's all too easy to think that a stock that has risen sharply is no longer a bargain -- or conversely that shares that have been cut in half must be a good deal. If only investing were that simple.

I learned this the hard way a few years ago. In the summer of 2006 I bought some MasterCard stock after the credit card company went public. In the first few months the shares moved up steadily, but then they rocketed from $70 to $90 in just a week's time. Since I was on an overseas business trip with little time for research, I reflexively sold a chunk of my holdings.

Dumb move. As it turned out, the company's profit margins were growing faster than I had anticipated -- boosting MasterCard's value -- and the shares topped out at $320 a couple of years later. If I had paid more attention to the value of the business, rather than the price of the stock, I might have held on.

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Credit Scores: What You Need to Know Now

Posted by Andrew Lipsitz
Written by KAREN BLUMENTHAL

Are you keeping score?

Credit scores have been getting a lot of attention lately, as lenders tighten credit standards and contend with new legislation that has, among other things, reined in how credit-card issuers can raise rates.

Meanwhile, several firms, preying on our insecurities, are pushing credit scores and credit-score-tracking services for a monthly fee.

For all the attention they generate, though, credit scores are largely misunderstood. For instance, your precise score matters only when you're in need of new debt, like a home, auto or education loan or a new credit card, which should be a fairly rare occurrence.

You don't have just one score, but many. Your FICO score, the one developed by Fair Isaac Corp. that runs from a low of 300 to a high of 850, will vary depending on which credit bureau is reporting it and the kind of lender that requested it.
So the score that costs you $15.95 at MyFico.com may not be the score your lender sees. Beyond that, the three credit bureaus— Equifax, Experian and TransUnion— sell their own proprietary scores.

Confused about what to believe? Here are some common myths about credit scores:


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Factors that may Increase Personal Bankruptcy

Posted by Lindsey Connell

Bankruptcy filings have continued to rise year after year but the numbers in 2009 indicate a downward spiral. There are many factors that may increase personal bankruptcy such as natural disasters, high income rates, and mass layoffs. Natural disasters occur all around the world but a recent disaster occurred with Hurricane Katrina, resulting in a devastating amount of people left homeless. Because of occurrences like this and others, people may choose to file for bankruptcy to in a sense “start over” because what they had before was now gone. Bankruptcy may not even be a choice for those who were forced to take out another mortgage loan, keep up with the interest payment of credit cards, and medical expenses. Also, interest rates on credit cards are continuously increasing causing many individuals and companies to either rethink their current situation of look to bankruptcy. Another factor is with mass layoffs, and this is seen especially in the past two years. With the economy so down today, many companies are making cost cuts by laying off current employees. This results in workers losing their jobs and having no source of income. Some other factors that could lead to bankruptcy are reduction of personal savings, increase in consumer debt, and changes to bankruptcy law.

http://ezinearticles.com/?Factors-That-May-Increase-Personal-Bankruptcy&id=840764
http://www.bankruptcyinformations.com/reasons_that_may_increase_personal_bankruptcy.htm
http://www.encyclopedia.com/doc/1G1-158573574.html

Corporate Bankruptcy is Stealing

By: Scott Graulich

Lawyers have figured out a way to steal money from hardworking Americans and congress has helped them. Let's take two examples of what recently happened in two well known bankruptcies. Washington Mutual Bank executives made some very bad decisions, giving loans to undeserving customers which forced the bank into bankruptcy. Shareholders, pension plans and investors were conveniently wiped out completely. The bank was then purchased by JP Morgan Chase who continues to operate the bank and make money. Therefore the brand and all its assets are alive and well while everyone who put money into the stock has suffered greatly. It just does not make any sense.The second example is General Motors. Suppliers, creditors and investors were all wiped out and General Motors can start a new without any obligation to previous individuals and companies who helped them succeed. These two examples send a horrible message to America about responsibility. It will have terrible implications, not only financially, but morally in our society.

References:http://money.cnn.com/2009/08/18/autos/general_motors_second_chance.fortune/index.htmhttp://www.fiercefinance.com/story/still-paying-sins-wamu/2009-09-10http://www.articlemaniac.com/article/238099/when-are-bankruptcy-lawyers-needed.html

Saving for Retirement in your 20s

By: Lily Mei

It’s easy to understand why retirement plans don’t loom in mind to most 20-year-olds. Most of them are more concerned about kick-starting their careers, not ending them in the long distant future.

But the fact that if you’re young and start saving it gives you the leverage to be extremely rich in your retirement years. That’s because when you’re in your 20s, you can invest relatively little for a short period and wind up with far more money than someone older who saves much more over a longer period.

Consider this scenario: If you start saving for retirement at the tender age of 26, putting away about $1500 a year for just 45 years, you’ll have around $500,000 at the end with annual earnings of 8%. Now, let’s say you wait until you’re 36 to start saving. You put away the same $1500 a year, but for 30 years and earnings grow at 8% a year. When you’re 66 you only have about $200,000 less than half of what you could have if you started saving earlier.

Sources:

http://www.oprah.com/article/money/personalfinance/20090122_expert_retirement

http://www.money-zine.com/Financial-Planning/Retirement/Retirement-Planning-in-Your-20s/

http://www.usnews.com/usnews/biztech/articles/060428/28tips_retirement.htm

Obama Urges Wall Street Not to Ignore Lessons of Crisis

WASHINGTON -- President Barack Obama warned Wall Street that it wouldn't be wise to ignore lessons from last year's economic turmoil, pressing the financial sector to join his effort to remake financial regulation by the end of the year.

In a major address in New York, Mr. Obama said the storms of the financial crisis "are beginning to break" with less need for the government to get involved in the financial system. But he pressed Wall Street not to grow complacent as the economy returns to normal, saying banks shouldn't expect taxpayers to come to the rescue again.

"Unfortunately, there are some in the financial industry who are misreading this moment," Mr. Obama said. "Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them. They do so not just at their own peril, but at our nation's."

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Posted by: Kelsey Hoffman

Is The Commercial Real Estate Market The Next To Crumble?

So now that our economy has begun to re-shape itself since the credit crisis in the 2008 we are beginning to see the light at the end of the tunnel. Right? Consumer confidence has increased, the markets are picking up and the DOW Jones is almost back to 10,000 and S&P 1050. Think again.
The ever important commercial real estate market could be the next, biggest piece to bring our economy back to familiar waters. Many major commercial buildings need refinancing yet banks are skeptical of the loans because of the exposure they warrant.
Daniel Tishman, CEO of Tishman Construction Corp states, "..there's a total amount of $3.4 trillion in commercial loans that needs refinancing, and many local banks are holding those loans. There are huge numbers of banks that could have problems (and face closings) going forward because of carrying these commercial loans."
TALF (Troubled Asset Loan Facility) is the implemented government program which provides financing to holders of asset-backed securities for CMBS is about to come to an end. The congressional oversight panel is scheduled to meet this Thursday to discuss the effectiveness of the program and plans for moving forward.

This program is ever so important as commercial property sales plunged 73% last year and hundreds of large properties are in default.

By Eric Gursky

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Tax Friendly Places for Retirement

Posted by: Janielle Viggiano

No matter where you live, the federal taxes will be about the same. But you'd be amazed at how much your state and local tax burden may vary. And if you itemize deductions, how much you pay -- and deduct -- in local property taxes could affect the bottom line of your federal return, too.

People planning to retire "often use the presence or absence of a state income tax as a litmus test for a retirement destination," says Tom Wetzel, president of the Retirement Living Information Center. "But higher sales and property taxes can more than offset the lack of a state income tax."

Seven states -- Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming -- have no state income tax. Two states -- New Hampshire and Tennessee -- tax only dividend and interest income that exceeds certain limits. But many of the remaining 41 states (and the District of Columbia) that impose an income tax offer generous incentives for retirees. If you qualify, moving to one of these retiree-friendly areas could be cheaper than relocating to a state with no income tax.

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Power Point Slides for Chapters 4 - 6

Below are the slides for the first 8 chapters of the textbook.  Enjoy!

Chapter 1
Chapter 2
Chapter 3

Chapter 4

Chapter 5

Chapter 6

Chapter 7

Chapter 8

What Social Security's Underfunding Means for Your Retirement

The baby boomers will get their payouts, but what about the rest of us?

Posted by Mary Clare McGraw

Social Security and Medicare's annual checkup revealed that the recession
and longer life expectancies are taxing the health of the entitlement system. The Social Security Board of Trustees report found that program costs will exceed tax revenues in 2016, a year sooner than predicted in last year's report. The trust fund will be exhausted in 2037, four years sooner than the 2008 estimate. Here's a look at how the projections could affect your retirement plans.

Smooth sailing for the baby boomers. In 2037, the year the trust fund is currently projected to be depleted, the youngest baby boomers, currently age 45, will be 73. It's highly unlikely that baby boomers will face a rise in the retirement age or cuts in benefits. "The good news for current beneficiaries and those nearing retirement is that your benefits will remain secure and intact for the foreseeable future," says Nancy LeaMond, executive vice president of AARP, a lobbying group for older Americans.

Changes for younger people. Social Security and Medicare will still be around for younger generations. But there is some uncertainty about whether there will be tax increases, benefit cuts, some combination of the two, or other fixes to correct the underfunding.

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Retirement Savings Challenges for Women

by Leah Gorham

Studies have shown that women tend to lag behind men in saving for retirement. In a 2008 survey of over 1,300 workers or retirees over age 25 by nonpartisan Employee Benefit Research Institute (EBRI) and Matthew Greenwald & Associates it was found that 58% of women and 64% of men said they were contributing to a workplace retirement account. Also, while 70% of men said that they were "currently saving," only 59% of women said the same.

There are several factors that account for why women save less then men for retirement. First, the wage gap between men and women result in lower median pay for women, then resulting in a reduced ability to save for retirement. However, behavioral differences can also impact the gender gap in retirement savings. Many women make choices to provide care for their children and/or aging family members and in doing so may give up their careers or significantly decrease their earnings. Women are also more likely to work for non-profits and small firms that are less likely to offer employer-based retirement plans. Women need to consider these challenges seriously when thinking about saving for their retirement. Another factor to consider is that women generally live longer then men and therefore need to plan for a longer retirement.

There are several strategies that women can use in order to ensure a secure retirement and lessen the gender gap in retirement savings. These strategies include:
-Starting your own retirement account and putting your retirement savings first.
-Seek employment with retirement benefits.
-Always keep a portion of investments in stocks.
-Consider opening a spousal IRA.
-Check your Social Security record.
-Continue to play an active role in the financial planning process.

Source 1, Source 2, Source 3

Housing: Short sales spread across real estate market, leaving frustration in their wake

Posted by: Srividya Srinivasan

Article By Mary Ellen Podmolik - Tribune reporter


Offers may roll in, but banks often slow to respond, prompting buyers to walk away.

A few years ago, few people in the housing market had ever heard of a short sale. Mention the term today and people, whether they are homeowners or real estate agents, just roll their eyes. The practice, which involves selling a property for less than the amount owed on the mortgage, has grown in popularity as an exit strategy for financially strapped homeowners because it doesn't ding a credit report as deeply as a foreclosure. But because the transactions have to be approved by first and second lien holders, they are languishing. Some real estate agents try to steer clear of them entirely and even specify in their listings that a property is not a short sale.

The Obama administration is aware of the frustrations. In mid-May, Treasury Secretary Tim Geithner announced plans to streamline the process by offering financial incentives to mortgage servicers and investors that accept short sales, much in the same way that they are rewarded for refinancing or modifying troubled mortgages.


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One Year After The Collapse

“In many ways, it’s going to be a healthier market. It will be more affordable to more people, which is more sustainable. A lot of money was made during the boom years, but I don’t know if it’s such a great world when people with good jobs and a good income can’t buy a home. I don’t think we’re going back there for a while.”
Hall Willkie, President of Brown Harris Stevens

Written by Stefanie Marty





It has been one year since the Lehman Brothers collapse on September 15th of 2008, which was a dark moment for markets all over the globe. I found some interesting articles on how the real estate market has developed over the last year and what we have learned by the collapse.

The last winter was a really bad one for the real estate market when activity was almost frozen. Also the spring season was rather slow and it took until the summer when sales started to stabilize again. Now the question is: What is the fall going to bring about? As of right now the market seems to behave normally and the seasonal expectations, which were characteristic over the last years in fall, are met. People are optimistic that the real estate market goes in a better direction again.

The three things that are important factors in the housing market are prices, transaction activity and inventory. It seems like the last two are getting were they are supposed to be. Activity is going up while inventory is stabilizing. The only thing of concern is the dropping prices. The median asking price for the new listings in Manhattan on September 13th of this year was $860,750 compared to the $1,100,000 of last year.

Some housing prices dropped more than 40 percent and many people have lost all of the equity in their houses. Neither high nor low housing prices are favorable. In the first case no one can afford to buy a house, in the second case homeowners and banks have lost all their net worth. Thus stabilization in prices is important.

People have to realize that a house is just a home and nothing else. It is not a source of cash or any retirement plan. The developments in the housing market over the last year made many people feel poorer even though they are employed and do not need to move. A house is nothing to make money in; it is just a long-term financial commitment.


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Now Is The Time To Buy Real Estate!

Posted By: Lisa Matthys

Written by Michael Rivezzo

House buyers are now finding lower prices for houses in areas they previously couldn't afford before the stock market collapse. Consumers are starting to take their money out of CD's and other investments and putting it into the housing market. With foreclosures reaching milestone highs in some areas, people seeking a more affordable price for a house can buy a foreclosed house at a discount. Banks acting in their best interest are trying to sell off as much debt as possible, which accommodates the consumer who previously could not afford the price of a house.

With that in mind we look at another asset for the home buyer. There is a $8,000 tax credit due to expire on the 30th of November. This tax credit is given to a consumer who qualify for a mortgage. People have taken advantage of this tax credit so far, 300,000 people would not have purchased otherwise so far this year.

This is a monumental moment for the first time house buyer to own a home. Foreclosed homes will be sold up rapidly so time is of the important matter. The tax credit is also due to expire within the next month but is being discussed for a possible extension.

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Real Estate Listings Going Into Cell Phones

Posted By: Lisa Matthys

Written By: Josh Brodesky

Searching online home listings on your desktop is becoming oh so 1990s.

The push is on in real estate to capture the mobile market — and the elusive 35-and-younger demographic that comes with it.

Numerous brokerages and listing companies have launched mobile Web sites and smart-phone applications to showcase homes on cell phones. There are also text feeds that send prospective buyers information on listings.

But the founder and president of Tucson-based Nova Home Loans, Ray Desmond, is dialing up something bigger.

He has launched a new platform that lets users search listings, pre-qualify for loans, call up title reports and even submit offers — all by cell phone. Deals could be made — or at least tentatively agreed to — in minutes.

Click here to read more.

Is college still worth the price?

Posted by Jonathan Tse
By Penelope Wang, Money Magazine senior writer
Last Updated: April 13, 2009: 12:36 PM ET

Costs are soaring twice as fast as inflation, even as salaries for graduates are falling. Time to examine the old belief that college is worth whatever you can pay.



For more than two decades, colleges and universities across the country have been jacking up tuition at a faster rate than costs have risen on any other major product or service - four times faster than the overall inflation rate and faster even than increases in the price of gasoline or health care (see the chart to the right). The result: After adjusting for financial aid, the amount families pay for college has skyrocketed 439% since 1982.
Prices for college have begun to follow their own peculiar logic. In the absence of any objective measure of the value of an education, price becomes the default yardstick. The more expensive a college is, the better the education it presumably provides. (After all, if other families were willing to pay this much to send their kids here, it must be worth it.)

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Malpractice Insurance

A Medical Nightmare
Post by David Held

Medical Malpractice Insurance is a form of insurance that most doctors carry. Doctors, in general, make mistakes daily; from misdiagnosing a condition to a fatal delivery. In case of an accident all doctors try to protect themselves against a lawsuit by carrying malpractice insurance. A problem that has risen, given to the increasing rates of medical malpractice insurance, is there are less specialized doctors in a given region. Meaning, since insurance is so high, doctors cannot afford to practice, thus there are less doctors in many areas of our country. An article says, “Whopping medical malpractice premiums are forcing many doctors to stop practicing high-risk specialties, such as brain surgery, orthopedic surgery, and delivering babies.” This could potentially be devastating to patients, but at the same time it’s not the doctor’s fault. The insurance companies are encroaching upon the doctor’s ability to perform. We all know that there are always risks involved with any procedure. In America we sue for everything even when faced with the risks in advance. The problem becomes one where the patients are not being cared for by the best professionals available, those without malpractice insurance, or at all, thus no lawsuit can develop if anything happens to the patient.

President Obama also recognizes that lawsuits against doctors have become a major issue. Recently, Obama listened to the Republicans and created pilot programs which are suppose to reduce the number of lawsuits against doctors. If successful, these programs will also help reduce the cost of health insurance for many Americans as most of our insurance money goes to covering the doctors’ malpractice insurance. The details for these programs have not been released, nor has the budget for the projects. Hopefully in the near future healthcare can be free and doctors will not have to constantly worry about getting sued.

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How much should older Americans pay for Insurance?

Posted by Ahmed Al-Salem

How Much Should Older Americans Pay for Insurance?
By MICHELLE ANDREWS

Should older people pay more for health insurance than younger people, and if so, how much more?

The issue has long been on the radar of health policy analysts and consumer advocates weighing the fairness and affordability of health care costs. But it’s likely to receive more scrutiny now. The health reform “framework” put forward by the Senate Finance Committee’s chairman, Max Baucus, Democrat of Montana, proposed a new standard that would permit older people to be charged significantly higher premiums than would be the case under any of the other health care reform bills.

Under Senator Baucus’s plan, insurers would be permitted to charge older people five times more for their health insurance premiums than younger people. That proposal, first circulated in a Finance Committee policy options paper last spring, is a significant departure from the approaches put forth by three House committees and the Senate Health, Education, Labor and Pensions Committee. Those bills would only allow insurers to charge older people twice as much as younger ones.

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Government Attempts to Handle High Tuition Costs

By Jameel Murray

Along with the woes and blunders of the sluggish economy, Americans are also forced to worry themselves of the uncontrollable rise in college tuition. According to the biennial report from the National Center for Public Policy, the drastic increases in higher education may be out of reach for most Americans. While increases in family income are somewhat persistent, college tuition has increased 147 percent from 1982 to 2007. According to Patrick M. Callahan, the president of the center, the education gap between the American workforce and the rest of the world will make it difficult to be competitive.
Even though college tuition will consistently increase, the government has acknowledged the situation, implementing many plans in hope of providing higher education for all students. The stimulus bill, which was passed by President Obama, has set aside $90 billion for higher education initiatives. Because the money would allow more students to receive a college education, the Obama administration believes that this money would eventually enhance the American economy. Vice President Joe Biden also conducted a town hall meeting at Syracuse University to discuss the progress being made toward handling the increases in college education. According to Biden, the administration has simplified the federal loan process and is also pushing to increase grants and loans paid for by reduced subsidies to private lenders. Government officials are immediately making an attempt to grapple with the outrageous costs of college tuition. We have already seen some states like Michigan offering free college tuition to students.

References: http://www.aralifestyle.com/article.aspx?UserFeedGuid=790f937a-c021-4f40-b71d-51b495ef27d1&ArticleId=2103&ComboId=4225&title=Obama-s-stimulus-bill-pays-for-education

http://www.detnews.com/article/20090915/POLITICS02/909150354/State-plan-urges-free-college-tuition

http://thegovmonitor.com/world_news/united_states/saving-and-paying-for-college-needs-to-be-fair-simple-and-more-efficient-4426.html

10 Things Gas Stations Won't Tell You

Posted By Lingxiao Li
By Jim Rendon


1. “Good luck finding the best deal.”
2. “I hate it when gas prices go up.”
3. “My gas isn’t better for your car; it’s just more expensive.”
4. “If you’re smart, you’ll put that debit card away . . .”
5. “. . . and don’t even consider applying for our gas card.”
6. “Looking for the cheapest gas in town? Try the Internet.”
7. “It’s a gallon when I say it’s a gallon.”
8. “I might gouge you on a soda, but my coffee’s a real bargain.”
9. “If you’re having car trouble, you’re in the wrong place.”
10. “You don’t even need gas to run your car.”

Click here for full article...

The Greater the Number the More Complex Problem

By: Michael Herscovici

Some people have a hard time maintaining a budget for themsleves. It does not matter if this is due to implusive buying, splurging, or other reasons, some people find it is a difficult task to stay within budget all of the time. This problem increases when you are sharing your money with your wife/husband. Even if you are good at sticking to a budget, your significant other might not be, leading to stress in an otherwise successful marrage. This problem becomes even bigger when children are involved.

Most families do not start out with 10 children. They like an investment grow over time. However, the larger the family is, the harder it becomes to maintain a consistent budget within their means. This problem increases because children do not consider budgets or finances when making requests or kicking a screaming at the toy store. All they know is their needs. Professor Watkins said it best when he stated that "Children are like money vaccums".

One might think that parents often sacrifice the things they want in order to allow their children to gain the things they desire. However, more often then not, parents just like businesses are finding ways to cut cost, and be more efficient rather than in business terms, "try to increase revenue".

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Is Home-Loan Modification the Right Step?

Posted by Andrew Lipsitz

Q I am a business owner, and due to economic downturn our business receipts are down by almost 40 percent. I've been using my credit card to help keep the business afloat, and my credit-card debt has gone very high.I am starting to have difficulty paying my home mortgage each month. I have contacted consumer credit-counseling services, and they are working on helping me with a credit-card-repayment plan. They also suggested I apply for a home-loan modification.Am I taking the right steps, or are there some other alternatives I should consider? Also, how will my credit rating be affected by these moves?A If you have maxed out your credit cards and are having trouble making your mortgage payments, you need help in figuring out how to get these amounts in line with your income.As difficult as it might be, a properly designed and administered debt-management plan is a good way to go. If you need a debt-management plan, your credit history and credit score have likely already suffered either because your debt-to-credit limits are out of whack or because you have started to pay some of your bills late.Joining a debt-management plan shouldn't affect your credit negatively, and as you start making your payments on time and in full through the plan, your credit history and credit score should improve, as you feel more in control of your debt.

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The Future of Personal Finance?

We all wish we were better at our personal finances, but it's just too confusing — and boring! Secretly, we wish someone else would do it for us. This is the key factor behind the success of Mint.com, a website that was started three years ago by then 25-year-old CEO Aaron Patzer in his Silicon Valley apartment. Now it has been sold to Intuit for a stunning $170 million.

Mint, which was launched two years to the day before the announcement of its sale, works like a personal financial manager. You sign up and give it the online passwords to all your bank accounts, credit cards, retirement accounts, mother's maiden name, everything. It requires that you show the Full Monty. In return, Mint shows you, with minimal effort on your part, a complete picture of where the heck all your money is going. Many potential investors in Patzer's idea thought people would simply never be bold enough to hand over all that information — Patzer himself admits to some early doubts. Turns out they underestimated how lazy or desperate we all are. In its first month, Mint signed up 50,000 users. At sale time, it had 1.5 million.

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Posted by Chris O'Sullivan

Triple - A Failure: The Rating Game

Posted by: Lily Mei

Obscure and dry-seeming as it was, this business offered a certain magic. The magic consisted of turning risky mortgages into investments that would be suitable for investors who would know nothing about the underlying loans. To get why this is impressive, you have to think about all that determines whether a mortgage is safe. Who owns the property? What is his or her income? Bundle hundreds of mortgages into a single security and the questions multiply; no investor could begin to answer them. But suppose the security had a rating. If it were rated triple-A by a firm like Moody’s, then the investor could forget about the underlying mortgages. He wouldn’t need to know what properties were in the pool, only that the pool was triple-A — it was just as safe, in theory, as other triple-A securities.
Over the last decade, Moody’s and its two principal competitors, Standard & Poor’s and Fitch, played this game to perfection — putting what amounted to gold seals on mortgage securities that investors swept up with increasing élan. For the rating agencies, this business was extremely lucrative. Their profits surged, Moody’s in particular: it went public, saw its stock increase sixfold and its earnings grow by 900 percent.
By providing the mortgage industry with an entree to Wall Street, the agencies also transformed what had been among the sleepiest corners of finance. No longer did mortgage banks have to wait 10 or 20 or 30 years to get their money back from homeowners. Now they sold their loans into securitized pools and — their capital thus replenished — wrote new loans at a much quicker pace.
Mortgage volume surged; in 2006, it topped $2.5 trillion. Also, many more mortgages were issued to risky subprime borrowers. Almost all of those subprime loans ended up in securitized pools; indeed, the reason banks were willing to issue so many risky loans is that they could fob them off on Wall Street.

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Trials Continue on Merrill Lynch’s Bonuses Paid Out

By: Sara Sindelar

Everyone wants to be rewarded for their hard work but there is a line that does not need to be crossed. It was no surprise that C-suite level executives are treated very well but after the recession started more details were given out. I do not think you can find many people that will agree with the amount in bonuses and the VIP treatment that corporate executives get. “Regulators have claimed that BofA had said in its proxy statement that it would not pay out bonuses to Merrill employees in fiscal year 2008, when, in fact, the bank authorized bonus payments of as much as $5.8 billion. Of that allowance, $3.6 billion was paid out in 2008 to more than 39,000 Merrill employees.” (CNN Money)” This week in court discussions on how the banks, Merrill Lynch and Bank of America, should be punished for going against what their proxy statement promised. There are questions being thrown around about who is to blame about the pay out. No matter who signed the checks it is still wrong that so many corporate executives are gaining so much money especially during this recession. Even though the government is making strides to cut down corporate spending it will still happen and more needs to be done in order to control unnecessary spending by corporations. Hopefully there will be consequences for this pay out of bonuses in court.

References: http://www.boston.com/business/articles/2009/08/25/sec_bank_defend_bonus_settlement/ http://money.cnn.com/2009/09/09/news/companies/bofa_sec/index.htm?postversion=2009091015 http://online.wsj.com/article/SB123750034629289161.html

The Reluctant Landlords

By Shea McCabe

With housing prices still in the dumps, many Americans are finding themselves in the uncomfortable position of landlord.

Some have been forced to relocate for a job and can't sell their houses. Others have moved, but are holding onto their previous homes, hoping for prices to rebound before selling. Many are finding that rent checks don't come close to covering their mortgage payments.

Hard data are scant on how many homeowners are renting out their homes, but anecdotal evidence suggests numbers are up. In one indication of the trend: more homeowners are converting their homeowners insurance to landlord policies that cover the additional risks of leasing out a home. Allstate Corp., the second largest home insurer in the U.S., reported a 27% increase in conversions in the first quarter from the previous year.

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Social Security Bonuses See No Rise on the Horizon

Economists are famed for the phrase “on the other hand,” and the sobriquet fits in looking at the most recent report on the Consumer Price Index.

While Friday’s report on the CPI was benign -- no change in the overall price index and a modest change in the “core” index -- it nonetheless could be a downer to millions of people collecting Social Security payments

Under provisions of a 1975 law, Social Security benefits are adjusted each year based on the year-to-year change of the Consumer Price Index for Urban Wage Earners (known as CPI-W). For every year since the law was enacted, benefits have been adjusted upward each January, with a 5.8% boost at the beginning of this year, the largest since 1982.

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Posted By: Laura Reginelli

Estates of disarray

By Chris Keeler

Wealthy people who spend their careers building complex portfolios, with investments and assets all over the world, often overlook one key area of financial planning: how their estate will be passed on when they die.

Advisers say that no matter how closely engaged some investors are in their financial affairs during their lifetime, many are woefully unprepared when it comes to structuring their estate for their death. This partly reflects a reluctance to face the reality of death, but also time-pressed entrepreneurs and business owners often find the process of making a will a burden they can do without.

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