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Americans losing faith in mortgage loans and real estate

Peter Stone — Mon, 28 Feb 2011 21:13:28 +0000

Fewer Americans believe homeownership and real estate are worthy investments. Photo Credit: Infrogmation/Wikimedia Commons/CC-BY

Americans are becoming less convinced that getting mortgage loans to buy real estate is a good idea. A recent survey found that the number of people who believe owning a home is a worthy investment has dwindled to the lowest level in years. Home sales have been sluggish to recover from the housing crash.

Fewer see homeownership as good investment

American real estate has been shaken to its core during the past few years. One of the side effects has been that fewer people believe homeownership is something to aspire to and that owning a home is not as good an investment as once thought, according to Reuters. Mortgage investment house Fannie Mae performs a quarterly survey on attitudes about home ownership, called the National Housing Quarterly Survey, which found that 64 percent of respondents believed that the tradition of going to a bank or loan company to get a loan and buy a house was a good investment. That marked a declined from early 2010, when 70 percent of respondents thought so. In 2003, the figure was 83 percent.

More people turning to rentals

As fewer are buying houses, more are going with paying landlords instant cash through renting. The percentage of vacant rental units declined over the fourth quarter of 2010 to 9.4 percent from 10.3 percent in the summer of 2010. That is the lowest percentage of available rental units since 2007. The same survey from Fannie Mae found that nearly 75 percent of respondents said they thought it would be harder to get a mortgage from a loan lender than to rent.

Home sales fall

New home sales plunged over the month of January 2011, according to CNN. Some areas where prices are dropping are able to sell more inventory, but areas like Arizona and other places with highly inflated prices have difficulty liquidating housing inventory. However, after stops and starts over the fall, new home sales fell 11.2 percent over January 2011, marking an 18.2 percent reduction between January 2010 and January 2011. The housing market is down more than 80 percent overall from a peak point in 2005.

Sources

Mortgage modification programs under fire from Republicans

Peter Stone — Fri, 25 Feb 2011 22:04:22 +0000

Congressional Republicans are looking to cut mortgage modification programs that don't work. Photo Credit: respres/Flickr.com/CC-BY

The federal mortgage modification program is fast becoming a target for criticism as a failed program. Congressional Republicans have announced intentions on scrapping federal mortgage relief programs, which have been dismal failures. Foreclosures on failing mortgages have slowed, but procedural issues are hampering the foreclosure processes nationwide.

Failed mortgage relief programs prime target for spending cuts

Congressional Republicans are taking aim at failing programs that throw money down the drain, and mortgage modification programs are prime targets, according to CNN. Republican members of the House of Representatives have announced intentions to put federal programs aimed at saving failing mortgages on the chopping block in order to cut about $38 billion in instant cash from the budget. The Home Affordable Modification Program is a prime target, as Inspector General for the Troubled Asset Relief Program Neil Barofsky described the program as a failure.

On the chopping block

Other programs slated for demolition include the Neighborhood Stabilization Program, refinance programs under the Federal Housing Administration and the Emergency Homeowner Relief Fund, all of which lend emergency loans to aid troubled mortgages. However, these programs haven’t been smashing successes, either. Spencer Bacchus, a Representative from Mississippi and chair of the House Financial Services Committee, said that “it’s time to pull the plug” and end programs that don’t work. Only about 500,000 permanent mortgage modifications have been performed on troubled mortgages through these programs, which is a success rate of less than 50 percent. Foreclosures are also taking far longer to process.

Foreclosures take longer

Because of new procedural rules for foreclosure and increased scrutiny of foreclosure practices, loan lenders are taking far longer to foreclose on a home, according to USA Today. A distressed homeowner will spend about 19 to 20 months living in a foreclosed home at current rates, which may increase to 22 to 23 months. The average person in a foreclosed home would normally have gone 250 days without making a payment prior to the mortgage crisis, but that stretched from 410 days in January 2010 to 507 days in December 2010. Increased scrutiny due to the “robo-signing” controversy has led to foreclosures taking far longer, which causes loan lenders to lose considerable amounts of money.

Sources

Housing prices decline, but home sales are rising

Peter Stone — Thu, 24 Feb 2011 00:08:22 +0000

Home sales have been increasing, but home values are declining. Image from Wikimedia Commons.

Nationwide home prices are declining, but home sales are beginning to rise. The past year has been volatile for real estate, but more people have been consulting with loan lenders to purchase a home. The low prices are thought to be the reason for the spike in purchases.

Wealthy and investors buying houses again

Figures for nationwide home sales from the National Association of Realtors indicate that an increasing number of people are purchasing homes, according to CNN. Home sales rose 2.7 percent over January 2011, to a seasonally adjusted rate of 5.36 million per year. The increase is also a 5.3 percent improvement over January 2010, marking the first time in seven months that home sales have been higher than figures from a year ago. However, the increase may be bolstered by people who don’t need to go to loan lenders to finance a home purchase. The number of cash purchases was 32 percent of all sales, up from 26 percent in January 2010. Sales to investors made up 23 percent of sales, which accounted for 17 percent of home sales in January 2010.

Foreclosures may have made up difference

The increased number of cash and investor purchases likely is due to deep discounts available on foreclosed properties. Distressed properties, according to Bloomberg, accounted for 37 percent of January 2011 home sales. More homes are available at rock bottom prices, and many a loan company is anxious to get a home off its balance sheet. There aren’t many people who have enough instant cash to pay for a home out of pocket, even one sold at half its value. The median home price has declined 3 percent since January 2010, to $158,800.

Home prices dropping

Many major metropolitan areas are still experiencing declining home values, according to USA Today. The Standard & Poor’s Case Shiller Index recorded drops in all but one of the 20 major cities it tracks. Only Washington D.C. did not see home prices decline. Areas with inflated real estate values such as Arizona, California and Florida have experienced the worst in decline, but southern states like Mississippi and Alabama are also experiencing price declines. The rise in sales may signal reversing demand, and many economists believe 2011 will be a year of dramatic recovery.

Sources

Bloomberg

Bank profits tumble as new laws for credit cards start working

Peter Stone — Tue, 22 Feb 2011 18:20:57 +0000

Credit card issuers, such as Bank of America, have been affected by new laws regarding credit cards. Image: MoneyBlogNewz/Flickr.com/CC-BY

New regulations for credit cards on how interest rates and fees can be assessed are working. However, some loan lenders are lamenting the new rules that require greater disclosure when changing terms with customers. Outlawing guerrilla-style fee and interest raises has led Bank of America and other companies to lose value from credit card units.

Bank of America realizes loss from credit card unit

The largest loan lender in the nation, Bank of America, recently announced that it would be adjusting previously filed financial statements regarding the banks’ credit card unit, according to Bloomberg. B of A announced that it was adjusting a write down of FIA Card services, its credit card unit, for late 2009 from $10.4 billion to $20.3 billion, meaning the credit card unit is worth $20.3 billion less thank it was in 2008. In other words, the company adjusted previous filings to reflect a greater loss of value than previously thought. The write down is not a true cash loss, but an adjustment of the “goodwill” value, or the value of an asset above market value, due to the prestige of the holder of the asset. The bank cited regulatory conditions and “deteriorating credit quality” for FIA Card Services being worth $10 billion less than estimated in 2009.

CARD Act cited for losses

Some credit card loan lenders, such as Bank of America, are claiming that they are being hampered by new regulations, specifically the CARD Act, or Credit Card Accountability Responsibility and Disclosure Act. It is posited that the act means less access to advance cash for further lending, though this means that the law is working. Since the CARD Act was enacted, fewer people have been hit with late fees and stung with sudden interest rate raises, according to CNN.

New card law a smashing success

The CARD Act has yielded some great results. Since the law was passed, studies show that about 2 percent of card holders had interest rates raised, compared to 15 percent before the CARD Act was passed. Late fees, which accounted for $901 million in instant cash for card issuers in January 2010 — before the Act took effect in February 2010 — had dropped to $427 million by November 2010. That means companies from Scottsdale to Birmingham and all over the U.S. that look to seemingly surreptitious practices for revenue are having a harder time, which is what the CARD Act is supposed to do.

Sources

Bloomberg

The adjustable rate mortgage is staging a comeback

Peter Stone — Mon, 14 Feb 2011 22:53:21 +0000

The adjustable rate mortgage was blamed in part for the recession, but it is starting to make a comeback. Image from Wikimedia Commons.

One of the supposed causes of the real estate collapse and recession of the last few years was something called an adjustable rate mortgage. An adjustable rate mortgage, or ARM, can be misunderstood and, in fact, has a lot of benefits for some buyers. The ARM is starting to make a comeback.

Adjustable Rate Mortgages vilified

During the real estate crash and recession, one of the financial instruments that was blamed was the adjustable rate mortgage. Unscrupulous loan lenders would offer mortgages with a low introductory rate. The interest rate would be drastically raised, pulling the rug from under the homeowner. However, when handled by the right bank and in the right situation, the adjustable rate mortgage, or ARM, is not inherently evil. For some people, it is the perfect loan, according to CNN. That is largely why sales of ARMs have risen to 5 percent of all mortgages in 2010, up from 3 percent in 2009. It is predicted that 10 percent of all mortgages lent during 2011 will be ARM loans.

Perfect for some homeowners

The flagship of all mortgages is the 30-year fixed rate mortgage, in which the rate never changes. An ARM has a lower introductory, averaging currently about 3.5 percent. The increments at which an ARM can be raised are limited by law, and so is the final interest rate. If a person plans to live in the home for five years or fewer, it makes more sense to get an ARM, as payments will be less and payments over the minimum can net greater equity. So if a person is planning to transfer from Jackson, Mississippi, to Birmingham, Alabama only a few years from when they purchase the home, it may be better to go with an ARM.

Flipping houses

The ARM is also great for homeowners attempting to flip homes and sell them for profit. By selecting an ARM, the homeowner has more instant cash that can be put into the remodeling budget. The trade of flipping houses could also make a comeback, according to Reuters, as the Federal Housing Association is extending a program providing government backed mortgage insurance on homes that are resold within 90 days of a previous sale.

Sources

Jackson Hewitt sues H&R Block over short term loan ads

Peter Stone — Mon, 31 Jan 2011 22:17:22 +0000

Jackson Hewitt is suing H&R Block for defamation. Image from Wikimedia Commons.

Tax preparation giant H&R Block is being sued by Jackson-Hewitt over an ad campaign blasting the short term loan program offered by Jackson Hewitt. Both companies offer some form of a refund anticipation loan or a loan against an income tax return. Tax season is when both companies make the bulk of their revenue.

H&R Block’s short term loan ads land company in court

An advertising campaign run by tax preparation giant H&R Block has resulted in the company being sued by competitor Jackson Hewitt, according to Reuters. The lawsuit alleges that H&R Block deliberately misled consumers about Jackson Hewitt through the commercials about a program called “Second Look,” which mentions Hewitt by name. The commercial offers a free review of returns prepared by competitors. The commercial says two of every three returns prepared by Hewitt had errors and had missed deductions. Hewitt is also claiming that Block made false statements about the short term loan program Hewitt offers, being refund anticipation loans, or RALs. Hewitt maintains that customers can get a loan of up to $1,500 in day.

The tax cash advance

Refund Anticipation Loans are a cash advance against an income tax refund. Filers who are due a refund can get a check for their expected refund amount, minus a fee for the preparer and loan lender. The tax preparer files the return and takes the income tax return as payment, while the borrower walks away with instant cash rather than waiting for a deposit or a check. H&R Block is unlikely to be able to lend these loans this tax season, as a key financier and partner of Block, HSBC, was forbidden from funding the loans by the U.S. Treasury.

IRS advises to e-file

The Internal Revenue Service does not have an official position on RALs but suggests people electronically file and elect to have their refund directly deposited. A refund can be deposited electronically in far less time than it takes for a paper check to arrive, whether the check is being sent to Jackson, Mississippi, or to Hawaii.

Source

Estimates project Social Security will run out of cash by 2037

Peter Stone — Fri, 28 Jan 2011 22:51:48 +0000

New estimates for Social Security indicate the program will run deficits until 2037, when the trust fund will run as dry as the Bonneville Salt Flats. Image from Wikimedia Commons.

New estimates project that Social Security will run out of cash by 2037. The estimates, from the Congressional Budget Office purport that Social Security will run a deficit until 2037, when the trust fund will be completely depleted. Recent tax cuts already have given advance cash out of Social Security revenue.

Constant deficits projected for Social Security

A new series of projections for the Social Security program by the Congressional Budget Office estimates that Social Security will run a deficit from now until 2037, according to MSNBC. The new projections are a reversal from last year, when the CBO had a far rosier estimation of the health of the Social Security Administration. In 2010, the SSA ran a deficit for the first time since the Reagan administration, but the CBO estimated Social Security would recover from any shortfalls by 2012. Previous estimates had projected a $45 billion shortfall for 2011, but it is now estimated that the shortfall will increase to $130 billion. The CBO also contends that Social Security will continue to post deficits until 2037, when the Social Security Trust Fund is expected to run out, leaving retirees from Alabama to Arizona high and dry.

Rare losses

The Social Security Administration had not run at a loss since the 1980s, though it is the single largest expenditure in the national budget. Budget surpluses of Social Security, which have been constant until recently, were put into the Social Security Trust Fund but have been a frequent source of emergency loans for the U.S. government. This year, the government is expected to run a $1.5 trillion deficit, which is more than a government can take out some personal loans to cover.

Tax cuts a partial culprit

Part of the problem, if the CBO’s estimates prove correct, is that the Bush era tax cuts that were re-extended included a reduction of Social Security payroll taxes. The loss of revenue will only exacerbate the loss, though Congress has pledged to put up the necessary funding to cover the loss.

Source

MSNBC

Debt settlement plans more likely than state bankruptcy

Peter Stone — Wed, 26 Jan 2011 23:55:17 +0000

Congressional leaders such as Eric Cantor have insisted on debt settlement options before state bankruptcies can even be contemplated. Image from Wikimedia Commons.

There has been speculation that some U.S. states will declare bankruptcy due to budget issues, but debt settlement plans are more likely. Senior members of Congress have discussed it, but key Republicans have dismissed the idea. However, further loans from the government are not likely either.

State bankruptcy less likely than debt settlement measures

Most U.S. states, if not all, have encountered some sort of budget shortfall since the recession began in 2008. Fewer people employed — and therefore purchasing goods and services — combined with a sluggish housing market has exacerbated state budgetary woes. The idea of state bankruptcy has been discussed, but top Republican lawmakers are not entirely receptive to the idea, according to Reuters. House Majority Leader Eric Cantor expressed that debt settlement options exist outside of passing legislation to allow states to declare bankruptcy, including drastic spending cuts. The possible outcomes from allowing state bankruptcies could include the growing municipal bond market collapsing. However, it has also been made clear that emergency loans, like those included in the bailout packages, were not likely to be lent.

States insist bankruptcy not on agenda

Some state governors of states with budget woes have insisted that their respective states would not consider bankruptcy. Governors Christine Gregoire (Wash.) and Dave Heineman (Neb.) issued a joint statement to the effect that neither state would file for bankruptcy even if it were made an option legally. There are 44 states looking at a budget shortfall in the next year, according to the Center on Budget and Policy Priorities. Only six states — Alabama, Arkansas, Alaska, Delaware, North Dakota and Wyoming — are not expecting to be short instant cash at some point.

Toughest years possibly behind

Most economic forecasts have been for a slow but steady growth out of recession conditions. The possible ramifications for a state government to declare bankruptcy could be catastrophic, and thus the idea is too dangerous for lawmakers to contemplate. Federal bankruptcy courts would be tied up for years were that to happen.

Sources

CBPP

Banks demanding advance cash for checking accounts

Peter Stone — Tue, 25 Jan 2011 18:11:43 +0000

People are going to have to pay advance cash to banks more often to use their checking accounts. Image from Wikimedia Commons.

People who bank with the nation’s largest banks are going to have to start paying advance cash for having a checking account. Free checking accounts are all but gone at major banks, now that U.S. Bank is rumored to be jumping on the account fee bandwagon. Increasing bank fees are a trend unlikely to cease.

Banks charging advance cash

Free checking accounts, from the customer’s standpoint, were far preferable to checking accounts with fees. It used to be an account holder simply had to pay for blank checks, they didn’t have to pay the bank advance cash to keep the account open for another month. Account holders at the nation’s largest banks can bid goodbye to those days, as free checking accounts are becoming a thing of the past. Bank of America, Wells Fargo and JP Morgan Chase all introduced new fees on checking accounts, and U.S. Bank is likely going to hop on the bandwagon, according to CNN. More people can expect to have to part with some instant cash to use their own money.

Get around fees

Avoiding bank fees is one of the more common reasons people take out a payday loan, but there are other ways around bank fees as well. Consumers should check with their banks to find out what loopholes they might be able to use to get around fees. For instance, check to see if a minimum balance can get any maintenance fees waived and whether monthly direct deposits can get fees waived. Some banks will waive account fees after a minimum number of purchases with a debit card.

Free checking will not die

Just because major banks are instituting fees does not mean free checking is going extinct. For instance, many community banks and credit unions offer free checking accounts and lower fees than major banks. Fees at those institutions go back into the community, not toward funding an executive ski chalet in Scottsdale, Arizona.

Source

Gas prices expected to continue rising in the year ahead

Thomas Hart — Fri, 21 Jan 2011 22:48:49 +0000

Gas prices are rising and rising demand, along with seasonal supply restrictions, could result in $4 a gallon gas in 2011. Image: qthrul/Flickr

Gas prices rose to the highest level in more than two years in the week ending Jan. 21. A record global demand for oil in 2010 has been driving the spike in gas prices, along with restrictions in supply. Analysts expect gas prices to continue upward, and U.S. motorists may pay $4 a gallon this spring.

Average gas prices rising

The national average for gas prices was about $3.12 a gallon Jan. 21, according to AAA. The last time gas prices approached that average was October 2008. The price differs from one region to another, depending on such factors as demand and state gasoline taxes. In Salt Lake City gas averaged $2.74. A bank loan is practically necessary for a fill-up in Honolulu, where it’s $3.58. Average gas prices have risen 9 percent in the U.S. since Dec. 1, though oil prices fell on Jan. 21. Benchmark crude for March delivery dropped to $89.11 on the New York Mercantile Exchange. Oil speculators hungry for instant cash are nervous about Chinese plans to cool its overheating economy, which has a voracious demand for oil.

Gas prices a drag on recovery

Oil industry experts contend the world produces 5 million barrels a day more than it consumes. Oil speculators have been driving up gas prices over the last several months. They are hoping the U.S. economy is on the verge of taking off. But higher gas prices may work against a more robust recovery. According to Cameron Hanover, an energy consulting firm, for every 1 cent rise in gas prices, U.S. consumers spend another $4 million at the pump. The average gas price in the U.S. rose 12 cents in the last month, diverting another $48 million — not good news for those who had already budgeted their cash until payday.

What to expect in 2011

Some experts have said gas prices could approach $4 a gallon this spring. In addition to oil speculators, supply factors will have an effect on gas prices. In the next few months gasoline refineries will scale back production in preparation for a switch to summer automotive blends. Americans increase their road miles in the spring and summer. OPEC may also choose to further restrict production to sustain the upward trend in the price of oil. Supply also has yet to recover from the drilling moratorium in the Gulf of Mexico, which the Energy Information said will cut oil production by about 120,000 barrels a day this year.

Sources

ABC News

KING 5.com

Prepaid debit card fees can add up to a lot of cash quick

Peter Stone — Thu, 20 Jan 2011 18:37:11 +0000

Prepaid debit cards have of advantages, but the fees can total up to a lot of cash quick. Photo Credit: MoneyBlogNewz/Flickr.com/CC-BY

Prepaid debit cards have become quite the popular item for people who don’t want to deal with banks, but the fees can add up to a lot of cash, quick. There are some benefits to using prepaid debit cards, but consumers should comparison shop to find the best one.

Avoid being drained of cash quick by checking prepaid card fees

Prepaid debit cards are not a bad idea. A person purchases a card and deposits money into an account tied to the card, just like a debit card for a checking account through a bank. They are better than credit cards because they use real money and don’t create debt. However, the fees can add up to a lot of cash, and quick. The first fee to look at is the monthly maintenance fee. The standard seems to be about $5 or less. For instance, GreenDot is a prominent prepaid debit card line. A GreenDot card carries a $4.95 per month fee, but it gets waived when the customer makes more than 30 purchases a month or deposits more than $1,000 per month. Paying $5 a month just to have the account adds up to a pretty penny and a lot of instant cash over a year.

Beware wolves in pop clothing

Consumers should always be cautious when it comes to sponsored products. Some celebrity or sport endorsed products are of high quality. However, marketing firms know that celebrities lend instant credibility to a product regardless of quality and that some people will to pay extra for products backed by big names. Also, look for withdrawal and ATM fees. Some prepaid cards only charge for out-of-network ATM usage, so consumers should check to see whether that network is only one ATM in Jackson, Mississippi.

The benefits

One benefit of having a prepaid debit card is that the fees don’t change like checking accounts through major banks. Prepaid cards can also be reloaded with money just about anywhere, and that mobility is handy. Some people don’t like dealing with banks, and given the number of banking scandals in recent memory, that is completely understandable.

Self-filing taxes is better than giving preparers a pay day

Peter Stone — Tue, 18 Jan 2011 22:29:48 +0000

By self-filing, a person can save time and cash by not giving a preparation service a pay day. Image from Wikimedia Commons.

A lot of people might be better off self-filing their taxes instead of giving a preparation service a pay day. It is not difficult, and most people can file electronically for free through numerous avenues. It is a good way to gain self sufficiency and save some money during tax season.

Cut the middleman and save money by self filing

Soon enough, the tax filing deadline of April 18 will be here. A lot of people take their tax returns to a tax preparation service, such as H&R Block, and a preparer fills out and submits an income tax return for them. The majority of Americans, from Alabama to Alaska, use a professional preparer, as about 60 percent of all returns are done by a preparation service annually, according to USA Today. Unless a person has a laundry list of itemized deductions to make, a lot of Americans really don’t have to give preparers a pay day and could be saving instant cash by self preparing. That said, people with complex returns should have their returns prepared by a professional. However, someone with only a 1040 EZ or 1040A likely doesn’t need to worry.

E-file for free

The Internal Revenue Service has an entire page dedicated to E-file services, many of which are available completely free of charge for people with an Adjusted Gross Income less than $58,000. There are numerous tax software companies, including TaxSlayer and TurboTax, that allow a person to file a free federal return, and free software for preparing a return through numerous other companies. TaxAct and H&R Block both offer free home editions of their tax return software, though that means people won’t be able to get short term loans against their returns if they need them.

Direct deposit means faster dispersal

People who elect to receive their income tax return through direct deposit can expect to get it sooner than a person who chooses a paper check. That way, instead of having to check out Wheresmyreturn.com, taxpayers need only to check their account balances.

Sources

Ways to save instant cash on leisure activities

Peter Stone — Sat, 15 Jan 2011 21:54:36 +0000

There are ways to save serious instant cash on leisure activities, like checking out books from a library instead of buying them at a bookstore. Image from Wikimedia Commons.

There are a lot of ways to save instant cash by cutting corners on leisure activities. Believe it or not, there are ways to still have fun and not have to sacrifice much at all. One just has to be creative and know a little.

Ways to cut leisure expenses and save some serious cash

Leisure activities are a necessary expense in order for people to stay mentally healthy. For instance, a lot of people love movies. It’s a time honored tradition, and a lot of instant cash gets spent at theaters every year. However, that doesn’t mean paying full price. For instance:

Matinees at theaters are usually 25 percent cheaper or more
Most cities have discount theaters that show films that have been out for awhile at half the cost or less
Only go to the theaters if it counts – limit your trips to just a few special films and wait for the rest to come out on DVD
Check out free streaming movies Netflix and other services

Get a library card

Libraries are increasingly neglected resources. Most are funded publicly, and a library card is worth it. Late fees won’t make a person run for a loan until payday. Checking out a book from the library means not having to pay Barnes and Noble a lot of money, and because most public libraries have DVD selections, you may even be able to avoid paying for rental. There are public libraries in nearly every town in America from Alabama to Alaska.

Learn to cut corners

There is no reason to pay full price for anything there is an alternative to if quality is not compromised. Just because a movie or book is a little older doesn’t mean it is no good. Cutting corners when it comes to leisure activities without sacrificing is entirely possible and can mean some serious spare change in the pocket.

Major banks want more cash advanced from customers

Peter Stone — Fri, 07 Jan 2011 22:44:30 +0000

Major banks are starting to demand more cash be advanced to them simply for having an account with them. Photo Credit: MoneyBlogNews/Flickr/CC-BY

Major banks are all starting to require some cash advanced by checking account holders just for the pleasure of banking with the company. Fees for checking accounts are being raised at most major banks, but there are ways of getting around them. People using their own money are having to pay more for it.

Banks want cash advanced just for banking with them

Part of the marketability of the nation’s largest banks is that they project an image of more security. Banks know this, and now they want some cash advanced to them just for the pleasure of banking with them. The largest national banks are raising fees on checking accounts, according to CNN, and the changes are starting soon. JPMorgan Chase has announced that new checking accounts will automatically be opened under the new Total Checking program, which has a base monthly maintenance fee of $12 a month. Bank of America is instituting fees on checking accounts, from $8.95 to $25 a month, depending on the plan. It appears Corporate America wants people to pay to use their own pay day cash.

Free checking not disappearing

It may seem there aren’t any banks that offer free checking anymore, but nothing could be further from the truth. The majority of credit unions and community banks offer free checking, and because credit unions are nonprofit organizations, an account holder is essentially injecting instant cash into their own community. Credit unions and community banks are in nearly every city, in every state, from Alabama to Arizona, and all points in between.

The same folks who needed bailouts

These are the same people who also received billions in the bailouts. Not only do they want more of our earnings, they want our tax dollars too. Not that these companies are all bad, but it certainly means that more people are going to be excluded.

Source

Largest loan lenders may settle with attorneys general quickly

Peter Stone — Tue, 04 Jan 2011 18:50:37 +0000

The largest national loan lenders might settle quickly in the investigation of "robo signing." Image from Wikimedia Commons.

The largest loan lenders may be the first to settle with various state attorneys general. All 50 states are investigating foreclosure practices and procedures of various banks and loan companies. The findings indicate not everyone has played by the rules.

Quick settlement may be forthcoming from large loan lenders

As every state attorney general is looking into foreclosure practices, especially the “robo-signing” controversy, the nation’s largest loan lenders for mortgages are lining up to reach a settlement as quickly as possible, according to Reuters. A widespread probe into mortgage foreclosures began several months ago, conducted by attorneys general from all 50 states, so foreclosures from Scottsdale, Arizona, to Birmingham, Alabama, will be scrutinized. It appears that the nation’s largest loan lenders are ready to settle, including Bank of America, Wells Fargo, Ally Financial, JP Morgan Chase and Citigroup, according to a recent statement from Iowa Attorney General Tom Miller. No concrete settlement has been reached, and no instant cash handed over for fines yet, but that could be the case fairly soon.

States shun bad practices

The finance industry has been under heavier scrutiny over the past few years, and the revelation that banks may have mechanically produced foreclosure documents without merit, which is called “robo-signing,” certainly does not paint the largest loan companies in the nation in a good light. People may have been issued foreclosure notices even though they were up to date on the installment loans they borrowed for their homes; this explains why all 50 state attorneys general are looking into the matter.

Housing market still down

The housing market is still on a shaky foundation. Homes have been losing value, and fewer people are confident about buying. If consumers become less confident that the institution that their mortgage was obtained through is honest or trustworthy, it could be a recipe for disaster.

Sources

H&R Block stops offering short term loans against tax refunds

Peter Stone — Tue, 28 Dec 2010 23:16:56 +0000

H&R Block won't be offering any short term loans against tax refund checks this year. Image: MoneyBlogNewz/Flickr.com/CC-BY

This year, H&R Block will not be offering any short term loans against tax refunds. Refund Anticipation Loans, or RALs, are loans lent by a preparer against a potential refund, less a fee. The banking partner of the company was forced out of offering the loans by regulatory bodies.

No more short term loans from H&R Block

The nation’s largest tax preparation service, H&R Block, previously offered a credit product to customers called a Refund Anticipation Loan. The loans, RALs for short, are offered by many tax preparation services. It’s a short term loan against an anticipated tax refund, with a fee subtracted from the refund total. The preparer cuts a check or dispenses instant cash, and the refund check is turned over to the preparation service. In other words, if a person should hypothetically get an $800 tax refund, but needs money now, he or she can get an RAL for $725 against the $800 return. The return check goes to the preparer, if the return is accepted. Recent regulatory action has forced H&R Block to stop offering the loans.

HSBC forced out of bankrolling the loans

According to USA Today, the former partner of H&R Block in funding the cash advances against tax refund checks was HSBC. HSBC was ordered not to proceed with funding any of this type of quick loan to customers by the Office of the Comptroller of the Currency, part of the Department of the Treasury. This forces HSBC to withdraw from its agreement with H&R Block. H&R Block tried to sue to keep HSBC in the agreement, but was not successful. H&R insists it will have alternatives, but there is likely to be some loss in business as customers from Kansas City to Chicago to San Diego will have to seek RALs from other preparers.

IRS cautions against using RALs

The Internal Revenue Service has long cautioned people not to take RALs against tax refunds. The IRS recommends that people use e-filing, as e-filing through the IRS or affiliated E-file programs is free for some taxpayers, and refund checks can be direct deposited in a couple weeks.

Source

Debt settlement relief companies ignoring memo from government

Peter Stone — Tue, 21 Dec 2010 21:55:14 +0000

A debt settlement relief company that offers the end of debt for pennies on the dollar is likely a scam. Image: MoneyBlogNewz/Flickr.com/CC-BY

In the last few years, there has been a growing number of debt settlement relief companies offering to get people out debt. Some of these companies are on the level, but many are not and the government put rules in place to prevent dishonest practices. Many of these companies have not gotten the memo.

Debt settlement relief companies grow like weeds

The last few years have seen a growing number of debt settlement relief companies that promise to get people out of debt quickly, and ask for upfront fees that would send most people running for payday loans. Often the fee is a percentage of the total debts. Not all of these companies are created equal, according to CNN. A lot of people have given a lot of instant cash to these companies, never hearing a peep on the progress of their debt consolidation, only to find debt levels had remained the same if not worse than before. That is why the Federal Trade Commission put new rules in place that prevent firms from doing so. However, a lot of companies haven’t gotten the memo.

Too good to be true

If a company can wipe some away for an upfront payment that doesn’t make a person desperate for loans for bad credit to stay afloat, it seems like a good idea. However, a lot of these companies don’t do a thing, and pocket the fee. One company, Elite Financial Services in Missouri, was caught absconding with huge amounts of advance cash from customers and doing nothing about their debts, according to the St. Louis Business Journal, and had to refund all customers in Missouri.

Be careful

Another practice is for a company to add a lawyer to its staff, and claim the company is then a law firm. Still others will move corporate charters to foreign countries to avoid U.S. jurisdiction. Consumers that get offers for debt relief should research the company the offer comes from thoroughly.

Sources

St. Louis Business Journal

Shoppers need less pay day cash to nab holiday gifts

Peter Stone — Fri, 17 Dec 2010 19:08:59 +0000

Shoppers may have to part with less pay day cash to stock up under the tree this year. Image from Wikimedia Commons.

Shoppers may end up having to part with less pay day cash during holiday shopping this year. Consumer items that are common gifts are priced drastically lower than they have been in decades. The news may not be fantastic for retailers if sales are sluggish, though.

Gift items going for least amount of pay day cash in decades

Shoppers may have to part with less pay day cash to stuff stockings this year. The average prices on consumer goods that typically fly off shelves during the holiday shopping season are at the lowest levels in decades, according to CNN. The price of small appliances, like toasters and coffee makers has dropped 30 percent since 1998. Television sets have dropped more than 90 percent since 1980, and stereo equipment has dropped 50 percent in price since that time. The benefit for consumers that they “get to buy more crap,” as John Norris, a wealth management director in Birmingham, Alabama, puts it. Typically, a good shopping spree results in a lot of people needing installment loans to cover the tab, but that may not be the case this year.

Discounts at register pick up the pace

Retailers are offering more discounts than ever, despite the fact that shoppers were buying more this year, according to USA Today. The gains in holiday sales, especially around Black Friday, have been slight, but gains were realized nevertheless. Consumers have been shopping more, but not using credit cards to excess and running for a loan until payday in January. Retailers are willing to keep offering sales and discounts to get people into the stores to spend some instant cash.

Every little bit helps

Though economic conditions are such that people are not spending wildly like in past years, they are willing to spend a bit on gifts for the holidays. Whether it is a little something for themselves, or a loved one, the confidence among the public to shop again is an encouraging sign.

Sources

Chase fees may cost customers more cash per month

Peter Stone — Wed, 15 Dec 2010 23:07:07 +0000

Chase wants more instant cash from customers who are audacious enough to be poor and bank with them. Image from Wikimedia Commons.

Chase banking customers will soon start to see more cash going out the door in bank fees. Major banks are raising account fees left and right, as apparently even the biggest banking organizations are hard up for money. Regulations have made covert bank fees harder to institute.

Bank fees rise for least wealthy of Chase customers

JP Morgan Chase is raising the fees on some checking accounts that receive direct deposits that will cost the least wealthy of Chase customers more instant cash for the egregious act of simply banking with one of the nations’ largest banks, according to USA Today. Chase will be assessing a $6 fee on accounts that receive direct deposits if a deposit is less than $500. Say a person gets one $495 direct deposit and a $1,000 deposit of pay day cash into a Chase account every month. That person will end up with a $6 account fee because one of the deposits is less than $1,000 and that person had the audacity to not be rich while banking with JPMorgan Chase. The fees take effect in February of 2011.

Punishment of the poor

The people who will end up getting hit with the fees and having to advance cash to Chase for having an account that receives deposits with them are the most vulnerable. Mostly, it will be retirees and the unemployed. Many people receive unemployment benefits that total less than $500 per check, and about 7 percent of people living off of Social Security benefits receive $500 or less as well. Apparently, if a multi-billion dollar corporation needs money now, the best source for it is people who really do need money now.

Even the largest banks need money

Major banks, such as Chase and Bank of America are thought of as virtuous bastions of capitalism but have begun notoriously raising bank fees in the open as regulations make it harder for them to do so covertly. For instance, a bank cannot automatically enroll a person in overdraft protection without asking them first. Overdraft fees are one of the largest sources of revenue for banking institutions.

Sources