You are currently browsing the monthly archive for December 2010.
Jeannie Nuss of The Associated Press (as reported in The Maui News, December 22, 2010) notes that a handful of Yoga studios accross the country have began to offer free or reduced priced classes to the unemployed in order to learn how to deal with the stress of unemployment.
"It helps to quiet the mind and helps people realize that this is a temporary situation," says Jo Sgammato, general manager at Integral oga Institute in New York.
Practicing yoga is believed to reduce stress and improve concentration. Some studios also offer special classes to help vetrans work through traumatic experiences and women cope with pregnancies, according to Ms. Nuss of the Associated Press.
The Wall Street Journal (Andrew Batson) reported on Thursday, December 16, 2010 ("Marketplace" page B1) that the US does not receive trade credit for its high technology advancements when trade balances/imbalances with other countries are calculated.
Mr. Batson took the example of Apple Inc.’s iphone. The iphone added $1.9 billion to the U.S. trade deficit in 2009 because the traditional ways of measuring global trade fails to reflect the current realities and complexities of global commerce where the design, manufacturing and assembly of products often involve several countries. The current measurement standards result in distortion, according to Mr. Batson.
Of the I-Phone’s $178.96 estimated wholesale cost of the shipped phone which is shipped from China, the entire cost is of the phone is credited to China, even though the value of the work performed by Chinese workers is a mere $6.50 per phone and is limited almost exclusively to assembly only – with other parts of the phone components manufactured elsewhere e.g. 34% from Japan, 17% Germany, 13% South Korea 6% United States, 27% other countries. Only 3.6% should be attributed to China under a "value added" approach, instead of attributing the shipping country, China, with the entire $178.96 wholesale cost.
The Chinese have been quick to pick up and leverage upon this alleged mis-calculation to Chinese detriment. Mr. Batson reports as follows:
"…research also found that Chinese labor accounted for only a few dollars of the iPod’s value, even though trade statistics credited China with producing its full value. In a speech in September in New York, Chinese Premier Wen Jiabao cited that research to argue that trade tensions between the US and China are overblown."
Wall Street Journal, Thursday, December 16, 2010.
President Obama has proposed small cuts in the mortgage home interest deduction for top earners in the past. The current deduction allows taxpayers to deduct interest paid on mortgages up to $1 million for first and second homes, and up to $100,000 in additional home-equity borrowings.
Early in December 2010, the president’s deficit reduction commission proposed reducing the mortgage interest deduction.
According to the Wall Street Journal’s S. Mitra Kalita and Nick Timiraos (Thursday, December 16, 2010, Page A7, “Homeowner Perks Under Fire”), mortgage deductions will reduce tax revenue in 2012 by $131 billion.
President Obama’s deficit panel seeks to replace the current system with a flat 12% tax credit for interest on mortgages up to $500,000 for first homes.
Another growing debate is whether the government should reduce its role in backing mortgages, as at present, 90% of new mortgages are government backed.
Kalita and Timiraos report that Michael Farrell (Chairman of Annaly Capital Management, a NY-based, mortgage bond investor) believes that if the government stopped guaranteeing mortgages through organizations like the Federal Housing Administration, Fannie Mae and Freddie Mac, that interest rates could be at least two to three percentage points higher.
Back to the subject of possible changes to the home mortgage interest deduction. Kalita and Timiraos report that a Wednesday, December 15, 2010 WSJ/NBC News poll found that 60% of Americans found it totally or mostly acceptable to eliminate the mortgage deduction on second homes, home-equity loans and any portion of a mortgage over $500,000 – consistent with the recommendations of the presidential deficit reduction commission.
Ideas for Action:
If the ability to deduct home mortgage interest from federal income taxes is in question, and inflationary pressures are on the rise in the economy, then refinancing your mortgage to the lowest rate that you qualify for is one of the most prudent defensive measures that you can take.
I warned earlier of two “off topic” posts. The earlier was a post about the historical origin of the Lady Justice Figure (you know, the sword, blindfold, and balance scale figure). This is the second “off topic” post for those of us old enough to remember any Soviet leader prior to Gorbachev.
The New York Times reported on how to survive a nuclear terrorist attack or other true meltdown.
First, if you are in a concrete underground parking garage – stay put! You will be generally well sheltered from radioactive fallout.
Second, if you are in a home, head for the basement, if you have one.
Third, if you are in a car and can’t readily and very quickly leave it to move to an underground location, stay put.
Fourth, don’t flee – get inside.
This is all wisdom quite to the contrary of advice of an earlier time to flee the area.
The second or lower level of an underground concrete parking garage is the best place to take refuge and strangely enough, the core of a large office building about three stories off of the ground takes a second place.
Even staying put for a few hours after the “blast” in such an underground location will make a huge difference in long-term survival rates.
Here is the latest thinking from Brooke Buddemeier, a Livermore health scientist, as quoted in the NY Times Article of Thursday, December 16, 2010, as reported by William J. Broad:
“The big surprise was how taking shelter for as little as several hours made a huge difference in survival rates. ‘This has been a game changer,’ Brooke Buddemeier, a Livermore health physicist, told a Los Angeles conference. He showed a slide labeled ‘How Many Lives Can Sheltering Save?’ If people in Los Angeles a mile or more from ground zero of an attack took no shelter, Mr. Buddemeier said, there would be 285,000 casualties from fallout in that region. Taking shelter in place with minimal protection, like a car, would cut that figure to 125,000 deaths or injuries, he said. A shallow basement would further reduce it to 45,000 casualties. And the core of a big office building or an underground garage would provide the best shelter of all. ‘We’d have no significant exposures,’ Mr. Buddemeier told the conference, and thus virtually no casualties from fallout.”
Part of the “don’t flee” idea came from the expectation that the initial flash would blind many drivers on the road, resulting in so many accidents that the road infrastructure would become impassable.
[Categories: Washington Bankruptcy Attorney]
How do I apply for a modification under HAMP?
If you meet the general eligibility criteria for a modification under HAMP, you should gather the financial documentation that your servicer will need to determine if you qualify (See "What information and forms will I need in order to be considered for HAMP?"). Once you have this information, you should contact your servicer and ask to be considered for a modification under HAMP. The servicer’s phone number and email address is on your monthly mortgage bill or coupon book. Please be patient yet persistent. Your servicer may be handling a large volume of inquiries about the program and it may take some time before your servicer is able to process your application.
If you would like to speak to a housing counselor, call 888-995-HOPE (4673). HUD-approved housing counselors can help you evaluate your income and expenses and understand your options, and apply to your servicer for HAMP. This counseling is FREE.
If you have already missed one or more mortgage payments and have not yet spoken to your servicer, call your servicer immediately.
What information and forms will I need in order to be considered for HAMP?
Recently, Treasury announced a more streamlined homeowner evaluation process. Now, in order to apply for a Home Affordable Modification, homeowners can submit proof of income (See "What proof of income will I be required to provide with my HAMP application?") plus the following two forms:
The MHA Request for Modification and Affidavit Form (RMA). This Form captures information on borrower income, expenses, subordinate liens on the property, and liquid assets. It includes a Hardship Affidavit, fraud notice, and information about the Trial Period Plan.
The Internal Revenue Service (IRS) Form 4506T-EZ (Short Form Request for Individual Tax Return Transcript). This form gives permission for your mortgage servicer to request a copy of the most recent tax return you have filed with the IRS. After you have completed the form, print two copies—one for your records and one to send to your mortgage servicer.
Visit the "Request a Modification" section of MakingHomeAfordable.gov for more detailed information.
What proof of income will I be required to provide with my HAMP application?
Be prepared to submit a copy of your two most recent pay stubs that show year-to-date earnings. If you are self-employed, you must provide your most recent quarterly or year-to-date profit/loss statement. Visit the "Request a Modification" section of MakingHomeAfordable.gov for more detailed information. If you cannot find the required documentation, or have questions about the paperwork required, please call 888-995 HOPE (4673) and ask for "MHA HELP."
I’m self-employed. How do I get a copy of my most recent quarterly or year-to-date Profit and Loss Statement?
Contact your CPA (Certified Public Accountant) or the licensed tax professional who assisted you in completing your tax documentation.
What types of documentation would be considered reliable enough to validate "Other Earned Income" for HAMP?
148B
Other earned income (bonus, commission, fee, housing allowances, tips, overtime) must be documented by your employer in either your paystubs or other employment paperwork/contracts. Homeowners are encouraged to work with their employers to gather this information to describe the nature of the income and the continuity of the income.
51.
57BHow do I get evidence of benefit income (e.g., social security, disability, death benefits, pension, public assistance, adoption assistance)?
149B
You can provide a copy of benefit letters/statements, disability policy, or receipt of payments such as copies of two most recent bank statements showing electronic deposit of benefits. For additional information regarding social security, disability or death benefit income, contact Social Security directly toll-free at 1-800-772-1213 or visit their website at www.socialsecurity.gov. For all other benefits, you must contact the provider directly for additional information.
52. How do I get evidence of unemployment benefits?
Evidence of unemployment income may currently be obtained through the Department of Labor UI benefit tool, which is available at http://www.ows.doleta.gov/unemploy/ben_entitle.asp. After the Home Affordable Unemployment Program (UP) becomes effective on July 1, 2010, unemployment benefits and severance pay will no longer be acceptable sources of income for HAMP consideration. (See "Home Affordable Unemployment Program (UP)" for more information about help for unemployed homeowners.)
My rental income was not reported on last year’s tax returns because the property was vacant. What documentation do I need to validate rental income?
In such cases where a property has recently been rented, a signed Rental Agreement contract must be provided to show: the property address, date of contract, lessees name and address, rental amount and rental period. The contract must be signed by all parties (lessor, lessee, rental agents etc.)
How do I get a copy of my Divorce Decree, Separation Agreement or other legal written agreements filed with a court (e.g., alimony or child support)?
Gather the information listed below and contact the Office of Vital Statistics in the state where your divorce occurred. The homepage of the state’s website will provide a link/information on how to contact the office of Vital Statistics. Generally, the documentation needed may include, but is not limited to, the following:
Date of your divorce
Full name of spouse
Your driver’s license number
Purpose for which record is needed
Your name and address, together with a self-addressed, stamped envelope
See the June 8, 2010, government publication re: info relevant to this post: http://makinghomeaffordable.gov/docs/BORROWER%20FAQs_6-8-10.pdf
This post is a bit off topic for this blog, but I thought you might find something a bit out of the ordinary refreshing.
The lady with the balance scales, sword, and blindfold comes from ancient history. This symbol is used in American jurisprudence as a representation of judicial justice.
She was known as Maat in ancient Egypt – the goddess of harmony and order. She is depicted in the Book of the Dead as weighing a human heart against a feather to determine a soul’s fate in the afterlife.
She evolved in ancient Grecian lore to become Themis, sister, wife and counselor to Zeus.
Roman mythology rolled Themis and her sister Dike together to form Justitia, the only one of the cardinal virtues to have a signature look in ancient art, reports Randy Kennedy in the New York Times, Thursday, December 16, 2010 edition.
Mr. Kennedy cites a recent book/treatise by Yale Law School professors Judith Resnik and Dennis Curtis. Resnik and Curtis recite that Lady Justice’s familiar blindfold did not become her fashion accessory until late in the 17th century (the 1600s).
Resnik and Curtis recite that medieval and Renaissance people did not view blindfolds favorably. Up into the 1600s sight was considered a virtue, and thus a blindfold carried a very negative connotation. Resnik/Curtis recite that a medieval/Renaissance term for a blindfold was a “hoodwink” – a noun – which today means to trick or deceive someone with an accompanying very negative connotation.
One interesting thing is that the image of Lady Justice seems to be something almost approaching universal although the exact look varies from culture to region. The Lady Justice figure can be found in courts from a statue at the Supreme Cout of Canada in Ottawa to one presideing over a constitutional court in Azerbaijan. The image can be found in courts of Zambia, Iraq, Brazil and Japan, according to Resnik/Curtis as reported by Randy Kennedy.
A grandstanding, self-serving and undisciplined avenger seeking local political status or a national law enforcer seeking to hold the rich and powerful to account? Ohio’s next Senator or Congressman? Opinions differ widely on Ohio Attorney General Richard Cordray.
See the NY Times October 12, 2010, article of Michael Powell: "The States vs. Wall Street – Crusaders for the Public’s Purse, in Ohio and Elsewhere".
http://www.nytimes.com/2010/10/12/business/12avenge.html?scp=1&sq=The+states+vs.+Wall+Street&st=nyt
Richard Cordray AG for Ohio, joins with Martha Coakly (AG for Mass.) Lisa Madigan (AG for Illinois) Roy Cooper (AG for North Carolina) and Tom Miller (AG for Iowa) – they are "cut from a mold like that of Eliot Spitzer, and give full throat to popular outrage." – Michael Powell, NY Times.
Michael Powell reports: "[Mr. Cordray] is no Wiliam Jennings Bryan inveighing against the evils of monopoly capital…he is, however, tapping a populist tradition in Ohio. THis is where politicians mounted challenges to the Standard Oil monopoly of John Rockefeller and where Senator John Sherman led a late 19th-century campaign to pass the Sherman Antitrust Act, which was the first law to require the federal government to investigate companies suspected of running cartels and monopolies…’the notion that banks will just get things right over time is perhaps true..but over that time period, and at what terrible cost to the individual American?’" Mr. Powell quotes Mr. Cordray.
Mr. Cordray has recently sued Bank of America in a "first of its kind" lawsuit in October 2009, accusing B of A oficials of concealing critical facts in the acquisition of Merrill Lynch, even as that firm careened towards insolvency. Top bankers, he said, had not come remotely clean about the extent of the losses at Merrill and its bonuses.
in the first week of October 2010, Mr. Cordray sued GMAC Mortgage over the "foreclosuregate" practices of allegedly filing thousands of false affidavits in Ohio foreclosures.
Mr. Cordray has wrung money out of lawsuits before (critics recite that the wealth banks just pay the settlements and then move on- calling it a "cost of doing business" – thus rarely amending their ways0 hitting Merrill Lynch for $475 million, $400 million from Marsh & McLennan and $725 from American International Group.
Is Richard Cordray out to help…or is he just out to grandstand for his own political gain? Keep an eye on Ohio Attorney General Richard Cordray – he may burst upon the national political scene – for better or for worse.
"Foreclosuregate" and "robo-signers" seem to be words fading from the public lexicon, although in September and October 2010, such words dominated business media.
"Robosigners" were individuals who signed vast numbers of foreclosure related documents (usually, affidavits for those states requiring bank affidavits in the processing of a foreclosure). The vast number of documents signed per month by such individuals begged the question of whether such individuals were truly signing and reviewing the foreclosure related documents and affidavits.
"Foreclosuregate" was the general name given to foreclosures that may have been flawed – either because the foreclosure was done with "robosigner" documents or was subject of some other technical mis-procedure.
Banks, their employees and their outsourced employees rushing "robosigned" documents through a foreclosure court (in those few states requiring a judge’s signature or judicial proceeding to foreclose – Washington state is not one of these states) may be undesirable, but perhaps understandable. Over 2.25 million foreclosures are expected in 2010, and 2 million more expected in each of 2011 and 2012. Many of these homes are abandoned – and many more involve owners who could not afford any mortgage payment whatsoever, so for that subgroup, even a modification is not plausible.
Perhaps three questions should be considered before the cheers grow to burn the foreclosure lawyers and the banks at the stake: First, did or did not the homeowner borrow funds to purchase a home? Second, did or did not the homeowner fail to make the payments? Third, what is to be gained by giving someone a "free house" by alleging technical procedural problems in a foreclosure?
Perhaps the most widley recognized consumer advocate attorney pursuing banks is O. Max Gardner, III, a Shelby, N.C. attorney. Mr. Gardner offers a "bootcamp" to lawyers to teach bankruptcy litigation techniques. Mr. Gardner is referenced the the October 16, 2010, NY Times article of Barry Meier – see link below:
First off, many kudos to Joe Nocera of the NY Times, the source of much of the info and inspiration in this post in his 11/27/2010 article:
"Liar Loans" a/k/a "stated income" loans were the forte of Countrywide, which may come to represent the dirtiest of all the subrime lenders. However, other companies also made stated income loans, in all fairness, and stated income loans have been around in one form or another since the 1980s.
However, Countrywide went around looking to purchase the "stated income" loans made by other companies, banks and lenders.
To help you understand this "behind the scense" squabbling between the banks and government, I quote from Stephanie Strom’s November 27, 2010, NY Times article:
"Take, for instance, that litigation between Countrywide and the Mortgage Guaranty Insurance Corporation (Ginnie Mae). For some time now, the mortgage insurer has refused to pay claims on thousands of stated-income loans it insured, on the unsuprising grounds that the loans were fraudulent at their inception and thus violated the terms under which the company insured them. In December, Bank of America (Countrywide) filed suit on behalf of its Countrywide unit, arguing, in effect that it doesn’t matter whether the loans were fraudulent. Since the insurer never asked for income verification – and accepted the fact they were stated income loans – it has to pay up. (Nearly a year later the litigation is just getting started.)
Now contrast that stance with Countrywide’s (B of A’s) effort to force smaller mortgage originators to buy back loans it had purchased. In these cases Countywide makes the exact opposite argument: because the loans were made fraudulently, the smaller companies have an obligation to buy them back. [ ]
Thus, when it serves Countrywide’s purposes (now owned by B of A) to argue that everyone knew the loans were fraudulent, it happily makes that case. But when it is better served by arguing that it is shocked – shocked! – to discover gambling in the casino, it makes that opposing argument wtih similar ease. Isn’t that the dictionary definition of hypocrisy?"
See "The Give and Take of Liar Loans", by Joe Nocera, NY Times Saturday, November 27, 2010.
http://www.nytimes.com/2010/11/27/business/27nocera.html
Many Kudos to Joe Nocera – a nicely written article!
Investors are mad, hopping mad, and Bank of America (and others) are in the crosshairs. Between 2004 and 2008 B of A assembled some $2 trillion in mortgage securities, and sold many of them off to investors, including Pimco and Black Rock, large money management companies.
These angry investors want to shove the cruddy mortgages down Bank of America’s throat.
This Nelson D. Schwartz October 20, 2010 NY Times Article is telling:
http://www.nytimes.com/2010/10/20/business/20bond.html
"But while the human toll of the foreclosure crisis has grabbed the headlines, the fight over how these loans were created in the first place could last much longer and ultimately cost the banks much, much more. And it is setting the stage for a huge battle between mortgage holders like the government (Fannie Mae, Freddie Mac and Ginnie Mae), hedge funds and other institutional investors on one side and teh big banks on the other. ‘It’s very serious said Glenn Schorr, an analyst with Nomura Securities. ‘The numbers are all over the map’ If the Fed and the investors succeed, it could cost Bank of America billions of dollars. On Wall STreet and in bank boardrooms,the question of whether investors can force banks to buy back, or "put back" bad mortgages to the banks that sold them is dominating the debate and worrying analysts, money managers and banking executives."
"The danger posed by angry – or opportunistic – investors ‘putting-back’ mortgages to the banks is hardly limited to Bank of America. Other giants like Citigroup and JPMorgan Chase face similar claims, and [on approximately October 14, 2010] JPMorgan set aside $1.3 billion just for the legal costs, including put-backs"
Gretchen Morgenson of the NY Times reports on October 16, 2010:
"…the settlement by Mr. Mozilo is the fist time that a prominent executive has been penalized personally for financial excesses linked to a mortgage boom that, when it went bust, threatened to topple the economy and led to an unprescedented wave of foreclosures."
"Earlier this year, Goldman Sachs paid a $550 million fine to setle securities fraud charges. Securities regulators are also investigating former senior executives at Merrill Lynch for possible securities fraud."
The SEC sued Mr. Mozilo alleging that he improperly generated profits on insider stock sales, and that he allowed "toxic" loan products to move forward, knowing them to be toxic.
Countrywide (acquired by Bank of America) is to pay $20 million of Mr. Mozilo’s settlement. Mr. Mozilo has also agreed to never again serve in a public company. (Note: Big fat deal – he is 71 years old and recorded gains on stock sales of over $140 million on Countrywide stock and for years was among the highest-paid executives in America – and was known as an audacious and flamboyant financier)
The settlement was reached four days before the scheduled beginning of a jury trial in Los Angeles.
Other Countrywide employees sued by the SEC (and whom settled) were David Sambol (former Countrywide president, paying 5.52 million) and Eric Sieracki (former Countrywide chief financial officer, paying $130,000).
Mr. Gordon has brain cancer. He is going to die, soon. Mr. Gordon used to sell expensive "actively managed" financial products that rarely, if ever, beat the market. Mr. Gordon feels poorly about this, and he wants you to learn how to avoid people like him who want to eat up all of your investment results through expensive actively managed mutual and bond funds.
Mr. Gordon wrote a book, it is called "The Investment Answer", co-written by Daniel C. Goldie.
If you are now earing more money, or have had your debts relieved, you should now have more funds to put away for your future.
Please consider reading Mr. Murray’s book.
You can get an overview of his book from the Saturday, November 27, 2010, NY Times article by Ron Lieber:
Median house prices have dropped 20 percent since 2005. Given an inflation rate of about 2 percent – a common forecast – it would take 13 years for housing prices to climb back to their previous levels – and that assumes no further value/price drops.
In Atlanta, the Southeast’s tallest building, the Bank of America tower, is one-fifth vacant – and the B of A just wrestled a rent decrease from the developer of the building.
In Cherry Hill, NJ, 10 percent of the houses on the market are so-called short sales, in which sellers ask for less than they owe lenders.
Commercial vacancies are soaring, and it could take a decade to absorb the excess in many of the largest cities. The commercial vacancy rates (end of June 2010) stand at 21.4% in Phoenix, 19.7% in Las Vegas, 18.3% in Dallas/Fort Worth & 17.3% in Atlanta, according to data firm CoStar Group.
According to the NY Times’ MIchael Powell and Motoko Rich’s October 13, 2010, article, "Some of the homes being offered at distressed prices are dragging down prices for less troubled homeowners who hope to sell. And with [some] foreclosures in disarray, the market could be further weakened."
"Even someone who is trying to sell a normal, well-maintained house is at the mercy of these low prices," said Walter Bud Crane, agent with Re/Max of Cherry Hill, NJ, as uoted by Powell and Rich.
I grew up in "gold bug" days of the late 1970s and early 1980s. There was even a gold mine up the street from my home during the mid 1980s (no joke!).
Nevertheless, I have never owned any gold. But I find gold fascinating.
Here is an article for you that I found interesting, it is Floyd Norris’ NY Times article from Friday, November 26, 2010 (Black Friday!) about investing in gold.
Gold is perhaps more of a statement than an investment, is what Mr. Norris points out. Read on, and I hope that you are as fascinated as was I. The article gave voice to feelings I held since I was a youngster 12-13 years old trying to understand Howard Ruff’s "How to Proposer in the Coming Bad Years" a popular book in the late 1970s early 1980s – which was a popular title in the hard-hit apple-belt of Wenatchee, WA, where I grew up.
An "ineffective charity" is the name given to a charity which consumes a substantial portion of its gifts and donations in management and administration fees. The charity is thus "ineffetive" at serving its intended beneficiaries.
The organization Charity Navigator seeks to guide you towards more effective charities that truly benefit the intended recipients of your donated funds. www.charitynavigator.org
There is one caveat to Charity Navigator raised by critics of Charity Navigator – a focus placed solely on an a charity’s organizational expenses may shortchange some worthwhile charities. Focusing solely on (a) how much an organization spends of fund raising and (b) the ratio of administrative costs to their overall revenue may end up giving an undeserved poor rating to some worthy charities, critics counsel.
"By focusing on administrative costs,’ said Sean Stannard-Stockton, a consultant on philanthropies, "it encouraged donors to steer resources toward organizations pushing everything into the cause rather than investing in people with expertise, new technology and other things that make a nonprofit strong." As quoted by Stepanie Strom, NY Times, Saturday, November 27, 2010, "To help Donors Choose, Web Site Alters How It Sizes Up Charities"
Charity Navigator is growing more sophisticated in response to these critics, reports Ms. Strom of the NY Times. Over the next three years, Charity Navigator plans to add evaluations of a nonprofit’s accountability and transparency to its ratings, as well as research on its impact and research by other organizations, reports Ms. Strom, so it would appear that Charity Navigator is still a good "starting point", and is going to continue in its relevancy over the coming years.
Oly about 35% of donors do any research before making a gift, and only 10% use a service like Charity Navigator as their primary source of information about nonprofits, according to research by the firm Hope Consulting, reports Ms. Strom in her 11/27/10 NY Times Article.
Don’t wait..don’t walk…don’t meander…but RUN!!!! to your computer and buy this book: "Guide to Surviving Debt", by the National Consumer Law Center, with principal author Deanne Loonin. See www.consumerlaw.org to order it directly from the NCLC.
What is the National Consumer Law Center? It is a group of people who care about you! "NCLC is the nation’s expert on the rights of consumer borrowers. Since 1969, NCLC has been at the forefront in representing low income consumers, before the courts, government agencies, Congress, and state legislatures. [] NCLC publishes nationally acclaimed series of manuals on all major aspects of consumer credit and sales" – Excerpted from the 2010 edition of "Guide to Surviving Debt".
Frankly, how can you go wrong with a book that offers the following chapters (this is just a sampling, not an exhaustive list of the 21 Chapters of the 493 page "Guide to Surviving Debt"):
-Choosing which Debts to Pay First
-Establishing a Budget
-What You Need to Know About Your Credit Report – How to Obtain a Home Mortgage with a Blemished Credit Report
-Credit Counseling and "Debt Relief" Companies
-Responding to Debt Collectors
-Collection Lawsuits
-Mortgage Workouts
-What You Need to Know About Your Mortgage
-Defending Your Home From Foreclosure – Your Rights in the Mortgage Foreclosure Process
-Utility Terminations
-Automobile Repossessions – Your Rights When the Creditor Makes a Mistake
-Student Loans – Pros and Cons of Consolidation and Rehabilitation
-Many, many more topics and chapters beyond just the preceding!!!!!
Here are some of the "Guide to Surviving Debt" reviews, excerpted:
"A gold mine on topics like how to handle collectors, which debts to pay first and how collection lawsuits work" – U.S. News and World Report
"Great advice, from the nation’s experts, on how to pull yourself out of debt." – Jane Bryant Quinn
This book has been around for many years, but is updated every couple of years, with the most recent udpate completed for 2010. Prior editions were completed for 1992, 1996, 1999, 2002, 2005, 2006 and 2008. Make sure you nail down the 2010 edition.
This book is helpful to me as an attorney (even though it is clearly written for "the man/woman on the street") – because it is so well written in its approach. It really tells you step #1, step #2 etc, in its "what to do/what not to do" approach, that you will find much assistance.
This book is great. Even if you should file bankruptcy with our office, when your bankrutpcy is all done, gone and settled, I can assure you that you will find helpful info that will keep you out of bankruptcy court again.
The National Consumer Law Center’s 2006 publication "Student Loans" (see also the 2009 Supplement) pointed out that for-profit schools signed up many, graduated few, but left most all (graduated or not) saddled with substantial student debt which experienced much higher default rates than student loans originated by students attending non-profit public and non-profit private colleges and universities.
Consequently, it was no suprise to me when the NY Times reported on Wednesday, November 24, 2010, that the Education Trust (a non-profit research and advocacy group) which is a Bill and Melinda Gates Foundation funded organization, released a report entitled "Subrime Opportunity" which charges that such for-profit schools like the University of Phoenix deliver "little more than crippling debt" citing federal data taht suggests only 9 percent of the first-time, full time bachelor’s degree students at the Univeristy of Phoenix, the nation’s largest for-profit college, graduate within six years.
I quote from Tamar Lewin’s 11/24/2010, NY Times Article (page A18) "Report Finds Low Graduation RAtes at For-Profit Colleges": "…only 22 percent of the first-time, full-time bachelor’s degree students at for-profit collees over all graduate within six years, compared with 55 percent at public institutions and 65 percent at private non-profit colleges. Among Phoenix’s online students, only 5 percent graduated within six years, and at the campuses i Cleaveland and Wichita, Kansas, only 4 percent graduated within six years.[]…for-profit students graduate with so much more debt than community college students. Many either default on their loans, or struggle to make payments but find that their lives are taken over by debt. In a separate study also released Tuesday [11/23/10], the Pew Research Center reported that almost one-quarter of those who received bachelor’s degrees at for-profit schools in 2008 borrowed more than $40,000, comapred with 5 percent at public institutions and 14 percent at not-for-profit state colleges."
Interesting, Mr. Lewin points out that (as perhaps a sign of subtle protest) Melinda Gates resigned from the board of the Washington Post Company, which gets most of its revenues from its for-profit higher-education unit, Kaplan, Inc. http://www.nytimes.com/2010/11/24/education/24colleges.html?
See NY Times, Wednesday, Dec. 1, 2010, pg B11.
The Standard & Poor’s Case-Schiller 20-city home price index released 11/30/10 fell 0.7% September 2010 compared to August. 18 of 20 cities reported declines. Cleveland was the worst with a 3% decline.
Annualized, the rate of decline would seem to approach over 8.4%.
The Case-Schiller home price index is 28.6% off of its July 2006 peak.
Forbearance is not as helpful as deferment. During forbearance, interest will still accrue, but there is some benefit to forbearance on student loans because collection actions such as 1040 tax retur refund intercepts, garnishments and collection calls/letters will cease during a forbearance period.
On the issue of deferments, a distinction must be made. First, you must figure out what type of loan that you have, whether it is "subsidized" or "unsubsidized".
A "subsidized" loan, such as a Direct Student Loan, the government pays the interest during any deferal period, but in an "unsubsidized" loan such as some Federal Family Education Loans (FFEL), the loan always is accruing interest (thus no interest is paid by the Government on behalf of the student like in a subsidized loan during deferal) so any interest that accrues during the deferal of an unsubsidized loan is usually capitalized into the loan and added to the loan balance.
One important distinction is that even a loan in "default" may receive a forbearance, although it can take some arguing and pushing with the student loan agency to achieve the forbearance. Generally, though, once a loan is in "default" it is no longer eligible for "deferal", and "deferal" of a subsidized loan can be quite valuable. But just beause a loan is not eligible for deferal does not mean that it is likewise ineligible for forbearance.
FFEL loans have two types of forbearances, known as "mandatory" and "discretionary". The Direct Loan proram does not make this distinction.
The area of FFEL and Direct Loans forbearances is vast, and this post can only scratch the surface, however, note that both the FFEL and Direct Loan regulations provide for forbearances if borrowers are in poor health or have other ersonal problems that affect the ability o the borrower to make the scheduled payments. Forbearance for these reasons is discretionary under FFEL regulations. The forbearance is granted up to a year at a time under FFEL but there are no limits to the number of years this type o forbearance may be granted. While you are seeking one of these one-year discretionary forbearances, do not forget to ask for an "administrative" forbearance – generally with a few exceptions, the FFEL "administrative" forbearance is granted by discretion.
When seeking a forbearance, I would suggest that you do so in writing (even if the writing is to confirm an oral understanding of forbearance) by using a form available at the Department of Education’s website www.ed.gov.
James H Magee, Washington Bankruptcy Attorney 