Credit Report Nuts and Bolts, Part 6 of 6: Who can see your credit report?

Creditors – can look at your report whenever you apply for credit, such as a mortgage, car loan, or credit cards.

Employers – can look at your report, but only under certain circumstances and only if you give them written authorization. Employers are allowed to look at your report to evaluate you for hiring, promotions, and other employment purposes – but I understand that it is done only with your permission in most states. A few states, such as Washington and Hawaii, have banned employers from using credit reports unless a good credit record is related to a job’s qualifications. (I will try to blog on this Washington state law in a later post)

Government agencies – some can look, but only if searching for hidden income or assets – usually only certain agencies can do this such as those trying to collect child support.

Insurance companies – home and auto insurers now use specialized credit scores to decide whether to issue you a policy and how much to charge for it.

Landlords – when deciding whether to rent you an apartment or home.

Utility companies – when deciding how much of a utility deposit (if any) to seek – but not in deciding whether to extend utility services.

Student loans – Usually, I am told by the NCLC’s Guide to Surviving Debt, that a credit score is irrelevant to obtaining government student loans, but it could be a factor in obtaining private (not government guaranteed) student loans. There may be an exception though, for Parent PLUS loans wherein parents–or professional students such as dental, law school, and medical school students–are seeking student loans in order to finance a child’s education.

Divorce, child custody, immigration, citizenship applications, registering to vote and other legal proceedings – your credit report should not be used against you, subject to a few limitations and circumstances.

A man with a future? Ohio Attorney General Richard Cordray avenges foreclosures with populist tradition.

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.

Attacks on foreclosure attorneys – a newer industry gathers steam with “robosigners” and “foreclosuregate” despite forecast of 2 million foreclosures per year.

"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:

http://www.nytimes.com/2010/10/16/business/16legal.html?_r=1&scp=1&sq=foreclosure%20mess%20draws%20in%20the%20filing%20lawyers,%20too&st=cse

Round Two: Countrywide/Bank of America now attacks those from whom it purchased loans. See my earlier post: “Round One: Bank of America under attack for selling lousy mortgages to investors Pimco Bonds and Black Rock”

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!

Round One: Bank of America under attack for selling lousy mortgages to investors Pimco Bonds and Black Rock

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"

Countrywide magnate pays $67 million – Angelo R. Mozilo former CEO pays to settle civil fraud case brought by SEC

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).

http://www.nytimes.com/2010/10/16/business/16countrywide.html?scp=1&sq=Lending+Magnate+Settles+Charges+for+%2467+million&st=nyt

Dying man’s last wish: that you learn how to effectively invest – see “The Investment Answer” by Gordon Murray

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:

http://www.nytimes.com/2010/11/27/your-money/27money.html

Housing prices will not return to previous levels for 13 years – commercial space could be vacant for 10 years – NY Times

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.

http://query.nytimes.com/gst/fullpage.html?res=9D06E7DC173EF930A25753C1A9669D8B63&scp=1&sq=Across+the+U.S.%2C+a+Long+Recovery+Looks+Much&st=nyt

Gold, gold, gold – religion, politics and voicing lack of confidence – but is it an investment?

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.

http://www.nytimes.com/2010/11/26/business/26norris.html

Charity Ripoffs: Charity Navigator seeks to help you avoid “ineffective charities” in your annual donations

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.

The best $20.00 you may spend this year: The National Consumer Law Center’s “Guide to Surviving Debt”

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.

University of Phoenix – “for profit” school – criticized by Bill and Melinda Gates’ education advocacy group “The Education Trust” – U of Phoenix produces low graduation rates and leaves students saddled with huge student loans

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?

Forbearance on student loans – interest continues to accrue but other collection stops. tax refund intercepts, collection calls/letters and garnishments cease during forbearance

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.

Genesis of “foreclosuregate” and “robosigners” – it all began in Denmark, Maine with Nicole Bradbury, retired lawyer Thomas A. Cox, Pine Tree Legal Assistance and GMAC’s Jeffrey Stephan

NY Times’ David Streitfeld assembles a fascinating and historically important article "From This House, a National Foreclosure Freeze" NY Times October 15, 2010.

Retired banking lawyer Thomas A. Cox, working as a volunteer at Pine Tree Legal Assistance in Maine, launched a national firestorm which helped bring the terms "foreclosuregate" and "robosigners" to the common lexicon.

Mr. Cox, a retired volunteer legal aid attorney, begain working on Ms. Bradbury’sGMAC foreclosure file in the summer of 2009.

Mr. Streitfeld’s reporting is concise: "Mr. Cox voiced to a colleague that he would expose GMAC’s proces and its limited signing officer Jeffrey Stephan, but Mr. Cox wanted to take the questioning much further. In June, he got his chance. A few weeks later, he spelled out in a court filing what he had learned from the robo-signer: ‘When Stephan says in an affidavit that he has personal knowledge of the facts stated in his affidavits, he doesn’t. When he says that he has custody and control of the loan documents, he doesn’t. When he says that he is attaching a true and accurate copy of a note or a mortgage, he has no idea if that is so, because he does not lok at the exhibits. When he makes any other statement of fact, he has no idea if it is true. When the notary says that Stephan appeared before him or her, he didn’t.’… it was not a complete loss for GMAC – Judge Powers declined to find the lender in contempt – but nearly so."

The article by Mr. Streitfeld alleges that GMAC had been admonished in another legal battle in Florida some four years ago for having used "robosigners".

Mr. Cox’s legal savvy is to be commended. But frankly, doesn’t the entire "foreclosuregate" dispute really beg the question: that despite the allegedly flawed attestation of "robosigner" Jeffrey Stephan on GMAC’s behalf – why should Ms. Bradbury of Denmark, Maine, get to live for free? Don’t you have to pay your mortgage or rent? How much free housing will Ms. Bradbury receive because of Mr. Stephan’s "robosigner" position with GMAC?

http://www.nytimes.com/2010/10/15/business/15maine.html?scp=1&sq=from+this+house%2C+a+national+foreclosure+freeze&st=nyt

There are easily two sides to this coin….

Did Debt Kill Mozart? – Composer faced Garnishment of Half of his Income regarding May 2, 1789 loan & judgment – Owed Two Years’ Salary

The NY Times reporter Daniel J. Wakin reports on Monday, November 29, 2010, that famous composer Mozart died just two weeks after the entry of a judgment for twice his annual

income.

http://www.nytimes.com/2010/11/29/arts/music/29mozart.html

"When his [Mozart's] name was discovered two decades ago in a Viennese archive from 1791, it caused a stir. The archive showed that an aristocratic friend and fellow Freemason, Prince Karl Lichnowsky, had sued Mozart over a debt and won a judgment of 1,435 florins and 32 kreutzer in Austrian currency of the time (nearly twice Mozart’s yearly income) weeks before the composer died. …scholars have generally assumed that it concerned a loan connected with a trip the two men made to Berlin."

‘"It gives us a concrete picture of the misery level that Mozart lived with in the last two and a half years of his life,’ Mr. Hoyt said in a recent interview."

Peter Hoyt is a Mozart scholar and assistant profesor of music history at the University of South Carolina and serves as a program annotator and lecturer for the Mostly Mozart Festival in New York. It is largely believed that the loan from Lichnowsky to Mozart carried a 4.0% interest rate, and had been unpaid for two years.

Mr. Wakin reports that the judgment against Mozart called for the garnisheering of half of his salary. Lichnowsky is not known to have pressed Mozart’s widow Constanze for repayment following Mozart’s debt.

Did this judgment and looming garnishment contribute to the death of one of the world’s leading composers?

Bankruptcy relief is there for you… it might not have been as freely available to Mozart in the form in which it is offered to Americans…don’t let your debts impact your ability to care for yourself and your family.

Debt may have contributed to the death of the world’s finest musical mind….think about it. The world is so much worse off for the early and untimely death of Mozart.

"If true, the conclusion could add depth and texture to our understanding of Mozart’s anxieties over financial problems at the end of his life and of his reception during one of his last journeys."

On-line Retail Scams: Tips on researching your vendor’s website before purchasing on-line

If you are going to purchase something over the internet from a non-national "name" vendor such as Costco, Best Buy, Nordstroms, Radio Shack etc, you should REALLY take a few moments to research the website before you hand out your credit card number.

According to a recent NY Times article, the following sites may help you avoid retail grief: Get Satisfaction, ComplaintsBoard.com, ConsumerAffairs.com and RipoffReport.com .

One word of caution about these sites, though. Sometimes an unreasonable customer can in fact post something damaging so I suppose take one or two postings with a grain of salt…the key is to look for multiple postings from a variety of customers which sound in the same complaint. An isolated complaint or two is not key…but ten or 15 negative postings can perhaps be telling.

If you have already been ripped-off, then consider a complaint made to the Internet Crime Complaint Center, or IC3, a partnership between the F.B.I. and the National White Collar Crime Center,

The following November 26, 2010 NY Times Article (link below) is almost unbelievable. It concerns a "new breed" of internet commerce where businessowners are intentionally foul and inappropriate in order to get "links" to their websites. These "inbound links" from postings on consumer complaint websites ironically help the fraudulent company to secure top locations in Google search-engine standings. Here is a link to the article – it is sickeningly fascinating:

http://www.nytimes.com/2010/11/28/business/28borker.html

After Ms. Rodriguez had a contacts and eyeglass purchase go horribly wrong (she was sold counterfeit goods – and the immigrant business owner was threatening, harassing and even posed as Ms. Rodriguez to try to cause trouble with Ms. Rodriguez’s credit card issuing company Citibank, she decided to investigate and push authorities to do something about a company called DecorMyEyes. Here is an excerpt from the investigative article of 11/26/2010 of

(Beginning of quote from NY Times Article of David Segal)

By then, Ms. Rodriguez had learned a lot more about DecorMyEyes on Get Satisfaction, an advocacy Web site where consumers vent en masse.

Dozens of people over the last three years, she found, had nearly identical tales about DecorMyEyes: a purchase gone wrong, followed by phone calls, e-mails and threats, sometimes lasting for months or years.

Occasionally, the owner of DecorMyEyes gave his name to these customers as Stanley Bolds, but the consensus at Get Satisfaction was that he and Tony Russo were the same person. Others dug around a little deeper and decided that both names were fictitious and that the company was actually owned and run by a man named Vitaly Borker.

Today, when reading the dozens of comments about DecorMyEyes, it is hard to decide which one conveys the most outrage. It is easy, though, to choose the most outrageous. It was written by Mr. Russo/Bolds/Borker himself.

“Hello, My name is Stanley with DecorMyEyes.com,” the post began. “I just wanted to let you guys know that the more replies you people post, the more business and the more hits and sales I get. My goal is NEGATIVE advertisement.”

It’s all part of a sales strategy, he said. Online chatter about DecorMyEyes, even furious online chatter, pushed the site higher in Google search results, which led to greater sales. He closed with a sardonic expression of gratitude: “I never had the amount of traffic I have now since my 1st complaint. I am in heaven.”

That would sound like schoolyard taunting but for this fact: The post is two years old. Between then and now, hundreds of additional tirades have been tacked to Get Satisfaction, ComplaintsBoard.com, ConsumerAffairs.com and sites like them.

Not only has this heap of grievances failed to deter DecorMyEyes, but as Ms. Rodriguez’s all-too-cursory Google search demonstrated, the company can show up in the most coveted place on the Internet’s most powerful site.

Which means the owner of DecorMyEyes might be more than just a combustible bully with a mean streak and a potty mouth. He might also be a pioneer of a new brand of anti-salesmanship — utterly noxious retail — that is facilitated by the quirks and shortcomings of Internet commerce and that tramples long-cherished traditions of customer service, like deference and charm.

Nice? No.

Profitable?

“Very,” says Vitaly Borker, the founder and owner of DecorMyEyes, during the first of several surprisingly unguarded conversations.

“I’ve exploited this opportunity because it works. No matter where they post their negative comments, it helps my return on investment. So I decided, why not use that negativity to my advantage?”

(End of Quote)

Note that I DID NOT link this blog post to the DecorMyEyes website – any sort of link to DecorMyEyes would help the Google standing of DecorMyEyes.

Get the picture?

Be careful out there…

Seattle home sales drop 32% – worst October since record-keeping started in 1994 – “shadow inventory” of 2 million homes

Nationally, 26% drop in sales of existing homes for October 2010. This was reported to have been the worst October in at least twenty years, according to the NY Times’ David Streitfeld (NY Times, Wednesday, November 24, 2010)

Portland, OR home sales droped 39%, Minneapolis saw a 41% drop and Massachussets and Illinois saw drops of 28% and 34%.

According to Mr. Streitfeld, aout 4.43 million homes were sold on a seasonally adjusted annual basis in October 2010, compared with nearly 6 million in October 2009. In October 2008, at the height of the financial crisis, about 5 million homes were sold. Distressed sales, including foreclosures, have ben about a third o the market, while first-time buyers ahve ben as much as 50 percent. Both are high by historic levels, reports Mr. Streitfeld.

Mr. Streitfeld reports taht short sales, where the sellers negotiate with their lender to sell thier house and repay less than the full amount owed, are rising in popularity although they are still outnumbered by foreclosures. Bank of America, for instance, said it had agreed to more than 60,000 short sales this year.

It appears to Mr. Streitfeld that the slight drop off in foreclosures is in turn increasing the likelihood of a successful "short sale" – he reports that lenders see themselves under pressure from shoddy documentation procedures, so with all 50 state attorneys general investigating foreclosure procedures, the banks have de-emphasized foreclosrues and have emphasized short sales.

Mr. Streitfeld also notes that there still remains a large "shadow inventory" of more than two million delinquent and foreclosed homes that banks will ultimately have to bring to the market in order to dispose of the homes. For this reason, the sales of previously foreclosed houses has dropped. By way of example, in California, there were 19,925 foreclosed homes sold by the banks in October 2008, and that number had dropped to 15,621 in October 2009, and then down to 10,367 in October 2010.

http://www.nytimes.com/2010/11/24/business/economy/24foreclosure.html

Buying foreclosures? – Beware of what you buy – heed the story of Todd Phelps and Paul Whitehead – NY Times October 16, 2010

NY Times Financial Reporter Ron Lieber, on October 16, 2010 reported on the sad story of Todd and Paul: They purchased a Riverside, Calif. home at a foreclosure sale, only to learn that they had bid at the foreclosure of the second mortgage – and the house still remained subject to the lien/mortgage of the first mortgage company.

Todd and Paul paid $137,000 of their hard-earned cash – and faced not getting one penny back. (This story eventually has a happy ending – it appears the foreclosing bank from whom Todd and Paul purchased the property felt them to be such hayseeds that the bank relented and took the property back and returned the $137,000.

Mr. Lieber reports: "The auction process: Foreclosure auctions can be a dangerous place for people who don’t know what they’re doing or are relying on help from people who are sloppy or negligent. … Take your time. Assemble a panel of experts and apprentice yourself to them. And watch listings carefully. For better or for worse, foreclosed properties are going to be available for a very, very long time."

http://www.nytimes.com/2010/10/16/your-money/mortgages/16money.html?scp=1&sq=Buyers+Beware+Foreclosures+&st=nyt

Financial planning in reverse: Convincing yourself to turn $14 million into $-0-, two pending home foreclosures and a marital separation – avoid this fate with my 10-step plan

The first part of this blog will be a bit random – but stick with me! It will all tie together in the end. TRUST ME – STICK WITH ME!

I am fond of asking people: "Who is the easiest person in the world to convince?" Rarely do people get the correct answer. The answer is "Yourself."

My Thanksgiving Day/Black Friday thought is that I am glad I know this lesson. Do I always follow and honor the wisdom – not exactly – but knowing this axiom makes it easier to temper and put the brakes on my behavior.

There are so many cool things upon which to convince yourself that you must spend your money. There are home and landscaping improvements, 65-inch 3-D plasma screen televisions, cool cars, trips to Disneyworld, Bose surround sound systems, boats, private school tuition, $1,000 Facconable suits, $300 Juicy sweatsuits and of course diamonds. Then there are products and goods to "purchase" security, such as life/disability insurance and even 401k plans & stocks/bonds. Some people convince themselves that they need $395,000 European cars, $173,000 horses and $5.3 million home renovations. Some people convince themselves that keeping up with their relatives and friends is the best way to spend their money.

I invest plenty of time (and money) into my business of helping others. I keep up this blog and then try to read extensively about topics that will help me assist my clients. I attend far-away seminars of the highest quality, such as those given by the National Association of Consumer Bankruptcy Attorneys and the American Bankruptcy Institute. I could probably do "less" but I enjoy the prestige and and trust of my clients – the clients hold me in esteem for these "extra" things done which may reveal knowledge that I can use to the client’s benefit – and I receive the esteem of my clients in exchange.

I work hard to earn the esteem of my clients. I have very little time, but I invest what I have into my business of helping others in times of need. Over the Thanksgiving Day holiday, as of 8:05 a.m. on "Black Friday", I have thus far completed 102 pages of the 258 page book "Foreclosure Prevention Counseling" a 2009 publication put out by the National Consumer Law Center. The publication is actually 405 pages in length, but pages 259-405 are appendix, glossary, sample forms and other supplementary materials. Time I should perhaps spend at the gymnasium or recreating with my wife and family is frequently siphoned off to build my blog, websites and to increase my knowledge of consumer law and bankruptcy issues.

I do not have a functional TV (I find TV largely a waste of time and I do not want to model TV watching to my children) so I try to read as much as I can. This week I have have read two editions (Wednesday’s and Friday’s) of the New York Times – I adore the NY Times and throughout the financial crisis of the past two years, it has provided plenty of information for my blog. I try to read the NY Times at least twice weekly – you should think about it too, it is available for $2.00 at most any Starbucks or Tully’s coffee house.

Ok, here is where I tie it all together.

On this day after Thanksgiving (Black Friday 11/26/10), I am reflecting on how pleased and grateful to be working with my clients – and how much I learn in exchange from my clients about the frailty of finances and how elusive is the Nirvana of financial security.
http://www.nytimes.com/2010/11/26/business/26fall.html

The Friday 11/26/2010 "Black Friday" edition of the NY Times has an article entitled: "A Windfall, Blown Away". http://www.nytimes.com/2010/11/26/business/26fall.html

This is the story of Nick and Kate Martin, who in 1998 received $14 million from the sale of their shares of a family advertising business. Other relatives received more, but the Martins received a tidy sum of $10 million after taxes. They blew it all. All of it. It is all gone.

Mr. Martin is now 59 years old, and is thankful that he did find a job, paying about $51,000 per year. His wife Kate helps out at a school, earning $14,000 per year. Mr. Martin found a job in Kansas, and he lives there with the parties’ 13 year old son. Mrs. Martin to date refuses to leave New York, where she lives on the parties’ remaining property (soon likely to be foreclosed) with the couple’s 9 year old daughter. Given the article, it doesn’t sound like Mrs. Martin is in any hurry to live with her husband in Kansas. The article subtly presents a family perhaps irremediably ripped apart by the disappointment of vanished wealth.

The story of Mr. and Mrs. Martin served as a "wake-up" call for me. As my law practice has grown and an ever increasing number of people see the value of what I am able to offer and appreciate the care and concern with which my staff and I approach their cases, I have been rewarded with increasing revenues – and the accompanying and sometimes difficult responsibility to use such new resources wisely.

The "hook" in the article is towards the end – Mrs. Martin tries to explain why the couple moved from California (where they lived before the $14 million windfall) to England, and then on to Vermont and finally New York, where they plowed millions into building an Adirondacks (upstate New York) "family compound" residence. They tried to sell the Adirondacks property for $4.9 million, but the best offer to date has been about $1.25 million. The Martin’s have stopped making payments on the $1.1 million Adirondack’s mortgage, and $51,000 annual property taxes on the Adirondack’s property. They have also stopped making payments on the Vermont property’s mortgage and property taxes, which also has not sold.

The parties estimate that they poured $5.3 million into refurbishing the Adirondack property (acquired for $250,000) and an additional $600,000 into the Vermont property(acquired for $650,000). The Vermont property was listed in 2007 – and there have not been any offers.

The couple sold a $395,000 Aston Martin vehicle, and a horse for which they had paid $173,000, and drained their final $91,000 retirement account.

Ms. Geraldine Fabrikant of the NY Times reports as follows: "Mrs. Martin says she believes the move from California was motivated in part because he [Mr. Martin] resented his brother and brother-in-law’s bigger role in the community. [in California, where the family business that had been sold was based] She [Mrs. Martin] also speculates that the Adirondacks estate was alluring partly as a way of keeping up. ‘I think he wanted to show his brother and brother-in-law that he had a big home, too’, she said over dinner recently in Saratoga Springs, N.Y. Mr. Martin disagreed. ‘We are Irish Catholics, and we thought it would be a compound for our family over generations,’ he said. After the cramped rooms at their house in England, he liked the big rooms, he said. ‘Sometimes, things don’t work out.’

Mr. and Mrs. Martin convinced themselves that they needed a $5.3 million lakeside "family compound" in the Adirondacks for the benefit of their family.

I easily convince myself that I need to acquire additional investments/insurances, additional consumer goods and additional "all sorts of stuff" for the safety, enjoyment/recreation and security of my family. But here is the painful question – is all this work and all of this effort at success perhaps more weighted towards "all about me"? – am I not just perhaps searching for greater self-esteem through the drive to acquire greater financial security, more awesome toys and greater displays of success? Are the benefits of greater safety, security and enjoyment/recreation for my family just the side-effects and the collateral results of a personal drive to be recognized as a rarely rivaled and extremely accomplished leader in my field – with the security, financial success and toys to "prove" to myself that I am such a cutting edge leader?

Mr. and Mrs. Martin seem completely lacking in maturity and insight. Obviously, I am not THAT stupid or dimwitted. However, it begs the question, how much less stupid am I than the Martins? The Martins’ situation also asks you the same questions.

If you are considering bankruptcy for a "fresh start" to recover from past hard luck or perhaps past indiscretions (or maybe a combination of a little of both) remember well that there are creditors out there who wish to ruin your fresh start. The creditors want to "reward" you with new credit cards, financing for cars, boats, ATVs, bigger houses, RVs, vacations, time shares, sofas/furniture and you-name-it.

Your bankruptcy case may well result in the most unbelievable plethora of new credit opportunities. Consider making a plan – convince yourself to do it. The Martins obviously lacked any sort of plan (or if they had one, it was fueled by whimsy and "lets-do-this-for-now" reasoning of self-deceit).

Resist the creditors who want to ruin your post-bankruptcy fresh start. Convince yourself to follow this 10-step plan:

-Step one: I will max out my 401k contributions.
-Step two: Of my remaining income, I will save 10% until I have at least four months’ worth of net-pay saved up.
-Step three: I will acquire disability insurance paying about 75% of my current net pay.
-Step four: After having saved 3 months’ worth of net pay, I will set up 529 educational plans for my children and/or grandchildren contributing no less than $100 monthly per child, regardless of the child’s age.
-Step five: In addition to the minimum monthly payment, I will pay an extra 50% of the minimum monthly payment towards my student loan debt.
-Step six: In addition to my minimum monthly mortgage payment(s), I will pay at least an extra 10% to pay down the mortgage(s).
-Step seven: I will chat with my boss to see if he/she will considering establishing performance goals for myself, and attempt to negotiate the raises that I may achieve for reaching certain performance goals.
-Step eight: I will set up a "vehicle fund" into which I will deposit $125 monthly towards the acquisition of a replacement vehicle. -Step nine: Until I am "on track" and living on a budget that enables me to maintain all of the above goals #1-7, I will not seek any new debt in any form.
-Step ten: I will avoid refund anticipation loans, payday loans, rent-to-own, pawning and any other sort of short-term lending. I will not refinance unsecured debt into secured debt, such as paying off credit cards with a home equity line of credit (HELOC).

The nirvana of financial security is elusive…you may never have the chance presented to the Martins to be fully financially secure (the Martins blew it, of course). But you CAN do something. Consider steps #1-10 above.

Convince yourself. Its so easy to convince yourself.

Title Insurance – what does it do? – be cautious if you purchase a foreclosed home to fix up.

The NY Times’ Ron Lieber assembled an important article for anyone thinking of buying and then dumping money into a foreclosed home to fix it up either to live in, rent out, or to try to "flip".

The crux is that if the foreclosure was upset due to "foreclosuregate" or "robosigner" issues – your maximum recovery might be what you paid for the home – and you could not recovery your repair or improvement costs.

Now, to date, I am not aware of alot of foreclosed homes being returned to people who lost them in some flawed foreclosure process. Usually, the foreclosure was for lack of payments and the foreclosed individual is unlikely to want to begin making payments on the old "under water" mortgage.

However, recognize that your "title insurance" only gives you what you paid for the home if your ownership and title to the home is somehow threatened by litigation.

Mr. Lieber: "While homeowners … may ahve title insurance, it generally covers them only for the purchase price of the home. When you buy a home out of foreclosure, however, it often needs a lot of work. ‘If I bought it at $200,000 and it’s a steal but I had to gut it and sink $100,000 more in, my recovery is limited if there is a problem,’ said Matthew Weidner, a lawyer in St. Petersburg, Fla."

Mr. Lieber’s October 9, 2010, NY Times article (section B1 "Business Day") is a "must read" for those investing in realty:

http://www.nytimes.com/2010/10/09/your-money/mortgages/09money.html?scp=1&sq=After+Foreclosure%2C+a+Focus+on+Title+Insurance&st=nyt