managing your personal finances

As you’ll read tomorrow (or Monday), I’ve entered a new phase in my life. After years of hard work and long hours building this blog (time that I’ve enjoyed), I’ve been shifting things around so that I have more free time. As a result, I’m going to have more time to devote to creating quality blog posts, instead of rushing around at the last minute looking for something to write about.

Because of this, it’s time yet again to take requests. I do this about once a year, and it’s a great way to get a feel for what GRS readers are interested in. I’d be grateful if you’d take the time to leave a comment below with topic suggestions or article requests. It doesn’t matter if we’ve covered the subject in the past. If you’d like me (or one of the other GRS staff) to write about it, let me know.

Have there been too many articles about credit cards? Too few articles about credit cards? Would you like to know more about individual savings accounts? Do you like the articles about the psychology of spending? Would it be helpful to have somebody come in to explain insurance concepts in plain English? Should I try to persuade my wife to share more of her recipes now and then? Let me know what you’d like to read about!

While you’re all providing feedback about the site, here are a few recent articles of note:

Over at The Simple Dollar, Trent and his readers had a thoughtful discussion about the obligations of wealth. “I think there is some inherent distrust of the rich in the mainstream of American society,” Trent writes as he describes how a wealthy person can keep from alienating his friends. There’s so much to say about this topic; I’m tempted to write an entire article about it.

GRS reader Steven writes a blog called Hundred Goals, which is about achieving your goals while managing your finances. After Sierra’s post this morning about travel, he dropped me a line to let me know that he has a recent article about how to have a great vacation.

Speaking of vacation, my pal Jason over at No Credit Needed spent time compiling day-use fees and free days for state parks across the United States. Handy page to bookmark!

And here’s more travel! At The Art of Non-Conformity, my good friend Chris Guillebeau has posted a beginner’s guide to travel hacking. I’ve been asking him to share this info for a long time; now I’ve got to take responsibility to use the knowledge he’s shared.

Finally, I’ve been giving a lot of interviews lately. I’m much more comfortable with these than I used to be. (They used to scare me to death!) Some examples:

• Colleen from The Frisky interviewed me about how to save money even when you’re living paycheck to paycheck. This is a tough quandary, something I’m asked about a lot.




• In an interview with BeFrugal, I discuss frugality, happiness, and conscious spending. (Note: “the ballot” should be “the balance” — I must have mumbled.)




• Jeff Rose at Good Financial Cents also interviewed me. This interview is very much about the process of writing a book, which may or may not interest you.




• I also spoke with Beverly Harzog from Card Ratings. We chatted about credit cards, of course, but also about other aspects of personal finance.




• Finally, USA Weekend has a short piece on how to give your 401(k) a midyear check, for which author Richard Eisenberg interviewed me back in May. This is a perfect example of how much work goes into even a small newspaper article. Eisenberg spent 20-30 minutes on the phone with me, and I’m sure he did the same with the other folks he quotes. Plus, I’ll bet he spent a lot of time writing. I wouldn’t be surprised if there were 4-6 hours in this small piece.

Okay, one last thing before I go. Tim pointed me to a two-year-old New York Times series about the debt trap, which includes an interactive infographic showing average household debt loads over the past century.

That’s enough links for today. Please do leave a comment with topic requests or other feedback. Meanwhile, it’s time for me to go do some yardwork…

As you’ll read tomorrow (or Monday), I’ve entered a new phase in my life. After years of hard work and long hours building this blog (time that I’ve enjoyed), I’ve been shifting things around so that I have more free time. As a result, I’m going to have more time to devote to creating quality blog posts, instead of rushing around at the last minute looking for something to write about.

Because of this, it’s time yet again to take requests. I do this about once a year, and it’s a great way to get a feel for what GRS readers are interested in. I’d be grateful if you’d take the time to leave a comment below with topic suggestions or article requests. It doesn’t matter if we’ve covered the subject in the past. If you’d like me (or one of the other GRS staff) to write about it, let me know.

Have there been too many articles about credit cards? Too few articles about credit cards? Would you like to know more about individual savings accounts? Do you like the articles about the psychology of spending? Would it be helpful to have somebody come in to explain insurance concepts in plain English? Should I try to persuade my wife to share more of her recipes now and then? Let me know what you’d like to read about!

While you’re all providing feedback about the site, here are a few recent articles of note:

Over at The Simple Dollar, Trent and his readers had a thoughtful discussion about the obligations of wealth. “I think there is some inherent distrust of the rich in the mainstream of American society,” Trent writes as he describes how a wealthy person can keep from alienating his friends. There’s so much to say about this topic; I’m tempted to write an entire article about it.

GRS reader Steven writes a blog called Hundred Goals, which is about achieving your goals while managing your finances. After Sierra’s post this morning about travel, he dropped me a line to let me know that he has a recent article about how to have a great vacation.

Speaking of vacation, my pal Jason over at No Credit Needed spent time compiling day-use fees and free days for state parks across the United States. Handy page to bookmark!

And here’s more travel! At The Art of Non-Conformity, my good friend Chris Guillebeau has posted a beginner’s guide to travel hacking. I’ve been asking him to share this info for a long time; now I’ve got to take responsibility to use the knowledge he’s shared.

Finally, I’ve been giving a lot of interviews lately. I’m much more comfortable with these than I used to be. (They used to scare me to death!) Some examples:

• Colleen from The Frisky interviewed me about how to save money even when you’re living paycheck to paycheck. This is a tough quandary, something I’m asked about a lot.




• In an interview with BeFrugal, I discuss frugality, happiness, and conscious spending. (Note: “the ballot” should be “the balance” — I must have mumbled.)




• Jeff Rose at Good Financial Cents also interviewed me. This interview is very much about the process of writing a book, which may or may not interest you.




• I also spoke with Beverly Harzog from Card Ratings. We chatted about credit cards, of course, but also about other aspects of personal finance.




• Finally, USA Weekend has a short piece on how to give your 401(k) a midyear check, for which author Richard Eisenberg interviewed me back in May. This is a perfect example of how much work goes into even a small newspaper article. Eisenberg spent 20-30 minutes on the phone with me, and I’m sure he did the same with the other folks he quotes. Plus, I’ll bet he spent a lot of time writing. I wouldn’t be surprised if there were 4-6 hours in this small piece.

Okay, one last thing before I go. Tim pointed me to a two-year-old New York Times series about the debt trap, which includes an interactive infographic showing average household debt loads over the past century.

That’s enough links for today. Please do leave a comment with topic requests or other feedback. Meanwhile, it’s time for me to go do some yardwork…

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Managing your finances while you are between jobs is tough. You have to consider the overall economy, the reason for your unemployment, your skill set, and estimated length of unemployment. The economy is a determining factor since you may apply for unemployment benefits via your state. The estimated time frame is 24 weeks with the possibility of extension for an additional 24 weeks but if the economy has a high unemployment the probability for an extension is limited.

The reason for your unemployment is important. For example, if your company was part of a well-known, massive layoff/acquisition you may have received a generous severance package. You would be able to maintain fixed expenses such as rent/mortgage, property taxes, and insurance using your severance while keeping your unemployment separate for postponed/variable expenses such as dining out, entertainment, and travel.

On the other hand, it is rare to obtain a generous package so your unemployment may be your only income for both fixed and variable expenses. Remember, it will run out. While searching for a new job, check with an unemployment expert to see if you can go back to school for a short-term certificate in a promising field such as computers, technology, education, and medicine. Also, check with your state to determine if you can start a homebased business for minimal costs instead of searching for a traditional job.

Your skill set is critical. For instance, if you are a registered nurse who lost her job because of a merger you will obtain a job offer sooner because of the national shortage of good nurses and you may receive better pay/benefits/work-life options. You may still choose to enjoy an expensive two week vacation. However, a low-skilled clerical worker who has enormous competition needs to forego a vacation and hit the books.

Managing your household income will be a challenge and it may take time to establish a new budget. However, you can change your unemployment budget based on your personal needs.


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I sought government assistance ONE time.  I mean actively go and get it, had a lawyer and everything and I got it. 

It was the TOUGHEST decision I ever made because I hated, I mean HATED the idea of relying on governmental help because I was raised to be independent but I had to do it.  I had to do it because I made a mistake unwittingly years ago (follies of youth) and I had to pay the piper as it were because it caught up with me and it was a bit of an act of desperation and had very little choice.  (bankruptcy)

I was taught not to look to the government for more than the execution of righteous laws, including and especially the Constitution, and its military defense of the country.   So this was little more than a handout from the government and because it bothered me so much, I actually went to therapy for a short while.  Things are fine now, as I said, this was years ago.

Because of the way I was brought up, and the way I am, I don't see how people can seek government help without trying other avenues first?  And I mean really trying.  Yeah, there are some legit cases, but then you know there are the loafers out there too, and this business of the unemployment benefits has been abused in recent times, especially since it has been certified that the Obeyme administration truly is anti-business and places to work at don't want to hire people in that kind of climate.  So you got two big problems here, the people taking advantage of a situation and the current government taking advantage of a situation and NEITHER one benefits in the end....except the government has tighter control.

So what are people to do?  The options are getting more and more limited these days.

-Jon

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President Obama Signs Iranian Sanctions Bill into Law

July 01, 2010 7:22 PM

ABC News’ Yunji de Nies and Sunlen Miller Report:

President Barack Obama signed a new sanctions bill against Iran aimed at “striking at the heart” of that country’s ability to develop nuclear weapons.  It’s a move the President says he did not seek, but one the Iranian government brought on themselves.

“Since taking office, I have made it clear that the United States was prepared to begin a new chapter of engagement with the Islamic Republic of Iran.  We offered the Iranian government a clear choice.  It could fulfill its international obligations and realize greater security, deeper economic and political integration with the world, and a better future for all Iranians.  Or, it could continue to flout its responsibilities and face even more pressure and isolation,” he said, “To date, Iran has chosen the path of defiance.”

Because of those choices, Mr. Obama says the United States and the international community will continue to increase their efforts to keep nuclear weapons out of the hands of Tehran. The new sanctions passed by Congress, entitled the ” Comprehensive Iran Sanctions, Accountability, and Divestment Act” limit fuel imports and the ability of foreign banks to do business with the Islamic Republic.

“It makes it harder for the Revolutionary Guards and banks that support Iran’s nuclear programs and terrorism to engage in international finance.  It says to companies seeking procurement contracts with the United States government—if you want to do business with us, you first have to certify that you’re not doing prohibited business with Iran,” the President said.

Even as he increases the pressure on their government, Mr. Obama sought to reassure the Iranian people that “the United States stands with the Iranian people as they seek to exercise their universal rights.  This legislation imposes sanctions on individuals who commit serious human rights abuses.  And it exempts from our trade embargo technologies that allow the Iranian people to access information and communicate freely.”

The President said this is not an irreversible course, and the Iranian government can still choose a path of peace.

“The door to diplomacy is still open.  Iran can prove that its intentions are peaceful,” the President said, “And it remains our hope that they choose this path, even as we are clear-eyed about the difficult challenges ahead.”

- Yunji de Nies and Sunlen Miller

July 1, 2010

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Small Business <b>News</b>: The Better Business Owner | Small Business Trends

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foreclosure help

I’ve been around Firedoglake as long as most of you, and I’m happy to be asked to tell you what matters to me about FDL.

What is most striking to me about the FDL of today is the diversity of subject matter: wingnut-filleting, Palin-watching, bassets, Figs & ferrets, Saturday preaching and Sunday contemplation, arts fine and not-so, food from far and near. And that just the nights and weekends! During the business part of every single day, you can tune to Firedoglake for the best coverage of foreclosure fraud, ongoing torture and wiretapping abuses, America’s galloping corporatism, and Republican pandering to the worst of their base.

If there’s a status quo ante that needs puncturing and exposure, you already know Firedoglake writers have a bead on it. You’ve read about it here, or you will soon.

Can you please help FDL raise $60,000 by day’s end so that we can continue to provide you with such a wide range of topics, views, and perspectives untainted by lobbyist money and untrammeled by corporate leash?

There isn’t a better place on the internet for a wider range of topics. If the subject is elite misperception of our deficit problem, you know it’s covered here. If the topic is ignoring the American people’s views on raising taxes on the rich to recoup this century’s losses, it’ll be front-paged at FDL. If the topic you want is our elite non-profit organizations supposedly dedicated to the issue in their mission statement giving this new Democratic president a free pass or even a ringing endorsement, look no further. If you’ve been away from the ‘tubes all day and want to catch up quickly on the stories missed by the Legacy Media, tune in to the News Desk Roundup. If the intersection of politics and the Left Coast glitterati is your game, LaFiga has you covered.

But, for me, what matters most is Firedoglake’s coverage of Lesbian-Gay-Bisexual-Transgender (LGBT) issues, and the effort the blog has undertaken to cover the Prop 8 referendum and the subsequent historic efforts to overturn that civil rights rollback in federal court.

The day after the 2008 election, when jubilant progressives elsewhere prematurely celebrated the election of a young, dynamic Democratic president and LGBT Californians sat stunned and demoralized at our civil rights stripped away, Jane Hamsher sent me an email saying, “We will not rest until this injustice is undone, Teddy.”

This isn’t Firedoglake’s issue: we’re not a ‘gay blog’ and most of us aren’t ‘gay bloggers.’

But amidst my tears on Election Day Plus One, Jane’s email presaged the work FDL has done the last 18 months. FDL is not an LGBT blog nor are we LGBT bloggers, many of us. But the expert team assembled to liveblog from Judge Vaughn Walker’s courtroom — David Dayen, Marcy Wheeler, and Emptywheel’s bmaz — lifted me up. They provided me with the will to continue as my fingers cramped and my back cried out. As I wept in the courtroom while brave plaintiffs described the simple human rights they were daily denied as a gay couple and a lesbian couple, I had the power of FDL with me and behind me.

And you knew where to look for this coverage, because FDL’s tremendous backstage crew had provided a Hub where all our coverage lived — and will always live as long as there’s a federal trial underway on our right to marry.

I knew I could not rest until we’d seen that trial through — and there’s plenty more to come, you know very well, no matter the decision Judge Vaughn Walker renders.

There were plenty of LGBT bloggers covering the trial, twitterers and texters too. But if you wanted the core coverage, the word-for-word explication, the sense of the courtroom, the attitude from the bench, the despair and confusion among the Counsel for Defendant-Intervenors — here’s where you tuned in. The activist organizations and LGBT organizers and bloggers provided plenty of fine background, flavor, color, and perspective.

Firedoglake was the model, though — and for that I am very grateful and thankful. Aren’t you?

Please help Firedoglake raise $60,000 by the end of the day so that we can, among many other things, bring you continued Prop 8 Trial coverage: at the full Ninth Circuit, at the Ninth Circuit Court of Appeals, and — eventually — at the Supreme Court.

I appreciate all the support you’ve provided me, and my co-livebloggers, throughout the trial in San Francisco. Can you please make that support tangible today in a way that will allow us to continue to provide you the coverage you’ve come to expect from us?

Thank you very much!

Underwater and the Strategic Default PR Campaign, 1: Fannie and a 7-year penalty.

Thursday, 06/24/2010 - 10:52 am by Mike Konczal | One Comment

Wow. Fannie is jumping ahead of Congress in going after Strategic Defaulters without (a) identifying who they are even quasi-rigorously and (b) identifying how big of a problem this is, and how this isn’t just piling on people experiencing deep income shocks in a major recession. Fannie Mae Increases Penalties for Borrowers Who Walk Away: Seven-Year Lockout Policy for Strategic Defaulters:

WASHINGTON, DC — Fannie Mae (FNM/NYSE) announced today policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers who have extenuating circumstances may be eligible for new loan in a shorter timeframe….

Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.

Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances.

A few initial thoughts with lots of graphs.

1) Why don’t they cramdown these mortgages? Why don’t they do a Right-To-Rent process? “Loan modification” has turned out historically to increase the balance of the loan by capitalizing fees and then just spinning out the length of the loan.

We know from HAMP analysis, specifically carried out by Analysis of Mortgage Servicing Performance, that 70% of modified mortgages have a principal increase (data discussed here):

And that a surprising amount of them redefault a year out:

There is no working definition of predatory lending, but a loan that has a negative amort (increases the balance) and a person is unlikely to be able to pay seems like a good working definition of predatory lending. If the GSEs are going to pressure people into modifications, I wonder what their expectations are of how much principal will be reduced and how likely it is people will immediately redefault. We didn’t do this with HAMP, even though we should have, and HAMP is a disaster nobody will stand by.

Reducing principal, especially cramming it down to the market rate, is a plan to save a mortgage and get homeowners back on track. Modifications have a history of kicking a serious problem 10 yards down the road. And don’t be mad Fannie, but the “we’ll just kick the can for now” solution seems right up your alley.

2) Annie Lowrey has a good catch in When Underwater Homeowners Walk Away, with this Federal Reserve paper The Depth of Negative Equity and Mortgage Default Decisions:

After distinguishing between defaults induced by job losses and other income shocks from those induced purely by negative equity, we find that the median borrower does not strategically default until equity falls to -62 percent of their home’s value. This result suggests that borrowers face high default and transaction costs. Our estimates show that about 80 percent of defaults in our sample are the result of income shocks combined with negative equity. However, when equity falls below -50 percent, half of the defaults are driven purely by negative equity. Therefore, our findings lend support to both the “double-trigger” theory of default and the view that mortgage borrowers exercise the implicit put option when it is in their interest.

The median 2006 borrower from the four housing disaster states doesn’t strategically default until LTV is at 162, and even then it is mostly from income shocks (unemployment, health care, etc.). For what it is worth, we ran some numbers here:

And if you are an LTV of 160, it will be, under generic estimates, a range of around 8 to 12 years until you are above water. You “own” (and have to upkeep) a place you are a decade out from owning. So a 7 year penalty has to be taken in context.

That paper has issues that could be extrapolated (we don’t need the median borrower to walk away before we have major problems), but it’s important to us to have a clear sense that there is an actual problem here, as opposed to the income shocks of near 20% underemployment.

3) Fannie is saying homeowners should be working with the servicers here. And they should. But it is worth noting that even when we bribe servicers to “nudge” them, as we have done in HAMP, we still don’t actually get principal cuts. Shahien Nasiripour has just found, “As few as 0.1 percent of mortgage modifications initiated under the Obama administration’s signature foreclosure prevention program involve reductions in principal, according to a federal report released Wednesday…A January report by the State Foreclosure Prevention Working Group noted that principal reduction is the best way to stem the foreclosure crisis.” Usually these involve payment increases, unless they lengthen the period of the loan, which means more time underwater.

HAMP, the Obama adminstration’s foreclosure prevention program, has gone from “look busy” to “not working” to utter, complete disaster. A complete waste of time, resources and energy. And Fannie now wants to replicate it. Let’s see how this goes.

Mike Konczal is a fellow with the Roosevelt Institute. You can follow him on twitter here.

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Brad Friedman and Desi Doyen: Green <b>News</b> Report: July 15, 2010 (Audio)

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In the polarization of politics, parsing words of politicians has become a fine art form by opponents to score points as if the public has a mental scoreboard in their heads.

I’m drawing from memory here as most voters would on criticism tossed at House Speaker Nancy Pelosi and Senate

Banking chairman Chris Dodd.

After passage of the health reform legislation, Pelosi said we won’t know what’s in the law until it plays out in real time.

After the joint conference agreement on the pending financial reform package, Dodd said he hoped the new regulations would work.

That’s how I understood what they were trying to say.

The Republican attack machine framed it differently. They suggested Pelosi didn’t bother to read the health legislation. And Dodd was dabbling in some unproven experiment for heavy-handed governmental interference of the capitalist system.

Both pieces of legislation are 1,500 to more than 2,000 pages thick. Not in a million years am I so altruistic that I believe all 535 House and Senate members read every word of both legislative proposals.

Nor do I believe every subsection of each law will work as intended.

Laws are not set in concrete. They can be amended. They can be improved to meet the test of pragmatism. They can be dropped as failures. Awkwardly, it takes Congressional action to do that.

During the 1992 presidential campaign, the one proposal Ross Perot advocated I subscribed to was that each law passed by Congress have a two to five-year sunset clause to determine if it was working.

Now that’s a reasonable concept rather than the Republican battle cry to repeal the health reform law because they don’t like the one section, of hundreds, that mandates purchase of insurance coverage. Some opponents, such as former Alaska half-Gov. Sarah Palin, I presume would not settle for less than a repeal of the entire legislative act.

As for the financial reform legislation, no one other than a cheer-leading President Obama, who does not have a vote, is so bold as to predict passage, especially in the Senate.

What Dodd maybe was referring to as a “hope,” is based on what a battalion of lawyers will write as specific regulatory rules applying to each subsection of the massive legislation overhauling our financial industry how it conducts business.

How that plays out is anyone’s guess. Here are two analysis that may help in determining the prospective winners and losers.

What I object to is that the financial reform package exempted Fannie Mae and Freddie Mac which were instrumental in creating the housing market collapse.

The Congressional Budget Office says Fannie and Freddie will end up costing taxpayers more money than the historic bailout of the financial industry.

Congress voted in 2008 to effectively place the two mortgage giants in a federal receivership by taking over 80% of its paper holdings.

So far the tab stands at $145.9 billion, and it grows with every foreclosure of a three-bedroom home with a two-car garage. The CBO predicts that the final bill could reach $389 billion.

Rather than being in the lending business, Fannie and Freddie are just as active in the foreclosure end of it.

Every 90 seconds in the first quarter of this year the two giants foreclosed on a home they financed and guaranteed to pay back investors.

By the end of March they owned 163,828 foreclosed homes, about the same number of total households in Seattle.

“Our business is the American dream of home ownership,” Fannie Mae declared in its mission statement, and in 2001 the company set a target of helping to create six million new homeowners by 2014. The New York Times, reporting from Casa Grande, about an hour’s drive from Phoenix:

Fannie and Freddie increased American home ownership over the last half-century by persuading investors to provide money for mortgage loans. The sales pitch amounted to a money-back guarantee: If borrowers defaulted, the companies promised to repay the investors.

Rather than actually making loans, the two companies — Fannie older and larger, Freddie created to provide competition — bought loans from banks and other originators, providing money for more lending and helping to hold down interest rates.

They paid no heed to predator lenders requiring no money down, balloon payments nor financial statements

from new home buyers’ ability to pay.

The result is Fannie and Freddie today are the nation’s largest landlords.

The two companies together accounted for 17% of real estate sales in Arizona during the first four months of the year, almost three times their share of the market during the same period last year, according to an analysis by MDA DataQuick.

It costs the government about $10,000 to sell each foreclosed house and recoup less than 60% of what the homeowner failed to pay after a resale at deflated market values than the original mortgage purchase price.

Some sales are to investors who “flip” the houses for quick profits after the government repaired interior damage and maintained its yards.

As to the maintenance costs, just the cost of contracting mowing an empty foreclosed property costs $80 per month. The Times:

That’s a monthly grass bill of more than $10 million.

All told, the companies spent more than $1 billion on upkeep last year.

To ensure more new homeowners buy the foreclosures, Fannie and Freddie agreed to sell to nonprofits using taxpayer grants from the federal Neighborhood Stabilization Program.

Chicanos por la Causa, which won $137 million under the program in partnership with nonprofits in eight other states, plans to buy more than 200 homes in Phoenix in the next two years. It plans to renovate them to sell to local families.

Another gimmick:

Fannie Mae last summer announced that it would give people seeking homes a “first look” by not accepting offers from investors in the first 15 days that a property is on the market. It also offers to help buyers with closing costs, and prohibits buyers from reselling properties at a profit for 90 days, to discourage speculation. Fannie Mae said that 68.4% of buyers this year had certified that they would use the house as a primary residence.

Fannie Mae and Freddie Mac is our problem because Congress bought them for us without our asking.

Cross posted on

I’m not quite certain how to calibrate journalism American Banker style, but I found this article, “Challenges to Foreclosure Docs Reach a Fever Pitch,” (sadly, subscription only, e-mailed by Chris Whalen), to be both interesting and more than a tad disingenuous.

The spin starts with the headline, it’s a doozy. The “challenge to foreclosure documents” message persists throughout the article, and it’s perilously close to a misrepresentation:

Because the notes were often sold and resold during the boom years, many financial companies lost track of the documents. Now, legal officials are accusing companies of forging the documents needed to reclaim the properties.

On Monday, the Florida Attorney General’s Office said it was investigating the use of “bogus assignment” documents by Lender Processing Services Inc. and its former parent, Fidelity National Financial Inc. And last week a federal judge in Florida ordered a hearing to determine whether M&T Bank Corp. should be charged with fraud after it changed the assignment of a mortgage note for one borrower three separate times…

In many cases, [plaintiff attorney] Kowalski said, it has become impossible to establish when a mortgage was sold, and to whom, so the servicers are trying to recreate the paperwork, right down to the stamps that financial companies use to verify when a note has changed hands…

In a notice on its website, the Florida attorney general said it is examining whether Docx, an Alpharetta, Ga., unit of Lender Processing Services, forged documents so foreclosures could be processed more quickly.

“These documents are used in court cases as ‘real’ documents of assignment and presented to the court as so, when it actually appears that they are fabricated in order to meet the demands of the institution that does not, in fact, have the necessary documentation to foreclose according to law,” the notice said..

Yves here. Let’s parse the two messages:

1. Note how the problem is presented as one of “documentation”, implying it is not substantive.

2. Because everyone knows mortgages were sold a lot, (which is clearly mentioned in the piece) the idea that some somehow went missing (or as the piece suggests, the “documentation” is missing even though the parties are presented as if they know who really owns the mortgage) is presented as something routine and not very alarming.

OK, let’s dig a little deeper. Even though the media refers to “mortgages”, under the law there are two pieces: the note, which is the indebtedness, and the mortgage (in some states, a “deed of trust”), which is the lien against the property. In 45 of 50 states, the mortgage follows the note (it is an “accessory”) and has no independent existence (as in you can’t enforce the mortgage if you don’t hold the note. You need to have both the note and the mortgage. This is a bit approximate, but will do for this discussion).

Now, the note is a bearer instrument if it is endorsed in blank (as in signed by current owner but not specifically made payable to the next owner, which was common for notes that were sold). It isn’t some damned “documentation”. Remember the days of bonds, when you had the real security, or stock certificates? This is paper with a hard monetary value, the face amount of the note (as long as it’s current, anyhow).

So now go back and look at that little extract. This “oh business was so busy we mislaid a lot of paper” isn’t some mere filing error. It’s like saying you left an envelopes full of cash in the subway on a regular basis. In the late 1960s back office crisis on Wall Street, when the volume of stock trading overwhelmed delivery and settlement infrastructure, a LOT of firms went out of business, in the midst of a bull market.

OK, now the second item with the article finesses is the sale of mortgages versus the role of the servicer. For the overwhelming majority of first mortgages, and I believe about 50% of second mortgages and HELOCs, the servicer is working for a trust that holds the notes pursuant to a securitization.

The standard documentation for a RMBS calls for the trust to gave a certification at closing that it has all the notes and it has to recertify that it has all the assets at two additional future dates, usually 90 days out and a full year after closing.

So this “notes were flyin’ around, yeah we lost track” is presumably impossible if we are discussing securitizations. Or put it another way: it means the fraud here is much more extensive than servicers making up documents ex post facto. It means the fraud extended back into how the securitization took place (as in what investors were told v. what actually happened).

And before you say these reports are exaggerated, my limited sample and my discussions with mortgage professional (not merely plaitiff’s attorneys but mortgage industry lifers) suggests the reverse.

But what about the second claim in the headline, that this activity has reached a “fever pitch”? Wellie, that’s a distortion too, perhaps to energize those who would be enraged by visions of deadbeat borrowers staying in houses due to fancy legal footwork. Trust me, there are FAR more overextended borrowers living in “free” housing due to banks slowing up the foreclosure process than due to legal battles.

First, the story is ONLY about Florida, despite the hyperventilating tone. And Florida is way ahead of other jurisdictions. There is a group of lawyers that are sharing G2 on these cases, and there are also a fair number of sympathetic judges. Note some states (Minnesota in particular) have both extremely pro bank laws and a business friendly bar. So it’s misleading to make sweeping generalizations; you need to get a bit more granular, which this article fails to do.

Second, the “fever pitch” headline also conveys the impression that this is an epidemic, ergo, these cases are widespread. While it is hard to be certain (this activity is by nature fragmented), at this point, that looks to be quite an exaggeration. The vast majority of borrowers, when the foreclosure process moves forward, don’t fight. They lack the energy and the resources. And when the borrower prevails, the case is typically dismissed “without prejudice”, meaning if the servicer and trustee get their act together, they can come back to court and try again.

Most of the battles against foreclosure appear to fall into one of two categories:

1. The borrower can afford the mortgage, but has fallen behind due to what he thinks is a servicing snafu. I can give you the long form, but the way servicers charge extra fees is in violation of Federal law and is designed to put the borrower on a treadmill of escalating fees. And they do not typically inform the borrower that fees have compounded until 6 or more months into the mess, and by that time, the arrearage can be $2000 or more. The borrower is unable to fix the servicing error, the fees continue to escalate, and the house goes into foreclosure.

2. The borrower has filed for a Chapter 13 bankruptcy, but the trustee is fighting the bankruptcy stay and trying to seize the house.

So why this alarmist American Banker article? Even if the numbers of successfully contested foreclosures are not (yet) large, the precedents being set are very detrimental to the foreclosure mills, the servicers, and the trustees. Moreover, the costs of fighting these cases can quickly exceed the value of the mortgage. So it would not take much of an increase in this trend to wreak havoc with servicer economics, and ultimately, the losses on the trust, particularly on prime mortgages, where the loss cushions were considerably smaller than on subprime.

I suspect the real reason for alarm isn’t the “fever pitch,” meaning the current level of activity. It’s that a state attorney general is throwing his weight against the servicers, and what he is uncovering is every bit as bad as what the critics have been saying for some time. That may indeed kick up anti-foreclosure efforts in states with open-minded judges to a completely new level.

Mike Fuljenz Mike Fuljenz

foreclosure listings

From a report emailed to me over the weekend:

At the core of the foreclosure-prevention strategy is ignoring delinquencies. The percentage of older delinquent loans not yet in foreclosure is startling: 60% have at least 12 missed payments, and 35% have at least 18 missed payments. Add to this that three-fourths of delinquent loans are not in foreclosure, and we see that hidden losses well exceed those in the open.

Uh, they're not being "ignored" - this is systemic and intentional fraud.

Remember, these loans are either being held by someone or securitized into some sort of package.  When you have a loan that has no chance of "curing" (to cure a loan with 12 missed payments the borrower would have to come up with the 12 payments to bring it current!) that loan should be carried at its recovery value - that is, the value of the collateral that can be seized and sold, LESS the cost of eviction, remediation and resale.

Does anyone recall all the entries I've written about getting competent legal and accounting (tax) advice before proceeding with any sort of action regarding walking away, short sales or foreclosure?  This same report says:

Many homeowners would be better off going into foreclosure, than doing a short sale. Short sales are fraught with potential legal, credit, and complicated tax issues. For example, someone who refinanced could owe capital gains taxes, which are not forgiven under federal and California temporary debt relief acts. In the foreclosure route, borrowers can live in their house mortgage-free for at least one year, maybe two years. Both short sales and foreclosures are reported as “account not paid in full”, and are equally damaging to a credit score. An exception exists if short sellers can negotiate better terms with their lender on recourse liens. The other possible advantage to a short sale is the ability to get a mortgage again in 2 years (Fannie, Freddie), rather than having to wait 3-5 years after a foreclosure.

Homeowners pursue short sales, unaware of the problems they are creating for themselves. Their agents never warned them of deficiencies, ruined credit, taxes due on forgiven debt, or legal consequences. Agents made flowery promises to get listings, and now the lawsuits are starting.

No, really?  You mean that people in the real estate business are less than truthful with their clients?  That would never, ever happen with licensed professionals, right?

Then there's this, which I also have written about:

Another gray area is junior lien holders asking buyers for additional payments. As the market improved, juniors were no longer content with $3k thrown to them from the senior. They now want 10% of the junior note. They argue the additional payment is legal practice because the payment is made to escrow and appears on the HUD-1. However, they are actually hoping the senior lien holder does not read the HUD-1. The California Association of REALTORS® position is that all payments made by the buyer or agent in the purchase of a short sale must be part of the written short sale agreement signed by the senior lien holder. Concealing payments from seniors is loan fraud, and omitting these payments from the HUD-1 closing statement may violate RESPA. Some seniors reinstate their security interests because of the fraud. It’s surprising that the biggest banks are responding, when pressed on the fraud of their request, “just do it if you want the deal done”.

Right.  Big banks saying "just do it"?  Why would they do that?  Is it so they can re-instate their security interests?  No, nobody would ever do anything that hoses the consumer, would they?  Naw.....

Few people understand that the bank that gave them their mortgage turned around and sold it into a mortgage bond, and the “bank” on their mortgage statement is actually a servicer.

Actually, it's a bit more complicated than that.

As I've been working on (and writing on) for a long time, and as a few attorneys are now starting to understand, the entirety of this process was corrupted and is rife with outright fraud from top to bottom.

Let's go through a (partial) list of the problems:

• 
  
  

  From a report emailed to me over the weekend:

  
  

  
  

  At the core of the foreclosure-prevention strategy is ignoring delinquencies. The percentage of older delinquent loans not yet in foreclosure is startling: 60% have at least 12 missed payments, and 35% have at least 18 missed payments. Add to this that three-fourths of delinquent loans are not in foreclosure, and we see that hidden losses well exceed those in the open.

  
  

  Uh, they're not being "ignored" - this is systemic and intentional fraud.

  
  

  Remember, these loans are either being held by someone or securitized into some sort of package.  When you have a loan that has no chance of "curing" (to cure a loan with 12 missed payments the borrower would have to come up with the 12 payments to bring it current!) that loan should be carried at its recovery value - that is, the value of the collateral that can be seized and sold, LESS the cost of eviction, remediation and resale.

  
  

  Does anyone recall all the entries I've written about getting competent legal and accounting (tax) advice before proceeding with any sort of action regarding walking away, short sales or foreclosure?  This same report says:

  
  

  
  

  Many homeowners would be better off going into foreclosure, than doing a short sale. Short sales are fraught with potential legal, credit, and complicated tax issues. For example, someone who refinanced could owe capital gains taxes, which are not forgiven under federal and California temporary debt relief acts. In the foreclosure route, borrowers can live in their house mortgage-free for at least one year, maybe two years. Both short sales and foreclosures are reported as “account not paid in full”, and are equally damaging to a credit score. An exception exists if short sellers can negotiate better terms with their lender on recourse liens. The other possible advantage to a short sale is the ability to get a mortgage again in 2 years (Fannie, Freddie), rather than having to wait 3-5 years after a foreclosure.

  
  

  Homeowners pursue short sales, unaware of the problems they are creating for themselves. Their agents never warned them of deficiencies, ruined credit, taxes due on forgiven debt, or legal consequences. Agents made flowery promises to get listings, and now the lawsuits are starting.

  
  

  No, really?  You mean that people in the real estate business are less than truthful with their clients?  That would never, ever happen with licensed professionals, right?

  
  

  Then there's this, which I also have written about:

  
  

  
  

  Another gray area is junior lien holders asking buyers for additional payments. As the market improved, juniors were no longer content with $3k thrown to them from the senior. They now want 10% of the junior note. They argue the additional payment is legal practice because the payment is made to escrow and appears on the HUD-1. However, they are actually hoping the senior lien holder does not read the HUD-1. The California Association of REALTORS® position is that all payments made by the buyer or agent in the purchase of a short sale must be part of the written short sale agreement signed by the senior lien holder. Concealing payments from seniors is loan fraud, and omitting these payments from the HUD-1 closing statement may violate RESPA. Some seniors reinstate their security interests because of the fraud. It’s surprising that the biggest banks are responding, when pressed on the fraud of their request, “just do it if you want the deal done”.

  
  

  Right.  Big banks saying "just do it"?  Why would they do that?  Is it so they can re-instate their security interests?  No, nobody would ever do anything that hoses the consumer, would they?  Naw.....

  
  

  
  

  Few people understand that the bank that gave them their mortgage turned around and sold it into a mortgage bond, and the “bank” on their mortgage statement is actually a servicer.

  
  

  Actually, it's a bit more complicated than that.

  
  

  As I've been working on (and writing on) for a long time, and as a few attorneys are now starting to understand, the entirety of this process was corrupted and is rife with outright fraud from top to bottom.

  
  

  Let's go through a (partial) list of the problems:

  
  
  • 
    
    penis enlargement products
    
    

    

managing your personal finance

Mint.com helps Web users who are willing to enter their bank and credit card account information track their spending and savings. Now another start-up called Wikinvest wants to do the same thing for investments.

Wikinvest, as we have written about, is a site with user-generated information about stocks — Wikipedia meets Yahoo Finance. On Wednesday, it will introduce a tool that imports information from a user’s brokerage and investment accounts and arranges it in a readable way.

“Today, lots of people are paying more attention to the markets, but there is no good way to do this,” said Michael Sha, a co-founder of Wikinvest.

Some people enter the data manually in spreadsheets. Others track their personal investments on sites like Yahoo Finance and Google Finance, but few do so, Mr. Sha said, because it requires entering each investment manually.

Brokerage Web sites track investments, but many people have several accounts, and these sites rarely include information like news reports.

Wikinvest will sync with 25 brokerages, including Scottrade, Charles Schwab and Vanguard. Users enter their brokerage account log-ins on Wikinvest, and Wikinvest will import their investment information and present it in easy-to-read columns that show things like the 52-week price range for stocks and recent news headlines and Wikinvest articles that could affect investments.

Charts compile all a user’s investments, across brokerage accounts, taking into account information like deposits and withdrawals, dividends and fees, and compare performance to the rest of the market.

This could be useful for people managing their own money or for people who want to monitor what a financial planner is doing with their money, Mr. Sha said.

Having the information compiled in one place could also be useful when tax season comes around — Wikinvest could automatically fill in Schedule D forms, he said.

In the next few weeks, Wikinvest will add personalized, real-time e-mail alerts about news related to stocks that an individual owns. The company is also building versions for the iPhone and iPad.

The service is free, and eventually Wikinvest plans to make money off of it by running various types of ads.

These could include suggesting an index fund similar to one that somebody owns but with a lower fee, or suggesting investments catered to someone’s risk level, asset level and interests. Wikinvest could also refer users to accountants, brokers or financial planners.

“The relevance of having your portfolio data with alerts is even more relevant when it comes to making decisions,” Mr. Sha said. “We can target better ads.”

This is also like Mint, which makes money by suggesting credit card or bank accounts with lower fees, for example, and then earning an affiliate fee when users sign up.

Many people might be hesitant about entering their brokerage log-ins and passwords on Wikinvest.

“Hopefully the value we can provide as a result is worthwhile,” Mr. Sha said, raising an issue that was also addressed in a recent Times article. “A lot of work was done by Mint to pave the way in getting people comfortable.”

The site has taken pains to secure its hardware and encrypt its Web site, said Mr. Sha, who previously worked on fraud prevention at Amazon.com.

Even if an intruder broke into the Wikinvest site and could see a user’s balances, it is impossible to trade or access brokerage accounts from the site.

Five Simple Substitutions, One Big Change [The Simple Dollar] "It’s amazing how much money can be saved by making one simple change in your life."

Personal-Finance Basics for the Class of 2010 [The Wall Street Journal] "Here are some of the new developments most likely to affect the class of 2010."

Things you think will make money but don't [Smart Spending] "When asked, readers listed going to college, buying gold, and cooking at home, among other things. Not everyone agreed."

The wacky world of college scholarships [MSN Money] "Need some help affording college? A special skill or interest -- or even a particular last name -- can put a big dent in a student's tuition."

7 Questions You Must Ask Your Financial Adviser "Understanding your financial adviser’s motives, expertise and methods is crucial to managing your wealth."

— FREE MONEY FINANCE

penis enlargement

Trouble with your monthly budget? Need to visualize your financial investments? Described by Wikipedia as a "free web-based personal financial management service," Mint.com is a tool to keep track of your money and cash flow. The website was named one of the 50 best of 2008 by Time magazine. Here's how to make the most of the free service.

1. Sign up for a free account at Mint.com. To navigate there, visit this link: Mint.com

2. Enter your bank information so Mint.com can access your financial accounts through a secure connection. Enter as many financial accounts as you have so that Mint.com can aggregate the data into a single overview of your financial situation to help you manage finances easier.

3. You can also add information about your savings accounts, credit cards, investment accounts, loans, real estate, vehicles and credit score.

4. Once your personal finance accounts have been authenticated, your transactions and balance information will be updated nightly.

5. Use the data Mint.com compiles for you any way you choose. You may notice a horrifying spending habit or trend (like dining out too much) after examining one of Mint.com's helpful pie charts and graphs. Use the Mint.com budgeting tool to assure that you never again have to scrap together dollars at the end of the month to make your payments. Managing personal finances has never been more fun.

6. Mint.com uses your transaction activity to recommend credit cards, saving accounts and checking accounts that could help you save money.

7. Hook Mint up with your mobile device to get instant notifications about your financial situation.

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Panasonic reveals more details of AG-AF100 Micro Four Thirds camcorder: Panasonic has released more details of its AG-AF100 professional Micro Four Thirds HD camcorder. It is capable of recording up to 12 hours of video using its two ...

Lee Camp: Fox <b>News</b> and Its Fans Blasted on New Showtime Show (VIDEO)

I was lucky enough to get the opportunity to tear down Fox News and its fans on the new Showtime show "The Green Room with Paul Provenza." (Video below.) Learn more about "The Green Room" by clicking HERE. ...