Smart Borrower Blog

Archive for July, 2009

Frank Considers Reviving “Cram Down” Legislation

Barney Frank, House Financial Services Committee Chairman, is concerned that lenders aren’t doing enough to help modify home loans that are in stress. Frank is threatening to revive the “cram-down” legislation that failed to pass Congress earlier this year. Under this legislation, federal judges are given the power to cut interest rates, reduce mortgage balances and extend terms. The judges would have the authority to do this even if the lender protests. Although Congress has given the mortgage industry many tools to quickly and easily modify loans, the results have been dismal, according to Frank. An article on Bloomberg.com tells... more »

Swindlers Take Advantage Of Distressed Homeowners

Every night, the nightly news tells us about more and more foreclosures, and people in trouble with credit card bills and other unsecured debt. People, desperate to get out from under this staggering situation, are turning to any service or company that can help them find relief. With people in such distress, it is inevitable that unethical people come around to take advantage of them. In an article in The New York Times, the reporter wrote about a new breed of swindler. These defrauders aren’t trying any longer to bilk people out of the little equity they may have in... more »

Americans Cutting Back on Credit Cards More Than Others

In a new survey commissioned by international lender ING Direct , it appears that Americans are far more likely than their European counterparts to cut back on their credit card use during this recession in order to save money. A full 46 percent of Americans surveyed said they are refraining from charging their purchases with plastic, a much higher percentage than any of the other eight included countries had. For example, only 11 percent of Germans and 17 percent of Italians said they were doing the same. “Whether it’s at home, in the boardroom or in the car showroom, people... more »

Will America’s Recovery Capital Loan Program Work for Small Business Owners?

America’s Recovery Capital Loan program (ARC) will provide up to $35,000 in short-term relief for small businesses having problems meeting expenses. Small Business Administration (SBA) lenders are generating these loans, which will be available for small businesses until September 30, 2010. This $255 million loan program has been in effect for approximately one month. Some of the program’s detractors are having doubts about the effectiveness of the program. The SBA plans to approve $190 million in loans in 2009, and $150 million in 2010. The plan is to bail out 11,000 small businesses and retain 55,000 jobs. An article on... more »

What Are Banks Really Doing With TARP funds?

There have been 360 banks and lending institutions across that have received government funding from the Treasury Department’s Troubled Asset Relief Program (TARP). Have you been wondering what these financial institutions have been doing with your taxes? Well, a new report from the Office of the Special Inspector General, the oversight department for the program, has shed some light on that question. Apparently, 83 percent of these banks are using some or all of the money to make more loans, including things like commercial and residential mortgage loans, small business loans, and credit card loans. Yet 43 percent are using... more »

Is Obama’s Home Affordable Modification Program a Good Deal?

If you are in danger of default or delinquent on mortgage payments, you may wish to take advantage of the home affordable modification program that began in March. Although the program provides relief for home owners, what is little-known about the program is the damage that is done to your credit score. An article from Bloomberg gives us the information that everyone should be aware of when considering this program. What happens is this: When you apply for a loan modification, many of the large lenders, including J.P. Morgan Chase & Co. and Bank of America, report the loan modification... more »

The End of Small Business Loans?

The End of Small Business Loans? With the announcement that CIT Group is in active discussions with its principal regulators on a series of measures to improve the company’s near-term liquidity position and now working with a law firm that specialize in bankruptcy dealings, small businesses may have been dealt another costly blow. CIT has been a major lender of small business loans, and its failure could mean an almost completely dry field for such loans in the near future. The New York Time Boss Blog reported that according to the most recent annual report filed with the Securities and... more »

Obama’s “Cash For Clunkers” Program Gives Incentive to New Car Buyers

Last Thursday, Congress approved the new Cash for Clunkers program.  The program is designed to provide motorists with a $3,500-$4,500 incentive if they agree to trade in their older vehicles for one that is more fuel-efficient.  The Obama administration feels that this program will be a stimulus for car dealerships; it also provides the nation with vehicles that are more fuel efficient.  In states that rely heavily on the auto industry for jobs, such as Michigan, this can be seen as a good thing. But what if the car being traded in his worth more than $3,500?  Many vehicles on... more »

Pimco Backing Out of U.S. Treasury Toxic-Debt Program

Pimco, the world’s largest bond manager, has backed out of the treasury’s plan to buy up to $40 billion in assets from banks, according to Bloomberg. The plan, called the Public-Private Investment Program (PPIP), was originally expected to buy as much as $1 trillion in mortgage backed assets and devalued real estate loans. Pimco had originally announced in March that it would participate in the program. In June, the bond manager withdrew its application for participation, citing uncertainties about the design of the initiative. The government’s plan is smaller than originally expected. With Pimco backing away from the program, questions... more »

Consumer Delinquency Rates Grow, Unemployment to Blame

A recently released report from the American Bankers Association (ABA) showed that 3.35 percent of consumers were behind on their loans during the first three months of this year, compared with 3.16 percent in the last quarter of 2008. These consumer loans include home equity loans, home improvement loans, direct and indirect auto loans, marine and RV loans, mobile home loans and personal loans. Of those categories, the delinquency rate on direct car loans grew the most from 2.03 percent to 3.01 percent. ABA chief economist James Chessen said in a statement: “The number one driver of delinquencies is job... more »