Smart Borrower Blog

Archive for the ‘Personal Borrowing’ Category

Banks Take Credit Card Law Frustrations Out on Checking Accounts

Did lawmakers really think that banks would take this new credit card law lying down? As banks got slapped with tighter restrictions on how they can handle credit card billing and rate adjustments, the banks are trying to recoup some of those reduced profits by gouging their checking account holders. The costs always get passed back down to the consumers when big corporations are taxed or restricted; they never just eat the loss in profits – they try to make it up elsewhere. They work for their share holders, not their clients, apparently. Here’s what’s going down according to USA... more »

A Look At the Bankruptcy Abuse Prevention and Consumer Protection Act

In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act.  This Act was heavily pushed by the credit card industry. Under the Act, households must file for bankruptcy under Chapter 13, which requires that they pay unsecured debt.  Before the passing of this Act, households could file under Chapter 7, which meant that they could write off unsecured debt, thus freeing up money to apply to the home mortgage to avoid foreclosure.  This is no longer the case. Now, three researchers at the Federal Reserve Bank of New York are saying that this legislation has shifted the risk... more »

News From Congress, et al

I’ve collected a few stats for today’s post that I found quite interesting.  I had the opportunity to watch part of the proceedings that other morning where Ben Bernanke was before the Congressional committee that was questioning him on the bailout of Bear Stearns.  Members of the panel were asking him some pretty hard questions, and his answers were not sitting well with a lot of the members. I get my news from the LA Times, NY Times and Reuters, and as a great source of information, they can’t be beat.  I also get Google alerts daily on the mortgage... more »

Avoiding Foreclosure

Many homeowners are finding themselves facing mortgage problems these days. Whether the problem is the current market values or you have experienced a sudden job loss or illness, there are solutions out there. If you are concerned about keeping up with your mortgage problems, the best thing to do is contact a non-profit counseling agency. Be sure that you pick one that is approved by HUD, available here: http://www.hud.gov/offices/hsg/sfh/hcc/hcc_home.cfm A counselor will help you to review your financial situation; he or she may find options that you did not know were available. Counselors can also walk you through the various... more »

Avoiding Foreclosure

Many borrowers wonder when they should begin contacting their lender, if loan payments have become late. Most lenders suggest that the wheels begin turning when your payment becomes 16 days overdue. At this point, the lender may try to get in touch with you to help decide how to bring the payment current. If not contact the lender yourself. At this point, lenders might still try to arrange a repayment schedule. You will have to pay some of the delinquent amount up front, and pay off a portion of the balance every month for a year or more. If you... more »

What Happens When a Loan Goes into Foreclosure?

With more and more families losing ground in the mortgage payment game, it might be prudent to explain the foreclosure process. Typically when a borrower falls behind on payments, the home doesn’t immediately go into foreclosure. Instead, the lender waits until the payments are delinquent 90 days. He then will send the borrowers a “breach letter” requesting (well, demanding really) that the total loan, including interest and penalties accrued so far, be paid. At this point, the next steps will vary depending on which state you live in. But the loan goes into a foreclosure status and stays there until... more »

Walking Away From The Mortgage

An alarming trend is hitting portions of the nation – people are trying to stay current on their car loans and credit cards, but are not paying their mortgage payment.  The NBC Nightly News reported on this topic, giving a lot of reasons why this is happening.  Today, in The Indianapolis Star and on the KNXV-ABC News website, I see the same story related. The NBC News reports that this is the course of action that people are taking because of several factors.  People are being hurt by the high price of gas, and the cost of groceries has taken... more »

Who Pays When Homeowners Walk?

Lots of advice is floating around for homeowners who are facing foreclosure. There are many: 2.2 million in 2007, according to RealtyTrac, a research company based in California. Most civic leaders and lawmakers are trying to educate consumers with steps that a homeowner can do to retain their home, such as: Make their mortgage payments a first priority, budget in order to avoid overspending, save money for an “emergency fund,” and let the lender know as soon as possible if the mortgage payment can’t be made. This is all normal financial advice. Other “experts” suggest that people simply walk away... more »

Walk Away from Debt?

Please read “Homeowners Stuck with Low-Value Properties,” my post from yesterday, if you haven’t already. One commonly held theory is this: if you are in danger of going into foreclosure, simply stop paying on part of your mortgage. Here is how this advice goes: If you have two, three, or more loans against your home, figure out which one is the “senior” loan — the loan that would be paid off first if you were to sell the property. Add up the subsequent loans and, if they are more than the value of the home, simply stop paying on the... more »

Homeowners Stuck with Low-Value Properties

The housing “bubble” of the past few years caused a flurry of lending that might not have happened, except property values were rising fast. Buyers felt good about it; after all, buying houses is what we do. And if they put 20% down, they figured property prices would have to drop by 20% immediately to lose out. Prices have been rising since the 1800s, so why would they drop now? Lenders also felt they were safe. Handing out second and third mortgages and home equity lines of credit was not risky because the value of property would rise quickly; the... more »