The White House Reveals the Housing Plan

There has been a lot of debate concerning the housing bailout plan. Many details of this plan have not been revealed…until now.

Details about exactly “who” and “when” are now being released by President Obama and his administration. The new plan is geared to help over 9 million homeowners stay in their homes. How will this happen? Struggling homeowners will be able to refinance their mortgages into new mortgage programs that have lower monthly payments.

This new program, also know as the “Making Home Affordable” program, has already been extremely popular among homeowners. Many homeowners, who have been struggling for several months, say that the new program is welcomed news.

Here’s an interesting point to consider however. Homeowners who have been hit the hardest by the crash of the housing market won’t be affected by the bailout plan. That’s right…homeowners who own their primary residence in Arizona, Nevada, California and Florida aren’t likely to qualify for the “Making Home Affordable” plan.

The Obama administration and other government officials predict that “tens of thousands” of homeowners who need the help the most, won’t be able to qualify for it. Instead, the housing bailout plan is only a small step in the right direction. The Obama administration has made it very clear that the plan is targeted to help “responsible” homeowners.

There is another factor to consider, here’s the marketing analytics: not every bank and/lender is going to be participating in the program. However, the plan is twofold. One aspect of the plan deals directly with banks and lenders. Up to 4 million homeowners will be assisted in this aspect because the government will work with the lender to modify existing troubled mortgages. The government will also work with the other 5 million homeowners to refinance their existing mortgages into more secure, fixed-rate loans.

Here’s what you need to know if you are interested in this program:

1. Eligible homeowners must provide a copy of their most recent tax return
2. Eligible homeowners must provide two of their most current pay stubs
3. Eligible homeowners must provide an “affidavit of financial hardship”
4. Eligible homeowners can only have their mortgage modified one time
5. The loan modification program runs from March 4, 2009 until 2012
6. The loan modification program affects mortgages made on or before January 1, 2009
7. Single-family residences that are worth more than $729,750 are not eligible for the program

Finally, there are some specific details about President Obama’s housing plan. If you are a homeowner that is struggling to make your mortgage payment, check into the details of this plan. This could be just what you have been waiting for.

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Have You Considered Swapping Your Home?

Have You Considered Swapping Your Home?

More and more people have been affected by the current housing crisis. Millions of homeowners are unable to sell their home for as much as they owe on it. Millions more simply can’t make their mortgage payments. However, a new real estate trend is sweeping the nation and this one has real estate agents stumped.

The trend is home swapping. You read that right. Home swapping. Here’s how it works: One potential home buyer wants a bigger house. One potential home seller wants a smaller house. The buyer can’t get necessary funding without selling their primary residence first. So, the buyer and seller simply “sell” their houses to each other. Each of the closings would have to happen almost simultaneously in order to avoid any sort of financing hang-ups.

Believe it or not, this trend is sweeping the nation. Of course, both the buyer and seller have to agree to the terms of the swap. Similarly, both the buyer and seller end up being both a buyer and seller of one another’s home.

There isn’t really a way to track how large of a trend this is becoming because the National Association of Realtors does not keep track of home swaps in its annual averages. Stephanie Singer, of the National Association of Realtors, said, “We haven’t seen this happen on a very big scale. It can be a very complex transaction, especially if you’re crossing state lines.” However, no one can be certain how often this is happening.

There have been home-swapping websites created to facilitate such transactions. MK HomeSwap, GoSwap.org, Domuswap.com and OnlineHouseTrading.com are some of the most popular home swapping websites out there.

Areas that have been hit the hardest by the housing collapse are also the areas that are seeing the most swapping. Southern California, Arizona, Nevada and Florida are home to many home swaps per year. This is proof that homeowners are getting creative, especially when they have been hit hard by the housing market.

If you have been experiencing problems with your current mortgage or have had a hard time selling your home, you might want to consider listing your home on a home swap website. It may be your only opportunity to get out of your current mortgage without losing money on the transaction.

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Which Retailers Are Bound For Bankruptcy

We, as a country, have already watched several big-name retailers go out of business. Mervyns, especially, comes to mind. Mervyns was a department store that sold products for low prices. Where are they no? Non-existent.

The retail industry is probably the most vulnerable right now. Customer analytics shows consumers are spending less and less of their valuable income on non-necessity items. Retailers spend over 10 years in an atmosphere that encouraged consumers to get into debt.

Now, consumers can’t get the same financing they could a few years ago. American families have had to cut back in every aspect of their lives, including unnecessary spending.

Large financial lenders have had to cut back their lending to retailers as well. Wachovia, GE Capital and CIT Group (some of the retail industry’s biggest lenders) have had to tighten their lending terms. Their reasoning is to reduce the exposure to nationwide retailers. These terms have made it much more difficult for retailers to “find capital to reorganize under bankruptcy-court protection.”

So, what does this all mean? There are likely to be a lot more retail liquidations in the coming months.

Circuit City Stores filed Chapter 11 bankruptcy protection in November. On January 9, the electronics superstore said that it faced possible liquidation if an acquisition or cash infusion deal didn’t work out.

Goody’s Family Clothing recently announced that it will be liquidating all of its remaining 287 stores. This announcement came just three months after it “exited” bankruptcy status.

Against All Odds USA, a clothing chain, also announced that it will enter Chapter 11 protection. It will enter this protection in hopes of being sold or being reorganized.

Standard and Poor’s recently reported that nine major U.S. retailers and restaurants face a significant risk of default. Among these are Loehmann’s Holdings, Duane Reade Holdings and Finlay Enterprises. One year ago, S&P had only six companies on its list.

Michael Henkin, managing director and co-head of the restructuring group at Jeffries said, “A lot of retailers survived through the holiday season because they built up their inventories in the summer before anyone, like their vendors, knew it would be this bad. But now you will see a lot of filings.”

Loehmann’s President, Robert Glass, said, “We have sufficient cash to sustain our operations, and pay the interest on (our) notes. Our parent has put money into the business, and has continued to be very, very supportive.”

Many of the retailers that are in grave danger of being liquidated say that they are “comfortable” in their current position. But, the fact of the matter is that many of these companies will be out of business by the end of 2009.

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Which Credit Card Fits Your Style

Everyone has different “taste.” This “taste” includes taste in food, clothes, home decor, furniture, etc. Afterall, that is what makes this world such an interesting place. But, did you know that consumers can get different credit cards according to their individual style.

The biggest indicator of your credit card style is the way that you were raised. Sound bogus? Let me explain…

When you were growing up, you probably intently watched how your parents handled their finances. Whether you realize it or not, you probably handle your finances much of the same way you saw your parents handle theirs. For instance, did your parents primarily use their credit cards to make purchases? Is that the same way that you handle your expenses and purchases? Chances are that your financial style is the same as your parent’s financial style.

Your financial style can predict what type of credit card you use. There is a countless array of credit card types out there. These include:

-instant approval credit cards
-High interest
-Low interest
-Cash back
-Travel rewards
-Rewards credit cards
-Annual fee credit cards
-Etc, etc, etc

So, which type of credit card fits your “taste” or financial style? Let’s take a look.

If you use your credit card for everyday purchases and make sure to pay off the entire balance every month, you will be better off with a reward-based credit card or a cash back credit card. You have the opportunity to rack up the points, without paying a dime of interest.

If you do a lot of traveling, either for your personal life or for your business, you might be better off with a travel reward credit card. Each time you use your credit card, you can earn points that can be used the next time you travel. You can either use these points frequently or save them. The more points you save, the better chance you have of paying for your next trip entirely with your reward points.

If you don’t pay off your entire credit card balance every month, you are better off with a low-interest or no-interest credit card. This will minimize your payments and the amount you will end up spending on interest.

Make sure you fully understand all of the ins and outs of your credit card terms. It is also extremely beneficial to understand what your credit card “tastes” are. This way, you can carefully choose a credit card that will benefit you and your finances the most.

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Marketing Credit Cards to Students

Marketing to Students?

Think back to when you were in college. Do you remember all of the credit card offers you received? Credit card companies spend millions of dollars targeting college students. Why? Because these students don’t always know how to use credit cards responsibly and can end up paying a great deal in interest payments.

Plus, these students will have good jobs and be in their careers in a couple of years. So, why not let students rack up credit card debt and then nail them in interest charges once they are finally in a career?

Many students don’t realize that their colleges and universities are helping the credit card companies. Not them. Many colleges and universities actually sell student contact information. Some institutions even give contact information to credit card companies. All of this is always done without any consent from the student.

Florida has already begun discussion about prohibiting these actions. A Republican lawmaker from Florida, Carey Baker, brought the item to the table. He has worked closely with The Consumer Warning Network to expose higher-education institutions and credit card companies.

In July of 2008, The Consumer Warning Network showed us just how dangerous things have gotten. It reported that some colleges/universities “pocket” a portion of the proceeds every time a student applies for or qualifies for a credit card. It also exposed exclusive marketing schemes from Bank of America to college students.

Now, lawmakers are extremely interested in what the relationship is between credit card companies and institutions of higher learning.

Carey Baker has proposed new legislation that would prohibit these practices. His bill would completely prohibit any college or university (public or private) from working with credit card companies. These institutions would now be prohibited from “offering or facilitating the marketing of credit cards to undergraduate students.”

This would be welcome legislation. Instead of helping credit card companies, maybe colleges and universities would take a more active role in educating undergraduate students about the proper ways to use credit cards. After all, the students of today will be the financial and economical leaders of tomorrow.

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The Importance of Payment Scheduling

The Importance of Payment Scheduling

One of the biggest problems that credit cardholders face is remember when a payment is due. Many cardholders try to juggle several different cards, each with a different due date and payment amount.

Here are a few reasons why you should schedule your credit card payments or automate the payment schedule.

1. You’ll Save Money. How many times have you paid a $10 late fee? How about a $25 late fee? Add up all of the money that you have wasted by missing due dates. Think about what you could do with that money now. Scheduling your credit card payments is a great way to keep all of that money in your wallet. You could even put that money into a savings account and watch your responsibility grow. Many bank accounts also offer a free bill pay service. Try using this service to have your credit card bills paid automatically every month. You can stay on top of your due dates without even having to think about it.

2. Your Credit Report Will Thank You. Many people don’t think that being a few days late dings their credit. Well, here’s a news flash. It does. Lenders can look up your payment history and see if you make it a habit to be late while paying your bills. Just because your bill paying tardiness doesn’t get reported to the credit bureaus each month, doesn’t mean that it won’t affect your ability to qualify for loans down the road. For instance…I used to work at a credit union. Each time a member came in to apply for a loan (whether it was an auto loan, a second mortgage, a line of credit, etc), we looked at their payment history. Those individuals who always paid their bills late usually didn’t get approved for the loan they were seeking. Keep this in mind.

It’s time to think about scheduling your credit card payments. You can create your own scheduling system or try an automated one. Either way, you’ll be better off than you were before you started scheduling your payments.

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10 Useful Credit Card Tips

Wouldn’t it be helpful to have a condensed guide that gave you all of the credit card secrets that you needed to know to stay ahead of the game?

Well, today is your lucky day. Pay close attention to these credit card secrets to know what you need to do to make the most of your credit card experience.

1. READ and UNDERSTAND the fine print. Most consumers don’t read the fine print and this is a dangerous habit to get into. Before signing up for a card, make sure you read all of the fine print and understand all of it as well.
2. Pay your bill on time. Paying your credit card bill on time can not only save you money in late charges, but it can ultimately save your credit history as well. Most consumers don’t realize that if your payment is late on one card, the interest rate on any of your other cards could go up.
3. Get rid of those annual fees. Do you have a credit card that has an annual fee? Do you have good or excellent credit? If your answer is “yes,” you are in good luck. All you have to do is call up your credit card company and ask them to get rid of the annual fee. Seventy-five percent of the time, this really works. So take advantage of it.
4. Pay in full all of the time. Don’t waste your time paying minimum payments. Minimum payments will get you no where. Paying interest on credit cards just doesn’t make sense. You end up paying much more than what a product is worth.
5. Pay attention. How many credit cardholders really read their statement every month? Not many. It is so important to pay close attention to your monthly statement. You can catch due dates that have changed. You can also keep a close eye on credit card fraud and unauthorized charges.
6. Waive it. You will always pay your credit card on time and in full. However, things do come up. If you don’t make it a habit to pay your credit card late, you can often get that “occasional” late payment waived.
7. Security insurance. Most credit cards come with insurance. You don’t need to buy extra insurance, but many people do. Check and make sure you aren’t spending unnecessary money on security insurance that won’t do you any good.
8. High-interest cards. Try not to use high-interest rate credit cards. Many of these cards come with a great “introductory offer.” However, once the offer has run out, the interest rate skyrockets. If you do have a balance on a high interest credit card, try and pay that one off first. The idea is to pay off the cards with the highest interest first. You can save yourself a bundle in the long run.
9. Credit Union Credit Cards. If you are looking to get a new credit card, try going through your local credit unions. Credit unions often have better rates and fees than other credit cards.
10. Insurance. Credit card insurance is different from credit card security insurance. In the event that you become disabled, unemployed, or experience other unforeseen situations, credit card insurance puts a stop to your payments. The downfall to this insurance is that it is extremely expensive. It also delays your debt instead of eliminating it.

There you have it. All of the credit card secrets that you need to know. Understand and follow these tips to make the most of your credit history and credit card usage.

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Predictions for 2009 Job Losses

Predictions for 2009 Job Losses

How many jobs will be lost in 2009? No one knows for sure. But, there are some pretty scary predictions out there.

An estimated 2 million more jobs could be lost in 2009. 2.6 million jobs were lost in 2008. The Conference Board issued a report that showed exactly where its Employment Trends Index fell to. The index recently fell to 99.6 (down 1.6% from just last month).

Gad Levanon, the Conference Board senior economist said, “The continued deterioration in the Employment Trends Index signals that no turnaround in the labor market is expected in the near future.”

The Employment Trends Index has continued to decline for the past 17 months. It has dropped more than 1.6 percent in the past six months.

Many Americans wish the index would change, but the truth is that it just isn’t getting better. Wachovia’s chief economist John Silvia said, “I know that this is frustrating for a lot of people because they would like to see a change in the trend. But what we’re seeing is the same as before.”

Silvia predicts that the worst is already behind us. He continued, “A lot of companies have already cleared the decks in 2008. Given that we’ve already claimed a loss of 2.6 million jobs, we can probably expect to see another million and a half.”

However, things don’t look so good for those who are out of work. The job market continues to decline as more and more companies resist hiring. In fact, “the jobs hard to get component” of the Employment Trends Index went from 37.1 percent in November to 42 percent in December.

It is getting harder and harder to become employed as millions of Americans look for work. Silvia said, “We can expect to see a further decline in the next six months, but we’ve probably already seen the biggest number we’re going to see.”

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The Truth About the Bailout

The Truth About the Bailout

Millions of Americans were against the idea of a ‘bailout plan.’ Millions more were in favor of the plan. Once the bailout plan was passed, it seemed as though Americans counted on this as the way to save the economy.

The bailout plan was passed in a matter of only 10 days. The bailout plan was passed to treat symptoms, not the disease. The bailout plan is merely a way for the government to apply band-aids to a large, open wound.

The government promised that the bailout plan would remove the cancer caused by the failure of Fannie Mae, Freddie Mac and the insurance-giant, AIG. However, all it did was prolong the illness.

Billions of dollars will be spent fixing the balance sheets of banks around the country. However, this does not fix the root of the problem. The root of the problem is that millions of homes around the nation are worth a considerable amount less than the outstanding balance of the homeowner’s mortgage.

These billions of dollars are “destroying Main Street’s balance sheet.” This money is obliterating the value of home-based securities that American Taxpayers are about to start purchasing.

Simply put…the government is trying to fight home foreclosures with an extremely inefficient tool. The tool? Loan modification programs that cover up the problem instead of treating it. As long as the problem is masked instead of fixed, foreclosures will continue to set record numbers.

Todd Harrison of MSN.com wrote, “Defaults become delinquencies, which become foreclosures, which become evictions, which become repossessions, which flood the market, depressing prices as supply outstrips demand.”

It used to be that home prices only went up. Not in this market. Home prices have plummeted and the bailout plan really isn’t doing anything to treat the problem.

Here are a few things for the government to keep in mind…

Teach the American people to simply live within their means. Less is more. Simplistic living could solve this crisis better and faster than the bailout plan ever could. Bigger is not necessarily better.

These principles may be the only way to get America out of the mess it has created…not the bailout plan.

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Only One Bank?

Only One Bank?

Doesn’t it seem wrong to you that banks don’t have to track exactly how they used bailout money? The government has handed millions of dollars out to banks around the country with no strings attached. They didn’t say, “Here’s some money to get you back on track, but how you spend it needs to be itemized and recorded.”

No, instead the government passed out this money like candy. There weren’t any rules about how the banks should use the money. And, the banks don’t have to report how they used the money. Doesn’t that seem a little sketchy to you?

The U.S. Treasury has undergone a lot of scrutiny for not making bailout banks account for the money they received. On the flip side, it does learn from its mistakes. 200 or more banks were not required to keep a log of how they used their money. Only 1 was.

Citigroup was given about $20 billion in bailout money. It promised that it would use “its reasonable best efforts to track the money and will send the government quarterly reports.” But, has the U.S. Treasury really learned from its mistake?

Seven other banks were given money the same day Citigroup was. However, these banks were not required to keep a log or track how they spend the bailout money. Why Citigroup? Why is Citigroup the ONLY bank being required to track how its spends government money?

The U.S. Treasury says that it doesn’t want to “impose a burden on institutions it deems healthy.” Surely Citigroup isn’t the only unhealthy bank in the nation. Why are ‘healthy’ institutions getting government money anyways? Why is the U.S. Treasury handing out our taxpayer money and not requesting these banks to track how they spend it?

Neel Kashkari, a Treasury official, gave this shocking defense…”It’s not going to be perfect. And as you know, you put $1 into an institution, it’s impossible to follow where that $1 goes.”

Shocking and ridiculous. What will it take to get government officials to be honest and responsible when it comes to spending our money?

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