NY press coverage from the USOBA conference !

http://www.nytimes.com/2010/06/19/business/economy/19debt.html?pagewanted=1&emc=eta1

MUST READ THIS ARTICLE!

Finally, more and more Debt Settlement Companies are going out of business due to the new regulations. I will will have more info in the days to come. Stay tuned! www.nwcdr.com

This article according to the Chicago Times today:

We have all seen the tan- talizing ads promising economic salvation.

And for the indebted among us, they are oh so tempting.

“Be Completely Debt Free in 12- 36 Months!”

“Debt settlement can help save you thousands!”

“Picture yourself debt-free!”

Your gut is right on this one: It’s almost always too good to be true.

Much of the so-called debt-settlement industry in Illinois, and across much of the country, resembles the Wild West. The industry — which, for a significant fee, works with credit card companies and other creditors to reduce debt for consumers drowning in it — has exploded in the last few years.

And it faces almost no regulation in Illinois. There are no licensing requirements, no caps on fees, no rules forbidding deceptive advertising practices. That must change, which is why we support, in concept, a bill backed by Attorney General Lisa Madigan that tightly regulates the industry. The bill has passed the Illinois House and now faces uncertain prospects in the Senate.

We like much about the bill, including its strict approach on licensing, refund requirements, public disclosure and its ban on deceptive advertising promises. But we fear it goes too far in limiting the fees debt-settlement companies can collect.

The debt-settlement industry worries this will put legitimate firms out of business. We don’t think the industry is crying wolf.

There are, it’s important to emphasize, reputable debt-settlement companies out there that provide a valuable alternative to debt consolidation and bankruptcy for some Americans. These companies are pushing for regulation nationwide and support most of the provisions in the Illinois bill, which is sponsored by Rep. Marlow Colvin and Sen. Jacqueline Collins.

Legitimate firms want to put the fly-by-night operations under; they want to push aside the crooks who give them a bad name. But they are balking hard at the Illinois bill’s fee structure, which limits upfront consumer costs to $50 and bans further payment until the company reaches settlements with the consumer’s creditors. The bill caps the final fee at 15 percent of the savings achieved from settling a debt.

The industry says this is too stingy. They need money upfront to pay employees, keep the lights on and pay rent. They also think the 15 percent contingency fee is too low. Without independent auditing of this industry, we can’t assess that assertion.

Still, we think the industry makes a point, and we urge Madigan and Collins to work with it to find a middle ground — a way to allow for modest payments upfront and a larger payment at the end that allows for reasonable profit.

That said, we strongly reject the “pay as you go” model backed by the industry, where consumers pay 17 percent to 20 percent of their original debt in monthly installments, all to be paid before settlements are reached with all of a consumer’s creditors.

The bulk of payment should be made after the firm has delivered for the consumer. One industry trade association admits 65 percent of consumers drop out before all debts are resolved. Often, consumers lose what they’ve already paid in fees. The attorney general’s office contends that dropout rate is much higher.

A middle-ground model bill has been drafted, in consultation with the industry and consumer advocates, by the Uniform Law Commission, a nonpartisan organization that is funded by the states to write model legislation. It’s a good starting place for negotiations on a fair fee structure.

Debt-ridden consumers desperately need protection from scam artists who take their money and run, leaving consumers deeper in debt than when they began.

But this legislation appears to go overboard, potentially putting legitimate businesses at risk.

With a little give on both sides, we believe both consumers and debt-settlement companies will end up better off.

Unfortunatley, not everyone is, or can be well organized. Here are some of the warning signs of debt going astray:
* The obvious one is when you start to miss payments. Why is this happening? Is it poor time management or do you lack the funds to make the payments?
*Collection agencies start calling you. You may want to familiarize yourself with the Fair Debt Collection Practices Act http://www.nwcdr.com/collection_practice.htm
This act sets forth the guidelines a debt collector must follow when pursuing payment of outstanding debts owed by consumers.It also sets forth procedures for the consumer to file complaints against debt collectors they feel have violated the laws.
*You have to shuffle payments or rob Peter to pay Paul.
*If you start going into the grace period, this suggests either bad time management or lack of funds.
*when you are at or near the credit limit on your credit cards.
*Cash advances on credit cards.
*When creditors start to close your accounts.
*When your debt payments are not enough to cover at least the interest due, the outstanding balance will increase instead of decrease.

Secured and Unsecured Credit

Over the years I have been asked by many consumers what is unscured debt and secured debt. ( whats the differance in the two)? So I have decide to explain this in my blog.

Secured credit is backed by pledging an asset(collateral) as a guarantee you will repay the money owed. For that reason secured credit typically has a lower interest rate than unsecured credit. Examples of secured credit ,mortgages, equity loans, auto loans, mobile home loans, pass book loans and secured credit cards.(secured credit cards are attached to a personal bank account of equal value).

Unsecured credit means that there is no collateral backing the loan- just good faith; for that reason this type of credit typically carries higher interest rates. Examples of unsecured credit are unsecured credit cards (not tied to a bank account), store charge cards,student loans, and personal loans. You can find out more at http://www.nwcdr.com/what_is_debt_consolidation.htm

The Securities and Exchange Commission has sent a “wish list” to Capitol Hill of 42 changes it would like made to federal securities law.

This list, obtained by FOX Business from a person on Capitol Hill, contains proposed alterations that the SEC believes would help strengthen regulation of the financial-services industry. The proposals likely wouldn’t be brought up as legislation on their own, but could possibly be attached to a larger bill at some point.

See our SEC page for the latest videos and news on the commission.

Below are about a dozen of those suggestions.

• Authorize the SEC to pay awards to individuals who provide information to the agency leading to the successful enforcement of the federal securities laws.
• A regulated person who violates the securities laws in one part of the securities industry — for example, a broker-dealer who misappropriates customer funds — should be barred from access to customer funds in another part of the industry.
• Authorize the SEC to pay awards to individuals who provide information to the agency leading to the successful enforcement of the federal securities laws.
• Authorize expanded access to grand jury materials when such information is critical to SEC cooperative investigations (with potential attendant safeguards to insure that the Commission maintains the confidentiality of the information) similar to access available to banking regulators.
• Authorize the SEC to obtain records from financial institutions in the same manner as it does from other third-party record holders.
• Amend numerous provisions of the federal securities laws to make it explicit (clarify or confirm) that the SEC has the authority to bring actions against persons formerly associated with a regulated or supervised entity for misconduct that occurred during that association.
• Clarify U.S. extraterritorial jurisdiction under antifraud provisions of securities laws, overwriting disparate judicial tests by combining both (effects and conduct).  U.S. courts would have jurisdiction over “conduct occurring outside the United States that has a foreseeable substantial effect within the United States.”  
• Authorize the SEC to set illiquid security limits for mutual funds because of the redeemability requirement.
• Give Public Company Accounting Oversight Board authority to inspect auditors of broker dealers.
• Give the SEC the same authority to examine “all” records of registered investment companies that it has had for other registered entities, including broker-dealers and investment advisers, since 1975.
• Amend Exchange Act to permit exchanges and the Financial Industry Regulatory Authority, or FINRA, to go to court on their own behalf to enforce compliance with fully litigated disciplinary sanctions, including fines and restitution.
• Amend Sarbanes-Oxley 806 to make clear that subsidiaries and affiliates of issuers may not retaliate against whistleblowers.
• Provide clarity for the SEC and provide greater ability to regulate the stock loan market.
• The amendment would require the personnel of registered securities information processors, national securities exchanges, and national securities associations to be fingerprinted.

Here’s the full list of 42 items:

NEW YORK–U.S. officials are weighing a plan to let borrowers who have fallen behind on mortgage payments avoid eviction by renting their home instead, sources familiar with the administration’s thinking said Tuesday.

Under one idea being discussed, delinquent homeowners would surrender ownership of their homes but would continue to live in the property for several years, the sources told Reuters.

Officials have been frustrated as red tape and rising interest rates have slowed a housing rescue plan announced in February that was meant to refinance five million borrowers and lower monthly payments for four million more.

“It’s not doing as much as we would like. It’s not doing enough. We’ve been asking the banks to do more,” Treasury Assistant Secretary Michael Barr said in an interview with Reuters Television.

See our Foreclosures page for the latest news and videos on the topic.

Officials are also considering whether the government should make mortgage payments on behalf of borrowers who cannot keep up with their home loans, tapping an unused portion of a $50 billion housing aid kitty.

As part of this plan, jobless borrowers might receive a housing stipend along with regular unemployment benefits, the sources said

Try this one-liner on parents who have kids in college: September is “National College Savings Month.”

I guarantee you won’t get a laugh. Not even a small guffaw. Anyone who’s just packed up a child–or, perhaps, multiple children–for college knows, “National College Spending Month” would be more appropriate.

According to figures compiled by the College Board, at public as well as private colleges and universities, total expenses–tuition, fees, plus room and board–rose 5.9% for the 2007-2008 school year. In-state students attending a four-year public institution are paying $13,589, on average, compared to $32,307 for a year at a private school.

Unfortunately, although you often hear students and parents bemoan the rising price tag for higher education, a new study by college loan company Sallie Mae (SLM: 8.69, -0.17, -1.92%), indicates that many are shouldering more of this cost than they need to. The reason? They’re simply not making the effort to fill out the Free Application for Federal Student Aid, a.k.a. FAFSA.

“Nine-out-of-ten families with income under $35,000 are doing the right thing and filling out the FAFSA form,” says Sallie Mae spokesperson Patricia Christel. But among families in the next income group–$35,000 to 50,000–this drops sharply. Only 76% complete the form, which she calls “your entrance ticket for getting free aid. Too many families are saying ‘It’s not worth my time.’”

According to Christel, even households with income up to $75,000 may qualify for aid, depending upon the number of children in the family.

Even if you aren’t eligible for grant money (the kind you don’t have to pay back), the only way to apply for low-cost student and parental loans is through the FAFSA. Currently, the interest rate on Stafford loans is 6.8% and “that’s for anyone, regardless of need.” If the student qualifies for a subsidized loan, the interest rate drops to 6%.

PLUS loans carry a fixed rate of 8.5%, according to Martha Holler, vice president of corporate communications for Sallie Mae. These parental loans can be used to cover any excess financial need after the student has taken out a Stafford loan. Anyone can qualify, “regardless of your credit score,” says Holler. “That’s what makes it so different from other potential loans.”

The number-one source of borrowing cited by parents last year was home-equity loans. Still, surprisingly few families–only 3%–relied on these. On average, this amounted to $11,000. However, three-quarters of those who tapped their homes to pay for college expenses plan to do so again this year. So, although this route is only being taken by a relatively small percentage of families, Holler says, “those using it are using it a lot.”

Perhaps the most revealing finding to come out of the “How America Pays for College” survey is that parents and students are not factoring in whether a particular school is affordable. As Holler points out, “When you think of other life purchases that have a large price tax, you’d never think of buying a house or car without considering the price.”

Instead, the attitude among parents and students seems to be “whatever the cost, we’ll figure out a way to pay for it.” Then they load up on loans. They’re “not looking at how much the student will earn after college” when deciding how much to borrow, says Christel.

Perhaps that’s due to the nature of student loans. After all, they’re the only money you can borrow without proving you’ve got the income to pay it back. The problem is, 70% of families said they did not consider whether it’s realistic to think a new graduate will command the salary required to pay off those loans. And furnish an apartment. And buy a car. And afford work clothes. And….

Whether your child is in high school, college, or grad school, you need to have a frank discussion about cost- both current and future. Sallie Mae’s recently launched Education Investment Planner is a good place to start. It will let you model what it will cost to attend a particular college, construct a plan to finance it using a variety of sources, and “estimate the salary a graduate would need to keep repayment of student loans manageable.”

By the way, although Sallie Mae started out as a Congressionally-chartered agency much like Fannie Mae and Freddie Mac, the government cut it loose four years ago. It’s now a private corporation that makes both federal and private student loans and, according to Holler, is not facing the same credit issues that are wreaking havoc with its former “cousins” in the mortgage business.

It may be too late for most first-time home buyers to cash in on free money from the government aimed at stimulating the housing market. Under the American Recovery and Reinvestment Act of 2009 [AARA], a qualifying individual who has not owned a primary residence within the past three years can get a tax credit equal to 10% of the purchase price of a new home, up to a maximum of $8,000.(1) Moreover, unlike similar legislation passed last year, you never have to pay the money back.

But the deadline is fast-approaching. It’s not enough to simply make an offer on a property by Nov. 30 — the deal has to be closed by this date. “Closed” means you actually take title to the property. “When the clock strikes twelve on December 1st, it’s over,” says Lucien Salvant, a spokesperson for the National Association of Realtors.

Prolonging the Process
The problem is, two things have to happen before you can close on a home: 1) the property has to be appraised, and 2) you need to secure financing. Both are taking longer than they used to. According to Salvant, these days “private lenders are requiring more documentation — in some cases a lot more” — before they will approve a mortgage. And, new regulations covering appraisers are also slowing up the process. As a result, Salvant says it’s commonly taking 60 days to get from offer to closing.

Toss in the fact that you’ll lose a day or two due to the Thanksgiving holiday in late November and it’s easy to understand why, if you haven’t already started the process, you may be out of luck.

Hail Mary Strategy
Still, if you’ve already zeroed in on a couple of homes you’re considering and you can find a co-operative lender, there’s one tactic you might consider: apply for a loan ASAP. In other words, get pre-approved for the amount you’ll need to borrow before you even decide which property you want to make an offer on. “Make sure you get ‘pre-approved’ and not simply ‘pre-qualified,’” says Salvant. The former means you’ve already got the loan, while the latter simply says you’re eligible for one.

What Qualifies?
According to the National Association of Home Builders, the property can be a single family home, a condo, a co-op, mobile home, or even a houseboat! It can be new construction or previously-owned. It can also be a home that you are having built as long as you move in by Nov. 30.

Again, the credit is only available if the property you’re purchasing is going to be your primary residence. So forget about using it to buy a vacation home or rental property.

Who Qualifies?

The first test you have to meet is the requirement that you have not owned a primary residence in the past three years.
There’s also an income limit. Abe Schneier, senior technical manager with the American Institute of Certified Public Accountants, says to be eligible for the credit, your “modified” adjusted gross income [MAGI] this year cannot exceed $75,000 if you file as a “single” taxpayer, or $150,000 if you are married. A partial credit is available provided your MAGI is not more than $20,000 above these amounts.

Using 2008 Income Instead of 2009
Even though you purchase the home this year, the law gives you the option of using your 2008 MAGI if that would enable you to meet the income limit. You might also want to use last year’s income if that would mean you can qualify for a larger credit. However, you will have to file an amended 2008 tax return.

The Marriage Penalty
If you’re married, both spouses must meet the three-year test about previously owning a home. That is, if you owned a condo, but your spouse rented, as a couple, you don’t qualify for this credit. If you both meet the 3-year test, your combined income will determine whether you meet the MAGI test.

However, if you’re not married to the person you’re buying the property with, then each of you is considered separately. If you both meet the eligibility requirements, you have to split the credit. How you do this is pretty much up to you provided it’s “reasonable.” One way, suggests Schneier, is “percent of ownership” based upon, say, how much each contributed to the purchase price.

Furthermore, if one of you owned a home within the past three years, but the other didn’t or one meets the income requirement, but the other earns too much, then the individual who qualifies can claim the entire credit, according to Schneier. This will not affect how the home is titled. For instance, the two of you can still own it as “joint tenants.”

With a Little Help From Mom and Dad
This opens the door for parents to help a child buy a home. Even if his parents have owned their current residence for 20 years and are joint owners of the new home, Junior could qualify for the tax break. As Schneier points out, “It’s the person who lives in the home that gets the credit. Not the one who’s financing it.”

What About the Red Tape?
It’s surprisingly simple to claim the credit. You or your tax preparer calculate the amount for which you’re eligible on IRS Form 5405 and then enter this figure on Line 69 of your 1040 income tax return. As mentioned above, if your income tax bill is less than the credit, you’ll get the difference in a check from Uncle Sam. For instance, if you owe $3,000 in income tax and your credit is worth $5,500, you’ll receive a check for $2,500.

Not So Fast
This credit is not meant to help speculators. You’ll have to re-pay the credit (known in tax-speak as “recapture”) if you don’t live in the home for three years.

Why Are You Reading This?!

If you’re in the market to buy a home and could qualify for this tax credit, time’s a-wastin’. Decide on the home your want. Get your paperwork to your lender ASAP. Be a pest. Check in with your realtor, appraiser and lender frequently to find out how they’re progressing. It might seem as if December is a long way off, but it’s closer than you think.

Nowadays, we could all use a little bit of extra cash. However, many people have no idea that unclaimed money is waiting with their name on it. In state treasuries alone, 1 in 10 people are owed money from places like banks, former employers and unclaimed tax refunds. If you answer “yes” to any of the questions below, you might be eligible for free dough.

1. Did Your Bank Recently Close?
Once a financial institution fails, the FDIC takes over and is responsible for paying insured deposits and the liquidation of remaining assets. If you did not claim your funds when the bank closed, you still can. “If your bank was never bought out by another bank, there is likely money out there for the bank account holder or power of attorney,” says Marcia Keppy, an unclaimed property expert and asset protection specialist. You can search for unclaimed funds in your name at www2.FDIC.gov/Funds/Index.asp.

2. Did Your Credit Union Fail?
When a credit union with federal insurance is liquidated, the National Credit Union Administration’s Asset Management and Assistance Center is responsible for paying the share accounts to members. Due to uncashed checks or incomplete addresses, some of the money remains unclaimed. If you think the National Credit Union Administration may have funds in your name, contact its Asset Management and Assistance Center at 512-231-7900.

3. Do You Have an FHA-Insured Mortgage?
Then you might be eligible for a refund from the U.S. Department of Housing and Urban Development. Find out if there’s a refund for you at HUD.gov/Offices/HSG/comp/refunds/index.cfm.

4. Are You a Former Employee of a Company That Went Out of Business?
If a company you worked for went belly-up, you may still be eligible for any pension earned while you were there. When a company goes out of business, the pension plan is generally transferred to the Pension Benefit Guaranty Corporation (PBGC). “The company should contact the former employees, but it just depends,” says Keppy. If the company doesn’t reach out to you, you can check the Missing Participants service at PBGC to see if any money is owed to you at https://Search.PBGC.gov/mp/mp.aspx.

5. Did You Not Receive Your Tax Refund Earlier This Year?
If you have not received your tax refund, it could be due to an incorrect address. There could be other reasons as well. “If you recently got a divorce or a close family member passed away, the IRS could still have an unclaimed tax refund on file,” says Keppy. Visit IRS.gov to claim it.

6. Could You Possibly Have Unclaimed Property in Your State?
Over $32 billion in unclaimed property is currently being safeguarded by state treasurers and agencies. Unclaimed property refers to accounts in financial institutions and companies that have been inactive or had no contact with the owner for over a year. It includes savings or checking accounts, uncashed payroll checks, certificates of deposit, stocks and more. Every U.S. state has unclaimed property programs that help find the rightful owners. “If you’re over 40 or if you’ve moved often, you’re more likely to have unclaimed property,” says Keppy. Also, if your parents have passed away, be sure to check their names. Go to MissingMoney.com to do a free search for money that might be due to you.

7. Do You Qualify for Government Benefit and Assistance Programs?
If you’ve been affected by a disaster or disability, need help with child care or health care, or require tax or living assistance, you may be eligible for financial assistance from the government. Go to GovBenefits.gov and search for specific benefits or take a questionnaire to find out which program(s) you may qualify for.