Creit Card Companies-Good Cop, Bad Cop

by Richard Geller

Card companies basically have two departments. A
nicey nice customer service department. And a
more nasty collection department.

You can try to call the customer service folks and
request a lower rate, or skip a monthly that is
due, or something like that.

But ultimately, they won't do much for you.

Because you are paying.

If you stop paying, then they will go from nice
to a little nice to nasty as you go into the
collections group.

Truth is, most folks can't take the heat. The
constant phone calls. The letters.

But after a bit, here is a major secret:

They will settle with you for 30 or 40 cents
on the clam, quite often. And they will even
sometimes say nice things about you to the
bureaus like Experian.

However, there is a chance they will sue you
and if you know what you are doing, this doesn't
have to be a big deal either.

I have subscribers who settle for a dime on
the dollar at some point and they end up
with their FICO score back up there too.

There are easy methods for this.

Tax Credit Extended

The Senate voted yesterday to pass an extension of the first-time homebuyer tax credit until April 2010. 98 Senators voted in favor of H.R. 3548, with zero votes against (two Senators did not vote). H.R. 3548 is a bill is primarily concerned with extending unemployment benefits. The bill is currently amended to include the extension of an $8,000 tax credit for those buying their first homes as well as an $6,500 tax credit for some borrowers buying a home for a second time. “This critical program has already enabled hundreds of thousands of Americans to become first-time homebuyers,” said Business Roundtable, an association of CEOs of leading U.S. companies. the tax credit can still be removed from the final wording of the bill, if placed under further review. However given recent lobbying efforts in the industry and a feeling of presidential support, this remains unlikely.

Fannie Mae Ups Ante

Fannie Mae updated its eligibility requirements for lenders, according to its new selling guide. To do business with Fannie Mae, lenders now need to have a net worth of at least $2.5 million, or 10 times the previous required net worth, plus a dollar amount equal to 0.25% of the outstanding principal balance of any Fannie Mae portfolio it services. The announcements also include updates from reverse mortgage lender letters Fannie Mae and announcements incorporated into the Selling Guide. Fannie said most of the information was unintentionally omitted from the April 2009 Selling Guide, but was added to the October issue. Within the next two months, Fannie Mae plans to issue another update to the Selling Guide that incorporates any outstanding announcements and those made between now and the time of the update.

Job Cuts More Than Expected

Some news organizations try to put lipstick on the pig by claiming the “pace” of job losses is slowing, but that doesn’t mean all that much this late in the recession. Automatic Data Processing, a payroll-processing firm, reports that private-sector employers cut 203,000 jobs in October. Economists surveyed by Briefing.com had forecast a loss of 198,000 jobs last month, so the October job loss was larger than expected. According to outplacement firm Challenger, Gray & Christmas Inc., the number of cuts announced in 2009 will soon exceed the total for 2008 – we’re only about 30,000 planned job cuts away from surpassing the total tally of 2008, which was 1,223,993.

Challenger remained cautiously optimistic, citing an uptick in GDP, an increase in manufacturing activity and a surprise gain in home sales. "It appears that the light at the end of the tunnel is finally visible," Challenger said. "However, it is important to realize that, as deep and widespread as this
recession was, it is going to be a long and sometimes painful recovery

MBA – weekly survey

The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending October 30, 2009, and it increased 8.2 percent on a seasonally adjusted basis from one week earlier. The Refinance Index increased 14.5 percent from the previous week and the seasonally adjusted Purchase Index decreased 1.8 percent from one week earlier, while the unadjusted Purchase Index decreased 3.0 percent compared with the previous week and was 3.4 percent lower than the same week one year ago.

The four week moving average for the seasonally adjusted Market Index is down 5.5 percent. The four week moving average is down 5.0 percent for the seasonally adjusted Purchase Index, and down 5.7 percent for the Refinance Index. The refinance share of mortgage activity increased to 66.1 percent of total applications from 62.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.1 percent from 6.9 percent of total applications
from the previous week. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.97 percent from 5.04 percent, with points decreasing to 1.01 from 1.25 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

Commercial Real Estate Prices Up

The MIT Center for Real Estate's transaction-based index (TBI) index shows that investment-grade commercial real estate rose 4.4 percent third-quarter in the third quarter – the first positive price change in the index in more than a year and the largest increase since the market downturn began in mid-2007. David Geltner, director of research at MIT/CRE, said in a statement: "One quarter does not a trend make and we are still well below normal trading volume. Nevertheless, this is the strongest sign of a bottom that we've had in two years." The price index at the third quarter stood at 36.5 percent below its 2007 peak, up from its 39 percent deficit seen last quarter, which now could be the trough and suggests the U.S. commercial property market may have finally found a price bottom. The delinquency rate of U.S. commercial real estate loans securitized into Commercial Mortgage-Backed Securities (CMBS) hit 4.8 percent in October, up from 4.36 the prior month and dwarfing
the 0.77 rate of a year earlier, according to Trepp, which tracks CMBS loans.

Credit Card Debt Relief

Contibuted by Richard Geller

Hello Richard, I owe about 60k and I am current
on all my cc because I borrow from savings each month. I
really can't afford to do this anymore. I like your info
and will use it. My biggest worry is if I get sued. After
they secure a judgement, can I still get them to settle?
Thank you Ed
----------

A law suit is a bummer but not a big issue.

It is really part of the settlement process.

You can settle before a court date, at the day of the
court hearing, and afterwards.

Best to file an answer to any complaint (legal paper
announcing the law suit) and appear in court.

Very few people ever do. You can demand that they show you
legal records showing that you were the one who got the
money, AND that they have legal standing to sue.

Much of the time the creditor has the lawyer show up
without the right proof. They assume nobody will bother
showing up so who cares.

And you can win.

In any event, law suits are not an obstacle to being debt
free.

A close relative got sued by a creditor. The relative,
I'll say an aunt, appeared in court and did what I am
suggesting.

The lawyer for the bank didn't have any proof other
than copies of the card statements, which is no proof
at all.

The judge dismissed the case "with prejudice" meaning
the bank cannot sue again. And the judge ordered
the bank to pay my aunt some money as a penalty,
called sanctions.

Banks are usually expecting to file law suits and
then waltz into court unopposed.

Because most people foolishly do not respond to
law suits.

Reality is, law suits are expensive for the bank
and seldom yield enough money to justify the
expense.

"You can't get blood from a stone" as they say.

So don't worry overly much about being sued.


----------
I am a CPA in the Commonwealth of Pennsylvania.
I currently do a lot of IRS tax workouts for my clients,
and I would like to also offer Loan Mod and CC Mod
services. I am a subscriber to both your courses, and I am
getting ready to dive in.

Is there anywhere I can go to find out the laws in PA on
what I can offer, either as a CPA on just as a separate
business? I have not been able to find any info. Please
help with this direction if you can. --"Sam"
----------

Hi Sam, here is what I do.

I search Google for "Pennsylvania statutes" "debt
settlement companies in order to find where the code is on
line.

Use the " " quotes as these are important.

Another good search is:

"Pennsylvania statutes" "foreclosure consultant"

or

"Pennsylvania statutes" "loan modifications"

And so forth. This will get you a good view of the laws
and rules in short order.

Since you are a CPA, you may want to telephone your board
and speak to one of the attorneys there about making sure
things are cool and what they say you can and cannot do.

I wouldn't take this as gospel but it is a good start.

I would probably do it as a separate business to keep
things clean and separate from your tax and accounting
practice.

Do it -- we need you!

Credit Card Debt & Buying Real Estate

Contributed by Richard Geller

Today I cover several topics on settling
obligations that seem daunting but are really not,
and buying without good credit.

Richard,

My current situation is this. I have 57,000 in unsecured
credit card debt. 31,0000 is business debt for my company,
company has no assets, and the rest is personal debt.
These are two credit cards. I am a guarantor on the
business credit card debt.

I have two real estate properties. One has obsolutely no
equity and the other has about 200,000 in equity. That is
my personal home which is covered under the homestead
exemption, I assume.

My credit is good. I make my payments on time, however, I
am feeling the pinch and would like to eliminate my
unsecured debt.

I understand that if I stopped making the credit card
payments and the credit card companies sell that debt or
send it to collections and I get sued, it is possible,
provided they have the required evidence, that the
collections agency will acquired a judgment against me for
the full amount of the debt which will stay on my credit
report until it runs out and not defiled or I satisfy the
judgment.

This is a public record and would prevent me from future
real estate purchases if not satisfied.

I also understand if I engage fully in the case that a
settlement is possible for 15-30 cents on the dollar and
that I could even negotiate to keep this from showing up
as a charge-off on my credit report.

I want to know what is the best way to get out from under
this debt because at this rate I am looking at enormous
amounts in interest.

"Oscar"
----------

Oscar, if someone gets a judgment against you, you can
still buy real estate.

You can buy it under the name of a limited liability
company or corporation.

More importantly, settling is always the best option if
you have consulted a good lawyer and ruled out bankruptcy.

Settling can be done before, during or after law suits.

In reality, most banks never sue. Some do for surprisingly
small debts. Others don't even for very large debts.

But everyone wants to get something without a law suit so
that is why settling is a great option for many.

Not sure about the homestead exemption. This varies state
to state so make sure that your equity in your primary
residence is really protected.

That said, I am confident you could settle this as I have
been in a similar situation and settled and avoided
bankruptcy myself.

Credit Card Debt

You would be amazed at what you can do:

1. You can often settle cards for 10% to 25% of what the
balance is.

2. You can end up with decent credit after 12 to 18
months, with just doing some simple things.

3. You should talk to the card company each month, once,
to let them know what you are doing.

4. Most settlements occur around month 5 after the time
you first became late.

5. They CANNOT put you in jail for not paying. It is a
civil matter, not a criminal matter.

Okay, in addition to all this, the stoopid Congress
passed a law that is throwing the lenders into a panic.

They are raising rates like crazy while they still can. And
they are screwing people with higher rates even good
people with great FICO scores.

These are weird times...

Construction Spending Up

The Commerce Department says total construction spending was up 0.8 percent in September, much better than the 0.3 percent drop that analysts had forecast. The August performance was revised down to show a 0.1 percent drop rather the 0.8 percent gain first reported. The overall increase reflected a 3.9 percent rise in spending on residential construction, the biggest jump in housing activity since July 2003.

A big part of the activity in recent months may have reflected a rush by builders to start projects that could qualify for a tax credit of up to $8,000 offered by the government to first time home buyers, and that tax credit is due to expire on Nov. 30, although there’s an extention for potential buyers who have sales agreements signed by the end of April. Those buyers would have until the end of June to close on their new homes. Total construction spending grew to $940.28 billion at an annual rate in September. It was the first increase after four straight declines but still left construction spending 13 percent below the level of a year ago.