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Didn’t HR Block get in trouble for providing low income customers with Sub Prime loans?
H&R Block will now offer food stamp advice, anyone wonder why.
H&R Block Inc. said Tuesday it will begin helping low-income customers in Kansas determine if they’re eligible for the state’s food stamp program and file the paperwork for them.
Beginning this month in Johnson, Wyandotte and Leavenworth counties, the nation’s largest tax preparer is teaming up with Kansas Social and Rehabilitation Services to increase the number of eligible residents taking advantage of the Food Assistance Program.
State officials estimate a third of those eligible for the program aren’t participating, which they blamed on a lack of information or difficulty in understanding the requirements and application process. The program provides an average of $4,000 a year in food assistance for a family of four.
H&R Block said its tax preparers will use financial information gathered in preparing the clients’ tax returns to determine if they’re qualified for food stamps and electronically file the paperwork to the state. A state case worker will then take over.
Company spokeswoman Denise Sposato said H&R Block for the past two years has advised clients in 12 states if they appeared eligible for food stamps, but this is the first time the company will begin the application process for them.
http://www.kansascity.com/mld/kansascity/news...
so many people losing their homes
- Posted in the San Francisco Forum
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That's exactly what you need... what California should do (preferably the US as a whole) is raise and synch the minimum wage. Up here in Ontario it's going to $8/hr in Feb (not enough but it's better than many states) and in US $ that would be just over $9. All job's should pay better, then those fruit jobs, janitor jobs, w/e would be appealing to those who live there. Low pay for lots of work makes people walk away and so they'll hire aliens at 20 cents a bushel. Btw..anybody here support that wall they want to build up along the border? Honestly, I think it's a good idea and so does everyone else I know. Illegals stay out, more actual citizens get jobs, more money is being made which causes more money to be spent, and that in turn raises the economy (especially the local one since most people spend close to home anyways). So business may think that they'll lose cash from fair wages being paid, but in actuality, the profits made from the customers who are now armed with more money, would be exponential. |
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I was not doing a lot of detailed research on East Bay values back in the early 90’s, but on the Peninsula and in the South Bay (where I was looking at a lot of REO property) and in Southern California (where I was watching closely as my equity in some apartments disappeared) the values dropped slowly from the day when I called the top (in January 1991 the same day that GHW Bush started calling “Desert Shield”“Desert Storm”) for over 18 months. In those 18 months the drop in values were so small that Realtors did not have to mess with the data much to say that values were “flat” and there were even a few sales at high prices breaking records that gave me hope (remembering that since I had seen real estate make my parents rich I had 98% of my net worth in apartments). In the next 18 months it got ugly with most of the (25% on average drops in N. Cal and big 50% drops in S. Cal). Most CA markets kept dropping a little in 1994, then 1995 to 1998 were basically flat until the dot com boom kicked things in to high gear up here with S. Cal following (and most markets actually outperforming N. Cal on a percentage basis)…
I think that things will play out about the same with timing. I called the top in October 2005 (the day that GW Bush got Iraq to sign the “constitution” that would be the start to “peace in the middle east”). I’m not planning to see things get really ugly until after tax day this year (when all the people that “had to sell in the Spring” either loose their homes or start dropping prices to move them. Last time we had high interest rates “dropping”(and making homes more affordable and investment property make more sense) this time we had record low rates just before the top with rates in the way up to their historic mean. Last time we had almost everyone with a 30 year fixed rate loan and a nice equity cushion, this time we have almost all new owners with crazy suicide loans and almost no equity (and 24 olds owning multiple homes that will all soon be sold by the lenders). It is going to be fun to watch, let’s hope that thenuttyneutron can get his wife on board so they both agree that now is a good time to be a renter and watch this thing melt down… |
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I agree that the US needs to have tighter control over the passage of illegal immigrants, however, I don't think that building a physical wall is the primary solution. Sections of wall (or fence) 10 or 20 miles wide could be placed at strategic locations where border cossings have been most problematic. However, there are also solutions like electronic fences, and other countries like Israel have already proven this technology to work in the field. What would be most effective is to restructure our housing and wellfare system in such a way that it identifies and discourages illegal residents. For example, if mice smell food in your home, there is nothing you can do to keep them out. However, if you don't keep food lying around, then they won't bother in the first place. Economic barriers are even more effective than those made from barb wire and brick. |
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Sub-Prime Disaster in the making
Peter Schiff Dec 23, 2006 A report released this week by the Center for Responsible Lending, a Durham, N.C. based research group, predicted that 1 in 5 sub-prime mortgages originated in the past two years would end in foreclosure. While most on Wall Street dismissed this survey as overly pessimistic, it actually represents a rather rosy outlook. One of the report's deficiencies is that it fails to account for how the foreclosures it does expect will impact those loans that it regards as safe. A 20% default rate would put millions of homes back on the market, and would also inflict severe losses on sub-prime lenders, causing them to pull in their horns and tighten their lending standards. More inventory and higher rates will put more downward pressure on home prices. Many over-stretched borrowers, who made little or no down payment, will find themselves struggling to make mortgage payments on properties with negative equity. Higher rates and lower prices will also remove the cash out options that many borrowers expected would bail them out of ballooning adjustable rate payments. Therefore, the secondary effects of the 1 in 5 sub-prime default rate will be a chain reaction of rising interest rates and falling home prices engendering still more defaults, with the added foreclosures causing the cycle to repeat. In my opinion, when the cycle is fully played out we are more likely to see an 80% default rate rather than 20%. The main problem is that the majority of these loans were made to people who really cannot afford to repay them and were collateralized by properties whose true values were but a fraction of the loan amounts. Once the music stops and prices return to earth, borrowers who put little or no money down may decide to simply mail in their house keys rather than make additional mortgage payments. Why would anyone stretch to spend 40% of his or her monthly income to service a $700,000 mortgage on a condo valued at $500,000, especially when there are plenty of comparable rentals that are far more affordable? In addition, even those who can comfortably afford to pay may choose not too. Basically, zero-down, non-recourse mortgages give borrowers a free put option should real estate prices decline. The bigger the drop, the more incentive there is to exercise. Rather than throwing good money after bad, borrowers could simply return their over-priced houses back to their lenders and buy one of their neighbor's deeply discounted foreclosures instead. Also, the idea that sub-prime foreclosures will not affect the broader market is absurd. These loans simply represent the weakest links in the mortgage/housing chain. Once they break the entire chain falls apart. The added demand from these marginal buyers helped produce and sustain the bubble. Remove it and the bubble deflates. Also, falling home prices and rising interest rates effect every homeowner, and the temptation to walk away from an upside down mortgage is not restricted to sub-prime borrowers. |
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http://www.businessweek.com/magazine/content/...
Bankruptcy Boot Camp How one man is training an army of lawyers to fight predatory lenders Every week at least two homeowners walk into the office of Boston bankruptcy attorney David G. Baker looking to get out from under their mortgage debt. That's an alarming increase for a sole practitioner like himself. "I've never before had clients who walk in and say:`I just can't afford my house anymore,'" he says. "It's a little scary." Baker needed to bone up on the intricacies of new mortgage products. So he signed up for Bankruptcy Boot Camp, the brainchild of O. Max Gardner III, the go-to guy for consumer bankruptcy attorneys across the country. The idea is to get lawyers familiar with the latest strains of mortgage abuse, then to educate them about federal laws that protect their clients. Baker now knows how to renegotiate mortgages and avoid a foreclosure. "People can ask lenders to restructure their loan," he says. "But that's something they keep from you because it's not in their best interest." Since Gardner launched the program in August, 82 attorneys have attended the 12-hour-a-day, four-day program held at his 160-acre Lizmere Farm in western North Carolina. It's a family operation: Gardner is the only instructor, and his wife does the cooking. He charges $7,775 a pop, but the lawyers don't seem to mind. Says Kathy Cruz of the Cruz Law Firm in Hot Springs, Ariz.: "It wasn't anything like law school. Boot Camp teaches what you need to know in the trenches." It sure helped Frank H. Coxwell, a consumer lawyer in Jackson, Miss. Even though he's been practicing for 30 years, Coxwell says he's now able to recognize violations he didn't know existed before going to Boot Camp. Since attending the first session in August, he has 140 cases headed for court, some of which were files he reviewed with a new eye. "Everyone always assumed that foreclosure was the debtor's fault," he says. "The lawyers, the judges, everyone has to be reeducated. You can't believe what we've caught [lenders and mortgage servicers] doing." It's inevitable that some homeowners get hurt in a downturn, especially those who have to sell unexpectedly and can't ride out the market. But experts say the pain will be broader and deeper this time around. In the past few years, millions of Americans bought homes they couldn't afford, lured by exotic mortgages that advertised no money down and low monthly payments--for a limited time only. As housing prices cratered and interest rates rose, borrowers got squeezed. The result: One in five subprime loans issued in 2005 and 2006 will fail, according to the Center for Responsible Lending. |
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http://www.businessweek.com/magazine/content/...
Bankruptcy Boot Camp How one man is training an army of lawyers to fight predatory lenders Every week at least two homeowners walk into the office of Boston bankruptcy attorney David G. Baker looking to get out from under their mortgage debt. That's an alarming increase for a sole practitioner like himself. "I've never before had clients who walk in and say:`I just can't afford my house anymore,'" he says. "It's a little scary." Baker needed to bone up on the intricacies of new mortgage products. So he signed up for Bankruptcy Boot Camp, the brainchild of O. Max Gardner III, the go-to guy for consumer bankruptcy attorneys across the country. The idea is to get lawyers familiar with the latest strains of mortgage abuse, then to educate them about federal laws that protect their clients. Baker now knows how to renegotiate mortgages and avoid a foreclosure. "People can ask lenders to restructure their loan," he says. "But that's something they keep from you because it's not in their best interest." Since Gardner launched the program in August, 82 attorneys have attended the 12-hour-a-day, four-day program held at his 160-acre Lizmere Farm in western North Carolina. It's a family operation: Gardner is the only instructor, and his wife does the cooking. He charges $7,775 a pop, but the lawyers don't seem to mind. Says Kathy Cruz of the Cruz Law Firm in Hot Springs, Ariz.: "It wasn't anything like law school. Boot Camp teaches what you need to know in the trenches." It sure helped Frank H. Coxwell, a consumer lawyer in Jackson, Miss. Even though he's been practicing for 30 years, Coxwell says he's now able to recognize violations he didn't know existed before going to Boot Camp. Since attending the first session in August, he has 140 cases headed for court, some of which were files he reviewed with a new eye. "Everyone always assumed that foreclosure was the debtor's fault," he says. "The lawyers, the judges, everyone has to be reeducated. You can't believe what we've caught [lenders and mortgage servicers] doing." It's inevitable that some homeowners get hurt in a downturn, especially those who have to sell unexpectedly and can't ride out the market. But experts say the pain will be broader and deeper this time around. In the past few years, millions of Americans bought homes they couldn't afford, lured by exotic mortgages that advertised no money down and low monthly payments--for a limited time only. As housing prices cratered and interest rates rose, borrowers got squeezed. The result: One in five subprime loans issued in 2005 and 2006 will fail, according to the Center for Responsible Lending. |
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Americans struggle to afford housing
An annual income of about $85,000 is needed to afford median-priced homes; salaries have not seen modest gains, according to a study. January 10 2007: 10:01 AM EST CHICAGO (Reuters)-- U.S. home prices may have dipped over the past year, but many American workers would still struggle to afford a median-priced home in major cities, a new study said Wednesday. "American workers are really not gaining ground and they're so far behind in the first place," said Barbara Lipman, research director for the nonprofit Center for Housing Policy, which conducted the study. While the median home price in the 202 largest metropolitan areas declined 2 percent from a year ago to $248,000 in the third quarter of 2006, mortgage rates rose enough over the year that homes actually became less affordable as pay did not keep pace. "The real story is what happened to salaries," Lipman said. "Lower-paid occupations - such as in retail, or home health workers - their salaries went up only about 3 percent." The study found an annual income of nearly $85,000 was needed to afford the median-priced U.S. home http://money.cnn.com/2007/01/10/real_estate/b... |
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Maybe if residents in Fresno knew the truth, the value of homes would be cut in half. The repairs cost more than the monthly payment!
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Have you ever though about starting your own RSS feed, so we can stream your hourly hoursing market updates to our desktop or cellphone? |
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I was just putting money on my Peets coffee card when I was enlightened about credit and inflation. I added $10, when it occurred to me that I was creating money.
After I put the money on the card, Peets had my $10 bill and I had a $10 credit. In a sense, I still had my $10, but Peets did too. There was really $20 in existence, almost like magic. I can now spend my $10 credit, and Peet’s can spend my $10 bill. And that’s how a loan (credit) creates money, and how credit contributes to inflation. Of course it’s money with a time-limited existence: as soon as I use my credit up, it goes away. So when a loan gets paid back, money goes out of existence. Paying back a loan contributes to deflation. So does defaulting on a loan. |
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If you really are looking at why people are forclosing, you should take a look at the type of mortgages people are obtaining. Brokers are getting people into these Negam or Payment Options products. They provide low payments for the first few years but once the loan has hit the max principal balance, the loan has to recast at a true payment. After 3 years, most people can't make the jump to a higher P&I and their income has not increased to this level. They are just happy to be in a house and do not understand the loans that they obtained. Wait until about 2 years - you'll see a big refinancing boom to get out of these loans or most likely, tons of foreclosures.
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Three men go to a cheap motel, and the desk clerk charges them a sum of $30.00 for the night. The three of them split the cost ten dollars each. Later the manager comes over and tells the desk clerk that he overcharged the men, since the actual cost should have been $25.00. The manager gives the bellboy $5.00 and tells him to give it to the men. The bellboy, however, decides to cheat the men and pockets $2.00, giving each of the men only one dollar.
Now each man has paid $9.00 to stay for the night, and 3 x $9.00 =$27.00. The bellboy has pocketed $2.00. But $27.00 +$2.00 =$29.00. Where is the missing $1.00? |
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Ok, first time on this thing and I look for a reponse on the negam and I get this riddle. It's driving me nuts because I can see it working both ways. I work with numbers to find the missing piece and I'm stumped with this one. I hate riddles!:)
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Credit card debt soared in November contributing to the $8.7 billion rise in revolving credit. After falling $1.3 billion in October, overall consumer credit rose $12.4 billion in November, likely an indication that consumers were feeling confident enough during the early holiday season to continue spending, using credit cards to fund purchases as home equity withdrawal wanes. Nonrevolving credit for purposes such as auto loans rose $3.7 billion.
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Is there a limit to the amount of Money the Fed can Print?
It’s obvious the Fed is willing and able to print an infinite amount of money. So why wouldn’t they? The answer lies in the fact that if people expected a never ending blizzard of paper they would take steps to protect themselves from holding such a depreciating item. How? By buying those items whose supply remains relatively inflexible for example Gold. Taken to the extreme, if expectations of complete and rapid money printing (debasement) became commonplace, the rush out of paper would become a MAD dash for the exits. Therefore, in the interest of holding onto the money creation reigns, the Fed is restrained by people’s expectations of how quickly their money will lose its purchasing power. That is, if expectations of inflation are low, the Fed can print a Lot and if expectations of inflation are high, the Fed can only print a Little. Are we now entering the Print a ‘Little’ stage? By 2003 the Fed had slashed short-term interest rates from 6% to 1%, the world began reflating from the Nasdaq collapse and asset prices were being fuelled by never-ending cheap money. The problem was/is that such money had to go somewhere and the money flowed into almost every asset class including Bonds (fuelling the Housing Bubble), the stock market (large caps and emerging markets), private equity funds (fuelling M&A) and ofcourse commodities (most notably Oil and Industrial Metals). But remember inflation expectations? Rising commodity prices and more precisely rising Gold prices raise the red flag on inflation expectations. To combat this, the Fed started its mini-rate rising campaign to convince the market that any inflation problem was being dealt with, thereby keeping a lid on inflation expectations. All the while, cheap money continued to flow from other central Banks, most notably the Bank of Japan, ensuring the monetary system was well supported and lubricated whilst inflation expectations remained low. The net result has been a global explosion in debt levels and a universal biding up of asset prices. But alas, the laws of nature apply to markets as well. Those micro Fed rate increases have begun to take their toll. As the Yen : Dollar rate stabilized the Yen Carry Trade has also slowed. And ever so subtly the tap of Fresh Money is being stopped up. The markets have responded through a drop in Home Building Stocks, a haphazard rise in Bond Yields and of course brutal corrections in commodities such as Oil. Now we find ourselves in a crazy situation where the Fed requires a slowdown and asset prices to fall in order to justify the next round of rate cuts and more money printing. Remember, inflation expectations must be kept low at all costs to keep the game going. Wow! What a dangerous game. We have entered into a Fed sponsored slowdown where an element of deflation will be allowed to enter the system. The Fed is attempting to land a debt laden Jumbo Jet. Refuel and take-off again. A lot is at stake and a lot could go wrong. Will they be successful? We’ll have to wait and see. |
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January 14, 2007 — Dear John: I’m not 100 percent sure why a drop in housing prices - especially in an overheated market - is such a bad thing. Cheap gas is good, so is cheap clothing, food etc. C.S.
Dear C.S.: Looking at it from a micro-economic perspective, you’re right. If housing prices fell, people like yourself would benefit. I have three children who aren’t many years away from buying a home, which at current prices they’ll be unable to afford. So the haves (homeowners) would suffer while the have-nots (people like yourself) would cheer the day that real estate values declined. What people are really afraid of is the macro-economic effect of the housing bubble being pricked. That is, if there really is a bubble in housing prices - let’s say prices are 30 percent higher than they should be - that creates a potentially huge problem for the country’s economic system. Since most people don’t have 30 percent equity in their homes, a drop in value of that amount would essentially wipe out a whole lot of wealth. The drop in wealth could force homeowners to move and turn their homes over to the mortgage holders, and most mortgages these days aren’t held by the banks that originally issued them. These mortgages have probably been packaged into securities that have been sold to investors by Wall Street. Those many investors would suffer. And that doesn’t even take into account the realtors, electricians, plumbers, furniture makers and a whole host of others who’d be hurt by a big housing downturn. http://www.nypost.com/seven/01142007/business... |
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Seniors in Debt
Recent stories about the plight of seniors bring to light the growing problem of money not stretching as far as it once did. Today, the elderly are in the unfortunate situation where they benefit very little from cheap imported goods manufactured in Asia - the key to what some call an "era of low inflation". Their money is increasingly spent on life's essentials - food, utilities, and medical costs - all of which have risen at a brisk pace in recent years. In many cases, the combination of a pension and a paid off home has been replaced by a meager retirement income, high bills, and a reverse mortgage. A decade ago, homes were routinely passed on free and clear to surviving children, ten years from now heirs may be surprised to find out how little is left after years of borrowing by their parents to make ends meet. According to this report from the U.K., inflation is now running at almost 10 percent for pensioners. With interest rates rising, those on fixed incomes who must access credit to square the books each month find themselves getting further and further behind. Stateside, an increasing number of senior citizens are turning to reverse mortgages and credit cards to make ends meet. It didn't used to be this way and it flies in the face of government pronouncements that inflation is under control. For decades, social security and pensions provided a stable income in retirement. That is still mostly true today, the problem is that living expenses are rising much more quickly than income as demonstrated a year ago when the average monthly social security increase was about $35 while Medicare premiums increased $28. |
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2007 housing bubble collapse caused by Greenspan policies, progressive blogger says
http://www.newstarget.com/021437.html Home owners who picked up property during the recent low-interest mortgage rate boom may find themselves with a massive sticker shock this coming year when rates increase, says one progressive blogger. More than ten million people will be affected when their adjustable-rate mortgages are “reset” to higher rates, says Mike Whitney of the web site dissidentvoice.org . The impact in 2007 -- when $1 trillion in adjustable-rate mortgages will reset to new, higher rates -- is that interest rates for homeowners who took the loans will double. The result will not only be an onset of home foreclosures, but Whitney predicts that the U.S. economy will go through chaos as housing markets crash and the population is pushed further into debt. Whitney says that Alan Greenspan, the former Chairman of the Board of Governors of the Federal Reserve System, is to blame. By introducing extremely low interest rates in 2001, the U.S. housing market grew tremendously, but so did homeowner’s debt. From 2001 to 2005, outstanding mortgage debt went from “$5.293 billion to $8.888 billion,” he writes. It was “the biggest expansion of debt in history and it was all engineered by seductively low interest rates,” Whitney writes. Whitney says that the reason Greenspan did this was to keep the economy afloat after the dot-com bubble hit. However, what Greenspan did instead was create a “time bomb.” When the rates increase on adjustable-rate mortgages, it puts the squeeze on the average American. For many – possibly 1 in 5 borrowers who took a sub-prime loan, according to the New York Times -- paying for their house will just be too much. The direct result will be a large increase in foreclosures, which in turn sinks the housing market, as over-leveraged homeowners will be unable to afford moving into more costly or newly built homes. This in turn undermines the economy, Whitney writes. Whitney predicts that one of two things will happen in 2007: either the Fed will “lower interest rates and forgo foreign investment ($2.5 billion a day) or keep interest rates where they are and accelerate the collapse of the housing market.” He sees no third option. |
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Do you plan on buying an Apple iPhone?
Yes 12% No 81% Not sure 9% 39168 Votes to date |
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