Consumer watchdog opens amid efforts to defang the new agency

With the Consumer Financial Protection Bureau up and running, its Consumer Response Center is accepting credit card complaints on its website, ConsumerFinance.gov. Struggling homeowners can also get referrals to housing counselors via the Homeowners HOPE Hotline.

by Broderick Perkins
© 2011 DeadlineNews.Com

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Deadline Newsroom - Born of the massive Dodd-Frank Wall Street Reform Act, signed into law a year ago, the Consumer Financial Protection Bureau (CFPB) officially opened last week, it's plate full and future clouded by attempts to dilute the agency's power.

Without a director or full staff, the agency created to protect consumers when they sign up for a mortgage, credit card or other financial product, has already laid a strong foundation, a foundation a gang of bankers and Republicans are anxious to undercut.

Dissident Republicans already won the first battle, politically strong-arming the White House into choosing CFPB's creator and champion, Elizabeth Warren, not as it's director, but as a temporary, interim director, Special Advisor to the Secretary of the Treasury on the CFPB.

With a record of being one of the nation's toughest consumer advocates, Warren would have been the best and bravest choice. Unfortunately, President Obama bowed to pressure and nominated Former Ohio attorney general Richard Cordray to run the agency and appease Republicans who threatened to block Warren's nomination and shackle CFPB's progress.

With the CFPB up and running, its Consumer Response Center is accepting credit card complaints on its website, ConsumerFinance.gov. Struggling homeowners can also get referrals to housing counselors via the Homeowners HOPE Hotline.

The nation's first 21st-century consumer protection agency, the CFPB is the first new government agency embedded in social networking, using Facebook, Twitter stream, Flickr and YouTube to get the word in and out.

Over the coming months, the agency will expand its Consumer Response Center to handle complaints about other consumer financial products and services under its jurisdiction. The agency is also contacting large banks to put them on notice to follow the rule of consumer law, to let them know how the agency will supervise them and how it will enforce federal consumer financial laws.

"Above all, this means ensuring that consumers get the information they need to make the financial decisions they believe are best for themselves and their families -- that prices are clear up front, that risks are visible, and that nothing is buried in fine print. In a market that works, consumers should be able to make direct comparisons among products and no provider should be able to build, or feel pressure to build, a business model around unfair, deceptive, or abusive practices," wrote Warren on the bureau's blog.

The CFPB's role is three fold:

• Educate consumers to give them a first line of defense against abusive practices.

• Enforce federal consumer financial laws and supervise banks, credit unions, and other financial companies.

• Examine gathered and analyzed data to better understand consumers, financial services and consumer financial markets.

CFPB reveals some of the agency's initial efforts in "Building the CFPB: A Progress Report."

• The "Know Before You Owe Project" is a process for combining the complex and duplicative Truth in Lending Act and Good Faith Estimate mortgage disclosure forms into a single, useable form.

• CFPB has issued two new studies, the first study examines the variations between the credit scores creditors use and the scores sold to consumers by credit reporting agencies. The second report focuses on how a consumers remittance history could be used to enhance his or her credit score.

Much more is in store, including:

• Rules to implement the Privacy Act and the Freedom of Information Act, in order to establish a process for anyone who wants testimony or records from the CFPB for use in litigation. Also included are confidentiality rules, describing how the CFPB will treat information it obtains.

• Rules similar to those issued by the Federal Trade Commission and Securities and Exchange Commission that outline how CFPB will conduct investigations of federal consumer financial law violations.

• Rules stating procedures state officials should use to notify the CFPB of state actions or enforcement proceedings.

• Click on the keywords below for more stories on this subject.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
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'Site to See': FTC's Money Matters

"Site to See" reviews are occasional, but timely critiques of content-heavy real estate Web sites deemed unique, consumer-friendly, informative and easy to use.

by Broderick Perkins
© 2008 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - If you are struggling with your mortgage, chances are you also aren't do so well with other credit payments, your savings are being depleted, money management is mangled and all that financial turmoil makes you vulnerable to a host of scams.

Chances are, you got into this pickle because, when it comes to home economics, you just don't know what you are doing.

Surf the Web on over to the Federal Trade Commissions' new Money Matters Web site and bone up on they fundamentals.

They still apply.

Another informational Web site from the Feds similar to the more exhaustive MyMoney.gov, but less overwhelming, Money Matters can help get you back on the right track.

Easily digestible content gets you started on everything from credit cards and debt to mortgage problems and job loss.

The site offers short, practical tips, videos, and links to reliable resources for more information on a host of topics, all from the FTC, a watchdog for consumers, working to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

Scam Watch: Information on scams related to mortgage and foreclosure rescues; work-at-home deals; secured credit cards; federal grants; economic stimulus; bank failures, mergers and takeovers; credit repair; advance-fee loans.

Credit Cards: Wisely choosing and using credit cards; disclosures; disputes, errors, refunds and payments; prescreened offers of credit and insurance; gold and platinum cards; rights and responsibilities; avoiding fraud; lost credit, ATM and debit cards; credit and debit card blocking; a credit card calculator that tells you how long it will take to pay off your balance making the minimum payment.

Money Management: Budget creating; saving and saving tips; spending; shopping around; coupon use; tracking spending; financial literacy.



Coping With Debt: Debt collection; debt relief services; credit repair; advance fee loans; vehicle repossession.

Your Home: Mortgage payments; repayment plans; forbearance (short sales); loan modifications; home selling; foreclosure rescue scams; bankruptcy; reverse mortgages; mortgage servicing; what to do when you can't make your mortgage payment.

Jobs: Job loss; business opportunities; work-at-home; wealth building; job-hunting/job scams; seminar pitch red flags.

See more "Sites to See"

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!

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How To Stop ID Theft, Cold

Consumers are proving they can turn back time on identity theft by following a prescribed program of diligent document protection and criminal deterrence.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - A well-measured program of preventive steps can protect your identity from theft.

ID theft-related fraud fell by 12 percent in 2007 and 300,000 fewer adults were victims, according to the latest from Javelin Strategy & Research, the longest-running ID theft study in the nation.

At the top of the list of reasons for the decline is "greater consumer vigilance and awareness," according to the report.

When someone steals your identity, you don't wander around aimlessly like some John or Jane Doe. Someone pilfers enough of your personal identifying information --name, address, Social Security Number, drivers license, credit and financial account numbers and the like -- then masquerades as you to make purchases, withdraw cash or otherwise undermine your financial assets and your name.

ID theft can cost you time and money (averaging $691, according to the report) to correct the misdeed and it can ruin your credit enough to prevent you from making major purchases including buying a home.

Companies that manage personal information have improved their ID theft protection measures, but consumers who protect their own personal information is the first line of defense.

Here's what Javelin suggests.

• Move your financial transactions online by turning off paper invoices, statements and checks, including paychecks, and replacing them with electronic versions where offered by employers, banks, utilities or merchants. Avoid mailing checks to pay bills or deposit funds in your banking account. Instead, pay bills online and use remote deposit check imaging services on online banking sites.

This effort rubs out the paper trail. Crooks are more likely to steal information on paper, from personal belongings and through telephone calls, rather than online.

• Monitor your accounts regularly online at bank and credit card websites. Americans who monitor their accounts online are most likely to uncover suspicious or unauthorized activity early.

• Likewise, review your credit information frequently. You can do so three times a year for free at the federally-sanctioned AnnualCreditReport.com by getting one report, from each of the three major credit reporting agencies -- Equifax, Experian and Transunion -- in turn, every four months.

• Reduce unnecessary access to your personal information wherever possible. For example, don't carry Social Security cards, unused credit cards or checks, and don't leave sensitive documents out in the open.

• Never provide sensitive financial information over the phone or Internet, including Social Security numbers, passwords, PINs or account numbers, unless you placed the call directly to a verified and trusted location, such as the number on back of a credit card or statement.

• Add your name to the federal Do Not Call registry and direct marketing opt-out lists to reduce solicitations that could be bogus.

Even as overall ID theft has fallen, "vishing," criminals using telecommunications, voice over Internet protocol (VoIP) and like methods, is on the rise. That's because, as more consumers shift more transactions to secure online services, thieves are becoming more creative on the telephone claiming to represent non-profit and charitable operations.

In the same vein, wireless phone accounts have become the most frequent types of new accounts opened fraudulently by criminals using stolen data. The trend exceeds that of fraudulent new credit cards, loans, checking or savings accounts.

• Install and regularly update firewall, browser, anti-spyware, and anti-virus security software on your personal computer, and keep operating systems updated. Updates typically come with spyware, virus and other protections.

• Consider placing a credit freeze on your credit report or your child's credit report if you know you won't be using credit for some time. Child ID theft is on the rise because thieves know you and your kid aren't likely to check the child's credit report for some time due to a lack of credit use. Check your state's "credit freeze" law. The cost may be nominal or free. The three credit reporting agencies offer the service for a fee.

• If you are an ID theft victim, report it to the police, affected accounts, and call any one of the three credit bureaus to have a fraud alert placed on your account to prevent future infractions as you sort out the mess. Contact one bureau to place a fraud alert on your credit report and that company is required to notify the other two so that they too can place an alert on their versions of your report.

More ID Theft news that really hits home.

Also see DeadlineNews.Com's ID Theft Archives

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Flushing Out Your Financial Funk

Are you hiding purchases from your spouse? Do you pay the minimum credit card payment? Does your home echo with money arguments? If so, you could be in a financial funk. Here's how to get the funk out of your house.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - Bury your head in the sand when faced with financial trouble and you'll only compound matters.

Not only will your tough luck continue and likely worsen, your eyes will really smart from all those tiny, gritty particles.

But seriously, the point is, doing nothing, procrastinating and clinging to denial will work against the fast action necessary when your financials get scrambled.

The National Foundation for Credit Counseling (NFCC) says Americans habitually turn their backs on signs they could be facing a financial meltdown instead of quickly getting the help they need.

To help them home in on -- instead of copping out of -- their financial funk, the foundation suggests taking a test to help recognize when professional help could be warranted.

Answer "true" or "false".

1. I squeeze out only the minimum credit card amount due.

2. My credit card balances swell each month.

3. Money arguments echo through my home.

4. I lie and hide purchases from my spouse.

5. I now charge stuff I used to pay for with hard cash.

6. I've considered bankruptcy.

7. I use cash advances to meet my obligations.

8. Most of my credit cards are maxed out and I'm applying for more plastic.

9. I have no idea what I owe.

10. I'm a deadbeat. I take a month off paying my bills sometimes, or I pay late.

11. I have zero dinero in the bank.

12. Thoughts of debt consume me.

13. My debt interferes with my job and my home life.

14. Collectors are stalking me.

15. I'm cracking retirement nest eggs to satisfy debts.

16. If I get fired, I would be financially doomed.

17. I use balance transfers.

18. I have no emergency savings.

19. Last months bills still haunt me when this month's bills arrive.

20. I avoid opening my bills.

Answer "true" to more than two or three of those questions and it's time to call for reinforcements, say a credit counselor or other financially savvy professional who can help you get a handle on your financial failing, says Gail Cunningham, spokesperson for the NFCC.

The first step toward a financially stable tomorrow is facing your situation head on today -- now.

"Whether the problem stems from a lack of financial education, financial mismanagement, concerns over meeting the mortgage payment, or if bankruptcy is being considered, sitting down with a trained third party will add insight to the situation," said Cunningham.

The NFCC as well as the Association of Independent Consumer Credit Counseling Agencies (AICCCA) can get you a referral.

Other help is available from a host of groups, including NeighborWorks of America; Association of Community Organizations for Reform Now (ACORN); U.S. Department Of Housing and Urban Development; and local community and social service programs.

More ways to cope during the mortgage meltdown and housing bust are available from DeadlineNews.Com's Post Boom Survival Guide

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© 2008 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Beginner's Guide To Mortgage Shopping

Here's what you need to get started looking for a mortgage that best serves your needs at the lowest cost possible.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - It's not everyday you go looking for a mortgage.

It's not a trip to the mall.

It's a methodical, step-by-step process requiring planning, time, effort and attention to details.

Here are some guidelines for beginners -- assuming you've already laid the groundwork by inspecting your credit report.

• Inspecting your credit report and getting it in the best shape possible is your first step to the best mortgage. In today's tight money world it behooves you to take the time necessary to carefully scrutinize your credit report and to be prepared to explain to creditors any dings you can't fix.

• Shop around for a mortgage from a variety of sources to determine what's available. Shop mortgage brokers, mortgage lenders, banks and credit unions. Don't forget to examine your local and state mortgage programs as well as community service and housing agency mortgages and mortgage assistance programs.

• Obtain all loan cost information, not just the monthly mortgage payment and annual percentage rate (APR). Check the cost of points (in dollar amounts, not just number of points), broker fees, origination fees, underwriting fees, administrative costs, mortgage insurance, yield spread premiums, commissions, escrow and closing costs -- each and every cost associated with your mortgage. You need these numbers to make a fair comparison.

• Get an explanation for every fee you don't understand. Use the Federal Deposit Insurance Corporation's (FDIC) "Mortgage Shopping Worksheet" to help keep your costs in focus.

• Check the loan terms for a variety of loans. Know what down payment you'll need, the term of the loan, whether the loan is a fixed rate mortgage (FRM) or an adjustable rate mortgage (ARM) and the specific terms of each. For ARMs, ask for the beginning rate, when and how often adjustments occur, how much adjustments could cost, and the ARMs ceiling rate.

• Be aggressive. Prepare to negotiate with the information you've gathered on the mortgage worksheet. The more information you have about each loan the move negotiating leverage you'll have. A pristine credit record can also give you an edge. Look particularly to quibble over points, yield spread premiums and other broker's fees or commissions. Don't be afraid to ask the lender the lender or broker to waive or reduce one or more of its fees or to agree to a lower rate or fewer points. Make sure the lender or broker isn't just lowering one fee to raise another or lowering the rate to raise points. There's also no harm in asking lenders or brokers if they can give better terms than the original ones they quoted to you, especially since you've found better terms elsewhere.

• Once you are satisfied with the terms you have negotiated, consider a written lock-in from the lender or broker. The lock-in should include the rate that you have agreed upon, the period the lock-in lasts, the number of points to be paid and a lock on as many other costs and terms as possible.

• Also seek a written loan commitment that guarantees you the terms and costs you've locked. A loan commitment puts you ahead of the pack in the eyes of the home seller who wants to sell quickly.

See DeadlineNews.Com's Finance Page

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© 2008 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Bankruptcy's Early Warning Signs

Bankruptcy filings are up, but you can keep from becoming a statistic if you heed the early warning signs and take action to save your credit and your home.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - Bankruptcy filings jumped 40 percent in 2007, after sharp declines from a year earlier when the new bankruptcy law made it more difficult to seek bankruptcy-court protection from creditors.

The new law, Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was first effective in 2006.

Even though the law makes bankruptcy a more difficult option to use, rising mortgage payments, job losses and other financial pressures pushed up the bankruptcy rate after more and more consumers found no other recourse, according to the American Bankruptcy Institute.

The Association of Independent Consumer Credit Counseling Agencies (AICCCA) says there's often an alternative to bankruptcy if consumers know the warning signs and seek help as soon as the red flags fly.

The association has developed a set of warning signs as a tip off to trouble ahead. If you experience two or more you should immediately seek help.

The warning signs are:

• Living paycheck to paycheck. Losing a job or a decrease in pay could be the final straw. Only a few months separates many consumers from a financial choke hold unless a quick change can be made to raise some cash or lower debt -- or both.

• No savings cushion. Americans' average savings rate is slim to none. If you spend more than you earn, an unexpected and costly change, say a divorce, major home repair or car expense, could cause severe financial trauma.

• Being under insured. A large portion of bankruptcies involve medical debt. If you can't afford the cost of an insurable incident without insurance, get insurance. If you lack insurance you also lack the wherewithal to cover sudden medical debt, home or car expenses and those other unexpected events.

• A non-mortgage debt-to-income ratio that is more than 20 percent. For those who spend more than 20 percent of their take home pay for non-mortgage debt, again, without a drastic change, financial frustration could become chronic.

• Making only minimum payments on credit cards. Paying only the minimum amount due means staying in debt longer and at a greater cost than is prudent. Those unable to make more than a minimum payment are at the mercy of even the slightest change in their financial condition.

If two of those red flags are signaling you, chances are you need financial counseling, assistance or both.

AICCCA and its members offer such counseling referrals. Other help is available from a host of other groups, including National Foundation for Credit Counseling (NFCC); NeighborWorks of America; Association of Community Organizations for Reform Now (ACORN); U.S. Department Of Housing and Urban Development; and local community and social service programs.

Get more bankruptcy information from DeadlineNews.Com's Credit Education section.

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Subprime Borrowers Get Hope...Now

If you are a homeowner with a subprime mortgage, chances are, you could use a little hope, right about now. You may be in luck. Mortgage servicers representing 90 percent of the subprime industry say they want to lend you a hand.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - If you are a homeowner with a subprime mortgage, chances are, you could use a little hope, right about now.

You may be in luck. A program that just happens to be called HopeNow is putting the kind of hope you need on the fast track. Refinanced mortgages with fixed rates are available from the HopeNow program for qualified homeowners struggling with subprime mortgages.

Since it was created last year, HopeNow has taken applications from 45,000 subprime borrowers looking for some quick relief from mortgages they can't handle.

Along with easier-to-manage mortgages, homeowners who refinance under the HopeNow program also get counseling to make sure they hold onto their new refinanced mortgage -- and their home.


The program has the blessings of both the U.S. Department of the Treasury and the U.S. Department of Housing and Urban Affairs. The outreach program contacts subprime borrowers before they get into trouble and gives them the help they need to remain homeowners.

HopeNow is the work of mortgage servicers who represent 90 percent of the subprime market. The subprime mortgage market includes 2 million subprime mortgage holders who have mortgages that could reset to higher rates in the next two years, according to the U.S. Department of the Treasury.

The HopeNow program's fast track effort is speeding early applicants through the refinance process to free up time for mortgage servicers to focus on the more difficult cases, according to the Treasury Department.

The ultimate goal is to prevent as many foreclosures as possible.


For more information, visit the HopeNow.com Web site or call 1-888-995-HOPE (4673).

Treasury Secretary Henry Paulson said Hope Now's effort to fast-track qualified borrowers into new, affordable loans "Will be measured by the number of avoidable foreclosures that are prevented, not by the number of refinancings or modifications with an interest rate freeze."

The federal government/mortgage servicers alliance includes the American Bankers Association; American Financial Services Association; American Securitization Forum; America's Community Bankers; Assurant, Inc.; Bank of America (which plans to purchase home loan lender Countrywide Financial); CCCS Atlanta, Inc.; Carrington Mortgage Services; Citigroup Inc.; Consumer Bankers Association; Consumer Mortgage Coalition; EMC Mortgage, Inc.; Fannie Mae; The Financial Services Roundtable; First Horizon National Corporation; First Tennessee Home Loans; Freddie Mac: GMAC ResCap; Homeownership Preservation Foundation; Housing Partnership Network; The Housing Policy Council; HSBC Finance; Indymac Bank; JPMorgan Chase & Co; Litton Loan Servicing; Merrill Lynch; Home Loan Services/Wilshire; Morgan Stanley/Saxon; Mortgage Bankers Association; National City; NeighborWorks America; Ocwen Loan Servicing; Option One Mortgage Corporation; PMI Mortgage Insurance Co.; Securities Industry and Financial Markets Association; State Farm Insurance Companies; SunTrust Mortgage, Inc.; Washington Mutual, Inc.; and Wells Fargo & Company, among others.

• Find more ways to Cope With The Mortgage Meltdown.

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Chronic Mortgage Confusion

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom – Consumers are confused, concerned and craving more regulatory protection when it comes to home loans.

Nearly half of mortgage consumers who hold adjustable rate mortgages (ARMs) aren't very informed about their mortgage terms, 40 percent of high-income borrowers say the next interest rate adjustment could break the household budget and 77 percent want more government regulation for mortgage lending.

Peter D. Hart Research Associates, on behalf of the AFL-CIO, recently surveyed 500 homeowners with ARMs and found homeowners are grappling with a host of issues impacting their loans.

The "Homeowners Confused, Worried About ARMs" study has findings similar to those in Bankrate, Inc.'s "Mortgage Ignorance Rampant" study conducted earlier this year.

Mortgages continue to confound.

As in the Bankrate study, key findings in the AFL-CIO-commissioned study include evidence that ARM holders lack vital information about their loan and how it can affect the household budget.

• Nearly half, 49 percent, say they aren't very informed about their mortgage's terms and conditions.

• One in five, 18 percent, does not know their current interest rate.

• Most, 73 percent, don't have a clue how much their monthly mortgage payment will increase the next time their rate rises.

• Nearly half, 47 percent, don't know what factors determine the amount of their rate adjustment and only 20 percent correctly answered how their rate is determined.

• Fifty-six percent do not recall their lender telling them how much they would be paying with their rate resets.

The AFL-CIO study also found that many ARM holders foresee financial problems down the not-too-distant road.

• Households with incomes of $50,000 or less start off behind the eight ball with higher-than-average rates on their loans -- 57 percent have rates in excess of 6 percent, compared with 39 percent of borrowers with incomes of more than $50,000.

• Thirty-seven percent of higher-income borrowers say it is likely they will have to cut back on items such as groceries and gasoline once their rate increases. The same is true for 80 percent of lower-income borrowers.

• Also, 36 percent of lower-income borrowers may have to postpone a major health procedure, 38 percent will have to postpone college or other education, 37 percent say they may face foreclosure and 18 percent say they will have to give up health insurance because of monthly mortgage payment increases.

"What we have here is a tale of two communities," said AFL-CIO President John J. Sweeney.

"The trap door between the American Dream and the American Nightmare for these homeowners is the ARM adjustment. This survey shows that many homeowners simply are not prepared for the steep rise in mortgage payments that this market inflicts on ARM holders," Sweeney added.

Many homeowners continue to enjoy introductory rates, indicating current market conditions are just the tip of the proverbial iceberg.

• Most, 59 percent, of ARM borrowers interviewed have not experienced a rate increase. Of those, 59 percent have a rate that's lower than 6 percent, compared to just 9 percent of those whose rates have already reset.

• Sixty-four percent of those whose rates have reset do not recall their lender telling them how much more their payment would increase and 32 percent don't recall being told when their rate would increase.

• Forty percent of those surveyed say they do not know where to turn for help and guidance, if they had difficulty paying their mortgage.

Homeowners also expect more regulatory oversight from the government and some sort of government bailout for those facing foreclosure.

• More than three in four, 77 percent, of ARM holders say the government should do more to regulate mortgage lending and protect consumers.

• Borrowers who obtained home loans through a mortgage broker are worse off than those who went directly to a lender. Broker borrowers are less likely to feel informed about the conditions of their loans than bank customers, 45 to 61 percent. They are also more likely to say they do not know where to turn should there be a problem paying the mortgage, 42 percent to 31 percent. They are more than twice as likely to have an interest rate of 8 percent or higher, 24 percent to 10 percent. Also, broker borrowers are more likely to have been late making a payment, 28 percent to 16 percent and to have maxed-out credit cards, 25 percent to 18 percent.

Coinciding with the release of the study, the AFL-CIO's Union Privilege benefits provider for union families, announced a "Save My Home Hotline", 1-866-490-5361, to offer free, around-the-clock advice from U.S. Department of Housing and Urban Development-certified counselors. Face-to-face counseling is also available.

The AFL-CIO also sponsors a trust to assist union members with financial hardship due to disability or unemployment.

"Nearly four out of 10 homeowners in the poll say they wouldn’t know who to turn to for help if they had difficulty paying their mortgage," said Leslie Tolf, president of Union Privilege.

"Unions are at the forefront of closing that gap," she added.

• Mortgage Pitches Not Credible
• Current Disclosures Muddy Mortgage Morass
• Consumer Mortgage Ignorance Hurts
• Points Taken, But Not Well
• How To Manage Your Mortgage

© 2007 DeadlineNews.Com

DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Of Intellectual Property Is A Federal Crime

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Mortgage Bailout Promotes Dysfunctional Lending System

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom – Offering more easy money to solve what easy mortgage money has wrought will only throw good money after bad and enable a flawed, strung-out system to flourish.

Even consumers with mortgages that have melted down don't deserve a federal cash-based bailout.
Don't shoot the messenger.

Those are the recommendations of the National Taxpayer Union.
Welcome to the school of hard knocks.

Call it tough love or tough luck, but the Union says borrowers, brokers, lenders and others who took on or gave out too much mortgage risk will just have to, well, suck on it.

They should get no quarter.

"A government bailout is not a viable solution. The government bailout is only going to reward people who made bad decisions -- both borrowers and lenders -- and if we reward bad decisions, it's only going to encourage more people to make these bad decisions in the future," said study author Jacob Vigdor, an associate professor of Public Policy Studies and Economics at Duke University.

Vigdor says just about any kind of financial lifesaver from rewriting a consumer's mortgage to stave off foreclosure to a cash infusion from the federal government to save a lender amounts to a subsidized bailout.

Foreclosure moratoriums, taxpayer-backed loans to troubled borrowers and lender-restrictions that effectively rewrite mortgage contracts all effectively socialize risk while encouraging recklessness from borrowers and lenders alike, the Union says.

While President Bush says he stopped short of a federal bailout for lenders for the same reasons the Union says any bailout is shortsighted, many consumer provisions in the Bush plan are just what the Union denounces.

Says Vigdor, any bailout approach is a "moral hazard" which means that "wealth is redistributed from the responsible to the irresponsible, from the ethical to the unethical."

The study, "What Should Government Do About the Subprime Mortgage Market?" recounts the causes of the current mortgage meltdown by spreading blame.

• Brokers, who account for the majority of subprime loan originations, pursued subprime borrowers aggressively, sometimes recommending loans that were a poor match for the borrower’s financial circumstances.

• Similarly over-eager to attract borrowers and to close deals quickly, lenders engaged in poor underwriting practices, failing to obtain reasonable evidence of a borrower’s ability to repay, offering no-money-down arrangements, and approving borrowers based on "teaser" rates, rather than the fully-indexed rate.

• Seeking to qualify for the largest loans possible, and often assuming that home prices would continue upward, borrowers with little ability to manage payment shock or earnings fluctuation "maxed out" their loans, in some cases by lying about their earnings.
The Union said, as everyone now knows, when housing prices leveled off, or declined in some regions, the house of cards collapsed. Borrowers defaulted on higher payments and couldn't tap their equity, if any, to refinance or pay off the large principal.

Government intervention also isn't necessary, says the Taxpayers Union, because evidence thus far doesn't indicate a "crisis."

It says delinquency, foreclosure and held-for-sale rates of subprime mortgages originated in 2006 are higher than for loans originated in 2003 and 2004, but are on par with those originated in 2000-2001.

Also while the rate of foreclosure this year has soared to 80 percent or more of those last year in some markets in some months, only 7 percent of subprime loans originating in 2006 were recently in danger of being held for sale, foreclosed upon, or going delinquent.

"The only sure way to eliminate the high rate of foreclosures in the subprime market would be to eliminate the market entirely," depriving the other 93-95 percent of subprime borrowers of their American Dream.

Rather than going to such extremes, instead of offering bailouts or ignoring the plight of existing borrowers, less intrusive forms of assistance do work, the Union says.

Some of the best forms of assistance are "educational bailouts" where consumer education and foreclosure-avoidance strategies are employed even after the borrower gets in too deep.

For example NeighborhoodWorks America and its Center for Foreclosure Solutions revealed a year ago how community-based programs can dramatically reduce foreclosure rates without major financial bailouts.

A combination of borrower education, sometime spanning the full cycle of homeownership and debt management, used in conjunction with loss mitigation and limited short-term financial assistance may be a better idea.

While lenders and brokers must retool their efforts to school borrowers, bring disclosures in line with today's complicated mortgages and underwrite based on real risk, NeighborWorks' work serves as a reminder that there are a multitude of ways to help borrowers avoid foreclosure, short of taxpayers taking over their mortgages.

"Consumer education is a theme running through every successful program," the report says.

You are what you know.

© 2007 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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