Effective January 1, the Maryland Court of Appeals has instituted new rules that will require debt buyers to have more proof before they can obtain affidavit judgments in debt collection cases.  This is good news for debtors.

Debt buying companies focus on buying debts from credit card companies and other creditors that are past due.  They buy the past due debt for a fraction of the amount owed.  Frequently, the only proof the debt buyer has regarding the debt is the debtor’s name, address and social security number.

Since debtors often don’t appear in court on debt buyer/debt collection cases, debt buyers bank on obtaining monetary judgments by default.  However, the debt buyer frequently does not have sufficient reliable documentation showing ownership and the details of the debt (principal, interest, etc.). 

Now, debt buying companies will have to have additional information when filing these types of cases.  Better proof of the debt and interest is now required in addition to proof of ownership by the debt buyer.

A win for Maryland consumers!

Have a wonderful and safe Valentine’s Day.

If you’ve ever felt powerless in a fight against a large corporation or been blind-sided by bank fees, you should know about James Noble.

The Charlottesville, Va., software engineer found himself on the short end of a credit card interest rate increase and facing $300 in overdraft fees levied by Bank of America earlier this year. In both cases, he felt the costs were unfair, but he couldn’t get anyone at the bank to listen.

“Customer service is so bad at most places now, it’s really starting to get to the point where you have to go to court to be treated fairly,” he said.

So he did. And he won – a judgment of almost $900 against Charlotte, N.C.,-based Bank of America.

Noble took advantage of an often overlooked option in U.S. judicial systems: small claims court. Because small claims courts are inexpensive and informal, plaintiffs can represent themselves.  Read the rest of this story on The Red Tape Chronicles.

In the realm of mortgages, a fixed rate mortgage is considered to be the perfect little princess. And, a variable rate mortgage is often thought of as the wicked stepsister. While variable mortgages can be detrimental to some, they can provide the most benefit for many others. The same logic applies to fixed rate mortgages.

Below, we’ll cover the good, bad, and ugly on both sides of the fence.

Variable Rate Mortgage

Due to its nature, variable rate mortgages start out at a substantially lower interest rate than fixed rate mortgages, and then increase incrementally overtime. This practice that is only associated with variable rate mortgages is often referred to as a teaser rate, because the introductory rate is so alluring.

The incremental increases, which are most often seen in 6-month or 12-month intervals, are set according to the current fluctuations of the average mortgage interest rates. Therefore, if you sign on with a reputable lender, your interest rate should be set according to the local average. Your interest rate will both increase and decrease according to the natural ebbs and flows of the market.

Below, we’ll cover which buyers would benefit most from opting for a variable rate mortgage.

Variable rate mortgages are ideal for the following buyers:

• Newlyweds who want to own a smaller home now and move on to a larger home once they’re ready to start a family

• Real estate investors who plan to flip a home (renovate for profit) over the course of several years and then sell at or before the five year mark

• Homeowners who are “testing out” a new area and want the leniency of being able to move within a few years with little penalty

Fixed Rate Mortgages

Fixed rate mortgages are the most popular mortgage selection among homebuyers. In fact, this type of mortgage is so popular that over 75% of homebuyers nationwide choose this option.

A fixed rate mortgage is self-explanatory; the interest rate you sign on with today is the same amount you’ll be paying in 5, 10, or 15 years, according to the terms of your mortgage – no surprises.

Though the security of a fixed rate mortgage may have you giddy to sign on the dotted line, there is one very important fact that you must be aware of before you make your decision. The interest rate applied to fixed rate mortgages is inflated.

This is because lenders must anticipate fluctuations, particularly increases, in interest rate averages long before they occur. Therefore, if the lender anticipates that over the course of your mortgage, interest rates will spike to 8%, you’ll likely be quoted an interest rate of 7%, even if the lender only needs to charge you 6%.

Interest rates are more inflated with 30-year fixed rate mortgages than they are with 15-year fixed. This is a logical move to lenders because they assume a far lower risk of exorbitantly spiked interest rates over the course of 180 months as opposed to 360 months.

A fixed rate mortgage is ideal for the following homebuyers:

• Those who plan to reside in their home throughout the duration of their mortgage and are purchasing a home with adequate space to accommodate the needs of their growing family

• Buyers who operate a small business locally and plan on staying in their home for an indefinite period of time

• Homebuyers who are uncomfortable with the uncertainty of variable rate mortgages and prefer to pay a set amount each month for the duration of their mortgage

When choosing your type of mortgage, base your decision on the foreseeable needs of your family.

It can be tempting to either go for the no-fuss fixed rate mortgage or the low introductory rates of a variable rate mortgage. But, if the decision isn’t practical for your specific needs in 5, 15 or 30 years, you’ll only be hurting yourself from a financial standpoint.

Owning a home is clearly number one on the wish list for many of us. However, owning a home outright is a close second. From a financial perspective, paying off your mortgage faster is a smart move.

Being mortgage-free allows you to decrease your monthly expenses dramatically and enables you to finally give your retirement, children’s college fund, and day-to-day savings account the attention they deserve.

Throughout the first few years of your mortgage, the majority of your payment will go towards interest. These tips can help you avoid the interest-trap and work towards living the mortgage-free life you deserve:

1. Choose a 15-year fixed rate mortgage. Most homebuyers choose a 30-year fixed rate mortgage because it allows them to pocket several hundred dollars more than a 15-year term each month. While this may be a sensible option, if you’re able to forgo the extra $400 or so in your bank account, choose a 15-year fixed rate.

• If you take out a loan for $200,000 at an interest rate of 6% for 30 years, your monthly mortgage payment will be $1,199 and you’ll pay over $231,000 in interest throughout the course of your mortgage.

• If you take out a loan for $200,000 at an interest rate of 6% for 15 years, your monthly mortgage payment will be $1,688 and you’ll pay just over $103,000 in interest throughout the course of your mortgage.

• Though a 15-year term will force you to pay a higher amount each month, you’ll be free from paying a mortgage in just 180 months and you’ll save $100,000 or more in interest payments.

• 15 year fixed rate mortgages boast lower interest rates because the lender assumes a lesser risk than a 30-year mortgage term.

2. Make regular lump sum payments. At the start of every year, make an extra lump sum payment towards your principal. When writing the check, specify that this payment should be applied to “principal only” as most lenders will simply apply the extra payment to interest, if given the opportunity.

• Apply your Christmas bonus towards making this extra lump sum payment. Or, if your employer is less generous, simply set aside $25 per week throughout the year and send in an extra check of $1,300 in addition to that month’s mortgage payment.

• Lump sum payments can be made at any time of the year you choose. However, most lenders set restrictions as to how many times per year you can make lump sum payments.

3. Send a second check each month. As stated above, the majority of your mortgage payment goes towards interest; in many cases up to 75% of your payment is applied towards interest. But, you can beat this catch 22 by sending an extra check to be applied only towards your principal in addition to your monthly mortgage.

• By doing this, you continue to pay your interest and heavily decrease the amount you owe on principal over the course of just a few years.

• Only send as much as you can afford. It can be anywhere from $50 to $300 or more. Though paying off your mortgage faster is a priority, it makes little sense to unnecessarily dig yourself into a financial hole.

• Many people opt to send biweekly payments towards the principal (you must arrange this with your broker), but there is security in taking this approach. If your income decreases, or if other expenses increase, you can stop making extra payments towards your principal at any time without penalty.

Other conventional options of paying off your mortgage faster include arranging biweekly mortgage payments, refinancing your home, or opting for a balloon mortgage. But you can avoid the hassle of these more complicated processes by simply working strategically with your existing mortgage.

Whether you want to admit it or not, there’s a global recession happening, and it’s affecting millions of families. People are being laid off, companies are going under, and even some state governments are completely broke.

Finding ways to cut back on your spending can help you during this difficult economic period. Saving money is always good, but it’s a skill that becomes especially important during a recession.

How can you save money during a recession? It’s all about planning, cutting frivolous costs, and changing the way you spend money.

Here are some handy tips you can use to help you save money:

1. Pay important bills first. The mortgage, electricity, water and heat have to be paid no matter what.

2. Save Money on groceries. Groceries are a huge, yet necessary, expense. After the bills are paid, most of the budget will fall into the groceries category.

• Buy generic rather than name brands. They usually taste just as good but cost less.

• Buy non-perishable foods in bulk. Many items can be bought in bulk such as rice, canned foods, and frozen foods.

• Never shop on an empty stomach. Eat before grocery shopping; otherwise, you’ll wind up buying more junk and convenience foods because you’re hungry.

• Make a list of what you need and stick to it. It really is that simple!

• Cut and use coupons. 10 for $10 deals and sale items are your friends. Combining coupons with sales can slash your grocery bill even more.

• Avoid shopping at expensive stores, even if they’re closer to home. Instead, go a few miles out of the way for the discount grocery stores. Most items in the store are exactly the same thing, other than the price tag.

3. Rent movies instead of going out. Have a movie night once a week. Sit down with some popcorn and watch a movie. This is a great way to spend quality family time, without much expense.

4. Put the credit card down. Credit purchases may get your “stuff” now, but you’ll pay double for it later. If you want something, save up and pay cash or wait.

5. Cook at home. If you go out to eat two or three times a week, cut back to once every two weeks or once a month. Instead, learn to cook at home. If you plan ahead and cook in quantities, you’ll save time and money by popping the extra portions into the freezer.

6. Unplug. If there are things in your house plugged into the wall and you aren’t using them, unplug them. Many items, like computers and phone chargers, draw electricity whether they’re on or not. Plug it in when you need it, then unplug it when you’re done.

7. Lower your thermostat. Set your thermostat at a specific temperature and leave it there. 68 to 70 is an energy-saving setting in the winter. If you get chilly, put on a sweater or grab a blanket. You’ll save more than you realize on your heating bills.

These are just some of the many ways to save money and stretch your dollar a bit further during these challenging times. These tips require a change to your habits, which can take some getting used to. In time, however, you’ll adjust and the money you save can make a big difference in your budget.

It’s important to stick with your plan to save money. Making a change for a week won’t do the trick. Committing to changing bad habits for good will reap the greatest benefits in the long run.

Fannie Mae has established new foreclosure timeframes for four states – Florida, Maryland, Nevada and New York – telling seller/servicers they face potentially steep fines if they cannot complete the task.

In a recent servicing announcement sent to seller/servicers, the GSE increased what it calls the “allowable time frame” for Florida foreclosures to 185 days, a 35-day increase. Fannie said it added days “to allow for a mediation referral prior to a foreclosure suit being commenced.”

The new foreclosure deadline for Maryland is 90 days. For Nevada it’s 150.

Fannie gave New York State two time frames: 300 days for upstate, but 420 days for New York City (the five boroughs) and Long Island.

The servicing bulletin excludes information on the prior time frame for these states. The GSE specifies that these new time frames are for “routine foreclosure proceedings.” The clock starts ticking on the count when the servicer refers the loan to an attorney for foreclosure.

Two weeks ago, news broke that the GSEs were going to get tougher on foreclosures but few details were available publicly. Fines will be assessed to mortgage bankers based on the outstanding loan balance. If a servicer submits a late ‘REOgram’ it faces a fine of $100 a day.

Buying a new car is one of the most exciting times in a person’s life. Your heart races with anticipation as you consider the perfect make, model, and color for you. Perhaps you’ve been dealing with breakdowns and repairs on your old car for years, and you’ve finally decided that getting a new one is right for you.

Whatever your situation, new car shopping can also be a frustrating experience if you’re not prepared. With the right strategies, you can save money on your next new car purchase.

To get the most for your money and drive away happy, follow these new car buying tips:

1. Determine whether buying a new car is right for you. Ensure that a new car purchase is the right fit for you, your lifestyle, your family, and your budget before you spend the money. If your current car is in good shape, you may want to keep it for a while and save yourself the money.

• You may be able to find a used car that’s in great shape for a lot less money. It’s not as glamorous or exciting, but it might be the wise choice for your pocketbook if you find a great deal.

2. Pay cash if possible. You can save yourself a lot of money on interest if you can afford to pay cash up front. The larger the down payment you make for your car, the more money you’ll save. Cars lose value fast, and you can end up paying hundreds of dollars more than the purchase price of the car in interest unless you pay cash for the purchase.

3. Take your time. It’s easy to get caught up in the excitement of shopping for your dream car. Car salesmen may add to the pressure by making you feel rushed. But if you take your time, you’ll be glad you did. You’ll make wiser decisions, save money, and be happier in the end if you slowly walk through the process, instead of rushing.

4. Sleep on it. When you find the car you want and you’re ready for purchase, go home and sleep on it overnight. In the morning, after having a night to think about the terms and the other options you’ve seen, you may feel differently about the choice than you did in the heat of the moment of shopping.

5. Shop around. If you’re willing to work for it, you can often save yourself hundreds of dollars by shopping around for the best price. You may also save by finding the dealership that offers you the best incentives for purchasing from them, such as cash back rebates.

6. Be wise about your trade-in. If you’re trading in your old car, take steps to get the highest value possible for your vehicle. By handling the situation correctly, you can often increase the money you receive for your trade-in by hundreds of dollars.

• If you plan to trade-in your old vehicle as part of your new car purchase, mention the trade-in to the dealer only after your negotiation for the purchase price of the new one is complete. Often, you’ll be treated more fairly by the dealer this way and get more for your old car.

• When you discuss your trade-in, let the dealer know that you’re going to ask for bids to get the best value. The bid you receive will likely be a bit higher, and the amount you receive for your trade-in can vary widely from dealership to dealership.

7. Go shopping when the next year’s models first come out. In about September every year, when the new car models come out for the following year, dealerships often have great incentives and sales to get rid of their inventory of the old models. This can mean great savings on a brand-new car that’s perfect for you.

Shopping for a new car can be both exciting and overwhelming. But if you follow these tips, you’ll save money on your next new car purchase and leave the experience knowing that you made the choice that’s right for you.

Foreclosure procedures have been initiated against 1.7 million of the
nation’s households. The pace of resolving these problem loans is slow and
getting slower because of legal challenges, foreclosure moratoriums,
government pressure to offer modifications and the inability of the lenders
to cope with so many souring mortgages. The average borrower in foreclosure
has been delinquent for 438 days before actually being evicted, up from 251
days in January 2008.

While there are no firm figures on how many households are following the
path of passive resistance, real estate agents and other experts say the
number of overextended borrowers taking the “free rent” approach is on the
rise. More than 650,000 households have not paid in 18 months. With 19
percent of those homes, the lender has not even begun to take action to
repossess the property – double the rate of a year earlier.

Bank of America had the highest reported rate of credit card delinquencies and charged-off the greatest percentage of its credit card loans in April, according to SEC filings by six major consumer credit card issuers.

Bank of America had the highest rate of total delinquencies at 6.73 percent of all credit card accounts. Bank of America also reported the highest net charge offs in April with 12.71 percent of card accounts charged off.