Archive for Finances

New Wave Of Home Foreclosures?

Posted in Money Matters with tags , , , on September 19, 2008 by gyma

Last week Bloomberg.com posted an article called “Alt-A Mortgages Next Risk for Housing Market as Defaults Surge.”

Alt-A mortgages were provided to individuals who had good credit ratings but couldn’t or didn’t want to provide income verification.  There are about 3 million borrowers with these type of mortgages, totaling $1 trillion worth of debt.

In same cases these were 3-year interest only loans starting at 6.25%.  Most people who took out these loans believed the housing market would continue rising and they would be able to sell before the rates reset at much higher rates (e.g., 10.6% and higher).

Of the 3 million borrowers with Alt-A mortgages, it is estimated that 70% of them overstated their income and could be in danger of defaulting.

Ugh.  Just go read the article so you see who the guilty banks are.  And make sure your bank balances are within the limits to be fully covered by FDIC.  If I had my primary checking account with Wachovia, I’d consider finding a new bank soon.  We do have an IRA with Wachovia but we can survive if we had to wait until the FDIC came through.

We’re Now A Nation Of Liars

Posted in Money Matters, Politics with tags , , on September 18, 2008 by gyma

When, exactly, did we become a nation of liars?  And more importantly, when did we stop caring about it?

Charles Hugh Smith has an insightful post on his blog about how we’ve become a nation of liars and what that all means.

We have candidates for the highest office of the land pronouncing their deep religious faith, yet not one candidate has expressed any outrage at the ubiquity, the pervasiveness, the crassness of the nation’s reliance on lies or the incalculable harm perpetrated by the lies which have formed the very bedrock of the debt/credit bubble which is now, at long last, finally imploding.

Go read the whole thing – it will get you thinking.

 

So. Very. Angry.

Posted in Money Matters, Politics with tags , , , on September 18, 2008 by gyma

I’ve been closely following the financial news over the last week and I’m really angry over what our elected officials have done to this country.  We’ve been repeatedly lied to for too many years and I no longer have any confidence in our government.  Can Barack Obama change it?  I honestly don’t know.  What I do know is I’m not willing to give Republicans another shot at trying to right this sinking ship.  And where in the hell has our dear leader, George W. Bush, been hiding?  Not that I want to see his pathetic face, but the least he could do was get on television and attempt to make us feel better.  Not. A. Peep.

At the end 1999 we bought our current house.  My husband was retired with social security income, we were 100% debt free and I had a part-time job at the public library making $17/hr.  We had more money invested in IRAs than we were requesting to borrow.  We also had a 45% down payment and wanted to finance less than $100K for this house.  Our payments would have been less than rent for a 1-bedroom apartment.  But no one wanted to give us a loan.  We had purchased our previous home for cash and had taken out a small home equity loan to do some remodeling.  We had excellent credit.  And no one wanted to give us a loan!  We ended up getting a loan with an interest rate nearly 2% higher than everyone else.

I can’t tell you how angry this makes me now.  As it turned out we paid off that crappy loan in 8 years and once again are 100% debt free.  Not so for much of the rest of this country.

Reading this article by Dean Starkman in the Columbia  Journalism Review only makes me angrier.  Much angrier.  Starkman talks not only about the total lack of regulation, the greed and malpractice of the Wizards of Wall Street, but also the media’s failure to accurately report what was happening.  Epic Fail all the way around.  From the article:

From 2004, Countrywide led the market in rolling out new “products” that were basically bureaucratic ways of approving a loan to anybody. The complaint said Countrywide threatened to fire underwriters for (my emphasis) attempting to verify a borrower’s ability to pay.

We’re being told not to panic but in the next sentence we’re hearing this is far from over.  Now I’m angry and spooked.  I’ve lost tens of thousands of dollars in about a year, which represents 7.5 years worth of contributions to my 401K.  I now understand the money I earned in the market was all based on a scam, a house of cards that is now tumbling down all around us.  I can only hope George W. Bush and John and Cindy McCain are heavily invested in this crap, too, and their losses are in the tens of millions.

This country can’t continue sticking its finger in the dike every time a large financial or insurance institution starts to fall.  Comprehensive overhaul is needed and sooner rather than later.  But I’m not hearing much of that coming out of Washington these days.  Rather I hear John McCain, who’s own party has been in charge these last 8 years, talking about how he’s going to spank Wall Street and everything will be better.  Yeah, right.  If you believe that, I have a Bridge to Nowhere I’d like to sell you.

Since the last 8 years of gains on Wall Street were built on quicksand, I can’t comprehend how long it will take for this to bottom out and begin reversing.  With less than 10 years to recover my losses, I made the very difficult decision last night to get out of the market this morning and that’s what I did.  Cashed out completely and now I’ll be able to sleep better.  When the check arrives I’ll seek out a financially healthy local bank and put it in a CD and wait out the storm.  Sad as this is, money market accounts aren’t even safe investments these days!

[h/t Hullabaloo]

Credit Card Conniving

Posted in Money Matters with tags , , on August 24, 2008 by gyma

I use hotmail as my primary e-mail account and sometimes I click on the MSN news I see there.  That is where I read this Business Week article about how some credit card companies are tracking where you use the card as part of a scoring system.

This really bothers me.  I understand that if you don’t pay your bills, then you might have to pay higher interest rates in order to convince a business to consider the additional risk posed by you.  But where you use your credit card?  Give me a break.

We pay our bills and we pay them on time.  I use a Discover card frequently so I don’t have to carry cash and also to get back that small rebate every year.  I never, ever carry a balance because I refuse to give any credit card company one penny of interest.

So even though this practice probably doesn’t affect me, I wish I knew how to fight this trend.