Few mysteries have been as hard to figure out as how in the world they determine your credit score.

We keep getting pieces of how it works. The latest: The folks who create FICO scores last week revealed what hurts your score. Here's what they said, according to CreditCards.com.

It's weird the way they work. When you do something bad for your credit, like make a late payment, higher credit scores fall farther than low scores. But if your score is low, doing damage to it can mean that you won't get any new credit cards.

P.S. I'm still looking for someone to participate in a story about converting your IRA to a Roth IRA. I can run some numbers for comparison.

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As I start to think about records, I'm wondering about the Lost Decade. The decade in which stocks went nowhere, if you measure from end to end in 2008. In the middle, there were huge declines and pretty big upsides. But you didn't get ahead in the long run..

Here's a link to USA Today's fine little piece on the Lost Decade.

How'd you do? Your portfolio, did it go anywhere in the last ten years?

Now, I am sure I will hear from someone who said those are just averages and that they beat them by picking the winners.

I decided to look into that, using USA Today's nifty list. Let's look at Apple, which certainly had a nice decade recently.

But let's say you got in long, long ago.

I looked at the period from Sept. 29, 1989 to June 30, 1989 and found that Apple shares went up a whole 4 percent. The annual equivalent return, 1.15 percent, for ten years.

Losers can become winners. But it goes the other way, too.

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Here’s something I think is important, but it’s not quite real yet. It could help to restore some trust between the public and investment advisors.

South Florida’s Harold Evensky, one of the most influential certified financial planners in the nation, tells me he thinks we’re close to getting a fiduciary standard for all financial advisors.

A fiduciary standard, in plain language, means the advisor puts your interest first. You, the investor, matter more than any sort of benefit or payment the advisor might get because you accepted the recommendation.

If advisors are held to a fiduciary standard, I would think, they would more often give you good advice. Because doing right by you would be their goal.

Evensky and a small band of like-minded financial professionals have made the trek to Washington four times now to argue for the standard.

“All the discussions we’ve had with the Treasury, with the SEC (Securities and Exchange Commission), with Finra (the Financial Industry Regulatory Authority) suggest to me there is a growing and a strong understand and a believe that advisors should be tied to a fiduciary standard,” he said the other day.

“My impression is they want to be able to make it work.”

If it happens, Evensky, of Evensky & Katz in Coral Gables, says there will be a “substantial and dramatic change in the culture of the business.”

Indeed. How will it be if the investment industry is about the investors and not about the products being sold?

Plenty of good people in the investment industry are all about the investors. This standard would bring the rest in line. And make everyone’s priorities clear.

Look for this debate, along with the broader financial reform issues, to begin shortly.

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Amidst rising unemployment, Florida’s consumer confidence index fell three percentage points to 69 in November.

“There are reasons for growing pessimism, particularly lingering employment issues that are expected to get worse over the next several months,” said Chris McCarty, survey director of
UF’s Bureau of Economic and Business Research.

He pointed to the state’s 11.2 percent unemployment rate, the highest in 34 years.

The index, which measures consumers’ perceptions of the economy and their finances today and over the long run, showed a sharp decline in expectations for the next five years.

“Florida consumers may be wondering whether the effects of this downturn will last longer than usual, or perhaps some aspects of this downturn are permanent,” McCarty said.

Floridians’ rising pessimism stands in contrast to the rest of the nation.

The Conference Board, a New York research organization, reported that its nationwide index of consumer confidence rose in November to 49.5 from 48.7

Lynn Franco, director of the Conference Board’s research center, said consumers nationwide seem to be thinking that things won’t get much worse.

But she cautioned, “Income expectations remain very pessimistic and consumers are entering the holiday season in a very frugal mood.”

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Mortgage news remains dismal. How dismal? You can see for yourself.

Here's a link to an interactive table in the Wall Street Journal today about underwater mortgages. Click on negative equity and you'll see Florida is number two in the nation.

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Some personal finance news to be thankful for Thanksgiving: Many companies that cut or stopped matching 401(k) plan contributions are putting the money in again.

Fidelity Investments reports that in the third quarter, from its survey of 17,000 retirement accounts, 27 percent of those companies that had reduced or suspended the employer match have started contributing again or plan to do so next year.

It’s the company match that lures many people to save at all. So hurray for its return.

And just so you know, those cutbacks were never all that widespread. Fidelity says they occurred at only 8 percent of the plans that Fidelity handles.

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What If?

This is a link to my Sunday column, in case you missed it.

It's my second What If column. This time, I wrote about What if you can't pay our credit card bills? What happens? There are three answers. Detailed paths you can take - each one with the consequences laid out.

The first one, two weeks ago, was What If you don't pay your mortgage? The consequences are big, bad and they come about quickly.

If you'd like to suggest a topic for a futre What If, I'd like to hear it.

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One out of four Florida home mortgages is in foreclosure or delinquent.

The third quarter report from the Mortgage Bankers Association brings almost too much precision to the picture of the foreclosure crisis.

Nationwide, more than 4 million home mortgage borrowers are behind on their payments.

In Florida, we have 441,440 home loans in foreclosure and 422,036 that are delinquent.

The Florida foreclosure rate is the highest in the nation. And the combination of the foreclosure and delinquency rate is also the highest.

A total of 12.18 percent of home mortgages in Florida were delinquent and 12.74 were in foreclosure in the third quarter.

That's up from 10.8 percent delinquent and 11.96 percent in foreclosure in the second quarter.

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Well, since the doubters were out yesterday (just look at the comments below my last post) doubting the figures I reported on inflation, which isn’t in the picture in South Florida because we’ve been going through deflation for a year but some of you don’t believe it, well, let me roll out another set of numbers today that are interesting, but…..

These figures I wonder about.

In October, the average person who has a home equity line of credit in South Florida owes $71,372.

That’s just a large number.

Could people really owe that much? Before you answer, look at the average consumer’s other debts, according to Credit Karma, a web site that deals with credit. Credit Karma looked at 1,150 consumer credit reports from TransUnion, one of the three major credit bureaus, for South Floridians.

What it found looks like a mountain of debt. For South Florida, the average consumer has:

• $7,547 in credit card debt
• $220,478 in home mortgage loans
• $14,843 in auto loans
• $29,260 in student loans

Grand total, with the home equity loan thrown in: $343,500

(The home equity figure isn’t an average for everyone. It’s the average for those who have home equity loans.)

That’s just a lot of money. It's more than the national average that Credit Karma found, which was $297,130.

The South Florida home mortgage debt is more than the national figure ($194,372), but not a lot more. The other figures are close.

It’s the home equity loans that stand out.

Why is the figure more than $71,000 for South Floridians and about $54,000 for the rest of the nation?

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Consumer prices in South Florida continue to fall.

The federal Bureau of Labor Statistics reported Wednesday that the consumer price index for the Miami-Fort Lauderdale metropolitan area fell 0.6 perccent through October, on an annual basis. That compares to a nationwide decline in consumer prices of 0.2 percent over the last year.

Consumer prices have either fallen or been flat in South Florida since this time last year.

Just remember that when the talking heads say inflation is about to come roaring back. We've got interest rates close to zero and fallling prices.

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Here’s some help to get your personal finances in shape.

Members of the Florida Institute of CPAs will answer your questions, for free, on Financial Fitness Friday, this week, Nov. 20.

Just call (800) 342-3197, Ext. 554, between 9 a.m. and 3 p.m.

Or submit your question online at www.ficpa.org/fff.

You can put your question in now and continue during the day Friday. Questions will be answered only during the event hours.

Some of the South Florida folks who will be taking your calls: Gary Horowitz and Kim Knoch of Horowitz & Knoch of Deerfield Beach, Mitch Bruckner of Mitchell W. Bruckner CPA in Lauderhill, Ashley Fagan of KPMG in Fort Lauderdale, Ronald Weinbaum of Infante & Co. in Hollywood and Andre McAden of Blake and Associates in Coconut Grove.

Real, unbiased advice, from someone qualified to give it. That's a public service much needed in these tough times.

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Okay, it's a cheap headline. But I am still looking for....

Anyone who wants to do a Money Makeover. If your finances are in a mess, I'll get you a financial plan and good advice. I want to help you get it right.

I've gotten a few candidates already. Hope to have some makeovers ready to read for the start of the new year. So if you're on the fence, get off. If I get too many candidates, it'll take me longer to get them done...

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Look for the battle over reform of the financial industry reform just after the Thanksgiving holiday.

That’s when the debate is expected to begin in the Senate over the massive proposal from Sen. Christopher Dodd, D-Conn.

The House Financial Services Committee has been dealing with the issues one by one, including its bill approved Oct. 22 that would create the Consumer Financial Protection Agency.

That's the part I'm watching closely.

There's tons of opposition, from the financial services industry.

"Just a year ago three brought the global economy to the verge of collapse. They're being remarkably successful in eating away at the reform proposals that are put on the table," said Barbara Roper, the Consumer Federation of America's investor expert.

"It's a tough battle, a lot tougher than it should be under the circumstances," she said.

Elizabeth Warren, the Harvard law professor who has been appointed by Congress to oversee the $700 billion in bailout money, calls the agency a potential game-changer.

She spoke last week to a small group of reporters who cover personal finance and the economy.

Warren pointed out that the Consumer Financial Protection Agency will not act like other regulators, who tell industry not to do this or to do that. Instead, its primary function will be to make financial services products more comprehensible to consumers. To make it possible for buyers to do such things as compare costs across companies.

"This agency has game-changing capacity. It will give consumers the power to make markets work effectively and to manage their own household budgets more powerfully," she said.

The new agency would gather up consumer protection authority from the Federal Reserve and other banking regulators and consolidate it. It would be able to set guidelines for credit cards and mortgages, and require disclosure of costs, benefits and risks.

The concept is good, but not perfect. It exempts auto dealers, for example, so you’d be on your own with their loans. And it won’t address insurance products, which I think plenty of people are going to buying as the Baby Boomers reach retirement.

Well, it’s only beginning. Let’s see what happens in the Senate.

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I'm looking for...

Anyone who wants to do a Money Makeover. If your finances are in a mess, I'll get you a financial plan and good advice. We want to help you get it right.

Anyone considering converting their Individual Retirement Account to a Roth IRA, for a future column. If you're trying to figure out if this makes sense, I can get you some help with the calculations....

And here are some things you've been telling me you are looking for....

Where can I find out if there's down payment assistance to help me buy a house?
I've been writing about the Florida Homebuyer Opportunity Program, which was set up by the Florida legislature to advance money to first-time homebuyers. This is a loan that the homebuyer pays back when he or she files for the $8,000 federal tax credit for first-time buyers that's available.

The application process is cumbersome, so get ready. But it could be worth it if you qualify.

To find out which organization is handing out this money in your area, go here

Select the city or county where you plan to buy the home and then get cracking.

Who can help me deal with my mortgage lender?
That's tricky. It's really difficult. Sometimes one of the HUD-approved housing counselors can help. Call 1-888-995-HOPE to find one near you. There's no charge for this. Ideally, you should make this call make before you start the process of trying to modify your loan.

But even if you make the call later, it might help.

If your lender seems to not being doing his part, then you might consider filing a complaint and asking a state or federal regulator to get involved.

At the state level, call or write the Florida Attorney General's office.
You can do this online at myfloridalegal.com. Go to Consumer Protection and then File a Complaint.

If you're dealing with a nationwide bank or lender, then the federal regulator who would take your complaint is the Office of the Comptroller of the Currency.

Go to occ.gov and click on consumer complaints and assistance.

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One more bit of perspective on the mortgage crisis.

Nationwide, the Treasury Department says 650,994 home loans have been modified under the Obama administration’s Making Home Affordable program through October.

That's a large number. But the number of those in need of a new mortgage deal is large, too.

You know how many troubled loans there are eligible for a modification in Florida? 667,754.

More than have been modified in the nation to date.

In Florida, almost 83,000 of those troubled loans have been modified so far.

That leave almost nine out ten loans yet to go.

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Help for Florida’s troubled homeowners is coming more slowly than in the rest of the nation.

A Treasury Department report Tuesday shows that only 12.4 percent of Florida borrowers who are at least two months behind on their mortgages have entered into a new deal – known as a trial loan modification -- through the Obama administration’s Making Home Affordable Program.

That puts the state behind the national pace, where 20 percent or one out of five troubled loans have been modified under the administration’s program through October.

Nationwide, 3.2 million borrowers are at least 60 days behind on their mortgage payments.

That includes many South Floridians. In September, 17.8 percent of home loan payments in Palm Beach, 20.7 percent in Broward and 25.1 percent in Miami-Dade were 90 days past due or more, according to the latest figures from First American CoreLogic, a real estate analysis firm.

Floridians trying to hold on to their homes are trying to get loan modifications in large numbers. Howard Nelson, a vice president at BB&T Bank in Sarasota and president of the Mortgage Bankers Association of Florida, said lenders are busy processing numerous loan applications. “The program is working from what we see,” he said.

But Florida Attorney General Bill McCollum, who has received more than 450 complaints about mortgage lenders across the state, said more needs to be done. “I am outraged by the reports I am receiving from homeowners telling me that banks are giving them the run-around instead of assisting them with their mortgage refinancing and loan modifications,” said McCollum, a candidate for governor.

The Treasury report, the first ever to break down results of the loan modification program by state, shows that Florida has the second highest number of loan modifications among the states. The 82,614 loans in a trial modification here dwarf the number recorded in states with large populations including New York (28,773) and Texas (21,260).

The Treasury report did not specify how many South Florida homeowners are affected and only covered those loan modifications under the new federal program.

A trial modification is the offer extended to the homeowner for the first three months of the loan. If the trial period is completed successfully and the homeowner submits the required information, trial modifications can be made permanent.

The leading state for loan modifications was California, where 134,609 cq loan modifications were in place through October. That encompasses about 19 percent of California’s eligible borrowers.

Nationwide, the Treasury said 650,994 loans have been modified. When the Obama administration launched the program, its stated goal was to help as many as 4 million troubled homeowners.

Among large lenders, Bank of America, which faces hundreds of complaints in Florida about troubled or stalled loan modifications, placed near the bottom of the list in the pace of loan modifications. Bank of America, which absorbed Countrywide Financial in 2008, is one of Florida’s largest lenders.

The Making Home Affordable report from the Treasury Department shows Bank of America has completed 14 percent of loan modifications for its eligible troubled borrowers – typically those having trouble paying the mortgage for their primary residence, purchased before Jan. 1, 2009.

The bank has 136,994 loan modifications in progress nationwide out of 990,628 eligible borrowers. Figures for Florida were not available.

Only Wachovia, with 3 percent of modifications started nationwide, had completed a smaller percentage, among large national banks.

Wells Fargo acquired Wachovia at the start of this year.

There’s a reason why Wachovia has not modified more loans under the Obama program, said Wells Fargo spokeswoman Teri Schrettenbrunner. Many Wachovia loans allowed borrowers to pay interest only. If those loans were modified following the program’s guidelines, borrowers would be paying interest as well as principal and their payments would increase. So those borrowers are being offered modifications under other programs, she said.

The top mortgage firm in the report nationwide was Saxon Mortgage Services, which services loans in Florida. The Treasury said Saxon has offered 44 percent of eligible borrowers a loan modification, followed by CitiMortgage, at 40 percent. GMAC is third, with 35 percent.

Bank of America is the subject of 220 complaints to the Florida Attorney General’s office about failed or stalled loan modifications, the attorney general’s office said Tuesday. That was a revised figure, down from the 452 complaints the attorney general’s office reported last month.

Spokeswoman Ryan Wiggins said the office later discovered that it had mistakenly included inquiries, which were not complaints, in its original figure.

Bank of America issued a statement Tuesday saying that nationwide, it has helped almost 600,000 customers to obtain a loan modification through the Making Home Affordable program and other programs.

Bank of America did not release current Florida loan modification figures.

Its results under the Obama administration program “continue to grow,” the statement said.

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Here's my Sunday column....

The Scott Rothstein case is far from complete. But investors can learn a few things from the unfolding story of the Fort Lauderdale attorney who is alleged to have taken at least $100 million from investors who wanted to get a piece of lucrative legal settlements. The money is missing.

What exactly was he promising. Huge returns, on unregistered investments, held in accounts that no one audited, with the promise of a payout that depended solely on his word.

Of course, it wasn't ever described that like that.

Here's how these deals worked, based on the offering memo he was showing to local investors, obtained by the Sun Sentinel.

http://www.sun-sentinel.com/business/fl-harriet-110809-20091109,0,6569475.column:

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From AP, the details of the homebuyer tax credit...

(The $8,000 credit), which was to expire at the end of this month, will be available through next June as long as the buyer signs a binding contract by the end of April.

Prolonging the life of the homebuyer credit has been a priority of the real estate industry, which says it has been instrumental in beginning to turn around a market that was a major cause of the economic downturn. About 1.4 million first-time homebuyers have qualified for the credit through August, and the National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

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The Internal Revenue Service has $15 million in federal tax refunds for Floridians – but it can’t find those taxppayers.
Undelivered refunds await 10,024 Florida taxpayers, the IRS announced this week.

“In Florida, the average undeliverable refund is $1,538,” said IRS spokesman Mike Dobzinski.
To figure out if the IRS has a refund waiting for you, the Sun Sentinel created a searchable database with all the names of those with undelivered refunds in Broward, Palm Beach, Miami-Dade and Monroe counties. The amount of the refund is not posted.

You can check out our IRS Refund Search site at www.sunsentinel.com/refunds.

You can also go to www.irs.gov and click on “Where's my refund?” to check your status.

If you find your name on the list, call the IRS refund hotline and you'll get instructions on how to update your address.

The hotline number is 800-829-1954. Be prepared to give your Social Security number, your filing status and some other details from your 2008 tax return.

There is no deadline for claiming your refund.

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So many questions I still have about the investments Scott Rothstein was selling.

They looked like structured settlements - which is a legitimate thing that courts approve all the time for injury victims.

But these weren't, by design, structured settlements, that could be sold only with court approval.

They were "pre litigation" settlements. Which appears to be a completely unregulated area, at least under state law.

They don't appear to be registered with any regulator or sold by any licensed broker.

But they were sold.

The offering sheet I have has the figures on what kind of return you'd get. The return is declared to be "Absolute."

And some of them are blacked out, with the word "Gone" written next to them.

"Who would consider an offering that uses the phrase "Gone" in describing the unavailability of a multi-million dollar investment?" said attorney Mark F. Raymond, managing partner of Broad and Cassell in Miami. " This is not an auction of used cars or a mark down event at Brandsmart."

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The news on Elizabeth Warren is interesting.

She heads Congress' oversight panel monitoring the $700 billion bailout money. Cong. Barney Frank, D-Mass., yesterday said that he'd like to see her become the first head of the proposed Consumer Financial Protection Agency.

Well, it's her idea. Two years ago, when I first discovered her exploding toaster analogy about consumer financial products, I wrote about it. Then I circulated her article -- suggesting the government create a financial products safety commission similar to the Consumer Product Safety Commission -- to some folks in the South Florida financial community. As I remember, the consensus was, it'd never work or Congress would never go for it. I'm betting they're still wrong.

The salient part of that column, from June 17, 2007:

Let's give the last word to Harvard law professor Elizabeth Warren and her exploding toaster argument.
From a recent blog post, she noted that if you bought a toaster, you could reasonably assume it would not explode. That's because the Underwriters Laboratories label showed it had been tested for safety, the Consumer Product Safety Commission would issue a recall if toasters began to blow up, and there are always lawyers to file lawsuits if that happened.
But none of those forms of protection are in place for credit cards (or other financial products), she noted. No testing, no watchdogs that can pull bad products off the market, very little ability for consumers to sue. (Credit cards increasingly are requiring cardholders to agree to arbitration for resolving a dispute.)
Exploding credit cards? It certainly can feel that way when your rate suddenly approaches 30 percent or you find out they charged you extra because you paid by phone.
The deal you thought you had often does blow up.

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Here's what I filed yesterday on Scott Rothstein, the lawyer at the center of the collapse of a Fort Lauderdale law firm. The allegation by his partners is that he was selling investments, using the firm's offices and name to promote the deals. The circular I saw for the investments offered impossibly high returns. The offering mentioned hundreds of such settlements, but I have seen the terms of only a few deals. Today's Wall Street Journal mentions 26 trust accounts that held an eye-popping sum of mone. "Mr. (Stuart) Rosenfeldt (A partner at the law firm with Rothstein) said he learned that on Oct. 23 the accounts contained about $500 million, but that the money was gone by Oct. 30," the Journal said.

Investing with Scott Rothstein

Circulating around South Florida in recent months were “confidential” offerings to investors about extremely high-paying but largely unregulated investments.

One from April involved a $1.8 million legal settlement. Another from August promised to pay investors a 36 percent return on their investment – which is much more than troubled stock and bond markets have returned recently.

“Every time I heard about them I just said, no way,” said Mark F. Raymond, managing partner of Broad and Cassel in Miami who says he convinced at least one client not to invest. “It amazes me in light of Madoff and Stanford that people even put their fingerprints on them.”

The investment offering connected to Rothstein was written in a way that makes it clear it was to be kept quiet.

The August circular says the investment strategy is to buy into a settlement that occurs before a trial begins, “in a manner that does not qualify as a structured settlement, therefore not being subject to court approval.”

A structured settlement typically is something a court approves in a legal case in which an injured person wins a large sum of money. The person or company that lost the lawsuit hands over the money to an insurance company to purchase an annuity contract. The annuity then pays the injured person for the rest of his life.

They are commonly used in large legal settlements. “In the ones for millions of dollars we always try to convince the client that they need to structure a good portion of it. Otherwise, statistically, the money’s gone,” said Adam Doner, a personal injury attorney in Palm Beach Gardens.

If the person doesn’t want to wait for his payout, he has the right to sell his settlement, but the terms of the transfer must be approved by a court, under Florida law.

The settlements and the brokers that buy and sell them don’t appear to be regulated by the Florida Office of Financial Regulation, said spokeswoman Holly Hinson after an initial review. But the deals might fall under state or federal securities regulation if it were determined that what was being sold qualified as a security, she said.

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Florida's Attorney General Bill McCollum today plans to ask state legislators to enhance his offices' ability to bring cases against unscrupulous debt collectors.

“As Attorney General, I am willing to go above and beyond what the law currently requires so that people who have complained about abusive practices by debt collectors may finally get some relief,” McCollum said.

Debt collections topped the list of consumer complaints among the nation's attorneys general last year. McCollum's office has received more than 4,400 complaints about debt collectors this year, but has not opened a single case, according to an upcoming story by The Orlando Sentinel. The attorney general's office told the newspaper it has little authority over debt collectors.

McCollum, a Republican, is running for governor, as is Democratic Alex Sink, Florida's chief financial officer.

Sink overseas the Office of Financial Regulation, which licenses debt collectors and which also receives consumer complaints about them.

The Orlando Sentinel story notes that the Office of Financial Regulation has not fined or revoked a debt collector's license in at least two years.

McCollum's office said it also plans to form a task force with the Office of Financial Regulation to address consumer complaints.

McCollum's Chief of Staff Joe Jacquot said the office will ask the Florida Legislature to increase its powers under the state's deceptive trade paractices statue to make it easier for prosecutors to demonstrate that debt collectors have violated the law with such tactics as harassment.

In addition, McCollum is asking for authority to bring lawsuits against out-of-state debt collectors in state court.

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