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June 30, 2010

Feeling Squeezed? Here's why

Want to know how your pay is doing compared to the rest of the crowd?

If you're in the middle or the bottom of the economic rungs, the answer is not so good.

Your income has gone up a fraction of the rise in income at the top of the economic ladder.

As in, an increase of 25 percent or less for the middle and bottom tiers vs. an almost 300 percent gain for the upper-income folks.

For a great chart and explanation about the squeeze on the middle and lower-income groups compared to the tremendous rise in income at the upper level, look here.

Thanks to the Columbia Journalism Review's online business news site The Audit for this tip. The information is from the Center on Budget and Policy Priorities, based on some numbers from the Congressional Budget Office.

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Financial Reform, Mom, Pop and Apple Pie

Harold Evensky says he’s cautiously optimistic that we’ll get meaningful financial reform soon. “It’s real Mom and Pop, apple pie, kind of reform,” he said.Harold%20Evensky.jpg

The well-known South Florida certified financial planner has been deeply involved in the debate, making half a dozen trips to D.C. and taking part in a small group of influential financial planners who have been trying to steer the debate toward what they see as the primary issue: Who comes first, when it comes to investment advice.

“South Florida investors have been taken advantage of more than most,” he says and that’s backed up by the Financial Industry Regulatory Authority, which says the Southeast region is the busiest in the nation when it comes to arbitrations of investor disputes. The Stanford scandal took place to a large degree in Miami and Madoff had thousands of Florida investors.

What the group wants most of all is a fiduciary standard, which would require investment advisors, brokers and others to put their customers’ interests ahead of their own in those circumstances.

The legislation as it stands now would require the Securities and Exchange Commission to study the fiduciary issue and possibly put out new requirements for investment advice.

“It’s up to the SEC to develop the meat of this,” Evensky said.

He sees it working in certain contexts. His example: If the customer tells a broker or advisor to buy a certain stock, no fiduciary standard. If the customer asks the advisor what he or she thinks of that stock, no fiduciary standard. But if the advisor says to buy the stock or not buy it, then the fiduciary standard applies.

The basic elements of the standard, he suggests, would be that the advisor puts the client’s interest first – no matter what the client’s decisions mean to the advisor’s compensation.

It means the advisor has to act with good judgment and not mislead the customer. That the advisor make meaningful disclosures, rather than just toss a big prospectus out there and assume the client will read and understand it.

It means that the advisor avoids conflicts of interest. And if the conflict can’t be avoided, that the issue be managed in the way that it favors the client.

The bill revamping the rules on mortgages, consumer financial products, and a host of other financial services provided by banks and Wall Street looks headed for a final vote, perhaps before July 4.

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June 29, 2010

Get amnesty for Florida taxes

All you eBay sellers, Craisglisters and those who play tax games by buying elsewhere and shipping to Florida to try to skip out on sales taxes -- your chance to fess up has arrived.

Amnesty for state taxes starts July 1.

From Thursday through Sept. 30, Florida is offering consumers and businesses a one-time chance to pay delinquent sales and use taxes, corporate income tax and a variety of other levies, according to the Florida Department of Revenue’s web site.

The benefits for those who pay up now: No penalty and no criminal prosecution, a 2010 state law says. You’ll also get a break on up to half the interest due.

Accountants are holding the doors open for non-taxpayers who need some help figuring out what they owe and to file returns to straighten out the situation.

“Florida did this back in 2003 and it was wildly successful,” said Carl Howden, a certified public accountant and partner in the Fort Lauderdale offices of MarcumRachlin. Howden says he's bracing for a rush of business. “Lots of clients don't necessarily know all of the rules,” he said.

The state has a list of examples of “overlooked” taxes that Floridians might have missed. Even those who are facing a state tax audit, Howden said, may have the chance to end that by taking part in the amnesty program this summer.

One big exception: Unemployment taxes. Businesses cannot get a break on those.

For consumers, Howden points out that if you are selling on eBay or other auction sites, you don't have sales tax issues if you sell your goods to customers in other states.

But, if you sell your goods in Florida, “generally, two sales per year are allowed and on the third sale, you're [considered] a dealer and you need to collect taxes from your Florida customers,” he said.

On the flip side, Floridians who buy from goods other states and don't pay sales taxes or talk the seller into not collecting sales tax – for example, on a piece of art from a gallery in New York or a computer from a seller in California - are subject to use taxes in Florida. Use taxes are assessed at a 6 percent rate.

If you think the state doesn’t know what you bought, you may be mistaken.

Howden says the Department of Revenue checks cargo manifests at ports, airports and truck weigh stations and can send you a notice after the sale demanding the tax.

Fessing up now is something state legislators think will help Florida with its budget crunch.

The last time Florida offered tax amnesty, the state said it expected to collect $100 million, with millions of dollars arriving at state offices, by mail and hand delivery, on the very last day, according to an Associated Press story at the time.

Considering how pressed Florida's state government is for revenue, “I wondered what took them so long,” Howden said.

Anyone interested in filing for the amnesty must sign an “amnesty agreement” which is scheduled to be available for the Florida Department of Revenue’s web site on Thursday at
http://dor.myflorida.com/dor/amnesty.

For a state tax information publication on the amnesty program, go here.

You can read the state tax amnesty law here.

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June 28, 2010

Your Money Q&A: How do I evaluate a reverse mortgage?

My husband and I are contemplating a reverse mortgage. There seems to be so very many out there. Are there any that are better than others? Do the prices vary as to the upfront amount you have to borrow or are they mostly the same?
Charlotte

A reverse mortgage is a loan that lets you borrow against the equity in your home. The amount you can borrow will be based on your home’s appraised value. The payments to you are tax-free. The borrower does not repay the loan. Instead, the balance and interest are due when you die, move, sell the house or stop paying property taxes or insurance.

Those are the basics, but here’s the caution: Reverse mortgages are complicated arrangements that take some time to evaluate. Certified Financial Planner Robert D. Barboni of Ibis Financial Group in Boca Raton recommends that you first do a complete examination of your finances to decide if a reverse mortgage is appropriate for your needs.

He points out that reverse mortgages can be a viable solution to individuals over age 62 who need income. Most are what's called Home Equity Conversion Mortgages and are insured by the Federal Housing Administration.

And yes, you can compare the loans. Some lenders are competing, lowering fees and costs. Here are some of the major terms:

Reverse mortgages come with fixed or adjustable interest rates. And you have options on how to receive the money – in a lump sum, in payments monthly for as long as you live in the home or as an equity line which you can draw down when you need money. Examine the terms of each option closely. That sounds simplistic, but the way the interest charges are determined on these loans can differ from a traditional mortgage.

A few other considerations Barboni says you should look at:

Closing costs are considerably more than for a traditional mortgage.

There also can be monthly servicing fees. You should ask your lender for a full explanation of what’s called “total annual loan cost.”

And cancellation policies are important.

If you look at all of those factors, you should be able to answer your own questions about which reverse mortgages are best.

The most important question is whether the purpose of the loan matches the loan’s potential payout.

You can talk over the terms of a loan even before you apply for one with a federal Department of Housing and Urban Development-certified counselor. You can find one by calling (800) 569-4287. Press four for "Home Equity Conversion Mortgage Counseling."

Another great place to get general information on the loans and even an estimate of what the payments could be is at www.AARP.org. Just put “reverse mortgage” in the search box.

Need help with a money problem? Columnist Harriet Johnson Brackey is working with certified financial planners to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628.

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June 25, 2010

Send in your personal finance questions

Need help with a money problem? Columnist Harriet Johnson Brackey is working with certified financial planners to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628.

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June 24, 2010

Would you pay to cut in line?

Of all the things to spend your money on, this one just does it for me.

The Wall Street Journal today reports that airlines are charging a fee, $10 to $30, to allow their customers to cut in line.

And it’s popular, apparently.

My grade-school sense of fairness has just gone haywire.

Would you pay a fee to cut in line at the airport? Would it be right? How would you feel if someone did it in front of you and your family and your suitcases?

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June 23, 2010

Recession: Did you learn anything?

Hold the tomatoes. Don’t throw them at me when I say it’s clear from the numbers that the recession, nationwide, is over. In Florida, it certainly doesn’t feel that way. Primarily because we have such a huge overhang of unemployment.k0611252.jpg
The question ahead: Did we learn anything?

What were your lessons from the recession? From the market’s downturn?

Here are a few of mine:

-Regulation has to counterbalance greed at some point. A lot or a little, that’s a political question. But the market unfettered gave us the housing collapse, the demise of Lehman Brothers, AIG getting bailed out, tottering banks.

-Your house isn’t an ATM. I borrowed this one from a friend who borrowed it from a USAA publication.

-Diversification worked. That’s what Vanguard pointed out in its spring newsletter, showing that a 50-50 stock and bond portfolio lost about half as much as an all-stock portfolio from the market’s peak in 2007 to its low in March 2009.

Tell me yours. I’ll add em to the list.

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June 22, 2010

Loan modifications: Dropouts exceed those helped

An interesting item from the monthly report on Making Home Affordable, the Obama administration’s mortgage loan modification program: The number of loans dropped from the program nationwide, 429,696, is greater than the number of loans permanently modified, 340,459.

The report, from the Treasury and the Department of Housing and Urban Development, notes that about half of those who drop out of the program are offered other forms of loan modifications by their servicers. Only about 10 percent end up in foreclosure, the report says.

Florida accounted for more than 12 percent of all the loan modifications, both trial and permanent, in May. Florida is second only to California, which has 22 percent of the loan mods in progress.

Florida has 99,372 loans in some stage of the process.

About a third of those loans are being made in Central and South Florida.

In the Miami-Fort Lauderdale-Pompano Beach metro area, 23,443 loan modifications or 4.8 percent of the nation’s total, were underway in May.

In the Orlando metro area, 9,214 loan mods are in progress, amounting to 2 percent of the nation’s total.

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June 21, 2010

Your Money Q&A: Can I take out dividends from my Roth tax-free?

I am a 68 year old retiree. About a year ago, I converted an Individual Retirement Account into a Roth IRA. I reinvest the dividends to help it grow so that I have an ace-in-the-hole later in life. I have three questions: Do I need to wait five years before taking any money out or will I have to pay a penalty? Can I take out the dividends without penalty or taxes?
Would I have to pay taxes on withdrawals I make after five years?
George W.

Rick Shapiro, a certified financial planner and CPA at Epstein & Shapiro in Fort Lauderdale, says the answers are no, it depends and no.

For your first question, the crucial fact is your age. The general rule is that someone who converts an IRA to a Roth IRA must wait five years or until age 59 and a half to withdraw the money and avoid a 10 percent tax penalty. Because you’re beyond that age, you won’t owe the penalty.

To answer the second question, Shapiro assumed you’d made only deductible contributions to your original IRA. The rule on this one is you can get back what you put in, tax-free, during the first five years. But you’d owe tax if you took out anything more.

As an example, let’s say you converted $5,000 from your IRA to a Roth IRA. You could withdraw $5,000 without any taxes due. But if your $5,000 grew to $5,500 because of those dividends, you’d pay taxes on the $500. That’s if you withdrew the full $5,500 during the first five years after the conversion.

For the third question, the answer is no. You could take out any amount, including dividends or earnings or interest, tax free five years after the conversion.

Personal finance Q&A
Submit your personal finance questions to Harriet Johnson Brackey at 954-356-4628 or SunSentinel.com/moneyquestions. Financial advisors
will offer answers online every Monday.

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Foreclosures: Chase bankers, 12-hour days

Another mortgage modification event:

Chase will hold a five-day Homeowner Assistance Event next week for struggling Chase, WaMu and EMC borrowers in South Florida.

Letters and voice mail messages have gone out to almost 22,000 customers who are late on their mortgages or who have started but not completed the loan modification process, a spokeswoman said.

Dozens of loan advisors will be available Friday June 25 through Tuesday June 29, from 8 a.m. until 8 p.m., at the InterContinental West Miami Hotel, 2505 NW 87th Ave., Miami.

For more information, call 305-669-8025 or 305-682-3018 or go to www.chase.com

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June 18, 2010

NACA, loan modifications: Update on South Florida event

Darren Duarte of the Neighborhood Assistance Corp. of America says the Save the Dream Tour will be returning to South Florida, but the group has not found a venue yet.

He said NACA, which negotiates loan modifications on the spot in massive, round-the-clock events, hopes to be in our neighborhood in August or September.

Originally, NACA had said it would be here Aug. 13 through 17.

To recap:

Almost 40,000 homeowners signed up for or submitted applications for loan mods at the two South Florida NACA events earlier this year. People lined the blocks and camped out in West Palm Beach in March, and the other in Miami in April.

NACA loans sometimes have more generous terms for borrowers than loan modifications that are possible through the Obama administration’s Making Home Affordable program.

Keep an eye on www.naca.com for more information.

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June 17, 2010

Foreclosure: How to get mediation

A lot of people asked, following the foreclosure court story, how could they get into mediation with their lender to work out a loan modification.

The answer is: Ask a judge to order it. An attorney can do this, but borrowers can too.

“Most of the homeowners are not represented,” pointed out attorney Kurt Hilberth of Hollywood, who does mediations. “But even an unrepresented borrower can ask a judge to make a formal motion, anytime they need relief.”

New foreclosure cases, starting July 1, will have to go first to mediation before the lender can ask the judge for a judgment against the borrower. The new procedure, put in place by Florida’s Supreme Court, covers only homesteaded properties.

For older cases, Hilberth says it might be as simple, for a borrower, as sending a letter. Borrowers should find out who handles foreclosure cases by calling the county clerk of court.

Many borrowers I have spoken to are very frustrated because they can't talk to their lenders in person or even to get someone with authority on the phone. Maybe mediation is one way to change that.

But, there's always a cost.

Mediation isn't free and the fees for mediators can run $200 an hour and more. Be sure to ask the court who has to foot that bill. I've heard all sorts of answers to that question - lenders pay, it's 50/50 with the borrower. You should know beforehand.

.

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Courts overwhelmed with foreclosures

In case you missed it, my story about foreclosure court is here.

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June 16, 2010

NACA, loan modifications, Save the Dream Tour returns to South Florida


UPDATE: The dates for the Save The Dream Tour's next stop in South Florida have been taken down from NACA's web site. I'm checking to see what's up....hjb

Another one of the immensely popular Neighborhood Assistance Corp. of America loan modification events will take place in South Florida in August.

Almost 40,000 homeowners signed up for or submitted applications for loan mods at the two South Florida NACA events earlier this year. People lined the blocks and camped out to get into the round-the-clock Save The Dream tour events, one in West Palm Beach in March, and the other in Miami in April.

NACA hasn’t said where this will take place, but has posted the dates of Aug. 13-17 on its website, Naca.com, where it encourages borrowers to sign up online.

Loan modifications can be approved on the spot.

And NACA loans sometimes have more generous terms for borrowers than loan modifications that are possible through the Obama administration’s Making Home Affordable program.

But the big draw – in my opinion – is getting to speak in person to someone who can actually get the deal done.

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June 14, 2010

Your Money Q&A: How do I pay self-employment taxes now that I'm a "consultant"?


I recently began to be paid at my employer like a "consultant" instead of a regular employee. The paycheck now does not have money withheld for Social Security, Medicare or federal income taxes. Am I supposed to pay these taxes quarterly? If so, how? And how do I pay my taxes at the end of the year?
Gary

First, you need to check whether your employer can make such a change. As a general rule, worker classification is based on IRS guidelines and unless your particular situation changed, neither should your status with your employer, said Carl Howden, a partner at MarcumRachlin.

Assuming that the change is correct and you become a sole proprietor, yes, you do have to pay the taxes yourself every quarter if you expect, at the end of the year, to owe tax of at least $1,000.

You will owe self-employment (FICA/Medicare) and federal income tax, which your employer withheld from your check. Only now, you would be responsible for both shares, your employer would no longer match. Self-employment tax is a combination of Social Security (12.4 percent) and Medicare (2.9 percent). The tax rate is steep, but when it is time to pay federal income taxes, you get to deduct half the self-employment taxes.

You can figure your self-employment tax on Schedule SE on the 1040 form, which is available online at irs.gov.

For federal income taxes, you should use Form 1040 ES to figure and to pay your taxes.

And remember, self-employed people can deduct business expenses such as office costs.
You would report your income and expenses on Form 1040-Schedule C.

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June 11, 2010

Mortgage fraud arrests


State officials Friday said three "straw buyers," an attorney and a title agent were arrested in Broward as part of a $2 million mortgage fraud scheme.
The Florida Office of Financial Regulation's Bureau of Financial Investigations said Susana Marrero, Keith Walker, Pricila Mercado, attorney Roland Cherasard and title agent Leona Womac surrendered at the Broward County Jail.to face first-degree grand theft charges. Three properties in foreclosure in Fort Lauderdale, Wilton Manors and Coral Springs were part of the alleged scheme, which took place between 2004 and 2006.

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Financial reform debate and South Florida

The debate over financial reform has just about blanketed my inbox. But outside of Washington, I don’t think it’s playing out quite the way the lobbyists in Washington would like.

Last month, the National Automobile Dealers Association sent me a survey saying that most consumers were against financial reform once they found out that it might cover loans from auto dealers.

Really, I said? Can you get me a consumer who said that? Or a South Florida auto dealer willing to say something about how financial reform is a bad idea?

I asked twice. I got no response.

Not having financial reform is a bad idea, outstandingly bad, for consumers. Even the auto dealers have to realize that.

But the lobbying push against it – from big banks, from Wall Street, from the auto industry - is huge in Washington.

Not so here. The industry argument just isn’t playing out here, with our outspoken consumers.

This morning, 7-11 franchise owner Zahid Anwar, who owns stores in Coral Springs and Sunrise, shows up in the battle of the press releases. 7-11s have indeed been involved in the debate locally, collecting almost 20,000 signatures from South Florida customers to push for limits on the charges merchants have to pay to accept debit and credit cards.

The argument they’re supporting: That merchants have to charge more to cover those fees. And consumers don’t want to pay for that.

"We've been working on this for more than," Anwar said. He says he pays about $50,000 a year in fees for accepting credit and debt at his two stores, yet has no negotiating power with the banks, that charge 2 percent or more of each transaction.

If the fees were capped, would he cut prices? Anwar didn't make that promise. But he did say he'd probably be able to hire more employees, which would pump more money into the South Florida economy.

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June 10, 2010

Foreclosures: The bomb is still exploding in the courts

You may have seen the report this morning from RealtyTrac that hints that the foreclosure crisis is stabilizing, but don’t tell that to the folks at any South Florida courthouse.

The bomb is still exploding in courtrooms, in filings and in frustration.

Maybe fewer foreclosure notices are going out, but the thousands upon thousands that are working their way through the legal system are straining all the resources.

Look for my story about foreclosure court on this in tomorrow’s paper.

Miami-Dade Judge Jennifer Bailey, who lead a statewide task force on the foreclosure problem, compared it to a highway.

There are those homes that are vacant, that the homeowners never could afford, homes where the owners have walked away. Those foreclosure cases should be zipping along in the fast lane to summary judgment.

And there are the other cases, where the homeowner is trying hard to hold on, that should be settled early and off the road altogether. In these, the homeowner tries to get a loan modification, but the lender starts foreclosure at the same time. Eventually, the lender may drop the case because it modifies the mortgage. But the legal system has to deal with the case anyway.

Other roadblocks: Disarray inside the lending institutions. And there are a limited number of law firms that are set up to handle foreclosures for the lenders. They are slammed with work.

Meanwhile, the Florida Attorney General’s office has investigations going on about some shoddy legal maneuvering on the part of some of the “foreclosure mills.”

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June 9, 2010

Florida, economy, a bit better

Here are two slightly encouraging numbers, gleaned from Enterprise Florida's most recent economic bulletin:

Florida's real gross domestic product in the first quarter of this year grew at a 0.9 percent rate.
Using estimates from IHS Global Insight, an economic consulting firm, the newsletter says this is the third consecutive quarter of growth, suggesting "a self-sustaining recovery may at last be underway," The growth rates include 2 percent in the third quarter of last year and a huge 5 percent leap in the fourth quarer.

This second number is a real surprise. Even though unemployment continues to rise in Florida, the state actually added jobs as the year began, Enterprise Florida says.

Just 5,000 jobs. And overall, there were 216,600 fewer people on payrolls in Florida in the first quarter than a year ago.

But a few jobs are being created, after three years of job destruction.

That's a positive. Nine months of a growing economy - including a huge 5 percent leap in the fourth quarter of last year. That's good.

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June 8, 2010

Free credit scores on your iPhone

I think I like this idea, but I'd be interested in anyone has found it useful: Estimated credit scores on your iPhone.

It's free. The MyFico App is from FICO, the company that created the most widely used credit score. It's supposed to be easy to use. It may not be what your lender is seeing if you are applying for a loan, but it is a range that is estimated, based on your answers to a few questions.

The problem with credit scores is that lenders access them all the time to judge whether you are credit-worthy, but you have to pay to get access to them. The actual scores are not free, like credit reports are, on a once-a-year- basis. You usually have to pay FICO or one of the credit bureaus to find out yours.

Should you? The scores are all important if you're needing to borrow. But otherwise, I wouldn't be checking it all the time.

Has anyone downloaded this app and found it to be worthwhile?

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June 7, 2010

Your Money Q&A: The CEO lied, can shareholders collect the fine?

I have 5,000 shares of Kmart stock. I want to know if I can collect any of the $10 million fine that the former CEO has to pay because he was found guilty of lying.
Morris Eisenstein, Delray Beach

Sounds like a song.....If I had a dollar for every CEO who lied, I'd be rich, rich, rich....

In 2005, the Securities and Exchange Commission charged former Kmart CEO Chuck Conaway with failing to disclose the company’s distressed financial situation during a conference call with Wall Street analysts -- just two months before KMart filed bankruptcy in 2002. Over the next 15 months, KMart shuttered 600 stores and cut thousands of jobs before emerging from bankruptcy.

In June, 2009, Conaway was found guilty after a short jury trial A federal judge issued an order in February compelling Conaway to pay more than $10 million in penalties.

Where does the money go? To the SEC.

There's no indication that the SEC will distribute any of this money to investors.
The agency has been able to do that since the passage of the Sarbanes-Oxley Act in 2002. It creates a "Fair Fund" to distribute proceeds from cases to those harmed by violations of securities laws. There's no sign of that here.

The court ordered that the fine be paid to the SEC. A spokesman said it will be turned over to the U.S. Treasury.

Sorry.

Your question? You can put me - and a cadre of local financial advisors - to work finding answers. We'll do the research and publish the Q&As online on Mondays.

Submit your questions at sunsentinel.com/moneyquestions. Or you can leave me a message at 954-356-4628.



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June 3, 2010

Outrage at bank overdraft fees

Double-Dipping on fees?

4823741.thl.jpg
Arlene Taylor, a nurse who lives in Weston, is so angry she's planning on changing banks. It wasn't the $35 overdraft charge that BankUnited slapped on her account.

It was the $4 per day fee on top of the overdraft charge, each day for seven days, that really irked her.

"I've never heard of a fee on top of an overdraft fee," she said. "What if I'd been out of town and these fees had been running and running."

Taylor says she did overdraw her account - by mistake. She had set up an automatic debit for her condo fees. She wasn't aware that the automatic withdrawals had already begun when she wrote her usual check to cover the condo fee. The double debit left her overdrawn. She spoke to the condo and it returned her money. She spoke to the bank and it took off the $35 bounced check fee. But that daily charge remained.

"It's the principal," she says. "I checked other banks and they don't charge it."

"They just made this up."

I'm waiting to hear back from BankUnited about this fee.

Predatory banking?

Sunday’s column about bank overdraft rules drew some strong responses – especially to the amount of money banks are making from these fees.

Scott Forgery of Boca, a former attorney who helps to train and develop bankruptcy law practices, had one of the strongest reactions. “It is not uncommon to see clients who incur $200 to $300 per month in bank fees due to overdrafts,” he wrote. “$200 represents a week of groceries to these families.”

The risk of running into an overdraft fee has worse odds than gambling in Las Vegas, he said, because the games he says banks play are rigged against the consumer.

The banks can take days to recognize a cash deposit, hold off on recognizing it until after debit-card transactions or checks come in and provide inaccurate information online about account balances.

“I see the face of anguish and unfairness every day,” he wrote. “They don’t need predatory (bank) practices to make it worse.”

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June 1, 2010

Driving car debt down

South Florida consumers who are digging their way out of debt seem to be starting with their auto loans. A new survey shows that South Floridians have pared their average auto debt to the lowest point in at least four years.

And, defaults are dropping. The rate of car and truck loan defaults in the Miami-Fort Lauderdale-Pompano Beach metro area had been going up sharply since 2007, but that changed in the first quarter of this year.

Consumers, nationwide, are also paying off auto debt and doing a better job of keeping up with their loans, according to the new survey by credit bureau TransUnion, which culled the trend from its database of 27 million consumer credit records.

“I definitely think we have a whole new type of consumer, what I call the newly frugal,” said Jessica Cecere, president of the Consumer Credit Counseling Service of Palm Beach County.

People are spending less, paying down old debts and not taking on new ones, she said, because of the weak economy and because credit has become harder to get. In addition, she says the consumers she sees are keeping their cars longer.

“The national trend we are now seeing points to a clear improvement in payment behavior,” said Peter Turek, automotive vice president in TransUnion’s financial services group.

South Floridians still owe more than the national average for their cars and trucks and are still defaulting at a slightly higher rate than the rest of the nation. But the situation has improved since last year.

For South Florida, the survey shows the average auto debt per borrower was $13,212, which is the least amount TransUnion has recorded in four years. The amount South Florida consumers owed on their cars peaked at more than $15,019 on average in 2007.

The default rate of borrowers who are at least 60 days behind on their auto loan payments in South Florida dropped to 0.99 percent in the first quarter, a more than 18 percent decline since the end of last year and the lowest figure since the start of 2008.

Nationwide, auto loan defaults in the first quarter fell 18.5 percent since last year. The national auto loan default rate is 0.66 percent.

To avoid default, Cecere advises that consumers avoid unnecessary spending and debt, focus on paying secured debts such as home mortgages and car loans ahead of other bills and to save whatever they can in case of an emergency.

For anyone trying to hold down a job, transportation is a necessity that should be paid for ahead of other things. “In South Florida, depending on where you live, you need a car to ride to work,” she said.

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Sunday's column on bank overdrafts

.....in case you missed it, is here.

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You've got the job of managing your money. No one in school taught you how. But you and I, we can teach each other, how to handle it, how to save for retirement, how to make money last, how to educate the kids, how to make a budget work. The conversations I have with my readers are fun. Money's important, but discussing it does not have to be boring.

Harriet Johnson Brackey Harriet Johnson Brackey, the personal finance columnist for the Sun Sentinel, is an award-winning business reporter. Her columns for 2008 were named "The Best in the Business," a national award chosen by her colleagues at the Society of American Business Editors and Writers.

Brackey has worked at Business Week magazine and at USA TODAY, where she was a founder and part of the original staff of the Money section at the country's first national newspaper. After nearly 11 years there - spent covering the 1980s bull market, the insider trading scandals, the 1987 crash - Brackey left Washington, D.C., and came to The Miami Herald. She spent the next decade writing a column about personal finance that chronicled the stock market's Internet boom and bust, as well as the popular Money Makeover features.

Brackey also has done commentaries for Marketplace Money, which airs on National Public Radio and The Nightly Business Report which is broadcast on more than 250 PBS television stations nationwide. She also has been a radio guest on WLRN’s Miami Herald News.
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