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December 21, 2010

Wells Fargo to modify $2 billion in mortgages


A story in the American Banker today says Wells Fargo has agreed to modify $2 billion in payment-option adjustible rate mortgages, all of them originated by Wachovia and World Savings.

These were known as "pick-a-pay" loans and were considered especially at risk for default.

The agreement reportedly came through a settlement negotiated by California's Governor-elect Edmund Jerry Brown and will affect 14,000 homeowners there.

I've asked Wells Fargo/Wachovia whether this will impact any Florida borrowers. I'll let you know what I hear.

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December 20, 2010

Foreclosures: Broward halts sales, hearings

For the holidays, major lenders are halting foreclosure evictions and some South Florida courts are canceling hearings as well as foreclosure sales.

Mortgage giants Fannie Mae and Freddie Mac plan to halt foreclosure evictions during the Christmas and New Year's holidays.

Bank of America also said it will pause its foreclosure sales and evictions from “late December through New Year's Day,” on loans in its portfolio or held by investors who will allow such a moratorium.

In Broward, the 17th judicial circuit has canceled all scheduled foreclosure auctions through the end of the year. Any foreclosure hearings set for that period must also be rescheduled, according to the courts.

In Palm Beach County, Chief Judge Peter Blanc said he hasn’t issued a smilar order, although sales can be canceled by request to the judge overseeing the case.

Major lenders last year also called a halt to evictions at this time of year.

But many loan servicers had already drastically slowed or stopped the process starting in September, to deal with shoddy paperwork and faulty legal processes.

Information from The Palm Beach Post supplemented this article.

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Your money Q&A: What's the standard deduction?

What are the standard deduction and personal exemption amounts for 2010?
-Mildred, Boca Raton

There’s only one change from last year. The head of household standard deduction goes up $50 to $8,400. The rest of the standard deductions remain the same -- $11,400 for married couples filing jointly, $5,700 for singles and married filing separately.

Each personal exemption is worth $3,650.

But note: You cannot take an additional standard deduction for real property taxes. This expired last year and was not extended in the Tax Relief Act of 2010.

And one more caution: “I can understand taxpayers are eager to file their returns so they can get their refunds early,” said IRS spokesman Michael Dobzinski. “Whether you are using e-file or paper, wait for your W-2s to file. Employers have until Jan. 31 to provide W-2s.”
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Need help with a money problem?
Columnist Harriet Johnson Brackey is working with South Florida financial advisors to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA


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December 15, 2010

The most-asked personal finance question of 2010

No surprise: Four of the top five questions asked at Bills.com this year had to do with mortgages. In 2009, the San Mateo, Calif.-based web site says its most-asked questions were more diversified. They were about credit cards and 401(k)s and car payments.

But houses and mortgage debt certainly have been the topics of the year. So with a drum roll, here's the most-asked of the almost 3,400 questions posed:

Can my second mortgage lender foreclose if I stay current on my first mortgage but default on my second?

And here's an answer, from me: The second mortgage lender -- for most of us, that's going to be in the form of a home equity line of credit or HELOC - usually has the right to foreclose but may decide not to do it.

Real estate attorney Shari Olefson of Fowler White Boggs in Fort Lauderdale explains, "The reason they don’t often foreclose is because they would take title subject to the first mortgage. One problem is a default on his or her HELOC would probably be considered a default under the terms of the first mortgage – the first could then foreclose if they want to."


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Florida home prices, from top to bottom

Here's the prediction for the average home price in Florida, during the boom and beyond, from Moody's Analytics. It'll get any homeowner's heart pounding.

Moody Analytics is forecasting an astounding drop, from peak to trough, that is not yet over. That’s from the height of the real estate boom to the bottom, which is still six months away.

For Florida, home prices will fall 52.4 percent from the second quarter of 2006 through the second quarter of 2012. The drubbing won't be over until next summer.

In the U.S., the peak-to-trough ride is a little shorter and somewhat less rough. Moody's Analytics says it will be a 33.75 percent drop from the first quarter of 2006 (the nation peaked earlier than Florida) to the second quarter of 2012.

Home prices nationwide had never, since the Great Depression, fallen on a year-over-year basis.

Now, we’re heading into the sixth year of falling prices.

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December 14, 2010

Congressional panel blasts loan modification program

The Obama administration's Making Home Affordable program will fall woefully short of its stated goal of helping 3 to 4 million homeowners, a Congressional Oversight Panel reports. It may help 700,000 to 800,000. Other shortcomings in the program are detailed here in a report from Mortgage News Daily.

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Holiday spending: Plan it


Two-thirds of Americans have no holiday budget, says a new survey from Bankrate.
Unplanned spending, here you come.

You know, giving up on this whole budgeting issue isn't resolving it.
I'm sure it seems too big, especially for those living on limited incomes.
The survey says that only one out of four people who have an annual income of less than $30,000 has a holiday budget.

But budgets really aren't about how much money you have.

They are about deciding where you want your money to go. And then using it that way.
Rather than letting all the bright lights of the holidays distract you.


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December 13, 2010

Florida home prices, cut in more than half

Here's the prediction for the average home price in Florida, during the boom and beyond, from Moody's Analytics. It'll get any homeowner's heart pounding.

Moody Analytics is forecasting an astounding drop, from peak to trough, that is not yet over. That’s from the height of the real estate boom to the bottom, which is still six months away.

For Florida, home prices will fall 52.4 percent from the second quarter of 2006 through the second quarter of 2012. The drubbing won't be over until next summer.

In the U.S., the peak-to-trough ride is a little shorter and somewhat less rough. Moody's Analystics says it will be a 33.75 percent drop from the first quarter of 2006 (the nation peaked earlier than Florida) to the second quarter of 2012.

Home prices nationwide had never, since the Great Depression, fallen on a year-over-year basis.

Now, we’re heading into the sixth year of falling prices.

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December 10, 2010

Your money Q&A: Tax breaks for college may continue

Will the new tax law affect breaks for college expenses?

The Senate legislation extends for two years the credit for up to $2,500 in qualified higher education expenses, according to a report from CCH, a Wolters Kluwer business.. The Project on Student Debt says more than 8 million families used the American Opportunity Tax Credit last year. The average credit was more than $1,700. This credit is especially beneficial because 40 percent of it can be refunded. But it has income limits. The deduction begins to phase out for singles with modified adjusted gross income of $80,000 and married couples of $160,000. This credit can be claimed for all four years of higher education. Some other education breaks extended in the Senate bill through 2012: The exclusion for up to $5,250 in employer-paid educational assistance, a $2,000 maximum contribution to a Coverdell Educational Savings Account and a deduction for up to $2,500 in student loan interest.
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Need help with a money problem?
Columnist Harriet Johnson Brackey is working with South Florida financial advisors to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA

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Did somebody say taxes were going down? This one is.

Starting Jan. 1, the sales tax rate in Palm Beach County will drop to 6 percent from 6.5 percent.
A five-year old local surtax for schools expires Dec. 31.
That'll bring Palm Beach County's sales tax rate in line with Broward's 6 percent. In Miami-Dade, it's 7 percent, because of two local option surtaxes.
People will notice, I bet, when they shop in Palm Beach.
So, let's say you pay rent of $2,000 a month, you've got an extra $10.
A little bit here, a little there, it adds up.

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December 9, 2010

Billion bills are being checked, problem with new $100s

Looks like those high tech new $100 bills that I wrote about a few months ago are just too difficult to print. CNBC was first to break the story....You can read it here.

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December 8, 2010

What Obama's new tax deal means for your finances

The first sign of Washington's new tax deal would be a boost to your paycheck, starting next month.

For 107,500 jobless Floridians, unemployment benefits would be restored. And anyone planning their estate now knows what the tax law will be for the next two years.

President Barack Obama announced on Monday that he'd reached a compromise with Republicans over the Bush tax cuts, which were set to expire Dec. 31. The compromise would cut payroll taxes, restore expiring unemployment benefits and bring back the federal estate tax. Now, the House and Senate have to vote on the deal, and if they agree, Obama would sign it into law by year's end.

The deal is a relief to anyone trying to plan their financial future. But whether it will help or hurt ordinary Americans is open to debate.

Even the broadest aspect of the bill — a payroll tax cut — has two sides. The tax cut will be offset by an expiring tax credit. The result for some workers: Tax bills will increase.

Here are what provisions of the new tax deal could mean to Floridians.

Social Security

"The payroll tax cut is a big one to everybody," said Ken Strauss, director of tax and personal financial planning at South Florida accounting firm Berkowitz Dick Pollack & Brant. "The real question is can payroll companies get this in their [computer] systems quickly enough."

The deal calls for a 2 percentage point cut in employees' Social Security tax for one year. That'll pump up paychecks because workers now pay 6.2 percent of their income up to $106,800 in Social Security tax. Employers also pay 6.2 percent, and their contribution would not change.

Lowering the Social Security rate to 4.2 percent would add $50 to take-home pay each month for someone earning $30,000 or $125 for someone earning $70,000.

But your total tax bill could go up.

That's because the compromise does not extend the Making Work Pay tax credit, which has reduced workers' tax bills for 2009 and 2010. It was not part of the Bush tax cuts and is set to expire.

This year, the Making Work Pay tax credit provided up to $800 for two-income couples. While the new tax deal would reduce Social Security taxes by $720 for a married couple making $36,000 a year, the same couple would lose the $800 credit. Total tax bill: $80 more than before, according to a calculation by payroll firm Symmetry Software.

Tax credits are a boon to South Floridians, whose incomes have been dropping for two years, according to the Census Bureau. In Broward County, the median household income was $48,844 in 2009. In Palm Beach County, it was $49,580.

Unemployment

Cash would begin flowing again to the unemployed, because the agreement calls for a 13-month extension of long-term unemployment benefits. That program expired at the end of November, leaving 107,500 unemployed Floridians without benefits. Nationwide, the number of workers affected is 2 million.

If the compromise is approved, newly laid-off workers would be eligible for up to 79 weeks of unemployment benefits.

Estate taxes

While few families pay estate taxes, those that expected to pay them were having a difficult time planning. This year, there is no estate tax. Next year, for estates worth more than $1 million, the tax rate was going to be 55 percent, if the Bush tax cuts expired.

The compromise calls for estates of more than $5 million to be taxed at a maximum rate of 35 percent for the next two years.

Tax rates

If the Bush tax cuts were allowed to expire, federal income tax rates would jump, pushing the top rate to 39.6 percent from 35 percent.

The compromise would prevent tax rates from rising. It also would keep capital gains tax rates, which investors pay, steady at 15 percent.

That would especially help seniors. "For people who are living on a fixed income and investments are paying so little, they would have been hit," if the capital gains had gone up, said Dennis Fitzpatrick, a principal with the South Florida accounting firm Kaufman, Rossin.

Under the compromise, "Nothing bad happens," said Clint Stretch, national director of tax policy at Deloitte in Washington.

Stretch said he expects extensions of some popular tax items — including the deductibility of state sales taxes — to be part of the final tax compromise law, which he expects will pass Congress before year's end.

In recent years, one in four Florida tax returns took advantage of this deduction.

Staff writer Marcia Heroux Pounds contributed to this story.


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December 7, 2010

Foreclosure: Lender Processing Services

Robo-signers, kickbacks, misleading judges, punishing law firms, downplaying its legal trouble to investors. Lender Processing Services, says this special report from Reuters, is feeling the pressure. The Jacksonville firm, which reportedly handles half the nation's foreclosures, is the target of investigations by federal prosecutors, the FBI, Florida's Attorney General, the Office of the Comptroller of the Currency and the Federal Reserve.

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December 6, 2010

Your money Q&A: Can I get the $1,500 federal tax credit for my AC?

I live part of the year in Florida, where I installed an energy-efficient air conditioning unit. My question is, will that qualify for the $1,500 federal tax credit? – Boynton Beach

The answer depends upon you. The federal tax credit – up to $1,500 or 30 percent of the cost of a qualified central air conditioning system – is good for installations through Dec. 31, but only at your principal residence. You can’t take this credit for second homes.

If instead of an AC unit you’d chosen to put in a solar system, the credit for that does apply to second homes. That credit will continue to be in effect through the end of next year.

Anyone considering an energy-efficient upgrade at home should take a look at what the credit applies to and the rules for suing it. To see what's included, go here.
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Need help with a money problem?
Columnist Harriet Johnson Brackey is working with South Florida financial advisors to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA

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December 3, 2010

Foreclosure: Chase holds events for homeowners

Chase is getting busy in South Florida, scheduling several free home preservation events in which troubled borrowers can talk in person to loan counselors.

Here's the list of where and when the events will take place, plus the documents that homeowners should bring along.

Chase Homeownership Center Sunrise
When: Dec. 13 and Dec. 15
Time: 11 a.m. - 5 p.m.
Location: Chase Homeownership Center
13450 West Sunrise Boulevard, Ste. 250
Sunrise,
More informtion: 954-846-8817

Chase Homeownership Center Palm Beach Gardens,
When: Dec. 9 and Dec. 16
Time: 4 p.m. – 7 p.m.
Location: 13833 Wellington Trace St E-15
Wellington 33414
More info: 561-775-7121

Chase Homeownership Center Boynton Beach and Chase Lake Worth US 441 branch
When: Dec. 7
Time: 9 a.m. - 6 p.m.
Location: Chase Branch
9863 Lake Worth Road
Lake Worth
More info: 561-738-2550

Homeowners should bring the following information:

• Most recent 30 day’s pay stubs (6 months Profit & Loss statement for self-employed borrowers)
• Most recent year’s tax returns and W-2 forms
• Most recent monthly bank statement (4 months for self-employed borrowers)
• Documentation for any other income (like rental income or unemployment)
• Proof of taxes paid; if not escrowed
• Proof of insurance paid; if not escrowed
• Proof of HOA dues paid (if applicable)


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December 1, 2010

Foreclosure attorney David Stern sued by former employees

CBS 4 is reporting that former employees of David J. Stern's foreclosure law firm have filed a federal lawsuit alleging that they didn't receive proper notice before they were laid off.

One of the four filing suit, Nikki Mack, says that she went to work even when she was going through cancer treatements for lymphoma for six months, but that Stern allowed her health insurance coverage to end.

To read the entire story, go here.
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Scam alert: Test your skills

Think you can't be fooled?

The Federal Deposit Insurance Corp. has put together a quiz to test whether you might be taken in by a scam. The quiz goes over the popular ones - work at home schemes, identity theft, official-looking requests for your personal information, among others. Check it out here to see if you're vulnerable to financial fraud.....


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About the author
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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