http://blogs.trb.com/business/columnists/brackey/blog/ You can manage it en Copyright 2009 Mon, 06 Jul 2009 11:09:10 -0500 http://www.sixapart.com/movabletype/ http://blogs.law.harvard.edu/tech/rss The Financial Times reported. Investors will be given a choice: Choose to pay a fee or have the cost of financial advice deducted from m their investment." The amount the advisor receives will be negotiated with the investor. Harold Evensky, of Evensky & Katz in Coral Gables, doesn't hold out much hope that the same standard will ever be adopted here. But he and a small group of well-known certified financial planners and advisors are trying. They're circulating a petition to get Congress to adopt a "fiduciary standard" for the financial services industry. Their first demand is that the advisor "put the client's best interest first." Another plain-language concept in their petition: "Do not mislead clients; provide conspicuous, full and fair disclosure of all important facts." "It will probably be a while (i.e., never) before we catch up with the investor protection provided investors in the U.K.," Evensky said in an e-mail. But there's a chance. Congress seems to be in the mood to consider it. Advisors, it would seem, may be more interested in this idea than ever before. That's considering how much suspicion is circling around their profession, due to the Madoff scandal, trouble in financial products that seemed straightforward (think target-date funds) and generally lousy investment results. ]]> http://blogs.trb.com/business/columnists/brackey/blog/2009/07/forgive_the_tennis_analogy_but.html http://blogs.trb.com/business/columnists/brackey/blog/2009/07/forgive_the_tennis_analogy_but.html Your Money Fiduciary standard target-date funds Mon, 06 Jul 2009 11:09:10 -0500 A lawsuit alleges the IBM employees credit union in South Florida caused its members to lose millions by steering them to investments in bonds from a now-bankrupt Georgia finance company that made loans to churches and faith-based organizations. The claim, made in a lawsuit filed this week in federal district court in West Palm Beach, is against the 85,000-member IBM Southeast Employees Federal Credit Union, which is based in Boca Raton. It has $800 million in assets and 22 branches, according to the credit union's web site. The suit says the credit union directed members to Wellstone Securities, a broker-dealer that has gone out of business, and that Wellstone recommended members buy bonds issued by Cornerstone Ministries Investments, which is now in liquidation and under investigation by George securities regulators. "The credit union and its CEO Lary McCants deny the allegations and intend to vigorously defend themselves in court," said its attorney Michael D. Lozoff of Adorno & Yoss in Miami. He said the suit is one of many where victims of fraud, bad judgment or the troubled economy seek to "recover their losses by imposing blame on the nearest deep pockets." Three South Florida law firms -- Sallah & Cox in Boca Raton, Dimond, Kaplan & Rothstein in Miami, and Blum & Silver in Boca Raton - filed the suit on behallf of Claudie Schorrig, a retired IBM employee. The suit sees class-action status, for what the attorneys say are "hundreds of victims." http://blogs.trb.com/business/columnists/brackey/blog/2009/07/suit_says_boca_ratonbased_ibm.html http://blogs.trb.com/business/columnists/brackey/blog/2009/07/suit_says_boca_ratonbased_ibm.html Your Money credit union ibm Thu, 02 Jul 2009 11:19:18 -0500 Here's what I've been writing for the newspaper this week. First, Wednesday's column about a dysfunctional Florida program that aims to help homebuyers but it doesn't have any money or procedures for people to use it. The story is here: http://tr.im/qwO2 And the second is a screed filled with the the anger of South Floridians at Bernard Madoff. My story about his sentencing is here: http://tr.im/qwPn And the third was last Sunday's column, about term life insurance, where rates have been low for years, but premiums are going up soon. http://tr.im/qwTO ]]> http://blogs.trb.com/business/columnists/brackey/blog/2009/07/sorry_i_have_gotten_behind_1.html http://blogs.trb.com/business/columnists/brackey/blog/2009/07/sorry_i_have_gotten_behind_1.html Your Money Madoff Wed, 01 Jul 2009 17:55:04 -0500 The latest: People are amending their 2008 tax returns to show that they've bought a home and are entitled to the $8,000 first-time homebuyers tax credit. But they haven't bought a home. They did, however, get a big fat check, because that tax credit is refundable. A local mortgage processor tells me she seen loan applications from five families that have done this. The first-time homebuyers tax credit covers any home purchased by Dec. 1 this year. So these families could indeed get a home by the deadline and everything would be OK. But I have a feeling that wasn't the point. If they don't, they probably would have to repay the tax credit. And, they could be in legal trouble, too, for filing a false tax return. Meanwhile, some of these folks have such poor credit, they're not going to qualify for a mortgage. Now or in December. Dangerous game they're playing. ]]> http://blogs.trb.com/business/columnists/brackey/blog/2009/06/dont_do_this.html http://blogs.trb.com/business/columnists/brackey/blog/2009/06/dont_do_this.html Mortgages Tue, 30 Jun 2009 08:00:00 -0500 How does an exceedingly rich person, one whose assets may have a net worth of $1 billion, end up $500 million in debt? The answer, for Michael Jackson as much as for any of us, is more than likely, bit by bit. I have seen it with rich people as well as the non-rich. The amount of money you have really doesn't matter when it comes to debt. What makes a difference whether you can arrange your life around the amount of money you have. Or less than what you have. What works is having an idea of where you want to go in your life and sticking to that plan, not letting every temptation that comes along divert your money away from your goal. You want something you don't have the cash for, you borrow. It's the same proposition at $1,000 or $1 million. You can do it in small amounts, with credit cards or home equity loans, or in large amounts, if your name is Michael Jackson. You can make bigger mistakes when you're richer. But that's no advantage, as I see it. He should have gotten help, real help, with money issues. Where were his financial advisors, as he sank into debt? http://blogs.trb.com/business/columnists/brackey/blog/2009/06/_how_does_an_exceedingly.html http://blogs.trb.com/business/columnists/brackey/blog/2009/06/_how_does_an_exceedingly.html Debt Mon, 29 Jun 2009 08:00:00 -0500 I'm always wary when someone says, "It's different this time." But maybe it is. The National Foundaiton for Credit Counseling says one-third of Americans think they'll never be able to afford a home. Even more telling results from its recent poll: Almost half don't believe owning a home is a good way to build wealth. What a change that would be from the basic message politicians and the tax code have been sending for years. What could replace a home as a way to build wealth? What do you think? Owning a home, does it make sense? Will it ever? http://blogs.trb.com/business/columnists/brackey/blog/2009/06/the_sinking_value_of_home_owne.html http://blogs.trb.com/business/columnists/brackey/blog/2009/06/the_sinking_value_of_home_owne.html Your Money Home ownership Tue, 23 Jun 2009 12:05:01 -0500 The FDIC says there’s a game going on at some companies that can’t actually deliver an insured CD, but they’re selling them anyway. The game goes like this: The company advertises high-rate, insured CDs. But you have to visit the office to get one. Then you find out that a minimum deposit is required and you may have to endure a sales pitch for other products. If you actually want the CD, you are then sent to a terminal to buy the CD over the Internet from the bank that’s actually FDIC-insured. Protect yourself. Always check to see if the bank where you are buying the CD is FDIC-insured, really. And if the rate is far higher than normal (you can find normal at www.bankrate.com), ask why. To read more, go here: http://tr.im/pkI6]]> http://blogs.trb.com/business/columnists/brackey/blog/2009/06/be_careful_about_cds_and_sales.html http://blogs.trb.com/business/columnists/brackey/blog/2009/06/be_careful_about_cds_and_sales.html Wall Street CD certificates of deposit FDIC Federal Deposit Insurance Corp. Mon, 22 Jun 2009 10:48:15 -0500 too much about your retirement. I know that's the opposite of what most financial advisors say. But I think most people's retirement plans work the other way, surviving on neglect. Which saves them in troubled times, when any pot of money might get raided. Summertime is the time to set up your account and, well, here's the rest. My most recent commentary from The Nightly Business Report on PBS... http://tr.im/p3Qf ]]> http://blogs.trb.com/business/columnists/brackey/blog/2009/06/set_it_and_forget_it.html http://blogs.trb.com/business/columnists/brackey/blog/2009/06/set_it_and_forget_it.html Your Money retirement Fri, 19 Jun 2009 10:48:10 -0500 Florida’s recession is worse than anything this state has seen in more than a half century, when it comes to money in your pocket. The Bureau of Economic Analysis said Thursday that Florida now has had three consecutive quarters -- a total of nine months -- in which the personal income of state residents has declined. That hasn’t happened since the BEA began keeping records in 1948. Florida hasn’t even had two consecutive quarters of falling income until now. Personal income is a measure of all the income to residents of the state. BEA said job losses, low interest rate payments and cuts in dividend income, plus direct pay cuts are to blame for the decline. “Salaries have taken a drastic hit,” said Jorge Roca, a recruiter for Spherion in the Miami Office. He says it’s not uncommon to see a candidate in a sales position who was making $150,000 in salary plus commission now be offered a position that offers total compensation of $60,000 to $70,000. The worst period for Floridians’ income in 61 years could have been even worse, had it not been for Social Security, unemployment and other so-called “transfer payments” that held steady. “Those are very important in all the states because that’s really the only thing supporting personal income these days,” said BEA economist David Lenze. Florida recorded a 0.9 percent fall in personal income in the first quarter of this year, compared to the fourth quarter of 2008. The nation as a whole saw personal income fall 0.5 percent. In the fourth quarter, U.S. personal income fell 0.4 percent. Florida’s first-quarter decline was larger than income cuts in all but seven states. Expect more of the same for the remainder of this year, experts say. Roca, the recruiter, says the number of jobs to be filled has been growing, but pay levels remain depressed because employers have so many candidates to choose from in the ranks of the unemployed. http://blogs.trb.com/business/columnists/brackey/blog/2009/06/months_and_months_of_pay_cuts.html http://blogs.trb.com/business/columnists/brackey/blog/2009/06/months_and_months_of_pay_cuts.html Your Money Personal income Thu, 18 Jun 2009 12:20:10 -0500 You may believe that if you sell your home in a short sale, you could be in for a big tax bill – as if getting out from under your old mortgage is the same as actually making some money. That’s not true, at least when it comes to taxes. There’s a two-year-old law that allows you to avoid federal income tax on forgiven mortgage debt, such as what you’d have in a short sale or a loan modification, under certain conditions. The IRS says the Mortgage Forgiveness Debt Relief Act of 2007 allows you to exclude from your taxable income: -Up to $2 million in mortgage debt -If it’s forgiven between 2007 and 2012 -If the debt t is discharged due to a decline in the home’s value or the taxpayer’s financial condition -If it was for your principal residence It’s a break, for those in dire distress. ]]> http://blogs.trb.com/business/columnists/brackey/blog/2009/06/tax_break_for_homeowners_in_di.html http://blogs.trb.com/business/columnists/brackey/blog/2009/06/tax_break_for_homeowners_in_di.html Your Money Thu, 18 Jun 2009 08:00:00 -0500 http://www.treasury.gov/news/index1.html]]> http://blogs.trb.com/business/columnists/brackey/blog/2009/06/will_obamas_financial_reform_p_1.html http://blogs.trb.com/business/columnists/brackey/blog/2009/06/will_obamas_financial_reform_p_1.html Your Money fiduciary Obama Securities and Exchange Commission Wed, 17 Jun 2009 15:18:05 -0500 Wall Street Journal covered. There's a huge logjam, borrowers say they're not getting any results, and from the street level. everyone's frustrated, including some bankers. We're not hearing anything from Washington, either. The Obama Administration set up a program to pay lenders to modify mortgages. So far, few have been done. When I called Treasury to ask for some specifics about how the program is working and whether banks are required to report back on how many loans have been changed, I didn't get an answer or a promised call back with the information. -Take One: A reader responding to my last story said she put her paperwork in with Chase in December and still hasn't heard back. Another said he waited seven months for word from Wells Fargo. Paperwork got lost. Misinformation was on the application. He was denied. -Take Two: Chase this morning tells me they have modified 15,000 loans naitonwide since last October using the Obama administration's new plan. This is both a good and a bad number, It's a good number, for one lender (even though Chase now includes Washington Mutual), considering that it's a big chunk of the 55,000 loans nationwide that the administration says have been modified under its plan. But in the overall picture, there are millions of loans in trouble. The proportion of those getting help remains small. -Take Three: John Ulzheimer, president of consumer education for Credit.com, points out in an email that you don't have to pay anyone to get your loan modified. Sure, some law firms and companies that advertise will handle your modification, but for a fee. It's not necessary. You can do it yourself. But as my story pointed out, it takes a lot of effort. -Take Four: Ulzheimer points out that modification, if you can get it, won't damage your credit the way a foreclosure or a short sale would. ]]> http://blogs.trb.com/business/columnists/brackey/blog/2009/06/loan_modificatioons_are_a_hot.html http://blogs.trb.com/business/columnists/brackey/blog/2009/06/loan_modificatioons_are_a_hot.html Mortgages Wed, 17 Jun 2009 11:07:11 -0500 In case you didn't see it, my latest story, about modifying your mortgage.... If you know you’re headed for trouble with your mortgage or you already are there, brace yourself. It’s a mess for borrowers trying to re-negotiate the terms of their mortgages right now. That’s despite a highly publicized, $75 billion, Obama Administration program that pays lenders to modify loans. If you need to get a new deal on your mortgage – as millions of people do -- the best thing you can do is to arm yourself with information, about the problems you’ll face and what you can do to get around them. “People are confused,” said Kevin Walker, president and chief executive officer of MortgageReport.com, a new website that helps borrowers learn if they’re e eligible for loan modifications. “Frankly lenders are still trying to figure out the procedures they’re supposed to follow to implement these programs.” Not many loans are being modified under the Making Home Affordable program, which was announced in February. By mid-May, the Treasury Dept. reported that the program had resulted in 55,000 loan modifications so far. Lenders can modify loans on their own, not using the program. Hope Now, an industry coalition that’s trying to combat the flood of foreclosures nationwide, said its members had independently modified 127,000 loans in April and made 143,000 new repayment plans, a record number. But even those figures combined are a drop in the bucket against the Obama program’s stated goal of helping up to 9 million homeowners refinance or modify their loans. Nothing has turned back the tidal wave of foreclosures sweeping Florida and the nation. Between January and the end of May, the Center for Responsible Lending estimates that 1 million new foreclosures were filed nationwide. Moody’s Economy.com expects 1.54 million new foreclosures this year, on top of 1.44 million foreclosures last year. Still, the program is new and some lenders appear to be still kicking its tires. In South Florida, Allen Robinson, managing partner of First Trust Mortgage Corp., said lenders don’t seem interested in drastically altering mortgages. They aren’t reducing the principal owed, he said, but are cutting rates or extending terms. And there’s the problem of loan servicers handling a flood of applications. Jessica Cecere of the Consumer Credit Counseling Service of Palm Beach said she thinks fewer than 2 percent of loans are being modified. “We haven’t necessarily seen a lot of denials, just not a lot of answers,” she said. Lenders say they’re trying to keep up with the demand, but the number of troubled borrowers is huge and still growing. In April, almost 3 million home loans nationwide were 60 days or more delinquent, according to the Hope Now alliance. “The pipeline of people requesting loan modifications has grown tremendously since March,” said JP Morgan Chase spokeswoman Nancy Norris. Lenders and services are making some efforts to meet the demand. Chase has opened five offices in Florida devoted only to loan modifications, including one in Aventura and one in Miami. Norris said Chase can modify loans from Chase, Washington Mutual and a small lender named EMC. Those loan offices are open evenings and weekends. Wells Fargo, which owns Wachovia, has put details of the program on a special website devoted to mortgages, www.wellsfargo.com/homeassist. What can you do if you need to rework your mortgage loan? Here’s some advice: Get informed This is easier than you think. Start off at www.makinghomeaffordable.gov, the official Treasury Department web site for the program. You’ll find such details as you can refinance your loan using the program if you are current on your payments, but if you’ve fallen behind, you’ll need to seek a loan modification. The site points out that loans that are “underwater” – where the value of the home is less than the current mortgage – can qualify, for loans that are up to 105 percent of the home’s current value. Moody’s Economy.com estimates that up to 15.9 percent of all home loans are “underwater” to some degree this year. Seriously underwater loans – those where the home’s value has dropped more than 20 to 25 percent – won’t qualify. Lenders will be given financial incentives to modify loans. The Treasury says it will share the lender or servicer’s cost of reducing payments to some borrowers, plus it will pay up-front fees of $1,000 for each loan modification and up to $3,000 for three years for successful modifications Borrowers have the potential to gain, too. The Treasury can make payments in loan modifications that would reduce the principal owed by up to $5,000 for borrowers who make timely payments for the first five years. Get Help Some web sites will show you the terms of the loan modification program and figure out whether you qualify. One is MortgageReport.com, which comes from the same firm that created SimpleTuition.com, a student loan comparison tool. MortgageReport.com gives borrowers a “diagnosis” for their loans. There is no charge to borrowers, who input their loan amounts and other debts. But users who do qualify for a modification will be provided with a list of lenders. Borrowers can then decide whether to send on their own information. Another site has the advantage of providing borrowers with a free credit score. Fair Isaac, the company that produces the FICO credit score that is commonly used for mortgages, launched Mortgage ReliefOnline.com in April. The site, which is also free to users, allows you to see if you qualify and then refers you to mortgage counselors You can also get help the old fashioned way -- by talking to someone. You can find thousands of U.S. Department of Housing and Urban Development-trained counselors by calling the local consumer credit counseling service or through the federal Hope Now program, 888-995-Hope (4673). Get your documents together “Be prepared,” said Dale Vermillion, a mortgage industry consultant and author of Navigating the Mortgage Maze. “Have your credit report available and know your credit score.” Expect to be asked for copies of recent tax returns or pay stubs, information on your loan and any other loans, including a car loan, student loans and personal debts. Don’t give up “The first three or four people (you speak to) don’t have any power at all,” said Ryan Smart, vice president of RightTrack Financial Services, a Delray Beach firm that negotiates loan modifications. “The whole system exists to keep people away. They give you “negotiators” who have no power to negotiate the loans.” Keep going until you get to someone who does have the power to change your loan. ]]> http://blogs.trb.com/business/columnists/brackey/blog/2009/06/its_not_easy_to_change_the_ter.html http://blogs.trb.com/business/columnists/brackey/blog/2009/06/its_not_easy_to_change_the_ter.html Your Money loan modification Mortgage Mon, 15 Jun 2009 11:37:33 -0500 --> Because starting July 1, there’s a new repayment option on federal student loans that will allow some borrowers to reduce their monthly payments. According to the Project on Student Debt, the new income-based repayment option pegs what you must pay to income and family size – and cuts debts for those in the lower-income brackets. “For example, a single person earning $30,000 a year with $30,000 in debt could cut her or his standard monthly payment amount in half. All federal loans made to students are eligible for this program, regardless of when they were taken out, from which lender, whether for graduate or undergraduate study," the Project’s web site reports. The new provision is part of a 2007 law that will be effective next month. Another part of that law, already in place, wipes out student debt for many borrowers who have full-time careers in public service and who have been repaying the loan for 10 years. The public service professions that qualify include: military service, public safety and law enforcement, public health, social work, librarians, college faculty and public defenders. Debts to those borrowers, when they are wiped out, won’t be taxable, FinAid.org says. Unfortunately, the income-based repayment option is only available for direct federal student loans, not for the federal student loans made to parents and for private student loans. You can find more details at: http://projectonstudentdebt.org/july1-2009.vp.html and at: http://www.finaid.org/loans/ibr.phtml]]> http://blogs.trb.com/business/columnists/brackey/blog/2009/06/college_debts_get_lighter_1.html http://blogs.trb.com/business/columnists/brackey/blog/2009/06/college_debts_get_lighter_1.html Your Money Student loans Fri, 12 Jun 2009 09:00:00 -0500 The way I read it, the Obama administration is indeed cracking down on executive pay, but only on the companies or banks that have received TARP money. Those folks can only receive a bonus of up to one-third of their salaries. But for the rest of the public corporations, the administration is planning to introduce a bill allowing a non-binding shareholder vote on compensation. So, there’s not much there, is there? Nonbinding votes, saying please don’t hand out millions in bonuses, sent to compensation committees that hand out millions in bonuses? I don’t think this pay debate will ever go anywhere. Big bonuses will go on. What do you think? http://blogs.trb.com/business/columnists/brackey/blog/2009/06/executive_pay_is_not_capped_cu.html http://blogs.trb.com/business/columnists/brackey/blog/2009/06/executive_pay_is_not_capped_cu.html Your Money compensation Executive pay Thu, 11 Jun 2009 12:04:17 -0500