After saving for five years to finance an around-the-world trip, Daniel and Jill Tobias knew how to make a budget to fund something special.

But their system actually was a bit clunky.

Daniel Tobias said his spreadsheets were just too complex. “I gave a few friends copies and they never used them,” he said.

So while he was on the road – for almost two years, roaming from San Diego to South Africa and home again – Tobias tinkered with his system and came up with a better version.

Back home now in Cooper City, Tobias has launched www.doughhound.com. It’s a free, online budgeting or spending plan that has flexible budget periods and categories that users can customize for regular use or for a project or goal, like, say, financing a world tour. Users make the rules and track their own spending.

There are plenty of places online where you can create a budget. But the unique thing about Tobias’ online budgeting tool is that users don't have to reveal their bank or credit card information.

“With so much identity theft occurring, people are hesitant to put personal information on a third-party site,” he said. That's why he decided to eliminate any concerns about security.

The start-up is designed to make money from advertising.

Once a year, I write about my family and money. Over the holiday weekend, you may have missed my column on the Jonas Brothers, my daughters, and money.

Here it is. Hope you enjoy it.

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."

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.

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.

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.

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.....

Today's column is about working the numbers, for anyone who believes that Social Security won't be around when they retire.

If that's what you believe, then you can't just throw your hands in the air and say retirement is impossible.

You need to look at the problem and prepare. You need to save, but exactly how much?

Of the scenarios I point out in the column, I think saving 12 to 15 percent of your income is the most reasonable plan. Of course, that's a big goal. You can get there, in small steps, if you just get started.

I'd like to hear your reaction.

Professor Elizabeth Warren says the new Consumer Financial Protection Bureau that she heads already know what it'll be working on: Mortgages, then credit cards.

The agency won't have full authority until next summer, but the work has already begun.

Here's a taste of her thinking, from a recent press conference:

"That’s what American families can expect to see from this new consumer agency: the ability to make direct comparisons when they shop for mortgages and credit cards, so families can make the choices that are best for them. We also will be a government agency that puts a cop on the beat to patrol the boundaries of the consumer credit market, and that also works every day for American families, using technology to make that work efficient and effective, " she said.

A lot of people could identify with Suzan McDowell, single mom, marketing firm owner in Miami and a person with far more questions about her finances than answers.

Boring? No way. I wouldn't have believed that personal finance would make for great videos but what this new series The Invested Life on MSN.com shows is that it's not about the money at all. It's about the stories.

McDowell's has to get ready for her daughter Sydney's college expenses in four years and her own eventual retirement. And in the episode I just watched, she had to get over her own shopping habits. No, you can't buy it just because you like it.

Ben Tobias, certified financial planner and head of Tobias Financial Advisors in Plantation, is just the person to go in there, give a hug, and to lead her through the process of figuring all this out.

Ben is real. He's no actor. He's a financial planner I've known for years and I know no one else could write his script.

The Invested Life takes real people and pairs them with experienced financial advisors in cities around the country. The videos, which began airing in late September, document the issues they're facing and how they resolve them.

You can look into their financial lives here.

Taking a break from foreclosures for a moment, I noticed this on the Discover U.S. Spending Monitor, a monthly index based on interview with a sample of 8,200 U.S. adults.

For consumers, having any money left over after paying the monthly bills is only a distant memory. The September report says it has been 18 months since a majority of those surveyed could say tha they had any extra money beyond expenses.

The Miami Herald reports that JP Morgan Chase has suspended "certain" foreclosures until it "reviews the legitimacy of certain affidavits in those cases."

I've called Chase to find out what's going on. Here are a few of my questions:

Did they fail to announce that they’re stopping foreclosures because they wanted to keep it quiet?

Is this something they’ve told the courts, all courts, only courts in Dade, in Florida, in other states?

Did they not want to make a big splash like GMAC?

How many borrowers do they have in Florida anyway? Tens of thousands? Did they tell them
that they may be experiencing the same problems as GMAC?

Last week, GMAC Mortgage, a unit of Ally Financial, announced that in 23 states including Florida, it was suspending evictions from homes in foreclosure and suspending sales of lender-owned homes while it reviewed its procedures. The company acknowledged that an employee did not personally verify documents in foreclosure cases.

The Senate looks unlikely to take up, until after the Nov. 2 elections, the question of what to do about the Bush tax cuts that expire at the end of this year.

Which leaves taxpayers with a lot of uncertainty. If you're trying to figure out what to do, I'd like to hear from you. I'm looking for South Floridians who are working on their tax plans, not knowing what the tax law will be next year.

Other items of note. The IRS is open this weekend, for people to walk in and ask their tax questions. To learn more, go here.

And, coming up soon is Financial Planning Day Oct. 2 in Miami, in which consumers can get free financial advice from a host of professionals. For more information, go here.

Finally, don't forget the Sun Sentinel is hosting a live, call-in financial planning day Tuesday Oct. 5. You can ask financial advisors any question you want by calling in that day or you can submit your question in advance. Just go here.

South Floridians really are mending their ways with money. Residents of Miami, Broward and Palm Beach Counties paid down about 6 percent of credit card debt between January and August. Miami lead the way, with a 10 percent debt haircut.

That’s according to figures from CreditKarma.com, which combed through records of 134,700 of the site’s users. CreditKarma provides credit research and information.

On the flip side, the survey showed credit scores – that all-important number that measure the credit-worthiness of borrowers – somehow declined slightly nationwide. CEO Ken Lin said prolonged unemployment and the still-stumbling housing market are offsetting consumers’ good financial behavior. He called it “a strange mix of economic conditions.”

You can benchmark your own financial situation by taking a look at a few results from the survey: The average consumer in Miami, Broward and Palm Beach Counties had $7,619 in credit card debt in August, down from $8,112 in January. The average person’s mortgage debt was $198,154, auto loan, $15,400 and student loans, $30,178.

Are you average? Above average?

Over the years, there has been an array of pitches, products, strategies and studies all aimed at figuring out what women should do, want to do, don't do or don't know about their money.

Now, we get some real information. A new survey from The Boston Consulting Group shows women to be a very unhappy group when it comes to managing their investments.

It says that women feel overlooked and under-served by their financial advisors. It says the strategies that advisors use to reach women are superficial, can backfire and can harm their financial prospects. It says advisors don't tailor their strategies to who women are and what they want.

Here's a link to the Boston Consulting Group's report....

For your reading pleasure, this is one interesting story about a Jacksonville-area Ponzi schemer who cheated IRS, FBI and law enforcement folks for decades.

How could that happen? The story, from Bloomberg BusinessWeek, talks about "cops trust cops." Once a person is inside law enforcement circles, he or she is, well, inside.

Another interesting tidbit is this one about who is most likely to get taken by investment fraud.

"Research has shown that males between the ages of 55 and 64 -- the bulk of McLeod's client list -- are the most typical investment-fraud victims, according to Lori Schock, the head of investor education at the SEC. As a group they are financially more literate than most, yet are willing to take bigger risks while doing less due diligence," the story says.

For 17 out of the last 18 months, consumer borrowing has been declining, the Federal Reserve Board reported yesterday.

Credit card use has been declining for 23 months.

Digging our way out.

Which, to someone concerned with the personal finances of the nation, is a good thing.

We’re no longer in this oblivion where spending never ends. The most recent peak in our amount of revolving debt came in 2008, when, stocks were doing well and housing values had fallen but not nearly as much as now. The year before, total consumer borrowing was growing at an annual rate of almost 6 percent.

But super-low levels of spending can make the economy contract even more. For someone concerned with the economy, that’s a worry.

Economists will be discussing the paradox. My take: Consumers are going to do what's best for them, especially when the outlook for jobs is uncertain. The economy will have to adjust. It'll have to step back from too much consumption.

This interview caught my eye, from the current Journal of Financial Planning. My favorite part:

Also, when the (stock market) fluctuations were extreme in 2008, as a self-control mechanism, I decided to enter the wrong password three times for accessing my portfolio online to lock myself out for a few weeks. I would still call my financial adviser from time to time to talk about what to do, but I didn’t want the ability to go in and see what was happening every day because it was so miserable. There is a principle called loss aversion, where losing is about twice as painful as gaining. I was really miserable.

That's from Daniel Ariely, the James B. Duke Professor of Behavioral Economics at Duke University’s Fuqua School of Business, author of the bestseller Predictably Irrational and The Upside of Irrationality.

Ariely explained that when times get rough, he looks to his financial advisor to be a sounding board. His goal, he said, is to keep looking forward, rather than react to short-term events. Then, of course, tricks help, too.

There was a big difference between the Neighborhood Assistance Corp. of America mortgage modification event that just ended and the one NACA held earlier this year.

This time around, people talked about jobs they had lost. Work they could not find.

While they were waiting, people did not talk about bad loans, mortgage payments that rose suddenly, or strange ways in which their loans never let them pay off any of the principal. This wasn’t an event in which exotic subprime mortgage were the problem. Even the housing bust, the dramatically lower home values, wasn’t much of a topic.

This time, the soft chatter in the huge Palm Beach County Convention Center crowd was about staying afloat. It was about people who can’t keep their homes but who, I fear, wouldn’t be able to keep anything going for much longer. Because they need jobs.

Neighborhood Assistance Corp. of American Chief Executive Officer Bruce Marks said late Tuesday that more than 17,000 people had been through the doors at its marathon mortgage modification event in West Palm Beach.

That was a smaller number than he originally expected, “But we’ve been here for five days straight, 24-hours a day and people are still coming in.” Marks had said he expected more than 20,000 borrowers.

NACA isn’t entirely going away after the doors close at 8 p.m. Marks promised that the organization, which acts as a not-for-profit mortgage broker, will open a South Florida office shortly. There are 38 other offices and two call centers.

NACA says it has modified thousands of mortgages for South Floridians, at three events here since last year.

But its events can be tiring, and not just for the hundreds of NACA loan counselors and lenders who attend.

"I spent a lot of hours there,” said Barry Dubinsky, a homeowner from Delray Beach who said he was there for a couple of days. They had all the lenders there at one time, everybody you need to see.”

Dubinsky said the modification reduces his monthly mortgage payment by one-third.

Borrowers facing foreclosure or seeking loan modifications can still get counseling and information on mortgage modifications at Naca.com.

They can also turn to the Homeowners Hope hotline, 1-888-995-HOPE, to find counseling and assistance.

In South Florida, the Urban League of Palm Beach County also is a Department of Housing and Urban Development-certified foreclosure mitigation counseling agency. The service is free.

“We have a dedicated staff that worked with more than 450 families last year who were facing foreclosure and with good results,” said Patrick J. Franklin, president and chief executive officer.

Counselors are available Monday through Friday 9 am to 5 pm at 561.833.1461 ext 3000.

Forms and paperwork needed for the service are available at www.ULPBC.org.

The Broward County Housing Authority also offers foreclosure counseling at 954-739-1114, or www.bchafl.org.

This time of year, there’s always the question of how to afford college textbooks.

Students have taken on this issue and found ways that don't subtract too much from their wallets. But, it's gotten more complicated. There are lots of ways to get a "book."

In one sense, it also has gotten easier, because a new federal law, that took effect July 1, requires colleges and universities to post information about textbooks (which makes it easier to shop around) and to let professors, who decide which books to use, know what the books cost.

For students, the best way to get started on the book hunt is to always know exactly what book you’re looking for. Sounds simple, but with updates and versions for international markets, this is not as easy as it seems.

Many students skip the bookstore entirely and buy books online for other sellers and re-sellers, but that's not always where you'll find the best deals. College bookstores are in the game, too, with plenty of web sites.

Check, too, to see if your school or state school systems offers free downloadable versions of any required books.

And then there are textbook rentals. A popular site for this is Chegg.com. CourseSmart.com sells subscriptions to digital copies of textbooks. TextbookMedia.com allows textbook downloads (some are free, with advertisements inserted, or you can decide to pay for other versions).

A recently launched website based in Jupiter, TextbookRentals.com, allows you to check one option against another.

TextbookRentals.com, offers a way to comparison shop , with a breakdown of rental costs across stores and a comparison to new and used prices for the book. The site's founder David Batchelor says rentals may not always be the best deal.

Here's another new option: Amazon's Kindle claims there are 200,000 electronic textbooks available on its reading device.

It's really up to you to decide which of these many options is the best fit.

If you'd like to know about the new law requiring schools to post textbook info, you can read a story about it here.

And here are some other sites where you can continue the hunt:

TextbookX.com
TextbooksRus.com
Ecampus.com
Buy.com
Amazon.com
BarnesandNoble.com
BestBookBuys.com

If there was ever a time to buy an air conditioning unit, this is it. With a $1,500 state tax rebate and a $1,500 federal income tax credit, it makes an old AC unit a lot easier to replace.

But don’t make one mistake as you plan your budget.

The federal government is not going to send you a $1,500 check.

You may not realize it, unless you pay close attention. That’s what happened to Virginia Blanchard, who lives part of the year in Delray Beach.

She was very surprised to learn that when she filed her taxes earlier this year, seeking the $1,500 credit for the AC unit she had installed in 2009, that she wasn’t going to get any money back in a federal income tax refund.

The reason: The federal tax credit for installing energy-efficient air conditioners is not refundable.

That means, if you owe taxes, the $1,500 tax credit can be subtracted from what you owe. But if you owe less than the credit, you won’t get anything back.

Blanchard didn’t owe taxes last year. So while she was thinking she was going to get a nice $1,500 check, she got nothing. “If a taxpayer is diligent with deductions, there is no $1,500 silver lining for them,” she wrote in an email.

“A nonrefundable tax credit allows taxpayers to lower their tax liability to zero, but not below zero,” is the official way the IRS phrases it on its website.

“Nonrefundable” sounds like jargon to people. But it’s important. The check is not in the mail.

Oh, but there’s this: Blanchard says she has no regrets. The new AC unit is efficient, has lowered her bills and she got the FPL rebate that also helped her cover the cost.

Just a quick note for your calendar: Saturday, Oct. 2 is Miami Financial Planning Day.

This will be a free event for the public (and not just folks from Miami, to anyone) at the Knight Center. Certified Financial Planners and other financial advisors from across South Florida will offer counseling and personalized advice (and no conflicts because they're not selling anything) to the public.

The advisors will focus on seven topics: Basics of investing, credit counseling, estate planning, financial literacy for children, mortgages, retirement planning and planning your future.

Last year, hundreds attended the event. This time around, with more than a million Floridians still unemployed, the crowd could be even bigger.

The event is a joint effort of the City of Miami, Certified Financial Planner Board of Standards, the Financial Planning Association, Foundation for Financial Planning and the U.S. Conference of Mayors.

To learn more and to register for the Miami Financial Planning Day, go to http://www.financialplanningdays.org.

Oh Benjamin, you’re changing your look!

Next February, the redesigned $100 bill goes into circulation. The colorful, high-tech C-note will have a three-dimensional security ribbon and other features that are supposed to thwart counterfeiting, which is on the rise.

Overseas, the U.S. Secret Service says, the $100 bill is counterfeiters’ favorite, while $20s are the top fake bills in the U.S. In South Florida, where local Secret Service agents say they’re taking around $120,000 a week of fake currency out of circulation, both bills are popular fakes.

You may only have small change in your pocket, but you’ll be able to virtually play with these $100s online. The government this summer is rolling out interactive tools and videos to introduce the color-changing $100s to the public. You can tilt, turn over and shine a light on the new bill online. The point is to increase its acceptance when it arrives Feb. 10, 2011.

Get your hands on the money right here, in this interactive graphic.

Here are some things you probably don’t know about those hundreds:

There are more $100s around than $20s nationwide. In June there were around 6.7 billion $100 bills in circulation worldwide – most of them in use overseas. By comparison, there were 9.6 billion $1 bills in circulation and 6.4 billion $20s. In total, there was more than $904 billion in U.S. paper currency floating around.

The Miami branch of the Federal Reserve Bank says during the year ending in July, in an average month there were $35 million dollar bills circulated in this area, 20.6 million $20 bills and 2.2 million $100s.

The new $100s look different from different angles. The new security features include: Next to Benjamin Franklin on the new bill will be a representation of the Liberty Bell that changes color, from copper to green and back, as it seems to appear and almost disappear inside an inkwell. Woven into the note is a three-dimensional security ribbon with bells and 100s that show up when you tilt the bill this way and that.

They last. An individual $100 bill can be passed around for more than seven years. The Federal Reserve Bank of Atlanta says the average lifespan of a $100 is 89 months.That compares to just 16 months for a $5 bill. A $20 stays around for 24 months.

Counterfeiting is on the rise. The U.S. Secret Service says more than $69 million in counterfeit bills were used in the United States in the 12 months ending last September, in the most recent figures. That’s up from $64 million in the previous year. Overseas, the volume of counterfeit bills more than tripled. The Secret Service made almost 4,000 arrests on counterfeiting charges in the U.S. during that year.

Local officials say the Miami office nabs about $70,000 a week, the West Palm Beach office around $30,000 and the Orlando field office around $20,000 to $30,000. Agents say tourism brings in the fake cash to Central Florida, while in Southern Florida, much of the fake money comes from presses in Latin America.

“We are a target-rich environment,” said James glendinning, assistant special agent in charge of the Orlando office. “The way our entire economy is structured is to cater to tourism and there are plenty of businesses here looking to take cash.”

The $100 is the last to get a new look. The colorful redesigns began in 2003 with the $20, the $50 in 2004, the $10 in 2006 and the $5 in 2008. A spokesowman for the U.S. Department of Treasury’s Bureau of Engraving and Printing said there are no plans to redesign the $1 and $2 bills.

When the $20s first arrived, consumers initially said they looked like “play money.” The Treasury, which unveiled the new $100 design in April, is rolling out an extensive training package, in dozens of languages, to smooth the way for Benjamin’s new look.

For more information, visit newmoney.gov.

The credit market seems to be rising from the dead. But that means the return of those irritating calls and offers that come out of the blue to get you to sign up for a new credit card. Just wanted to point out that you don't have to put up with all that.

You can tell the credit bureaus not to allow the credit card companies to have access to its information on you.

Here's how: Go to www.optoutprescreen.com or call 1-888-Optout (888-567-8688.)

Even with the financial crisis that we've all lived through, people still seem to trust their financial advisors. But that doesn't mean just anyone. The most trusted category? Read this story to find out.

Freedom from excessive overdrafts starts Sunday, Aug. 15.

What I’m talking about as excessive (for consumers) is this: When a $3 cup of coffee for which you have insufficient funds in your account turns into a $39 cup of coffee because you paid for it with your debit card and you incurred a $36 overdraft fee. (That’s what SunTrust charges.)

These charges were great for banks, which raked in $23.7 billion in overdraft fees a year, according to the Center for Responsible Lending. The Federal Reserve found that 41 percent of overdraft fees came from one-time purchases with a debit card.

The Fed also surveyed consumers a few years ago and found large numbers were unaware that their debit cards would not be declined if they were overdrawing their accounts.

After a hotly debated rule-making process that included more than 20,000 comments from consumers and banks and others, the regulations came out late last year.

They’re going into full force now.

Starting Aug. 15, a financial institution cannot slap you with any sort of fee for paying an overdraft on a transaction at an ATM or a one-time debit-card transaction – unless the institution has your permission to do so.

This means an end to “automatic overdraft protection.”

Automatic overdraft protection meant your debit card was never refused when you made a purchase, but you would get slapped with those big fees if you overdraw the account. Now, you have to say to the bank that you want this protection.

If you don’t say that, the bank will start refusing debit card transactions for which you don’t have the funds.

You can still get protection and not have your debit card refused if you take some action.

Say your debit card is attached to a checking account. Most banks will allow you to link that checking account to a savings account. If you overdraw, money is taken from savings to cover it.

Usually, linking accounts is cheaper than paying overdraft fees, which are somewhere north of $30 at many major banks. For linked accounts, Bank of America charges only $10 for this transfer of funds to cover the overdraft.

Check with your bank and find out the options. Otherwise, it’ll be back to Stupid Overdraft Charges.

Oh, and those billions that banks collected in overdraft charges? Many analysts have started to say that without those funds and with the expense of going to new rules for overdrafts, banks are going to have to start charging customers new fees. Such as, fees for a checking account that used to be free.

If you hear of such things, let me know. I’ll write about it.

Read my previous column about bank overdraft charges here.

One of the benefits for consumers that has come about since the Federal Reserve put out new rules on overdraft fees: Big banks, those that operate in Florida and nationwide, have decided to stop charging ridiculous fees for tiny overdrafts.

You should check with your bank and see if has a new policy. Most of the big Florida banks do.

Since last October, Bank of America stopped charging an overdraft fee if you overdraw your account by $10 or less. Previously, any tiny overdraft at Bank of America could bring on a $35-per-item overdraft charge in Florida. And there could be more fees than that, if your account remained overdrawn for a few days.

This is for overdrafts that aren’t due to debit-card transactions and for debit-card overdrafts if you've linked your card to another account. If you haven't set your account up this way, even a small overdraft will be declined on your debit card if you're trying to buy something.

JP Morgan Chase set its bar at $5 last September.

SunTrust told customers in recent checking account statements that it would not charge fees for overdrafts up to $5.

Wachovia/Wells Fargo said it, too, won't charge for overdrafts under $5 for existing customers starting Aug. 13. This policy already applies to newer customers, who opened their accounts by June 23.

Each bank has its own rules about when and how these small-overdraft policies apply. Be sure to ask, so you don't end up paying unexpected fees.

It was fun while it lasted, this victory for consumers. Read this one from CNBC....

Just sharing something I have had in my files for a long time. If you want to know what a mutual fund really costs, here's a great calculator that will tell you, after you answer a few questions.

www.personalfund.com

There are other calculators out there, including one from the Securities and Exchange Commission. But none so easy.

The rich are more willing to walk away from their mortgages than the rest of us.

That's what it looks like if you glance at CoreLogic's analysis of mortgage data for April.

A greater proportion of those with very high mortgage balances are not paying on their loans in Florida than those with smaller loan balances. Presumably, you had to be rich to qualify for a $1 million mortgage -- although a few years ago, maybe not.

The figures are:

If the original residential home mortgage balance was more than $1 million, 27.6 percent of those loans in Florida were seriously delinquent, 90 days behind or more. Nationwide, the figure's only 13 percent. And if the original loan balance is less than $1 million, the same figure is 17.3 percent in Florida.

If you're getting ready for the Back-to-School sales tax holiday, you might be taking part in a political gimmick.

That's one way of looking at it. The Tax Foundation says that after looking at sales tax holidays in 18 states, the holidays really do nothing for the economy, distort the free market and give some merchants free advertising. Not to mention that these tax breaks favor families with school-age kids over all others.

But the public likes sales tax holidays, right? Sure. The Florida Retail Federation declared in a recent press release that excitement is building for the holiday that takes place Aug. 13 through 15. Florida hasn't had a back-to-school sales tax holiday in two years.

A very interesting note in the Tax Foundation report indicates that in one study, done in Florida's panhandle at the time of the 2001 state sales tax holiday, retailers raised prices during the sales tax holiday. In essence, they grabbed 20 percent of the tax break for themselves!

What do you think?

South Florida accounting firm Kaufman Rossin & Co. reportedly has agreed to a $9.6 million settlement involving its role as auditor for two Palm Beach County hedge funds that collapsed last year.

The bankruptcy trustee for Palm Beach Financial Partners and Palm Beach Financial II claimed in a lawsuit that the two funds raised $1.1 billion from about 100 investors to lend to a company controlled by Thomas Petters, a Minnesota executive who was convicted of running a $3.65 billion ponzi scheme. Petters is serving a 50-year sentence.

“There are many more lawsuits that we intend to file,” said Michael Budwick, an attorney at Meland Russin & Budwick in Miami. Budwick represents the Chapter 11 Trustee for the hedge funds Barry Mukamal, who is also a partner at the South Florida accounting firm MarcumRachlin.

Budwick said the settlement, reached earlier this month, was filed with the court Monday. The court must approve the settlement, he said.

Several executives at Kaufman Rossin did not respond to requests for comment.

Financial reform and you.....I chatted with Christine DiMattei on WLRN this morning about what the massive new legislation will mean to South Florida. If you'd like to listen, here's the audio.

What a week for consumers.

First, we get the financial reform law signed.

Then, the Securities and Exchange Commission makes a move to limit and, in practical terms, perhaps eliminate fees that mutual funds charge to cover their marketing and distribution costs.

The SEC's decision to put some caps on 12b-1 fees is terrific.

Last year, the SEC says these fees amounted to $9.5 billion - up from just a few million dollars the decade before.

Investors pay these fees. Every year. And did we really need to do that?

I'm delighted to see the SEC say there needs to be some restraint and some competition on the price paid for investing in mutual funds.

Oh and, I wanted to point out one more thing about the financial reform bill. While it made the $250,000 Federal Deposit Insurance Corp. limit permanent, it also put that $250,000 limit in place retroactively. That'll impact depositors of some failed banks who may have thought they were out of luck.

Here's the FDIC's press release from yesterday:

Retroactive Deposit Insurance Increase to Cover Depositors at Banks That Failed in 2008
FOR IMMEDIATE RELEASE
July 21, 2010

The Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by President Barack Obama today permanently raised the maximum deposit insurance amount to $250,000. In addition, the Act made this increase retroactive to January 1, 2008.
The provision making the law retroactive means that the $250,000 deposit insurance amount applies to banks that failed between January 1 and October 3, 2008. These insured institutions are:

• Hume Bank, Hume, MO
• ANB Financial, N.A., Bentonville, AR
• IndyMac Bank, F.S.B., Pasadena, CA
• First Priority Bank, Bradenton, FL
• The Columbian Bank and Trust Company, Topeka, KS
• Silver State Bank, Henderson, NV

This retroactive increase has reduced the number of uninsured depositors at these failed institutions from more than 10,000 to approximately 500.

The FDIC will mail checks to uninsured depositors tomorrow, July 22, 2008.
To learn more, uninsured depositors of these institutions can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/dodd_frank_q_and_a.html or call toll-free on 1-866-806-5919.

UPDATE: It's the law.

Praising the law as the "strongest consumer financial protection in history, in history," President Barack Obama signed the financial reform bill.

The crowded room of supporters included a woman who had gone through a sudden hike in credit card interest rates and a man who had faced hundreds of dollars of overdraft fees that he never expected.

Stories like theirs had become all to common prior to the financial crisis, which eventually lead to this set of reforms now part of the law. The President said the law should ensure that those in the finanancial services industry can profit by playing by the rules, rather than gaming the system.

Consumer protection was the top issue, but the President also promised "There will be no more taxpayer-funded bailouts."

The law allows regulators to identify and to break up any institution that threatens the stability of the nation's financial system such as AIG.

-----

The fellow who called me yesterday wasn't among the crowd of important people watching President Barack Obama sign the financial reform legislation this morning.

But he’ll benefit from it.

And so will all of us. Anyone borrowing money to buy a house. Anyone dealing with a financial advisor. Anyone getting a loan.

I can’t tell you how important it is that there will soon be a law that requires a host of federal agencies to look after consumers’ financial interests. It’s immense.

It’s not a perfect law. But it passed, on the heels of scandal and disastrous financial conditions.

The man who called kept telling me his age, not his name. He’s 90. And he’s worried.

What about deposit insurance, he asked. Are they going to continue that at $250,000?

The financial reform bill makes that limit permanent. Otherwise, it would have expired three years from now.

He was worried, he said, because his wife, who is in her 80s, didn’t understand much about money and he wanted to make sure her money was safe. After he’s gone.

He has one certificate of deposit and he couldn’t afford for that money to be at risk. For her.

I asked him about his wife, whom he met 48 years ago and who he’s worrying about. We chatted.

I assured him, it’s in the bill. And the President will sign it this morning.

It’s a big law. And it takes care of many important people. Like the fellow who called me.

For more details on the law, here's the wire report.

I'll be chatting about it on WLRN on Friday morning, too.

____________________________

More information on how the new law affects you and your money.

My colleague Doreen Hemlock learned that nearly 80,000 Floridians were unable to use their Electronic Benefits Transfer cards Thursday and part of Friday, when service was interrupted in the network that processes those transactions.

Here's her report;

JPMorgan Chase said Friday it has fixed the network problem that affected EBT cardholders in Florida. The company processes cards for about 1.5 million people who receive benefits in Florida under the Supplemental Nutritional Assistance Program, formerly called food stamps, and the Temporary Assistance for Needy Families program.

The problem surfaced Thursday, as card holders found that they could not process their cards at sales terminals in stores.

One South Florida resident said his EBT card was declined at a Super Target in Deerfield Beach. When he called to clarify, he said he waited more than 20 minutes on hold, only to be told the issue was the network link – not his card. “Big problem,” he said in an e-mail to the SunSentinel.

JP Morgan Chase said 79,422 Florida cardholders experienced denials during their network telecom outage, or about 5 percent of cardholders in the state. The company traced the problem to hardware in its data center and rerouted network traffic to restore services.

During the outage, retailers could still process sales through JP Morgan’s Interactive Voice Response system or through customer service representatives, but with delays, the company said.

“The most comprehensive reform of Wall Street since the Great Depression,” President Barack Obama called the massive financial reform law passed Thursday by the Senate.

But the debate over what reforms are needed, who needs protection, and how this will all play out when a consumer, say, tries to get a loan, has not ended.

Rudy E. Schupp, president of 1st United Bank in Boca Raton, pointed out that the law has 2,323 pages including 60 pages of deadlines for new regulations that haven’t been written.

Exactly how all that will filter down to consumers isn’t entirely clear. And here’s one timeline: U.S. Chamber of Commerce President Thomas Donohoe said on television this week that he thinks it’ll be 15 years before all the regulations are written and the studies are done.

The goal of the law is to protect consumers from abusive financial products and to give the Federal Reserve new powers and responsibilities in hopes of averting any future financial crisis.

For consumers, the creation of a Consumer Financial Protection Bureau is one of the new law’s primary features. The new bureau will create rules for mortgages and other products that banks and other lenders will have to follow. “I think the Consumer Financial Protection Bureau is a big deal for consumers and hopefully they’ll do the work right and smartly to protect consumers,” Schupp said.

But the new law could have the unintended consequence of hurting them, said David Roda of Roda Asset Management in Miami, an investment advisory firm.

Among the impacts he sees on South Florida consumers:

-Marginal borrowers will have a harder time getting credit, because banks will have to increase their capital under the law and will likely put in place stricter lending standards.

-Because banks face greater restrictions on their profitable but risky trading activities, they may go cautious and limit their expansion plans.

“The fallout from this is it’s not pro-stimulus,” he said. “And it comes just at a time when it’s vital that banks begin to lend more, so you can create economic growth, especially in the state of Florida with its higher-than-average unemployment level.”

The National Council of La Raza, the Hispanic civil rights and advocacy group, is upbeat, says my colleague Doreen Hemlock. President Janet Murguia calls the reform “a huge victory for the Latino community and for America.. helping protect all American families from the threat of reckless, unchecked, and irresponsible profit-seeking on Wall Street.”

She said it will help Latino consumers by:

-- Offering at least $1 billion in bridge loans to help families hold on to their homes while they search for a job.

-- Creating a more transparent process for wiring money abroad, including disclosure on how much loved ones will receive in their home country and price comparisons for wiring the money.

Murguía said her group will continue working with lawmakers and advocates to see the reform “is implemented effectively, so it can truly aid in the recovery our country needs.”

This is one regulatory change for the better.....

The Financial Industry Regulatory Authority has announced plans to provide much deeper background on brokers and provide records even for those who have left the industry, under changes approved by the Securities and Exchange Commission.

Finra says its BrokerCheck data base will soon will increase the number of customer complaints reported publicly, extend the public disclosure period for the full record of a broker who leaves the industry from two years to 10 years and make certain information about former brokers available permanently, such as criminal convictions and certain civil injunctive actions and arbitration awards against the broker.

This is terrific news. Because even when someone is no longer acting as a broker because they've left a previous job, the person can still be handing out financial advice.

Investors should always check a broker's record - and make sure he or she has all the current regulatory ducks in a row. The new additions to BrokerCheck start in August and should be complete by the end of the year.

To look into a broker's background, go here.
------------------------------------------------------------------------------------------------------------------------------------------
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.

I know consumers are expressing their lack of conviction in the economic recovery. But a new survey shows they may not be holding back quite as much as last summer.

A full 17 percent of consumers plan to spend more on a major purchase in July, such as a vacation. That’s the highest percentage recorded in two years, says the Discover U.S. Spending Monitor, a daily poll on spending intentions.

I know it’s hard for people who don’t have a job to hear this and there are a million Floridians without a job, but people are indeed spending more at the mall, too.

The Chain Store Sales Index of major retailers is running strongly ahead of last year between February and June. The index is posting its largest year-over-year gain in that period since 2006, according to the International Council of Shopping Centers.

There is a curiously divided shopping pattern, however. The two categories growing the most are at opposite ends: Warehouse clubs and Luxury stores.

Buy on the cheap in bulk and then indulge on a special something?

All that's certain is retailers are beginning to hum again. Perhaps vacationers will return with a a brighter outlook on the economy.

Yvonne McBride Acosta may indeed have her loan modification.

“We are pleased that the initiative we have taken over the past several months have resulted in Ms. Acosta finally sending in her signed paperwork,” said Bank of America spokeswoman Jumana Bauwens in an email.

Yvonne, you'll remember, is the South Florida homeowner I've written about numerous times since last year, when her attempt to get a loan modification went haywire, again and again.

The relationship between Yvonne and her lender has become difficult since then. She has heard from the bank, she told me. But I'm holding my breath until I hear her say the deal is done.

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.

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.

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.

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?

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.
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.

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.

Double-Dipping on fees?

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.”

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.

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

Consumers are finally getting some protection to their most personal of financial accounts, their checking, debit and credit cards.
It’s good. But it’s far from perfect, as my column to be published in the newspaper on Sunday shows. The column will be posted online this weekend, as well.

The issue is overdraft fees related to debit-card purchases and withdrawals from automated teller machines. Consumers pay these onerous fees when they mess up, by spending more than they have in their accounts that back the debit cards. These fees add up to billions in profit for banks and other financial institutions.

All that’s just the way it is. If it were easy or inexpensive to overdraw your account, you might do it more often.

But banks were getting out of hand with the fees, charging them automatically for overdrafts even when you might have wanted them to refuse a transaction because you ran out of money. Finally, the Federal Reserve has stepped in with some new rules.

The rules do several good things, but they don’t tell the banks to limit what they charge. They also don’t tell the banks to stop charging you several fees a day.

Some banks are working to preserve their right to charge you, essentially, anything they want. That’s the story my column tells.

Imperfect protection? Tell me what you think.

In the wake of drenched pelicans, stock promoters are touting investments in companies that claim to be involved in cleanup operations for the Gulf of Mexico.

Watch out.

“While some of the companies touting their role in the cleanup may be legitimate, others could be bogus operations that are only looking to clean out unsuspecting investors,” said a news release Thursday from the Financial Industry Regulatory Authority and the Securities and Exchange Commission.

Finra and the SEC issued an investor alert about oil spill stock schemes.

The SEC earlier this week suspended trading in the stock of ACT Clean Technologies of Huntington Beach, Ca., because of questions about claims that a unit of the company licensed a promising “oil fluidizer technology” and that BP was interested in using it to clean up the spill in the Gulf of Mexico.

Finra and the SEC suggest you watch out for:
• Claims to have products or technologies that are effective in remediating oil spills or restoring the eco-system
• Mention of contracts or expected contracts with BP, formerly British Petroleum, that will aid the cleanup effort
• Claims that the company is providing technical assistance or expertise to BP or to U.S. government agencies such as the Coast Guard or the Environmental Protection Agency
• Predictions of rapid, exponential sales growth
• Pressure to invest immediately

To avoid getting caught, the SEC and Finra suggest investors look closely at any claims made by a company or by others discussing a stock in a blog or through Twitter or on a message board.

Regulators say, “Be extremely wary of any pitch that suggests immediate pay-offs, especially if the investment involves a start-up company or a product or service that is still in development.”

If you have a complaint, here’s where to go: www.sec.gov or www.finra.org/complaint

This message is for those 109,000 Fort Lauderdale folks so attached to paper that they receive actual checks when they get their Social Security benefits. It also is for all dunderheads who still go to the bank with their paychecks.

Let me remind you: One of the hardest things to get after Hurricane Wilma in 2005 was cash. Because first you had to have electricity and then open banks or working automated teller machines.

It was about a week and in some cases longer after the storm before banks were able to operate normally.

As part of Hurricane Preparedness Week, Gary Beets, a U.S. Treasury regional financial center
director, was trotting out the message that people should consider direct deposit or an electronic payment option for their Social Security Benefits.

About 80 percent of those who get these payments do have them deposited directly into their account. But those 109,000 paper-check-lovers in Fort Lauderdale are part of 435,000 statewide. In Florida, more than 4.2 million Social Security and Supplemental Security Income payments are processed each month.

To get your payment electronically means one of two things: Either the money flows through a direct deposit into your bank account or it is credited on to a debit MasterCard. The Treasury has offered the debit cards since 2008 for those who don’t have bank accounts. You can use the cards at ATMs and to make purchases, but users can be charged fees in some instances.

For more information on direct deposit, go to www.godirect.org or call 800-333-1795 . For info on the debit card option, go to www.usdirectexpress.com or call 877-212-9991

South Florida’s hot, again, in the eyes of at least one investment firm.

Edward Jones, based in St. Louis, plans to expand dramatically from 33 South Florida offices to as many as 150 locations in Palm Beach, Broward and Miami-Dade counties. It is hiring brokers and would-be financial advisors.

“We have a very different market strategy than I think our competitors have,” said Darcy Breeman, regional leader for Edward Jones in South Florida. “We will wait to open a branch until we find the right candidate for that location.” The timetable for opening the offices, which would have at least one financial advisor each, is flexible, she said.

In South Florida, the firm sees a lot of room for growth. Edward Jones says it serves almost 7 million investors nationwide, but its presence until 2000 was concentrated more in smaller towns than in major metro areas. The St. Louis-based firm emphasizes face-to-face contact and personal service.

But to expand dramatically in an area still struggling to find the end of the economic downturn? And when the volatile stock market has turned down? In the last three years, the brokerage industry seemed to be a place for mergers, not expansion. A.G. Edwards became part of Wachovia and Bank of America absorbed Merrill Lynch.

“People need help, probably more than ever before,” Beeman said. “Now you really have to have a plan and you need to find somebody you can trust.”

Beeman said there’s a June 1 recruiting event in Miami and another at her Fort Lauderdale office June 15. For more information, call 954-566-4252 or go to EdwardJones.com.

When it comes to investments, you don’t have to be the next victim of some greedy scum. And you don’t have to be afraid of falling into the clutches of the next Bernard Madoff, if you arm yourself with some knowledge.

“Outsmarting Investment Fraud” is a free seminar Tuesday in West Palm Beach. The goal is to help seniors who want to fight back against crooks and con-artists. The seminar is open to anyone, regardless of age.

The Financial Industry Regulatory Authority Foundation, along with Florida state regulators and AARP Florida and the Securities and Exchange Commission are hosting the forum. The information you get there will be unbiased.

To register for the event, go here: http://www.saveandinvest.org/55Plus/Events/P121332
Or call 866-862-0110.

You may be asked to leave your registration in a voice message – I was on hold for quite a while and did not reach a person – but with one call you are allowed to register as many people as you like.

The 11:30 a.m. to 2 p.m. forum will be held at the West Palm Beach Marriott, 1001 Okeechobee Blvd., in the Regency Ballroom.

Free, really free, credit scores with no strings attached may be coming soon.

The Senate tacked an amendment on to the financial reform bill that would allow consumers to get their credit scores for free.

Right now, consumers can't get them without paying a fee. You've been able to get your credit report, since 2003, once a year for free, but it didn't come with a score. That frustrates many consumers, who know that the score is the peg that determines so much about loans, credit and insurance.

If the Senate's amendment passes unchanged, someone could get their own credit score if it is used to deny them credit or a job. Also, it'll be free if the score is the reason the consumer is charged a higher interest rate on a loan.

In case you missed it, here's my latest column, about how to deal with volatility in the stock market.

They’re lining up. The consumers and their not-so-positive opinions about banks.

They are saying, in a study released today, that online banking provides them with a more satisfying experience than banking in person.

And here’s the twist: The nation’s largest banks – Bank of America, Citibank, Chase, PNC and Wells Fargo—scored the lowest in the study for online banking satisfaction. by ForeSee Results and Forbes.com Highest: Credit unions.

So the little guys beat the big guys where it matters, in satisfying their customers.

Remember last week, when I reported the J.D. Power and Associates survey about banks?

The little-er bank beat out all others. BankAtlantic topped all the major national banks in Florida in its customers’ rating.

But overall, J.D. Power found that customer satisfaction is declining nationwide and the ranks of highly committed, loyal customers are thinning.

Unhappy customers can be pretty demanding. And willing to check out the competition when they want service.

Even if it is years and years until you even consider retirement, here's something to think about that could mean more money in your pocket.

I suggest you tap into the debate about how to pump up your Social Security benefits to the max.

Here's one of the articles about it that's very interesting. It's from Investment News and you can read it here.

If you don't know much about Social Security, you really should get up to speed. Your marital status, your age and your work history all impact that eventual benefit. You should know something about how it works, so you can, well, work it, to your advantage.

The folks at BankAtlantic had every right to be ecstatic with their top-ranking in the recent J.D. Power and Associates retail banking satisfaction survey for 2010 for Florida.

The Fort Lauderdale-based bank beat out much larger institutions, including SunTrust, Regions and Wachovia, to come in at the top of the list of nine banks in the state.

But taking a second look at the survey shows the not-so-upbeat news for banks as a whole: Customers are really less and less pleased with their banking relationship.

If you've been reading the headlines, I'm sure your jaw is not dropping right now. The fury about banks has been building since 2008, in my view.

What's interesting about this survey is that it showed the overall satisfaction rankings didn't slip so much as the ties that typically bind customers to whatever bank they've always done business with.

Here's what I mean: Satisfaction with banks in general, out of a possible score of 1,000 points, is now at a level of 748. That's down slightly from 763 three years ago. But what has really plummeted is loyalty. In the 2007 survey, 46 percent of customers said they "definitely" would not switch banks in the next 12 months. That figure has fallen to only 34 percent of customers in 2010, which represents a 26 percent decline.

In other words, two out of every three customers may be willing to go through all the hassle it would be to change banks. The ties have come undone for most people.

Continue reading "Do you like your bank? If not, you've got plenty of company" »

Stocks have been trending up strongly in 2010. But wouldn’t you like to know if that will continue?

FinancialPlanning.com recently reported that a survey of 400 financial advisors showed they expect the annual return on their stock and bond portfolios to range between 2.5 percent to 4 percent after inflation.

Like Bob Veres, who conducted the survey, I remember when planners had expectations that were double those figures -- and higher. Veres says now no one's talking about what happened in the past. And plenty of people seem to be worrying about future threats to investing -- higher taxes, inflation.

So quick, what did stocks do last year? Remember my blog post about most people not knowing this.

For your scrapbook, the price gain for the Standard & Poor's 500 for one year, ended April 29, was 35.83 percent, for five years, 2.58 percent and for ten years, a decline of 18.30 percent.

With results like that, no wonder making a prediction is incredibly tricky.

People are afraid of what could happen to their money, their investments, their financial life.

And they have great reason to be, after all that's been uncovered since the meltdown of 2008.

If you made a list of what the threats are, you might also see what options you have for facing each one.

A little planning might lead to a bit more security.

Here's a great list of life's biggest risks.

.... Reading this morning about low-cost, no-cost ways for people to get financial advice, such as HelloWallet.com, a recent start-up, and some others. Sometimes, the lowest-cost ideas really do work.

I like Bill Hardekopf's suggestion that you try making twice-a-month payments on your credit cards, rather than once a month. Hardekopf is CEO of LowCards.com. His idea: Cut your regular payment in half, send it in twice a month and you'll save on interest, which is charged daily, by reducing the balance more quickly. Plus, by paying 26 times a year, it's the same as making one extra monthly payment every year. Working down that debt, little bit by little bit, is just as important as working it down in bigger steps.

You can catch me on TV tonight. On Nightly Business Report on PBS. It's a short commentary on what we're learning big investors were doing that individual investors cannot do.

Hey, don't want to read my whole column that was published today?

Then read this part.

The Great Depression brought us the Securities and Exchange Commission. The Great Recession should bring us something equally important.

Here’s my list of the reforms we need:

-Financial products sold to consumers should be made clear and easily comparable, from one seller to another. The financial services industry isn’t doing this. Is it possible that here in the middle of the nation’s foreclosure crisis, many South Floridians didn’t understand exactly what they were getting into when they signed their mortgages?

-The clarity rule should cover the financial products that most people buy. Like auto loans. And payday loans. Auto loans from dealers were exempted from the consumer reform bill that the House passed. And that’s almost as big an industry as credit cards, which we managed to re-regulate. Now, payday lenders are pushing hard to get their own loophole.

-Anyone offering financial advice to consumers should be regulated by the same rule. I want a fiduciary standard, which means simply they have to put the customer’s interest first, no matter what. I want this to apply no matter where the advice-giver works – a bank, a brokerage or an investment advisory firm.

-Financial institutions, which had government bailouts when the crisis came, must contribute to a fund to provide for future bailouts if needed. (They already do this with FDIC insurance. Strong banks are the ones paying the premiums used to cover the deposits of the failed banks. It’s a model that’s worked for decades.)

-Derivatives, which had a huge part in creating the financial crisis, should be traded out in the open. We need to know how large this market is and which way it is flowing.

-Too big to fail? I’d just like to feel confident that our regulators have a full picture of the risks facing our financial system every single day. I want them to require banks to operate like banks that depend primarily on their customers for their profits, rather than as clearing houses that off-load nearly all risks on to a marketplace that eventually affects ordinary investors. Regulators should tell banks to stop borrowing excessively so they can act like traders on Wall Street. They should force banks to stop hiding how much debt they really have.

Okay, let’s play a game. Match the quotes to who said them:

"Tricking an investor into taking a risk is theft by another name."

Derivatives are "financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."

“We’ve lost our moral compass.”

Ready? The quotees are:

President Bush, as he signed the Sarbanes-Oxley Act into law.

Warren Buffett’s letter to shareholders, 2003.

Then-New York Stock Exchange chairman Richard Grasso in 2002. He later lost his job in a dispute over excessive compensation

Hope you noticed that no one was talking about Goldman Sachs.

The point of playing this little game is to deliver this lesson:

The warning, followed by the blow-up, and the promise to do better are a regular part of the picture when you’re out here, on the outside, looking in, at Wall Street.

As an individual investor, you should get used to this. It's a cycle.

If you haven’t developed some sort of personal armor against Wall Street after this decade, what’s wrong with you?

It’s a question. You should consider it.

Here’s another one:

If Goldman Sachs is charged with fraud, who isn’t?

Who else should be charged?

What else do we not know now?

That’s the first thing that went through my mind last Friday.

Then in about a half-second, I thought of White House Chief of Staff Rahm Emanual's no good crisis should be wasted motto.

Ticking off the list, from Madoff to Stanford.

Just last week, a colleague and I were talking about how amazing that with the litany of scandals and the horrid economy and the billions spent on bailouts, that there would be no reforms, it looked like, to come out of this?

What a waste.

Tell me what you think.

Here's a link to my story from the weekend about the collapse of the condo market....
http://moourl.com/xwadm

Goldman Sachs charged with fraud. Market falls, bonds rise. What a day after Tax Day!

The Securities and Exchange Commission alleges that Goldman did more than mislead investors when it repackaged really bad subprime mortgages. The SEC charges Goldman failed to tell anyone that one of its big hedge fund clients helped to create these bad securities and also bet against them. It sold them anyway.

Goldman's bum's rush caused investors to lose $1 billion, the SEC said.

Goldman said the "SEC’s charges are completely unfounded" in a statement and said it would vigorously defend the firm. Paulson & Co., the hedge fund, pointed out that it was not charged and its statement said the firm did not sponsor, initiate or market the securities involved.

I don't know who woke up over at the SEC, but I can tell you, the public will be glad to see such huge, powerful, important firms taken to task.

You can read the SEC complaint here: http://moourl.com/3329k

Snooze alert: She's talking taxes again.

Oh give me a break. It's not so bad. Actually, the producer at Marketplace Money gave me a challenge: Do something funny about taxes.

Ha! No sweat. You live, you breathe, you struggle with taxes, what's not to be amused about?

My commentary will air on National Public Radio on Saturday.

The show from American Public Media airs on these stations
WLRN, Miami-Fort Lauderdale, FM 91.3, 2 p.m.
WQCS, Stuart- Fort Pierce, 11 a.m.

Elsewhere, if you want to find out when the program airs and on what station, click here.

Morgan Keegan faces a slew of new legal troubles, including a regulators' charge that it mislead investors, including many in South Florida, into seven bond funds that cost them more than $1 billion.

The Securities and Exchange Commission Wednesday filed fraud charges.
The Financial Industry Regulatory Authority also Wednesday asked for full restitution for what it charges were misleading marketing and sales materials.

It was two years ago when I first wrote about Morgan Keegan, which is a unit of Regions Financial.

Morgan Keegan said in a statement that it intends to vigorously contest the charges, which it linked to the public's anger at the near collapse of the nation's financial system.

"During the time of the most challenging market turmoil, Morgan Keegan invested over $100 million of the firm's capital into shares of two of the hardest-hit funds in order to provide liquidity for shareholders who wished to sell their Fund shares," the satement said.

Fort Lauderdale attorney Jeffrey Erez had around 25 cases brewing against the firm when all this started in 2008. Now, he says, he has pursued 50 arbitrations.

"A lot of local people were lead to believe these were safe investments," Erez said this morning.

He says about 30 cases are now over, either settled or the investors prevailed at arbitration. One case he lost. His biggest win came last month, when arbitrators awarded more than $1 million to a retired Alabama veteran.

If you're interested in the documents, here's a link to the SEC charges.

And here's the FINRA news release.

And below is my column on the case, from two years ago this month:

Auction-rate securities taking victims

As good as cash. As safe as a bond fund.
A growing number of investors have learned those statements when uttered by someone on Wall Street had no meaning. The credit crisis made those promises unreliable. Now, individual investors whose money is frozen or whose assets have been sharply devalued are part of an angry backlash.
I'm hearing a lot these days about problems with auction-rate securities, which were marketed as a good alternative to money market funds with a higher yield. I'm also hearing about a certain high-yield bond fund, which was heavily invested in securities backed by risky subprime mortgages.
One Delray Beach woman told me her tale with a mixture of fury and indignation. She had taken her divorce settlement money to a broker at UBS AG. She thought she was putting it into a fund much like a money market.
She deposited $370,000 in what turned out to be an auction-rate securities fund. A short time later, her broker told her that UBS had written down the value of her account. She's lost $97,000. "And I didn't even touch the principal," she said. She asked me to withhold her name.
Attorney Jeffrey Kaplan of Dimond Kaplan & Rothstein, which has offices in Miami and West Palm Beach, has filed dozens of arbitration claims on behalf of investors over auction-rate securities. He's been retained by the Delray Beach woman. Kaplan says he's representing everyone from individuals to corporations that put $100 million into funds that now can't be accessed.
"She didn't understand. The brokers did not understand," he said. "This is not a unique circumstance."
Auction-rate securities are a special breed of long-term investments typically bought and sold regularly, so investors can cash out before the securities mature. They offer higher yields than the safe investments money market funds own.
Auction-rate securities, which are estimated to be a $330 billion market, turned out to be neither safe nor as liquid as cash, when the credit market seized up in February.
Now, some brokerages, including UBS, have reacted by writing down the value of the accounts to what UBS supposes the securities could be sold for today. "UBS is committed to addressing our clients' concerns about the market events that caused the breakdown of liquidity for auction-rate securities," the company said in a statement, in response to my request for a comment. UBS said it is working with individuals and offering loans up to the full value of the accounts.
Kaplan says some of his clients have taken action on their own. They found buyers, but they can't get the full value. They're selling at a 25 percent discount.
Others are trying to restructure their funds. Nuveen Investments of Chicago has announced plans to try to work 100 of its mutual funds out of this problem, starting with redeeming large portions of the funds' auction-rate securities.
State regulators are demanding action, too. Nine states, including Florida, have formed a task force to investigate the collapse of the auction-rate securities market.
"If the product was represented to be a cash-equivalent going in, it must be treated as a cash equivalent coming out," Karen Tyler, North Dakota's securities commissioner and president of the North American Securities Administrators Association, said in a statement.
It's not only the "good-as-cash" promise that has investors infuriated.
John Klecha is an accountant and he regularly manages his own investments. He needs to be conservative in his choices. How then did Klecha and his companion Betsy Blum end up in a bond fund that doesn't seem to know any direction but down?
It was sold to them by brokers at Morgan Keegan, a unit of Regions Financial Corp., say Klecha and his attorney, Jeffrey Erez, of Sonn & Erez in Fort Lauderdale. The fund, they said, was investing in risky mortgage-backed securities but that wasn't disclosed to investors. .
"The problem is I had no understanding that this particular fund was not a safe fund," Klecha said from his home in Lighthouse Point. "It was very risky."
Klecha knows bond funds can fluctuate. When interest rates go up, the value of bonds goes down. But not like this. In 2007, Klecha's fund, which is RMK Multi-Sector High Income, dropped 61 percent. This year, it's down 29 percent.
He doesn't feel like he can get out. And so, he, too, is filing an arbitration claim.
Erez says he's filed nine arbitrations about Morgan Keegan bond funds and he's been retained by 25 other clients to look into the issues.
Morgan Keegan spokesman Eric Bran said the company doesn't comment on matters in litigation or arbitration.
So what can you learn from these investors' experiences?
If the yield is good, ask why. The auction-rate securities funds offered investors better rates than money market funds. But higher returns are always associated with risk. The same goes for bond funds. Delve into what the fund owns.
If you can't take the loss of the money you have put at risk, don't take it. About the only options available to these investors at the moment is to sell at a discount or to liquidate some other investments if they need cash.
If you're not sure that you're getting the full story from your broker, read the prospectus. They're boring and full of legalese, but the prospectus is the closest thing to a commitment that you'll get from a fund.

But how much?

This chart, from T. Rowe Price, gives you a look at what would happen if rates rise (or fall) one percentage point, on various categories of bonds.

Bond investors or those thinking about going into bond mutual funds should be aware of what's ahead. Interest rates won't stay this low forever and the Fed has signaled its willingness to let rates begin to rise.

So many investors have rushed into bonds. Last year, more than $375 billion flowed into bond mutual funds, according to the Investment Company Institute. In January this year, another $26.9 billion went in, almost as much as the $27.6 billion that went into bond mutual funds in all of 2008.

Hope those investors are ready.

Yvonne McBride Acosta, the poster child for the problems of the loan
modification mess, still has no loan mod.

I’ve written about her a number of times, documenting how she has been
offered and paid her loan mod payments, only to see the deal taken away
four times. I most recently reported that five months after she complained
to the Florida attorney general and local officials pulled business away
from Bank of America in protest of the way it was treating borrowers like
Acosta, still, she didn’t have a deal.

Acosta was supposed to get a loan modification offer shortly after that
column appeared. Bank of America’s spokeswoman said she would.

She did get a call the next day. Or rather, night. After refusing to leave
the house all day for fear she’d miss the bank’s representative, Acosta’s
phone rang at 8:45 p.m.

Let’s just say that conversation and a few others have not gone well.

Acosta has received a loan modification offer – for which the payments are
set around $200 a month higher than what she used to pay. If she was having
trouble with the loan at about $850, why should she have any less trouble at more
than $1,000 a month?

She has been told to return the loan mod papers by April 1. She says she won't sign them.

They kept their word. They did make her an offer. Just not one that she can
accept.

Ryan Wiggins, a spokeswoman for Florida's Attorney General Bill McCollum, says her office continues to try to work things out between Acosta and Countrywide, her original lender, which was acquired by Bank of America.

"We are trying to get to the bottom of what is actually going on," she said.

I'm catching up here, after a few days at home with a bad cold.

For anyone who missed my column last Sunday, here it is.

And here's the weekly Tax Q&A:

Is it right that you can take a deduction for gambling losses?

Some may not want to admit to it, but gambling income is always taxable just like income from your job. That applies to lottery winnings, raffles, the track and casinos. The payer might even give you a W2 if your winnings are significant.

But, if you take itemized deductions, you can write off your gambling losses. That is why you should save all those losing tickets. This is one of those itemized deductions that does not have to add up to more than 2 percent of your adjusted gross income. You can deduct whatever you lost up to the amount that you won.

But if you won more than you lost, then it has to reported as taxable income. The IRS requires that you be able to prove your losses. No ticket — or diary or other record of winnings vs. losses — means no write-off.

To find out more, go to www.irs.gov and enter Tax Topic 419 in the search box.

Submit your tax question in the box at the right.

Big changes announced this morning in the Obama administration’s Making Home Affordable program. Borrowers will be eligible to have their loan balances cut, if they owe more than the house is worth.

The highlights of the new rules:

-Loan servicers can slash payments for those who are unemployed. For up to six months, the payment could be set at 31 percent of the person’s current income, which, if that person’s only income is unemployment assistance, would be at a very low level

-Loan servicers must consider reducing the loan balance for those who owe much more than the home is worth. The rules now say that if the borrower owes more than 115 percent of the home’s value, the servicer has to consider reducing the principal or the amount owed.

-The principal reduction would take place in steps over three years. At first, there would be principal forbearance – which puts off payment due on a portion of the principal. If the borrower stays current with the payments, the amount of forbearance would be forgiven.

-Prohibits loan servicers from sending a home into foreclosure while the borrower’s request for a modification is being evaluated.

-Requires foreclosures to stop once a trial modification begins.

-Even if you are already in a trial or a permanent modification, loan servicers are required to consider doing a principal reduction retroactively.

For full details, look here:

http://makinghomeaffordable.gov/docs/HAMP%20Improvements_Fact_%20Sheet_032510%20FINAL2.pdf

Bank of America Corp., one of the largest mortgage lenders in Florida, said Wednesday it will give some troubled mortgage borrowers a huge break.

It will forgive up to 30 percent of some customers' total mortgage balance.

But the bank remains under fire in Florida, where hundreds of borrowers have lodged complaints with Attorney General Bill McCollum over its reluctance to modify mortgages, lost paperwork, or canceled deals for borrowers who are making their payments on time.

As the nation’s largest bank, Bank of America could lead the way for other lenders to start reducing principal, which is the amount the borrower owes. The U.S. Treasury has discussed making principal reductions a step in the Obama administration’s loan modification program. And, a group of influential mortgage investors recently called for it to become an industrywide practice.

“It’s a step in the right in the right direction,” said Peter E.S. Wallis, a Pompano Beach attorney who handles foreclosure defense cases. “We need to have all the major lenders, all the mortgage holders, to follow suit to bring principal reductions into line across the board.”

The plan, which would begin in May, is part of an agreement the Charlotte, N.C.-based bank reached 18 months ago with state attorneys general to settle charges over high-risk loans made by Countrywide Financial Corp. Florida was part of that agreement. The loans were made before Bank of America acquired Countrywide in mid-2008.

Those loans continue to trouble borrowers like Lynn Mankin of Coral Springs, whose lender was Countrywide and who has been battling Bank of America over a loan modification. She withdrew money – before retirement -- from her 401(k) account to keep paying her mortgage, after losing her job. But Bank of America later cancelled her loan modification. Her reaction to Wednesday’s announcment was skeptical: “I’m from Missouri,” she said. “Show me.”

Under Bank of America’s proposal, homeowners must be at least 60 days delinquent on their loans and owe more than 120 percent of their homes' value. Thousands of South Florida borrowers are “underwater” on their mortgages, meaning they owe more than their home is worth.

Roughly 54 percent of Broward County mortgage holders – 246,675 homeowners – are underwater, according to First American CoreLogic, a California research firm. In Palm Beach County, 45 percent of mortgage holders – 157,544 homeowners – face that problem.
Bank of America is the nation’s largest lender to systematically reduce principal, but it is not the first.

Ocwen Financial, based in West Palm Beach and a servicer of risky loans, has reduced principal on 15 percent of the 100,000 loans it has modified from its portfolio of 300,000 loans. It began reducing principal even before the Obama administration’s foreclosure program Making Home Affordable began a year ago.

Millions of homes have gone into foreclosure since the housing market collapsed in late 2007. The loans affected by Bank of America's announcement include certain subprime and option adjustable rate mortgages. Option ARMs allow borrowers to start with minimal monthly payments that actually increase the loan's balance.

The borrowers who can take advantage of the Bank of America program must also qualify for the Obama administration's $75 billion mortgage loan modification program.

Bank of America estimates that about 45,000 customers will qualify for its plan. It’s unclear how many South Florida homeowners might qualify.

The offer will cut total reduced principal by about $3 billion. That could lower the bank's earnings, which have already been hurt by consumers' continuing defaults on mortgage and credit card loans. Bank of America was among the hardest hit by the credit crisis and recession.

Even so, “the move helps create the best prospect of avoiding a further downward home price spiral, which would result in even deeper losses” for the bank, said Howard Glaser, a mortgage industry consultant, in an e-mail.

According to new plan, Bank of America will first offer to set aside a portion of the principal balance, interest free. That principal can be forgiven over five years, if homeowners don't miss any payments. The maximum decrease in principal will be 30 percent.

The forgiveness allows a homeowner to bring a mortgage balance back down to 100 percent of the home's value, the bank said.

Glaser said the program could lead the Obama administration to launch a similar effort for the entire industry. That, he wrote, would be a “major shift in loan modification efforts.”’

Lenders including Bank of America have been criticized for not helping enough borrowers to complete the Obama administration's $75 billion loan modification program, which is widely viewed as a disappointment. Only 170,000 homeowners have completed the program so far.
As of last month, Bank of America had completed modifications for about 22,000 homeowners, or about 8 percent of those signed up. That compares with about 12 percent for Wells Fargo & Co. and 11 percent for both JPMorgan Chase & Co. and Citigroup Inc.

The Treasury Department estimates that 1.5 million to 2 million homeowners will complete the program by the end of 2012, about half of the original goal. A report issued late Tuesday by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, says numerous changes to government guidelines “caused confusion and delay” and said the government did not do enough to advertise the program.

Staff writer Paul Owers contributed to this story.
Information from the Associated Press was used in this report.

Yvonne McBride-Acosta did get the call she was waiting for from Bank of America.
At 8:45 p.m. Monday.
But she didn't get a finalized loan modification.
She didn't get anything in writing.
The bank's representative said she would be getting a mortgage loan modification in May and that she would not have to start the process all over again.
But when Acosta told the bank's representative that she was recording the call, Acosta says the lady hung up.

"Are they trying to drain me or what?" she asks.

For more on Yvonne's story, read my column here.

More than 7,000 homeowners got permanent mortgage modifications during the recent West Palm Beach “Save the Dream” event organized by the Neighborhood Assistance Corporation of America.

Thousands of additional modification applications are pending. In all, 24,331 loan modification applications were taken during the five-day event two weeks ago. Of those, 7,631 were approved and made final, NACA said.

The remainder should receive word within the next 30 days. Each homeowner’s file has been submitted to their servicer, said Darren Duarte, communications director for NACA.

Those who did not attend the event can get help online at NACA.com. Click on “home save program” under “At risk homeowners.”

The group said it is trying to organize another mortgage modification event in South Florida within the next month.

During the five days, more than 31 percent of the applications processed by NACA in West Palm Beach resulted in a permanent modification.

That compares with about 16 percent of all borrowers who have applied for a permanent modification under the federal Making Home Affordable program during the last year, the treasury said last Friday.

...She's heading for the fourth. After more than a year of haggling with her lender Bank of America, Yvonne McBride-Acosta doesn't believe anything the bank says. But she's still hoping for a new loan that will save her home. You can read my column about her here.

The conflicting signals about where people are financially include:

-Consumer spending is growing
-People say they are saving more
-Credit card debt is declining
-Credit card debt remains at level as high as last year

So what do we know? We know that 43 percent of workers have $10,000 or less in their retirement accounts. The Employee Benefit Research Institute's annual Retirement Confidence Survey, out this week, shows that figure of slim to none for retirement savings has been growing for three years.

Heard the discussion that Buy and Hold is dead?

Like it never worked. And doesn’t still, for anyone who’s holding on for the one-year anniversary tomorrow of the start of the bull market. Which, if you held on like and let the negativity hit you on the head all the while, has paid off very handsomely. Between March 8, 2009, the day before stocks started going up, and last Friday, the Standard & Poor’s 500 has gained 67 percent.

There was a fabulous story by Jason Zweig in the Wall Street Journal Saturday about why holding often times means you ride the winners to the end. It was about the retirement of a tremendously successful T. Rowe Price small stock fund manager, John Laporte of T. Rowe Price New Horizons fund. You can read it here. As Zweig reports, he barely traded.

But that’s not normal at all.

The average holding period for a stock on the New York Stock Exchange is six months, according to a recent note from James Moniter at GMO, a global investment firm that manages $107 billion. “This seems like the investment equivalent of attention deficit hyperactivity disorder,” he wrote.

It makes my head ache, thinking about all the work it would be for people to change out every stock twice a year. How can they have a plan? A goal?

It takes discipline, Monitor notes, to do nothing. To have patience.