Tuesday, July 27, 2010

New Survey Shows Significant Local Government Jobs Losses

/PRNewswire/ -- New survey research announced today shows that local governments are now facing a fiscal crisis that will force job losses approaching 500,000 and significant cuts in much needed public services. Representatives from the National League of Cities (NLC), United States Conference of Mayors (USCM) and the National Association of Counties (NACo) jointly released the survey results at a press conference on Capitol Hill earlier today and were joined by several members of Congress offering their support to cities and counties during these difficult economic times.

Local governments are a lifeline for their communities providing essential services to their residents. Unfortunately, according to the survey of local governments, these services are being cut and will continue to be cut over the course of the next 18 months as local governments attempt to balance their budgets in response to the on-going economic crisis. Most of the cuts are coming from public safety, public works, public health, and social services.

"For local governments, unemployment and foreclosures resulting from the Great Recession translate into too few revenues making it increasingly difficult to fund or satisfactorily maintain many basic services--not only parks, libraries, and public works projects but also public safety, police and fire services," said Ron Loveridge, NLC President, Mayor of Riverside, California.

Loveridge continued, "Cities are not only the engines of their local communities, they are also the backbone of their regional economies, where investments in infrastructure and services provide a platform for private sector investment and growth. And cities are the wealth of nations. We are where economic recovery must take place... we are where jobs are increased, or more commonly lately, are lost. We must change that equation."

Local governments continue to make the difficult choices in balancing budgets and finding news to operate. "As families all across our country have tightened their budgets, so have our nation's counties. Services to the public have been cut, county employees have been laid off or furloughed and capital expenditures have been reduced," said Judge B. Glen Whitley, NACo President, Tarrant County, TX.

But the report demonstrates that all of the cost cutting will come at a price to our nation's recovery and families. The report makes clear that federal action is critical to helping city leaders stabilize local economies and serve families. Continued Whitley, "The Local Jobs for America Act will help ensure that our county employees who fight crime, protect our communities from fire and natural and man-made disasters, and teach our children, are able to continue performing these vital functions. For this reason as a Republican and President of the National Association of Counties I support passage of H.R. 4812/S.3500."

The three organizations also emphasized there can be no national economic recovery as long as unemployment remains high and the ability of local governments to respond to the needs of their residents is hindered.

U.S. Conference of Mayors Second Vice President, Michael Nutter, mayor of Philadelphia, Pennsylvania, concluded, "As a nation, we made a good start with the American Recovery and Reinvestment Act. But make no mistake about it: the bleeding at the local level is hurting our nation's march toward recovery. And people in America's cities don't understand news reports that refer to a rebounding economy when companies still are not hiring.

"The nation's mayors support the Local Jobs for America Act because it will help people access jobs. These are the same people who own homes, pay taxes and send children to school in our communities. What message does it send to hard-working people if we helped Wall Street, but we can't help create jobs for Main Street?"

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Eight Tips to Help Homeowners Get Their Loan Modification Application Reviewed by Mortgage Company

/PRNewswire/ -- Many homeowners seeking a loan modification to lower their monthly mortgage payments and avoid foreclosure continue to find the application process a complex web, often causing them to give up before their application is ever reviewed by their mortgage company.

Certified housing counselors for CredAbility, a national nonprofit credit counseling and education agency, speak daily with hundreds of homeowners seeking a loan modification or other solutions to keep their homes. The organization has several tips for people that will help them increase the chances that their application is reviewed as quickly as possible.

"A homeowner needs to collect and send several documents that tell the mortgage company why you need a modification, and it needs to be done in a timely, organized manner," said Michelle Jones, senior vice president of counseling for CredAbility. "Once a homeowner has submitted these documents, they need to stay in regular contact with the company. With hundreds of thousands of applications under consideration, homeowners must take matters into their own hands to make sure their application gets to the right person at the company."

Here are CredAbility's recommendations for homeowners seeking a loan modification:

Speak With a Nonprofit Housing Counselor to Understand Investor Rules for Your Loan. Every homeowner's mortgage loan is different, so don't rely on information you may have heard from your neighbor or your sister-in-law, even if they received a loan modification. For example, if your 30-year, fixed interest rate loan is owned by one investor, and your neighbor's is owned by another investor, the rules governing a loan modification may be quite different. A certified counselor at a nonprofit credit counseling agency can help you find the investor who owns your mortgage and determine your options.

Submit All Documents That Prove Your Current Income. Income verification is critical, but homeowners sometimes don't provide their mortgage company with recent documents. If you lost a job in June, don't provide pay stubs from March. In addition to recent pay stubs and other traditional income sources, homeowners should also provide a document called a "contribution letter." This letter explains the source of any household income that is not easily verified. For example, a servicer will want to know the total household income of a married couple, even if only one person's name is on the loan. The letter could also include income verifying that you have a roommate that pays rent.

Submit Current Bank Statements. Recent bank statements allow your mortgage company to verify your income and expenses. This information enables the mortgage company to see your monthly expenses for food, utilities and other expenses and determine whether you will have enough money to make your mortgage payment.

Mail Your Documents to the Mortgage Company. Many people prefer to send all of their documents by fax or scan their documents and send them via email. However, postal mail is usually more reliable, especially if it's addressed to the person you spoke with at the mortgage company. Faxes often get lost.

Label Each Page With Your Name and Loan Number. One of the most common complaints among homeowners is that the mortgage company loses their documents. You can help your own cause by writing your name and loan number on each page of every document.

Fully Explain Any Recent or Unique Income Changes. For example, a bank deposit may show various one-time transactions, such as an asset sale, cash gifts from family members or a bonus. Unless you explain this one-time increase in income, the servicer may not understand it and use this information to deny your loan modification.

Include a Timeline in Your Hardship Letter. Every application for a loan modification must include a "hardship letter" that explains the reasons for your request. But the letter must have specific dates explaining when an income loss has occurred. If your spouse lost her job on July 15 and your family income will decrease by $3,000 beginning in August, your letter needs to provide these details.

Call Your Mortgage Company Every Week. Many homeowners work extremely hard to submit all of their paperwork to the servicer - and then wait for weeks before picking up the telephone to call them about the status of their application. This is a mistake for several reasons: the person handling your application may quit; the application may be transferred to another person; the company may need more information. You get the picture.

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Thursday, July 22, 2010

Pew Report Finds Credit Cards More Transparent, Yet Problems Remain

/PRNewswire/ -- Most of the practices deemed "unfair" or "deceptive" by the Federal Reserve have disappeared from new credit card offers since federal passage of the Credit CARD Act last year, according to a new report by the Pew Health Group's Safe Credit Cards Project. Yet new trends have emerged that could cost cardholders significantly.

The report finds that issuers have eliminated practices such as "hair trigger" penalty rate increases (disproportionate charges for minor account violations), unfair payment allocation, and raising interest rates on existing balances. However, Pew's research also highlights a sharp rise in cash advance fees, continued widespread use of other penalty interest rates and an emerging trend of credit card companies failing to disclose penalty interest rates in their online terms and conditions.

"While it's been less than a year since passage of the Credit CARD Act, the new law appears to be working for millions of Americans who have credit cards," said Shelley A. Hearne, managing director of the Pew Health Group. "The elimination of most of the 'unfair' or 'deceptive' practices of the credit industry since we last surveyed the marketplace marks a major milestone in the move to make credit cards safer, transparent and more fair for consumers. Most of the news is good, but we are seeing the rise of new harmful behavior."

The study, Two Steps Forward: After the Credit CARD Act, Cards Are Safer and More Transparent--But Challenges Remain, is the latest in a series of reports from the Pew Safe Credit Cards Project that has examined all consumer credit cards offered online by the nation's 12 largest banks and 12 largest credit unions. Together these institutions control more than 90 percent of the nation's outstanding credit card debt. For this latest report, which measures how the industry has changed since the passage of the Credit CARD Act, Pew gathered data in March 2010 on nearly 450 cards. Full details, including previous research, can be found at www.pewtrusts.org/creditcards.

Key findings show:

-- Many of the most troublesome practices of the credit card industry
have been eliminated. A credit card issuer can no longer unilaterally
decide to raise interest rates on existing balances. Likewise,
practices including "hair trigger" penalty rate increases, unfair
payment allocation, and overlimit fees without prior consent are a
thing of the past. Earlier Pew research found that before the
implementation of the law, 100 percent of the credit cards surveyed
included at least one of these practices.
-- Beyond the requirements of the new law, there are new practices that
benefit consumers. Less than 25 percent of all cards examined had an
overlimit fee, which is down from more than 80 percent of cards in
July 2009. Additionally, mandatory arbitration clauses, which can
limit a consumer's right to settle disputes in court, are now found in
10 percent of cards compared to 68 percent in July 2009.
-- Predictions that legislation would spawn the growth of new fees have
yet to materialize. There was minimal change in the number of cards
that include an annual fee (down 1 percentage point from July 2009 to
March 2010). During that period, the median size of these fees
increased from $50 to $59 for banks and from $15 to $25 for credit
-- Some disclosures stopped including the size of penalty interest rates
even as issuers reserved the right to impose them. At least 94 percent
of bank cards and 46 percent of credit union cards came with interest
rates that could go up as a penalty for late payments or other
violations. But nearly half these warnings failed to inform the
consumer of the actual penalty interest rate or how high it could

"Although we applaud changes by the card industry to create a fairer and more transparent marketplace, our research shows that some challenges remain," said Nick Bourke, director of Pew's Safe Credit Cards Project and report co-author. "For the first time, we have seen credit card disclosures warning consumers that interest rates could go up as a penalty for certain actions, but not stating how high those rates could go. Federal regulators should pay attention to this problematic new trend. When issuers withhold vital pricing information, it leaves cardholders in the dark and puts their financial security at risk, which is why federal regulations have long required issuers to disclose their rates and fees up front."

Two Steps Forward includes a number of policy recommendations to address new challenges, including:

-- Federal bank regulators should enforce existing regulations that
require companies to disclose full and reliable credit card penalty
rate information.
-- The Federal Reserve should prohibit issuers from charging penalty
interest rates that are higher than initially disclosed when the
consumer opened the card account.

The report also shows that surcharge fees for cash advances rose sharply between July 2009 and March 2010. Bank cash advance and balance transfer fees increased on average by one-third during this period, from 3 percent of each transaction to 4 percent. Credit union cash advance fees went up by one quarter, from 2 percent to 2.5 percent.

Other pricing data is also included in the report, showing recent increases in a variety of credit card interest rates and fees.

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Tuesday, July 20, 2010

Direct Deposit Push Exposes Social Security Recipients to Bank Payday Loans

/PRNewswire/ -- The federal government's push to require all recipients of Social Security and other benefits to receive payments by direct deposit will expose many seniors to predatory payday loans made by banks.

That's the conclusion of "Runaway Bandwagon: How the Federal Government's Push for Direct Deposit of Social Security Benefits Has Exposed Seniors to Predatory Bank Loans," a new report issued by the National Consumer Law Center.

"Treasury must stop banks from making these high-cost, short-term loans to Social Security recipients," said Margot Saunders, an attorney with NCLC and an author of the report. "These loans are only made because they are fully secured by a borrower's next direct deposit of federal funds."

"While federal law protects Social Security and other benefits from seizure by creditors, banks regularly take those benefits as repayment for what are essentially payday loans that they have made without even assessing borrowers' ability to afford those loans," Saunders added.

"Runaway Bandwagon" spotlights account advance loan products - some with Annual Percentage Rates as high as 1,800% - that some banks offer to customers with checking accounts or prepaid debit cards. Banks help themselves to funds from customers' accounts to repay loan principal and fees, so that these loans closely resemble both fee-based overdraft programs and payday loans.

"With these loans, banks profit from vulnerable and hard-pressed recipients of federal benefits, trapping them in a cycle of mounting debt and high borrowing costs," said Leah Plunkett, an attorney with NCLC and an author of the report. "In effect, these high-cost loans are used to hijack benefits federal law intends to provide for the basic needs of elderly and disabled citizens."

More seniors and vulnerable benefits recipients will become the targets for such loans as the Treasury Department moves forward with its plan to require electronic payments to all federal benefit recipients by 2013. New protections are needed to prevent the victimization of seniors and other vulnerable consumers and preserve income from Social Security and other social insurance programs that many seniors depend upon for survival.

Treasury must ensure that when accounts used for benefit deposits are used to secure loans, those loans are made only after an evaluation of the borrower's ability to afford repayment, carry APRs including fees of no more than 36%, have a term of at least 90 days or one month per $100 borrowed and allow repayment in multiple installments. Treasury must also prohibit banks and other lenders from requiring borrowers to provide as security electronic access to a bank account. Borrowers who do allow lenders such access must be permitted to end that access at any time and at no cost.

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Friday, July 16, 2010

New Uniform Law Protects Family Land

/PRNewswire/ -- The adoption yesterday of a proposed uniform state law aimed at preserving home ownership for vulnerable families nationwide marks a crucial step in helping low-wealth and minority communities retain their family property.

The Uniform Partition of Heirs Property Act, drafted and approved by the Uniform Law Commission (ULC), establishes a number important protections for owners of heirs property, family land that has been passed down without a will, restricting access to the land's value and leaving families vulnerable to unfair dispossession. The act will now be sent to all states for adoption.

"Once enacted, new state laws will not only protect family land, but help families with heir property qualify for credit and otherwise access the land's value," said Appleseed Executive Director Betsy Cavendish. "The act addresses the largest cause of black land loss in the South, and Appleseed applauds its adoption by the ULC."

Craig H. Baab, Appleseed's Heirs Property Project Director, served as an official observer to the ULC drafting committee and was heavily involved in developing the act over the past three years, and Appleseed Centers in Alabama, Georgia, Louisiana, South Carolina and Texas are engaged in local efforts to address the problem through state legislation, attorney training and community education.

Among the protections adopted by the ULC are improved notification practices, broader judicial consideration - courts, for example, would consider how long a family has owned the land and whether that family would be rendered homeless if it were sold - and the establishment of priorities for buy-outs and physical divisions of the land before a forced sale would be permitted.

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Consumers, Small Businesses Win as Senate Passes Swipe Fee Reform, Says NACS

/PRNewswire-USNewswire/ -- The convenience and petroleum retailing industry's nearly decade-long battle to rein in outrageous interchange fees became a reality July 15 as the U.S. Senate voted 60 to 39 in support of the financial reform package known as the Dodd-Frank Bill.

Today's (July 15) vote removes the last hurdle in getting this bill enacted into law, given that President Obama has said that he will sign the legislation once it clears Congress. The House of Representatives passed the legislation on June 30.

Provisions within the package, known as the Durbin Amendment, direct the Federal Reserve to issue rules to ensure that debit card interchange fees, also known as swipe fees, are reasonable and proportional to the processing costs incurred. Visa and MasterCard currently charge debit swipe fees of around 1 percent to 2 percent of the transaction amount -- among the highest rates in the industrialized world.

Swipe fees have been the convenience and petroleum retailing industry's top pain point and second largest expense item -- behind only labor costs -- for a number of years.

"Today's vote demonstrates the value of retailers engaging with their elected officials," said NACS President and CEO Hank Armour. "This is why NACS exists - to help bring together the industry to amplify its voice and make a difference on issues important to all of us. Last year we said that 2010 will be the year that we achieve meaningful interchange reform if we can combine the power of skillful lobbying with dramatic grassroots activity. Through consistent engagement with Congress, combined with massive consumer petition campaigns, we have clearly seen that great things are possible when our industry is engaged."

The vote to pass the financial reform package followed intense lobbying by the banking industry in opposition to the Durbin Amendment.

"From the phone calls and letters that flooded congressional offices in support of this legislation to the record-setting 5.4 million customer signatures that our industry collected demanding reform, we have made our voices heard and Congress has listened," added Armour.

"This victory shows what we can accomplish as an industry working together," said NACS Chairman Jay Ricker, chairman of Anderson, Ind.-based Ricker Oil Co. "The power of grassroots advocacy is immense, and the possibilities are endless when we fight for what is right."

The legislation includes a provision directing the Federal Reserve to issue rules preventing card networks from requiring that their debit cards can only be used on one debit card network -- ensuring that retailers will have the choice of at least two networks upon which to run debit transactions. In addition, the amendment would allow merchants to choose to decline credit cards for small dollar purchases because swipe fees often exceed profits on such sales. The amendment also clarifies that retailers can offer discounts to consumers who choose to pay with cash, check or debit card.

"At its core, this legislation simply introduces competition to a market that has not had any," said NACS Vice Chairman of Government Relations Tom Robinson, president of Santa Clara, Calif.-based Robinson Oil Corp. "Both consumers and retailers will see benefits as debit card fees will be aligned more closely with the cost of checks, as opposed to credit cards."

Founded in 1961 as the National Association of Convenience Stores, NACS is the international association for convenience and petroleum retailing, representing more than 2,100 retail and 1,500 supplier member companies. The U.S. convenience store industry, with nearly 145,000 stores across the country, posted $511 billion in total sales in 2009, with $328 billion in motor fuels sales.

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Thursday, July 15, 2010

We're Teaching Kids to Earn Money - Are We Teaching Them to Manage It? Money Management International Survey Shows Nearly 7 in 10 Children Participate in Fundraisers

/PRNewswire/ -- Money Management International (MMI), the largest nonprofit credit counseling agency in the nation, released a survey showing that nearly 7 in 10 kids in America are asked to participate in fundraisers on behalf of their school or organization.

According to MMI's 2010 Kids and Money Survey, the majority of parents say they take advantage of fundraisers as an opportunity to teach their children financial lessons. Two-thirds of parents say they teach children financial responsibility and basic math skills. Roughly half of parents use fundraisers to teach their children goal setting or basic business skills, and 4 in 10 parents use the opportunity to teach budgeting or charitable giving.

School and organization fundraisers offer kids the opportunity to earn money and practice raising funds, but lessons in responsible money management come mostly from parents taking the initiative. For parents wanting to take fundraising lessons a step further, MMI offers some ideas on teaching kids important financial life lessons while fundraising.

Teach goal setting. Many fundraisers make teaching goal setting easy because they offer a tiered system of prizes for kids who sell a certain amount of items. Before the fundraiser begins, talk to your child about their goals and help them set a realistic expectation of what they can sell based on the time and resources available. Make sure to explain to them that the funds they raise don't just earn them a prize at the end, but result in the greater prize of benefiting their organization or school.

Teach basic math skills. Help your children count back change to customers, total the funds they've raised, and calculate how much they still need to earn in order to reach their goals.

Teach basic business skills. Capitalism is the heart of the American economy. Use fundraisers as an opportunity to prune your little entrepreneurs' goal setting, budgeting, and customer service skills.

Teach responsibility. Responsibility was the lesson cited as the most taught by parents when it comes to fundraising, probably because responsibility encompasses more than pure financial skills. Remember that a single fundraiser will not teach kids responsibility as much as you setting a consistent example of responsible money management with your family's finances.

"Parents are highly influential when it comes to kids learning how to responsibly earn and manage money," says Cate Williams, vice president of financial literacy at MMI. "Parents should use fundraisers as a tool to expand on the financial lessons their children will use for life."

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