It’s easier to understand the subprime mortgage meltdown and how it’s erasing gains in the global markets with the humorous little metaphor we heard offered on the BBC world service this morning from the editor of Britain’s MoneyWeek magazine. She likened the “eventuality” (seeing as we’re not quite ready to call it a crisis yet) to a butcher shop. It used to be that retail banks kept mortgages on their books for the life of the loan, but within the past five years, they realized that you instead of just eating the porkchop among your family, you can chop it into “tiny bits” and make them into “loads and loads of sausages” and sell them to everyone.
loans
FICO Expanding Number Of Bad Credit Categories, Overall Score Fluctuations Expected
By 8.13.07
Besides closing the authorized user piggyback loophole, another change in the new FICO score system is that the number of categories for risky debtors will go from two to four, reports the News&Observer. There will remain 8 categories for good credit, brining the total number of rankings to 12.
FICO Removing "Authorized Users" From Calculations; Credit Piggybackers Scores Dropping
By 8.13.07
No longer will consumer credit scores be able to get a free ride on another’s credit report; FICO has removed “authorized user” accounts from their calculations.
Department Of Education: Student Loan Oversight Is Overrated
By 8.3.07
Remember that whole student loan scandal, where lenders illegally gave gifts to financial aid officers? The Department of Education doesn’t! A damning GAO report claims that the DOE:
The Senate's New Student Loan Plan: Give Aid To Students, Not Corporations
By 7.28.07
Hey kids, good news! Student loans will become cheaper under a bill approved last week by the Senate. H.R. 2669, passed 78-17, will recast the Department of Education as Robin Hood, diverting money from lending companies to students.
By 7.27.07
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Debt isn’t just for the poor: This guy’s household makes $163,200, but they’re over $536,000 in debt. [Saving Advice via Mighty Bargain Hunter via Blogging Away Debt]
By 7.24.07
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List of Debtor’s Anonymous meetings by state. [Debtor’s Anonymous]
Sample Letter For Disputing A Debt Collection Notice
July 18, 2007
If you’ve received a notice from a debt collector, but have reason to believe you don’t actually owe that debt (or owe a lot less than they say you owe), federal law gives you a brief opportunity to force the collector to demonstrate that you do indeed owe this debt, and to stop trying to collect on it until they have verified you are the one responsible, and that the money is still owed. [More]
New Record For Foreclosures In The First Half
By 7.13.07
Foreclosures hit an all time record in the first half of 2007, according to Bloomberg. Since the beginning of the year 926,000 foreclosures have been filed, 56% more than a year earlier.
Are You Addicted To Debt? Take This 15 Question Quiz
By 7.12.07
If you answer yes to at least of these eight questions, you may be addicted to debt, according to Debtor’s Anonymous.
By 7.11.07
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House votes to cut student loan interest rates by from 6.8 percent to 3.4 and increase grants for poor student by $890 by 2011 [AP]
By 7.11.07
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A 56-year-old elementary school teacher’s story about how he got in— and out — of $61,000 in debt. [MySanAntonio via Blogging Away Debt]
12 Signs Of A Debt Addict
By 7.11.07
Do you have a problem with compulsive spending? Debtor’s Anonymous, yes, there is such a group, has 12 warning signs to watch out for.
Department Of Education Sends Warning Letters To 921 Colleges
By 7.10.07
The Department of Education wants you to know that they’ve sent warning letters to 921colleges and universities warning them not to limit students in their choice of lenders, according to the Chicago Tribune.
Jeff Baker, policy liaison at the Education Department’s federal student aid office, said a search of a student loan database showed that a vast majority of students at each of 921 campuses chose the same lender.
By 7.10.07
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The 7 myths of college financial aid (p.s. WSJ is free online today) [WSJ via AllFinancialMatters] (Photo: elle_rigby)
By 7.9.07
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Straight talk about the convoluted world of credit scores from author Evan Hendricks, who says it’s all a game to make you cough up more dough.
Student Aid Administrators Are Pleasantly Paranoid
By 7.9.07
The National Association of Student Financial Aid Administrators is too paranoid about the recent student loan scandal to allow Wachovia to splash its logo all over the nylon bags it ordered for its annual conference, according to the Chicago Tribune.
The group, which represents about 12,000 college-aid officials across the country, didn’t want to appear to be acting improperly by accepting money from Wachovia in exchange for the marketing opportunity. The association also ditched lanyards and pens from other businesses — and even cut off the bottom of notepads that featured the name of a financial-services company — forfeiting about $200,000 in sponsorship fees paid by various vendors.
H&R Block Continues To Hemorrhage Money
By 7.5.07
The subprime lending arm of tax giant H&R Block continues to hemorrhage money, to the extent that it’s close to being unsalable, according to Bloomberg.
H&R Block Inc.’s mortgage unit lost a $1.5 billion credit line, falling “dangerously close” to the minimum amount demanded by a hedge fund firm that has agreed to buy the money-losing home lender.
