Elizabeth Warren of Harvard Law, our very favorite consumer debt expert, gave an interview to Marketplace this morning in which she talked about the rising cost of so-called “fixed expenses” and their affect on the American consumer.
Harvard Professor Elizabeth Warren has spent a career looking at personal debt. I asked her if consumers can sustain the engine of our economy much longer.
Last week we talked about a NYT article about a bankruptcy professor who has been looking at fees loan services are charging and how she found many of them to be dubious and/or inexplicable. For example, by looking at all the defaulted loans being paid off under chapter 13 bankruptcy, she found millions of dollars of difference between what the debtor thought they owed and what the loan service said was owed. Some of that was due to the insertion of questionable fees, like “fax fees” and “demand fees.” There was a front-page NYT article on it, and now you can download the paper that started it all, Misbehavior and Mistake in Bankruptcy Mortgage Claims (PDF).
Analysts have downgraded E*Trade after the online broker announced further mortgage-related losses. E*Trade has responded with a message to their customers claiming that they could absorb a loss of $1 billion and still remain “well capitalized.” Translated, the message reads, “Please, please don’t pull your deposits!”
New York Attorney General, Andrew Cuomo has subpoenaed the nation’s two largest financiers of home mortgages, Fannie Mae and Freddie Mac in his investigation into the “systemic fraud” that has infected the business of real estate appraisals.
The New York Times today took a look at the work of Katherine M. Porter, associate professor of law at the University of Iowa, and bankruptcy specialist. She’s been taking a closer look at the fees that some loan servicers are charging homeowners who are in foreclosure. She’s determined that some of the fees are “questionable.”
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Citigroup said to announce announce another 8-11 billion in losses due to bad investments based on subprime mortgages tomorrow. Ouch. [CNNMoney]
You can still raise your credit score by getting added as an “authorized user” on the credit card account of someone with better credit. Industry plans close the loophole starting this September are still yet to be implemented. The change was to be part of the update to “FICO ’08,” a revised version of the credit scoring system sold by the Fair Issac Corporation and in use at the three major credit bureaus, Experian, Equifax, and TransUnion. So-called credit piggybacking is used by parents to help their kids get on the fast-track to better credit ratings. It has also used by fraudsters to qualify for mortgages they wouldn’t otherwise get – a contributing factor to the delinquencies in the subprime meltdown.
Citibank’s chairman and CEO Charles Prince announced his resignation Sunday, citing the subprime meltdown as the reason for his departure.
The Fed’s recent quarter-point rate cut could either mean more or less cash in your pocket, depending on what you accounts you own. Here is the breakdown:
As foreclosures continue to skyrocket, debt counselors have become a last resort—sometimes the only resort—for thousands of panicked homeowners who don’t know how they’re going to keep their homes. “I don’t think people fully appreciate the pressure that’s being put on those counselor organizations today,” says a Housing and Urban Development official. In addition to offering financial advice, the counselors try to help negotiate payment plans with lenders, stave off foreclosure notices, and even offer mental health support for people so distraught that they become depressed or suicidal. The average pay: $30-50,000 a year.
New York Attorney General, Andrew Cuomo, announced today that he’s suing one of the nation’s largest real estate appraisal firms for conspiring with Washington Mutual to artificially inflate appraisals.
As most economists predicted, the Federal Reserve Board has cut interest rates by a quarter of a point to 4 1/2 percent.
Foreclosure tracking firm RealtyTrac has been delivering lots of bad news this year, not least of which is some sobering numbers on Real Estate Owned properties or REOs. An REO is what happens when a home cannot be sold at auction and becomes the property of the lender.
The Joint Economic Committee has released a report estimating 2 million foreclosures by 2009, causing $71 billion in lost housing wealth.
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Merril Lynch a $7.9 BILLION write-down from sub-prime mortgage losses. [CNN Money]
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