What Are Payday Loans and Why You Should Look at Other Alternatives

Everyone in the US fits in one of three categories: they have used a payday loan company; they haven't used a payday loan company but know someone who has; or they haven't used one, don't know anyone who has, but have seen these businesses in storefronts or shopping malls, or advertised in the newspaper, radio, or TV. If you are in the last two categories, Mortgage311.org has one suggestion--don't use these services. If you have used these services in the past, stop using them. Why do we recommend this? Read on and we will explain.

What Is a PayDay Loan?
I payday loan is a small, short-term, high-rate loans by check cashing companies, finance companies, tax preparation companies, and other financial businesses. They sometimes have other names, like cash advance loans, check advance loans, post-dated check loans, or deferred deposit loans.

No matter what they are called, they all work in a similar way. A borrower writes a personal check payable to the lender for the amount the person wants to borrow, plus the fee they must pay for borrowing. The company gives the borrower the amount of the check less the fee, and agrees to hold the check until the loan is due, usually the borrower’s next payday. Some companies may also deposit the amount borrowed, minus the fee, into the borrower’s checking account electronically. The loan amount is due to be debited the next payday.

The fees on these loans, may be reasonable, but they can sneak up on you if you don't pay off the loan when it is due. If the loan is extended, or “rolled over,” you may be charged new fees each time.

The federal government requires payday loan companies to give you the finance charge (a dollar amount) and the annual percentage rate (APR — the cost of credit on a yearly basis) in writing before you sign for the loan. The APR is based on several things, including the amount you borrow, the interest rate and credit costs you’re being charged, and the length of your loan.

Payday Loans Are Very Expensive
A payday loan — that is, a cash advance secured by a personal check or paid by electronic transfer is very expensive credit. How expensive? Say you need to borrow $100 for two weeks. You write a personal check for $115, with $15 the fee to borrow the money. The check casher or payday lender agrees to hold your check until your next payday. When that day comes around, either the lender deposits the check and you redeem it by paying the $115 in cash, or you roll-over the loan and are charged $15 more to extend the financing for 14 more days. If you agree to electronic payments instead of a check, here’s what would happen on your next payday: the company would debit the full amount of the loan from your checking account electronically, or extend the loan for an additional $15. The cost of the initial $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.

Depending on the state you are in, payday loan companies may have many restrictions on what you can be charged or the amount you can borrow. No matter where you live, the the cost of a payday loan are much, much more higher than the fees and interest you may have on a home equity loan, credit card balance, or overdraft charges on your bank.

Because the costs of the loans are so high, payday loans are much more popular with people who don't have bank accounts, credit cards, or other sources of short term credit. It should not surprise you that these kinds of loan businesses are much more common than banks or credit unions in poorer neighborhoods.

What Is the Difference Between a Loan Shark and a PayDay Loan Company?
A loan shark is a person or informal business that offers unsecured loans at high interest rates to individuals, often backed by blackmail or threats of violence. Loan sharking is illegal because using violence or threats of violence is against the law. Legitimate payday loan companies follow the law and will not use violence to collect what is owed.


Consider Alternatives
Payday loans may be easy to find, but they are hard on your wallet. Before you decide to take out a payday loan, you should consider one or more of the following alternatives:

Banks and Credit Unions: Some banks and credit unions may offer short-term loans for small amounts at competitive rates.

Community Organizations: A local community-based organization may make small loans to individuals or small businesses.

Cash Advances: A cash advance on a credit card or check card (typically an ATM card that can be used like a credit card) also may be possible, but it may have a higher interest rate than a regular bank or credit union loan.

Negotiate with Your Creditors: If you see a short term financial problem coming up, contact your creditors or loan servicer as quickly as possible if you are having trouble with your payments, and ask for more time. Many may be willing to work with consumers who they believe are acting in good faith. They may offer an extension on your bills; make sure to find out what the charges would be for that service — a late charge, an additional finance charge, or a higher interest rate.

Get Help: Contact your local consumer credit counseling service if you need help working out a debt repayment plan with creditors or developing a budget. Non-profit groups in every state offer credit guidance to consumers for no or low cost. You may want to check with your employer, credit union, or housing authority for no- or low-cost credit counseling programs, too.

Plan Your Finances: Very often, you can avoid going to a payday loan company if you take the time and energy to understand your finances. That means understanding how much comes in, how much goes out, and making decisions that will either increase your income or decrease your expenses so that you will have money left over at the end of the month. Make a realistic budget, including your monthly and daily expenditures, and plan, plan, plan. Try to avoid unnecessary purchases: the costs of small, every-day items like a cup of coffee add up. You should also have a savings plan. You savings can help you avoid borrowing from a payday loan company in emergencies.

The bottom line on payday loans: Try to find an alternative. If you must use one, try to limit the amount. Borrow only as much as you can afford to pay with your next paycheck — and still have enough to make it to next payday.

Protections for Military Members
Payday loans (and certain other financing) offered to servicemembers and their dependents must include certain protections, under Federal law and a Department of Defense rule. For example, for payday loans offered after October 1, 2007, the military annual percentage rate cannot exceed 36%. Most fees and charges, with few exceptions, are included in the rate. Creditors also may not, for example, require use of a check or access to a bank account for the loan, mandatory arbitration, and unreasonable legal notices. Military consumers also must be given certain disclosures about the loan costs and your rights. Credit agreements that violate the protections are void. Creditors that offer payday loans may ask loan applicants to sign a statement about their military affiliation.

Even with these protections, payday loans can be costly, especially if you roll-over the loan. You instead may be able to obtain financial assistance from military aid societies, such as the Army Emergency Relief, Navy and Marine Corps Relief Society, Air Force Aid Society, or Coast Guard Mutual Aid. You may be able to borrow from families or friends, or get an advance on your paycheck from your employer. If you still need credit, loans from a credit union, bank, or a small loan company may offer you lower rates and costs. They may have special offers for military applicants, and may help you start a savings account. A cash advance on your credit card may be possible, but it could be costly. Find out the terms for any credit before you sign. You may request free legal advice about a credit application from a service legal assistance office, or financial counseling from a consumer credit counselor, including about deferring your payments.

Military consumers can contact the Department of Defense, toll-free 24 hours a day, 7 days a week, at 1-800-342-9647, or at www.militaryonesource.com. Information on the Department of Defense rule, alternatives to payday loans, financial planning, and other guidance is available.

How to Spot and Avoid Scam Web Sites Offering Free Credit Reports

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. While you can get this report by making a phone call or in writing, a very convenient way to get your report is online. There are many web sites offering to do this for a price, and even some claiming to do it for free, but are in reality either outright scams or or trying to sell you on some other service.

Only one website is authorized to fill orders for the free annual credit report you are entitled to under law — annualcreditreport.com. Other websites that claim to offer “free credit reports,” “free credit scores,” or “free credit monitoring” are not part of the legally mandated free annual credit report program. In some cases, the “free” product comes with strings attached. For example, some sites sign you up for a supposedly “free” service that converts to one you have to pay for after a trial period. If you don’t cancel during the trial period, you may be unwittingly agreeing to let the company start charging fees to your credit card.

Some “impostor” sites use terms like “free report” in their names; others have URLs that purposely misspell annualcreditreport.com in the hope that you will mistype the name of the official site. Some of these “imposter” sites direct you to other sites that try to sell you something or collect your personal information.

Annualcreditreport.com and the nationwide consumer reporting companies will not send you an email asking for your personal information. If you get an email, see a pop-up ad, or get a phone call from someone claiming to be from annualcreditreport.com or any of the three nationwide consumer reporting companies, do not reply or click on any link in the message. It’s probably a scam. Forward any such email to the FTC at spam@uce.gov.

Reporting Fraudulent Web Sites
To file a complaint about a fraudulent or misleading web site that claims to offer free credit reports, visit the Federal Trade Commission (FTC) at ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.

Detroit Politician Set to Lose Home Just Days Before Election Day

You often hear how the economy is bad all over and how anyone can be affected by it. In Detroit, one particularly high profile person is going through the pain of foreclosure in full view of the public.

In Detroit, Charles Pugh, a politician and former television reporter who is a front runner for a city council seat in next month's election, is set to lose his home at a foreclosure auction less than a week before the elections on November 3rd.

Like with families with mortgage problems, Mr. Pugh has several other financial fires to deal with, including unpaid condo association dues and late property taxes. While Pugh blamed his decision to change to a lower paying job for his troubles, he has a history of living beyond his means. According to the Detroit News, earlier this decade Mr. Pugh threatened with eviction 11 times, and each time paid up only after he was taken to court.

Perhaps the Detroit City Council is a magnet for politicians with financial problems. The Detroit News also noted that Councilman Kwame Kenyatta, who is currently serving and is running for re-election, walked away from his home and mortgage earlier this year, before his monthly payment jumped from $1,000 to about $3,600.

What can you learn from the Detroit City Council? If nothing else, it shows that anyone who has a mortgage, no matter how talented or how well-connected socially or politically, can run into mortgage and foreclosure problems if the basics aren't followed. These are basics like spend less money than you make, and making lifestyle decisions that won't leave you in a bad financial after normal life events like changing jobs.

How to Spot a Credit Repair Scam and What to Do If You Are a Victim

If you are looking for a new mortgage, looking to increase your credit card limit, or even applying for a job, your credit score can help you or hurt you. That's why if if you think that your credit score is causing you a problem, you should review your credit report for errors.

If you have a credit score problem, what you shouldn't do is fall for one of those credit repair scams. You've seen the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail, and maybe even calls offering credit repair services. They all make the same claims:

- “Credit problems? No problem!”

- “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”

- “We can erase your bad credit — 100% guaranteed.”

- “Create a new credit identity — legally.”

Don’t believe these claims: they’re very likely signs of a scam. Indeed, attorneys at the nation’s consumer protection agency say they’ve never seen a legitimate credit repair operation making those claims. The fact is there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sometimes it takes positive actions like coming up with a personal debt repayment plan and sticking with it.

Recognizing a Credit Repair Scam
Every day, companies target consumers who have poor credit histories with promises to clean up their credit report so they can get a car loan, a home mortgage, insurance, or even a job once they pay them a fee for the service. According to the Federal Trade Commission, these companies can’t deliver an improved credit report for you using the tactics they promote because those tactics are illegal: No one can remove accurate negative information from your credit report. So after you pay them hundreds or thousands of dollars in fees, you’re left with the same credit report and someone else has your money.

If you see a credit repair offer, here’s how to tell if the company behind it is up to no good:

• The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
  
  
• The company doesn’t tell you your rights and what you can do for yourself for free.
  
  
• The company recommends that you do not contact any of the three major national credit reporting companies directly.
  
  
• The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.
  
  
• The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
  
  
• The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.
  

If you follow illegal advice and commit fraud, you may find yourself in serious trouble: It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information.

Exercising Your Credit Repair Rights
No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Some people hire a company to investigate on their behalf, but anything a credit repair clinic can do legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):

• You’re entitled to a free report if a company takes “adverse action” against you, like denying your application for credit, insurance, or employment. You have to ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
  
  
• Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it. The three companies have a central website, a toll-free telephone number, and a mailing address for consumers to order the free annual credit reports the government entitles them to. To order, click on annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to:
  
  Annual Credit Report Request Service
  P.O. Box 105281
  Atlanta, GA 30348-5281
  
  
• You can use the Annual Credit Report Request Form that you can find at the Federal Trade Commission web site. You may order reports from each of the three consumer reporting companies at the same time, or you can stagger your requests, ordering one from each company throughout the year from the central address. Don’t contact the three nationwide consumer reporting companies individually or at another address because you may end up paying for a report that you’re entitled to get for free. In fact, each consumer reporting company may charge you up to $10.50 to purchase an additional copy of your report within a 12-month period.
  
  
• It doesn’t cost anything to dispute mistakes or outdated items on your credit report. Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under the FCRA, contact the consumer reporting company and the information provider.
  

Have You Been Victimized by a Scam?
Many states have laws regulating credit repair companies. State law enforcement officials may be helpful if you’ve lost money to credit repair scams. Don’t be embarrassed to report a problem with a credit repair company. While you may fear that contacting the government could make your problems worse, remember that laws are in place to protect you. Contact your local consumer affairs office or your state Attorney General (AGs). Many AGs have toll-free consumer hotlines; check the Blue Pages of your telephone directory for the phone number or www.naag.org for a list of state attorneys general.

The Federal Trade Commission works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Congressionlal Report on Mortgage Progress in the US - It's Worse Than You Think

Do you like scary stories? So do I, especially when it is written by professionals, paid with your US tax dollars (or perhaps by those nations that are financing America's debt). Enjoy these excerpts from the Congressional Oversight Panel's October Oversight Report, which was published on October 9, 2009.

The United States is now in the third year of a foreclosure crisis unprecedented since the Great Depression, with no end in sight. Of the 75.6 million owner-occupied residential housing units in the United States, approximately 68 percent (51.6 million) of homeowners carry a mortgage to finance the purchase of their homes. Since 2007, 5.4 million of these homes have entered foreclosure, and 1.9 million have been sold in foreclosure.

From July 2007 through August 2009, 1.8 million homes were lost to foreclosure and 5.2 million more foreclosures were started. One in eight mortgages is currently in foreclosure or default. Each month, an additional 250,000 foreclosures are initiated, resulting in direct investor losses that average more than $120,000. These investors include the American people.

Absent a significant upturn in the broader economy and the housing market, another 3.5 million homes could enter foreclosure by the end of 2010. Foreclosure rates are now nearly quadruple historic averages. At the close of second quarter 2009, the Mortgage Bankers Association reported that 4.3 percent of mortgages, 15.05 percent of sub-prime loans, and 24.40 percent of sub-prime adjustable rate mortgages (ARMs) were currently in foreclosure. In addition, 9.24 percent of all residential mortgages were delinquent, a rate nearly double historic norms. Homeowners avoiding foreclosure, but still losing their homes in preforeclosure sales (short sales) or deeds-in-lieu (DIL) transactions further add to this crisis.

My favorite statistic is from Figure 4 on page 15. This chart shows for each state the percentage of homes with negative equity or close to negative equity (loans are worth between 95% and 100% of the homes value). The winner with 59% is Nevada.

Having fun yet? Can't wait to read more? Then download the full report below.

Source
Congressional Oversight Panel: October Oversight Report -
An Assessment of Foreclosure Mitigation Efforts After Six Months (October 2009)

How to Talk to Your Loan Servicer

If you are under water on your house, and you may have problems like keeping up with your payments, you may need to contact the organization or company that is servicing the loan. It can be a bit scary dealing with the process, but if you do a little preparation ahead of time, and make an effort to keep track of what's going on, talking to the loan servicer should not be a problem.

Before you have any conversation with your loan servicer, the one thing you must do is prepare for it. Take the time to record your income and expenses, and calculate the equity in your home. To calculate the equity, estimate the market value and subtract the balance of your first and any second mortgage or home equity loan. You shouldn't subtract the maximum amount of any home equity line of credit, only subtract the amount of that line of credit that you have actually used.

Then, before you even talk to the loan servicing agent, write down ahead of time the answers to the following questions if that situation applies to you:

- Missed Payments: What happened to make you miss your mortgage payment or payments? Do you have any documents to back up your explanation for falling behind? How have you tried to resolve the problem?

- Can't Make Future Payments: Is your problem temporary, long-term, or permanent? What changes in your situation do you see in the short term, and in the long term? What other financial issues may be stopping you from getting back on track with your mortgage?

- Need to Make Serious Changes: What would you like to see happen? Do you want to keep the home? What type of payment arrangement would be feasible for you?

Foreclosure Process
If the situation has gotten to the point where foreclosure is a possibility, or if the foreclosure process has already started, you should do the following:

- Keep notes of all your communications with the servicer, including date and time of contact, the nature of the contact (face-to-face, by phone, email, fax or postal mail), the name of the representative, and the outcome.

- Follow up any oral requests you make with a letter to the servicer. Send your letter by certified mail, “return receipt requested,” so you can document what the servicer received. Keep copies of your letter and any enclosures.

- Meet all deadlines the servicer gives you.

- If he foreclosure process has already started, stay in your home, Tou may not qualify for certain types of assistance if you move out. Renting your home will change it from a primary residence to an investment property. Most likely, it will disqualify you for any additional “workout” assistance from the servicer. If you choose this route, be sure the rental income is enough to help you get and keep your loan current.

The bottom line is to be prepared, take notes, and make sure that you document any formal requests or agreement that you have with the loan servicing company or representative. This is important to help you protect your rights during foreclosure or any other legal process you may face, and it will make it easy for anyone you may hire to help you through this process.

How Can You Spot A Telephone or Email Fraud and What You Should Do

You don't have to have mortgage problems to get fraudulent phone calls or emails. Whoever is on the other end wants something from you, usually your money, your identity, or your home, and they will stop at nothing to do it.

Many of them start their fraud in one of two ways, by phone or by email. No matter how to try to get to you, they use similar tricks. If you can learn to spot them, you can avoid getting burned.

- They are in a hurry: Fast talkers who use high pressure tactics could be hiding something. The same can be true for any email that tells you to ACT NOW!!! Take your time. Most legitimate businesses will give you time and written information about an offer before asking you to commit to a purchase.

- Paying for Free Stuff: If someone asks you to pay in order to get a gift, prize, or other benefit, watch out and hold on to your wallet. Free is free. If you have to pay, it’s a purchase – not a prize or a gift.

- Asking for Sensitive Information: Some callers have your billing information before they call you. They’re trying to get you to say “okay” so they can claim you approved the charge. Or, they’re trying to learn your account number. Don’t give it out unless you know who you are talking to and what you are buying. The same for an email that asks you to confirm your account by following a link in your email. Don't fall for it. If the company is calling you, and wants information from you, contact them yourself to confirm what they are saying.

- Wants You to Send Sensitive Information by Email: Would you put your bank account number, passport number, address, phone number, passwords, or Social Security number on a postcard and mail it to a total stranger? I didn't think so. Email is like an electronic postcard. Every computer system that touches it can read it. If you have to send sensitive information to anyone, make sure you are sending it to the right place.

- Asking for Too Much Information: If the person or the company is asking for something that they don't need or never got from you before, its probably a fraud.

- You Don't Know These People: If a bank you don't know emails you and says you have a problem with your account, its probably a fraud. If someone you don't know calls and asks you if you want to confirm your order or wants information, don't do it.

- It Doesn't Feel Right: If something about the email or phone call doesn't feel right, its probably a good idea to hang up or hit the delete key.

Credit Card Balance Transfers Can Help You Only If You Understand What You Are Doing and Why

If money is tight, and you either don't see a raise coming, or worse, you see your income dropping in the future, you may want to get creative and transfer your credit card balance to a card with a lower interest rate. Done right, it could save you money. Done wrong, it can cost you money and give you more financial hassles.

The process may not be smooth and easy. There may be fees, penalties, and other costs when you make the move to another card.

The one thing you have to do is read the fine print. Different credit card companies handle balance transfers differently, so if you have more than one card, read the rules carefully for each.

Rate Jumps
Most of the deals out there involve a low initial rate, followed by a higher rate. You should find out exactly how long the lower rate lasts, how high it will go, and what you have to do to make sure the rates change to the right amount at the right time.

You should also check out all of the other costs and administrative issues, like the following:

• Fees for moving the balance
• Whether that fee is a specific amount or a percentage of your balance
• The fees your old credit card company may charge for closing your account
• Fees, rates, and penalties for the new credit card company
• Whether you will be notified when a balance has been transferred or an old account closed
• What would have to happen for the new company to change the terms of the deal.

Beware of of anything in the agreement that lets your interest rate or fees step up several time. You may find that it starts with low or even no fees or interest, and over time the agreement allows them to boost those rates and charges up.

One way this may work is that you may transfer with no interest on your transferred balance and for new purchases for a few months. You then may see one rate for your balance and a very different one for new purchases. The deal may start off sweet, but turn sour.

Paying Off the Old Debt Early
Credit card companies make their money from interest and fees. If you can pay off your balance when the interest rate is at its lowest, you could be doing yourself a big favor. Look at the rules. You may have a situation where the interest rate on the transferred balance zooms up. To avoid surprises, take the time to come up with a realistic plan that takes into account the rules of the new card. If that new card gives you a chance to get rid of some bad debt and avoid future interest and penalties, do it.

Transfer Limits
Some companies may limit how much you can transfer or how many times you can transfer a balance. They may also have fees or penalties if you go beyond these limits.

Timing the Handoff
Pay attention to how long the whole process will take, and when you can stop paying on the old card and start paying on the new. Avoid paying for a balance in two places at the same time,even if it is only for one month.

The Big Picture
If you are changing cards to avoid high interest rates or high penalty fees with your old card, the biggest problem isn't the old card company, but rather your actions. Having a balance on a credit card shouldn't be normal, it should be something you avoid. It's one thing if your card balance is because of a short term situation. Proper planning should get you out of that situation over time. If your balance problem because you were spending too much on things you didn't need, then you should look at changing your behavior as well as changing your card company.

How Do You Stop Businesses from Calling You About Financial Offers or Deals That You Don't Want?

Often if you are having financial difficulties, word gets out and you may be approached by businesses that want you as a customer. This may even happen if you are in a neighborhood with a lot of homes under water or in foreclosure, and everyone in the area gets approached. While some of them may actually be helpful to you, most of the time they just annoy the heck out of you.

They can come at you with email, leave a flyer in your windshield at the mall, or even walk up and knock on your door. While you can't do much about those approaches, you can do something about businesses that call you up.

Basic Restrictions
Since the 1990s, US federal law puts limits on how businesses and organizations can use the phone to contact you. Anyone making a telephone sales or solicitation call to your home to provide his or her name, the name of the organization or person on whose behalf the call is being made, and a telephone number or address at which that person or entity can be contacted. They also can't call your home before 8 am or after 9 pm, and if during the call you ask them not to call again, they have to stop.

The National Do-Not-Call List
You can put your home or personal wireless number on a list that will keep most businesses from making sales or solicitation calls to you. Your number or numbers will remain on the list until you remove them or discontinue service.

Exceptions to the Do-Not-Call List Rules
Not every kind of business or solicitation call is covered. The following may call you even if your number is on the Do-Not-Call List:

- Political organizations
- Charities and other tax-exempt non-profit organization
- Groups or individuals conducting surveys
- Companies that have a previous business relationship with you, unless you specifically ask the company not to call again
- Bill collectors, including either primary creditors or collection agencies.

How to Get on the List
You can register your home phone number or numbers on the national Do-Not-Call list by phone or by Internet at no cost. You can go online at www.donotcall.gov or you can call 888-382-1222. You have to call from the phone number you wish to register. For more information on the national Do-Not-Call list, visit www.fcc.gov/cgb/donotcall.

MoneyandMinds.com is Your Source for Finding Out How Your Mind Thinks About Money and Debt

While Mortgage311.org is focused on mortgages, home equity problems, and foreclosures, the site MoneyandMinds.com has plenty of information about how the mind works when it comes to money, including common decision problems around money, credit, budgeting, investing, and shopping behavior.

Loan Modifications and the Making Home Affordable Modification Program (HAMP)

If you are under water on your mortgage, and you are having trouble making your payments, contact your loan servicer to discuss your options as early as you can. The longer you wait to call, the fewer options you will have.

Servicers are getting lots of calls: Be patient, and be persistent if you don’t reach your servicer on the first try. Also, it’s worth calling your servicer even if your request has been turned down before, since there may be new options available that may help you.

One of these loan modification options is the US government's called the Making Home Affordable Modification Program (HAMP). You may be eligible if the following apply to you and your loan:

- Your home is your primary residence

- You owe less than $729,750 on your first mortgage

- You got your mortgage before January 1, 2009

- Your total payment on your first mortgage, including principal, interest, taxes, insurance and homeowner’s association dues (if applicable), is more than 31 percent of your current gross income

- You can’t afford your mortgage payment because of a financial hardship, like a job loss or medical bills.

If you meet these qualifications, contact your servicer. You will need to provide documentation that may include:

- Information about the monthly gross (before tax) income of your household, including recent pay stubs.

- Your most recent income tax return.

- Information about your savings and other assets.

- Your monthly mortgage statement.

- Information about any second mortgage or home equity line of credit on your home.

- Account balances and minimum monthly payments due on your credit cards.

- Account balances and monthly payments on your other debts, like student loans or car loans.

- A completed Hardship Affidavit describing the circumstances responsible for the decrease in your income or the increase in your expenses.

Don't worry if you don't have all the information right now or if you are not sure if all the restrictions apply to you. If you think that this program is for you, call your loan servicer now and get the ball rolling.

Resources
Find out if you are eligible for the program

Avoiding Default and Foreclosure

Being underwater on your mortgage isn't a fun situation to be in, but so long as you can keep up with your payments and don't have to sell your home immediately, it isn't a situation that will affect you in a bad way. However, if you are falling behind in your payments, or know that you will soon be in a situation where you may start falling behind in your payments, you should consider discussing the following foreclosure prevention options with your loan servicer:

Loan Reinstatement
You pay the loan servicer the entire amount that is past due, plus any late fees or penalties, by a date you both agree to. This option may be a good one if your problem paying your mortgage is temporary.

Agree to a Repayment Plan
In this situation, the loan servicer gives you a fixed amount of time to make up for missed payments by adding additional funds to each regular payment. This option may be appropriate if you’ve missed a small number of payments.

Loan Forbearance
You can work with your loan servicer to reduce or suspended your payments for a period you and your servicer agree to. At the end of that time, you resume making your regular payments and you make additional payments, either in a single lump sum payment, extra funds with each regular payment, or some combinaton of the two, until you bring the loan current. Forbearance may be an option if your income is reduced temporarily, such as during a short term disability leave. Forbearance isn’t going to help you if you won't be able afford the additional payments.

Loan modification
You and your loan servicer can agree to permanently change one or more of the terms of the mortgage contract to make your payments more manageable. Modifications may include reducing the interest rate, extending the term of the loan, or adding missed payments to the loan balance. A modification also may involve reducing the amount of money you owe on your primary residence by forgiving, or canceling, a portion of the mortgage debt.

Keep in mind that under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. A loan modification may be necessary if you are facing a long-term reduction in your income or increased payments on your mortgage, which may be the case if you have an adjustable rate mortgage.

Before you ask for forbearance or a loan modification, be prepared to show that you are making a good-faith effort to pay your mortgage. For example, if you can show that you’ve reduced other expenses, your loan servicer may be more likely to negotiate with you.

Selling Your Home
Depending on the real estate market in your area, selling your home may provide the funds you need to pay off your current mortgage debt in full. If your loan is already under water, that is if the sales price is less than the amount on the loan, you will either have to pay the difference or make some other arrangement to close the deal.

A sale under these conditions is called a "short sale." This approach is especially good if you are trying to avoid the damaging effect that a foreclosure would have on your credit report. Depending on your expenses related to the sale, including moving expenses to your new home, you may be above water on your mortgage but still come out of the deal with less money in your pocket.

Bankruptcy
Personal bankruptcy generally is a legal procedure that is considered to be the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, and can make it difficult to get credit, buy another home, get life insurance, or sometimes, get a job.

If you and your loan servicer cannot agree on a repayment plan or other remedy, and if you have a regular income, you may want to look at filing a Chapter 13 bankruptcy. In this kind of bankruptcy, the court approves a repayment plan that allows you to use your future income toward payment of your debts during a three-to-five-year period, rather than surrender the property. After you have made all the payments under the plan, you receive a discharge of certain debts. It is even possible that you may be able to keep your mortgage property.

To learn more about Chapter 13, visit www.usdoj.gov/ust; it’s the web site of the US Trustee Program, the organization within the US Department of Justice that oversees bankruptcy cases and trustees.

If you have a mortgage through the Federal Housing Administration (FHA) or Veterans Administration (VA), you may have other foreclosure alternatives. Contact the FHA (www.fha.gov) or VA (www.homeloans.va.gov) to talk about your options.

What Is an Unconventional Loan, and Why Should You Care?

Let's answer the last part of the question first. If you have any kind of loan on your house, you should care about unconventional loans because those are the kinds of loans that are most likely to get you into trouble, whether or not you are underwater on your current home.

The easy answer the first part of the question is that an unconventional loan is anything that isn't a conventional loan. In a conventional loan, the interest rate and the term of the loan are fixed. This means that you know ahead of time how much you have to pay each payment period (typically each month), and how many times you have to do that until the loan is paid off. You pay the same amount each month, and every month you pay off a little bit of the original amount. At the beginning, you are paying almost all interest, and toward the end you are paying almost all principal. A conventional loan is also called a fixed loan. The classic conventional home loan is a 30-year fixed interest rate loan.

An unconventional loan is anything else. One type is the adjustable rate mortgage or ARM. The rate may start off low, but could go lower or higher depending on many factors. The bottom line is you don't know how much you will pay later on. Two other types popular unconventional loans include an interest only loans, and loans with aballoon payment (a big payment at the end of the loan period).

Unconventional loans can work for you, but you have to do your homework to figure out what surprises they may have for you. If you are underwater on your mortgage, you should review your loan documents to see if you have to deal with one or more of the following:

1. An interest rate that may change in the future.

2. A loan where you only pay interest and the principal never goes down.

3. A loan with a big payment due at the end.

4. A loan where the lender can change the amount you pay if certain conditions happen.

If you find out you have one or more unconventional loans, do so planning so that the loan doesn't surprise you and put you at risk for foreclosure.

For more information on loans and loan terms, visit the Federal Trade Commission.

Foreclosure and Lawyers: Why You Might Need One

If you have an underwater mortgage, you are probably worried about foreclosure. What you may not realize is that foreclosure is a legal process, and both sides have to take care of their legal business properly to get a good result.

While there are many programs to help those without resources to get free legal help, those resources are being overwhelmed by demand. A recent report from the New York University law school outlines a very bleak picture for those facing foreclosure. They report that in many communities across the nation, homeowners have no legal representation and as a result may have a foreclosure happen that could have been avoided.

What a Lawyer Can Do for You
The report talks about the many ways that lawyers may be able to help homeowners in a foreclosure situation. Four of the most important include the following:

1. Dealing with lenders and mortgage servicing companies that may have broken the law.

2. Helping to renegotiate loans.

3. Making sure that the legal process is being followed properly.

4. Obtaining protection under bankruptcy laws.

What You Should Do
If you are being foreclosed on, or are about to be foreclosed on, take action now. Find a lawyer or legal organization that can help you. In most cases, it won't cost you a time to have an initial consultation.

If you have organizations in your community that help homeowners facing foreclosure, get in touch with them and find out what resources may be available to you. Once you find them, get in contact with them and start talking.

Most of all, don't ignore the problem. If the foreclosure process has started, or you think it may start soon, take action now. Any delay makes it harder for you to work things. out.

Resources
Foreclosure Advice from the US Government

NYU law school report "Foreclosures: A Crisis in Legal Representation"

Mortgage Scams 101

If you are underwater with your mortgage, or if you behind with your mortgage or about to fall behind, you may be tempted to respond to some pitch to fix your problems for a fee. You may be facing a bigger problem--a mortgage scam.

The US Federal Trade Commission offers some decent advice on how to spot and avoid a scam.


Don’t Get Hit by a Pitch
“We can stop your foreclosure!”
“97% success rate!”
“Guaranteed to save your home!”

These kinds of claims that promise quick and easy relief are often part of a scam or a fraudulent operation. Steer clear of anyone who offers an easy out.

Don’t Pay for a Promise
Don’t pay any business, organization, or person who promises to prevent foreclosure or get you a new mortgage. These so-called “foreclosure rescue companies” claim they can help save your home, but they’re out to make a quick buck. Some may request big fees up front – and then stop returning your phone calls. Others may string you along before they tell you how much they will charges. If someone insists on a fee, it's time for you to stop talking, hang up the phone, or walk out of their office.

Send Payments Directly
Some scammers offer to handle financial arrangements for you, but end up keeping your payment. Send your mortgage payments ONLY to your mortgage servicer.

Don’t Pay for a Second Opinion
If you applied for a loan modification and was turned down, don't pay for a “second opinion.”

Be On the Lookout for Imitations
Some con artists use names, phone numbers, and websites to make it look like they’re part of the government. If you want to contact a government agency, type the web address directly into your browser and look up any address you aren’t sure about. Use phone numbers listed on agency websites or in other reliable sources, like the Blue Pages in your phone directory. You can even call a reference librarian at your local library for help. If you get sent an unexpected email, don’t click on links or open any attachments.

Talk to a HUD-Certified Counseling Agency – For Free
If you’re having trouble paying your mortgage or you’ve already gotten a delinquency notice, free help is a phone call away. Call 1-888-995-HOPE for free personalized advice from housing counseling agencies certified by the U.S. Department of Housing and Urban Development (HUD). This 24-hour hotline is operated by the Homeownership Preservation Foundation, a nonprofit member of the HOPE NOW Alliance of mortgage industry members and HUD-certified counseling agencies. You can also check out their website at www.hopenow.com.