Credit

Chase becomes first bank to drop arbitration clause

Lita Epstein Nov 23rd 2009 @ 4:15PM EST Filed Under: Credit, Debt, Credit cards

JP Morgan Chase became the first bank to drop its arbitration clause from its credit card contracts, so Chase credit card holders will have the right to go to court to dispute a problem with its credit card decisions.

This decision was part of a settlement of an antitrust lawsuit filed by Minnesota Attorney General Lori Swanson that involved the largest arbitration company, the National Arbitration Forum, in July. The Forum is no longer part of the process of consumer-debt arbitration, but the banks have not yet settled the suit. This move by Chase will likely encourage other banks to do the same thing.

While Bank of America became the first one to announce that it would no longer require credit card, bank account and auto loan customers to sign away their right to sue and force arbitration, it has not yet settled the existing lawsuit. Capital One Financial, HSBC Holdings and Discover Financial are among the other financial institutions named in the suit.

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Reckless lendings' fallout continues

Barbara Bartlein Nov 23rd 2009 @ 3:15PM EST Filed Under: Borrowing, Credit, Debt, Home, Real Estate, Bankruptcy, Mortgages

The Mortgage Bankers Association (MBA) reports that a record number of loans -- one in seven -- is delinquent, up from one in 10 a year ago.

Today's numbers also show that one in 22 families in the U.S. is in the process of losing their home, up from one in 34 a year ago. Based on these figures, we are now on track for 2.9 million foreclosure starts in this year alone.

The lenders' trade association is quick to blame this worsening trend on higher unemployment levels. But that ignores the fact that reckless lending precipitated the economic crisis and prolongs it each day with every new foreclosure, which forces down surrounding property values.

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Cash is king this holiday season

Lita Epstein Nov 19th 2009 @ 5:00PM EST Filed Under: Credit, Debt, Credit cards

About 71.5% of consumers will use cash, checks or debit cards this holiday season versus 28.3% who plan to use credit cards, which is about a 10% decrease from last year and a clear sign that consumers are weaning themselves away from credit cards.

As credit card interest rates climb along with credit card delinquency consumers clearly want to avoid digging an even deeper credit hole.

According to the National Retail Federation's 2009 Holiday Consumer Intentions and Actions Survey, U.S. consumers plan to spend an average of $682.74 on holiday-related shopping, a 3.2% drop from last year's $705.01. Only 28.3% of shoppers will use credit this year compared to 31.5% a year ago.

"Paying with cash is the best way to add a safety brake during holiday shopping. Studies show that consumers typically spend 12% to 18% less when we use cash for payment. Counting out and handing over cash is a sobering reminder of how much items really cost. It makes you pause and consider if the purchase is really worth your labor," Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook, told me by e-mail.

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Bad Idea: Company claims to know credit score from Twitter friends

Josh Smith Nov 17th 2009 @ 4:15PM EST Filed Under: Credit, Technology, Credit Reports

According to a data mining company, the old adage of being judged by the friends you keep translates easily into the digital friends you keep.

Rapleaf, a social media monitoring company, claims that by analyzing public information such as the friends you have on Twitter it can assess how creditworthy you are and how likely you are to respond to advertising.

Rapleaf monitors public digital conversations and stores away your Twitter and Facebook status updates, restaurant reviews, Amazon book reviews and plenty of other online public information in its database of 378 million profiles to profile you.

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How many mistakes can really hurt your credit score

Geoff Williams Nov 16th 2009 @ 3:30PM EST Filed Under: Credit, Credit Reports, Credit cards

This isn't quite the falling of the Berlin Wall, but in the credit scoring world, it's close. Apparently, for the first time ever, FICO, the company that has its famed credit scoring model, has released details on how a financial goof-up actually affects your credit score.

First, before I go on, credit for making credit scores a little less mysterious goes to Liz Pulliam Weston, a prolific and well respected columnist with MSN Money. She asked FICO for details on how they determine how late fees, bankruptcies, foreclosures and so on affect one's credit score, and they decided to actually be upfront about it. Or at least more upfront than they used to be.

Every time you make a financial mistake, these are known as "damage points." And the higher credit score, the more points these mistakes will cost you, which is interesting. In other words, the slide descending into bad credit can be faster and more pronounced than someone already on their way down.

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Faces of loan modification: Christine Attalla, Bolingbrook, Ill.

Amy Pyle Nov 15th 2009 @ 10:00AM EST Filed Under: Banks, Budgets, Credit, Real Estate, Recession

How well is the government's loan modification working? WalletPop's four-part special report continues with profiles of some of those trying to get help. To read the overview, click here.

Christine Attalla is among the lucky. The suburban Chicago homeowner not only got a temporary loan modification, but she's on track to convert it to a long-term adjustment before Christmas.

She even calls herself lucky, although when she does there's a quiver in her voice. That's because in the process, her credit took a beating.

For a solo entrepreneur -- Attalla, 38 and divorced, runs her own public relations company -- poor credit is a serious problem.

It all began last spring, when Attalla realized the economic downturn was making it increasingly difficult for her to manage her $3,000-a-month payment on her Bolingbrook home. And she was pregnant, so she knew she'd have less earning power later in the year.

Attalla heard from a friend about the modification program, applied in April through her lender, CitiMortgage, and waited.

She was approved for a three-month trial reduction -- for June, July and August -- which cut her monthly payments in half. If she kept current, she said, she would qualify for a permanent modification that started with a 2% interest rate and tiered up after a decade. So far, so good.

Continue reading Faces of loan modification: Christine Attalla, Bolingbrook, Ill.

Loan modification: Needed help or an exercise in frustration?

Amy Pyle Nov 13th 2009 @ 12:00PM EST Filed Under: Banks, Credit, Debt, Real Estate, Mortgages, Refinancing

How well is the government's loan modification working? Find out in this four-part WalletPop special report, which begins with this overview and continues with three profiles of those trying to get help, which can be found here, here and here.

If the goal of the federal government's loan modification program was to frustrate applicants, then it certainly is succeeding. But if its goal was to prevent foreclosures, the effort may simply be postponing that eventuality for many.

With an estimated 3.1 million mortgages at least two months delinquent, through the end of October, just 650,994 homeowners had received adjustments through the Home Affordable Modification Program (HAMP) -- a notable uptick from past reports and a measurable step toward the Obama administration's goal of helping 4 million by 2012.

But from the halls of Congress to Internet message boards, anger rises about mixed messages, delays and denials without explanation and, most tangibly, the sharp decline in converting short-term loan adjustments into something more meaningful.

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The debtor's diet, week 1 -- Money traps that don't have to trip you up

Gina Roberts-Grey Nov 13th 2009 @ 11:30AM EST Filed Under: Budgets, Credit, Economizer

Budgets are like diets. Both are tough to define. And neither one is easy to stick to -- especially when you're tempted over the holidays.

Experts say just like diets, budgets tend to be blown more often on the weekends than during the week. The theory: You've deprived yourself all week, so when the weekend hits, your will-power splits.

"It's easier to stick to a budget during the week than on the weekends," says certified financial planner Julie Murphy Casserly, founder of JMC Wealth Management in Chicago and author of The Emotion Behind Money: Building Wealth From the Inside Out.

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Lender BlueHippo slammed by FTC for allegedly collecting $15 million in exchange for nothing

Mitch Lipka Nov 12th 2009 @ 3:30PM EST Filed Under: Credit, Shopping, Technology, Consumer Ally

BlueHippo.com, which markets itself as a way for the credit-challenged to buy a new computer and other electronics, has been ripping off its customers and should be ordered to stop, the Federal Trade Commission told a federal judge today.

"BlueHippo is a company with a business model based on deceit," FTC Chairman Jon Leibowitz said in a statement. The company is also allegedly operating in violation of a 2008 agreement to settle a previous case brought by the FTC.

Among its complaints, the FTC says BlueHippo took in $15 million under the guise of financing computer purchases for their customers, but it neither provided the financing nor the computers. Fewer than 1 percent of customers received what they signed up for, the FTC said.

A call to BlueHippo's designated phone number for the media rolls into a voice mail that doesn't accept messages. And a call to their spokesman at the Washington, D.C. offices of an international public relations firm was not returned.

Continue reading Lender BlueHippo slammed by FTC for allegedly collecting $15 million in exchange for nothing

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