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New Home Sales Up in April; Average Price $282,600

2012-05-23T17:21:23Z

A bit more encouraging news for the overall housing market arrived today with data for April showing a higher than projected jump in new home sales.

Sales of new single-family houses in April 2012 were at a seasonally adjusted annual rate of 343,000 units, according to U.S. government estimates.

This represents a 3.3 percent increase over the revised March rate of 332,000 and is 9.9 percent above the April 2011 estimate of 312,000.

Economists polled by Reuters had forecast sales at a 335,000-unit rate in April. The median estimate in a Bloomberg News survey of 72 economists was also 335,000.

The median sales price of new houses sold in April 2012 was $235,700; the average sales price was $282,600.

The seasonally adjusted estimate of new houses for sale at the end of April was 146,000, representing a supply of 5.1 months at the current sales rate.

The National Association of Realtors reported yesterday that existing-home sales rose more than forecast in April, with the median resale price for all housing types jumping 10.1 percent to $177,400 compared to a year ago.

Nationwide housing affordability hit a new record high for a second consecutive quarter in the first three months of this year, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), released last week.

However, tight lending conditions continue to pose a major obstacle to many prospective home buyers.

The latest HOI data found that 77.5 percent of all new and existing homes that were sold in this year’s first quarter were affordable to families earning the national median income of $65,000.

Higher One’s Student Debit Cards Target of Class Action Suit

2012-05-23T16:29:17Z

Soaring student loan debt is mostly measured in outstanding balances, but there are companies aligned with the nation’s public universities that charge student additional fees for accessing financial aid refunds via debit cards.

These companies manage financial aid disbursements, including Higher One, which reported a net income of $32 million in 2011, a 27 percent jump from a year earlier.

Sherry McFall, a student at Ventura College in California, claims Higher One automatically creates bank accounts for unsuspecting college students, according to a class action lawsuit she recently filed.

“Many students pay Higher One unconscionable bank fees with borrowed money, often at 7 percent interest or higher,” the lawsuit states.

In 2010, Higher One took in at least $66 million on so-called “convenience fees” charged to students, the suit said.

Higher One has arrangements with hundreds of colleges, including Ventura College, in which a student’s grant, scholarship and or loan money is automatically deposited into a Higher One bank account “without the authorization or consent of students,” McFall contends.

Colleges and universities, including Ventura College, then send student mailing address and email address information to Higher One without receiving consent, according to the suit.

Higher One uses this information to begin sending marketing mail and email to students, encouraging them to use Higher One banking services for their financial aid refunds, which are a student’s financial aid money (whether from grants, scholarships or loans) left over after the school deducts its tuition and fees, according to the suit.

Shoba Lemoine, spokesperson for Higher One, told The Huffington Post that the company’s debit card is optional and activated only if students select that method for receiving a refund.

“If Higher One has been hired by the school to handle the disbursements as a whole, then yes, the student has to work with Higher One to tell us how they would like to receive their refund, no matter what method they choose,” Lemoine told The Huffington Post.

Prepaid Cards to See First-Time U.S. Rules: Consumer Agency

2012-05-23T15:17:55Z

Prepaid cards that can be reloaded and often carry a litany of hidden fees are about to get their first dose of U.S. regulatory oversight, just as the market for such a payment method is surging.

The Consumer Financial Protection Bureau is considering rules that should apply to these cards, used by more than 7 million consumers.

The total dollar value of funds loaded onto these cards is growing at an annual rate of 42 percent.

The amount on prepaid cards is expected to reach $167 billion in 2014, more than 13 times the total of $12 billion for 2007.

But the CFPB is also looking for the public input before issuing its rules.

“As the market continues to grow, we want to learn more about the costs, benefits, and risks so that we can determine what protections are needed and what consumers need to know to make the best decisions for themselves,” the CFPB said in a statement.

The agency is looking for guidance on how to “provide the consumer with transparent, useful, and timely fee disclosures” for prepaid cards.

Click on the full “Advance Notice of Proposed Rulemaking” to see the specific questions on which the CFPB is seeking input.

HARP 2.0 Drives Mortgage Refinancing to 3-Month High

2012-05-23T14:49:02Z

A wave of refinancing borrowers seeking record low interest rates helped lift mortgage applications 3.8 percent from one week earlier, according to data from the Mortgage Bankers Association for the week ending May 18.

This is the third consecutive weekly increase in the association’s Refinance Index, which is at its highest level since February 10, 2012.

The Refinance Index increased 5.6 percent from the previous week.

A big factor in the refinancing wave is the Obama Administration’s enhanced Home Affordable Refinance Program, more commonly known as HARP 2.0. The program has been extended to eligible borrowers deeply “underwater” in their mortgages, owing more than the worth of their homes.

HARP 2.0, which has been up and running since March, has drawn half a million applications as of the last report by U.S. housing officials.

The HARP share of refinance applications was essentially unchanged over the week at 28 percent, according to the mortgage bankers.

“Mortgage rates again dipped to new record lows in the survey, which spurred more borrowers back into the refinance market,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “As a result, applications for refinance loans have increased for the third straight week and are at the highest level since February of this year.”

The overall Market Composite Index, a measure of mortgage loan application volume, increased 3.8 percent on a seasonally adjusted basis from one week earlier.

The refinance share of mortgage activity increased to 76.6 percent of total applications from 74.9 percent the previous week.

This is the highest refinance share since March 2, 2012.

Credit Card Nation: 40% of Households Get By on Plastic

2012-05-23T14:07:33Z

More than a third of U.S. households relied on credit cards to pay for living expenses, such as rent or mortgage bills, groceries, utilities or insurance, in the past year, according to a new survey on the third anniversary of credit card reform.

While 40 percent of Americans used plastic to cover these expenses, nearly the same percentage of households have experienced tighter credit, such as having cards canceled, credit limits reduced, or being denied a card when applying.

The survey by the think tank Demos is the third such study since 2005.

However, the results are striking because the rate of dependency on credit cards is about the same as that found in the last survey conducted in 2008, the height of the financial crisis.

Those who relied on credit cards did so because they did not have did not have enough money in their checking or savings accounts.

In February and March 2012, Demos surveyed a nationally representative sample of 997 low- and middle-income American households who carried credit card debt for three months or more.

In 2012, the average credit card debt totaled $7,145, down from $9,887 in our 2008 survey.

That lower average credit card debt is indicative of a wave of American’s “getting our financial house in order” during economic hardship, Demos said.

But the same is not necessarily true for low-income and many middle-income households struggling during the prolonged economic recovery.

Three years ago, President Obama signed into law landmark credit card reform – the Credit Card Accountability Responsibility and Disclosure Act, or Credit CARD Act – that restricts some interest rate hikes and penalty fees, and provides many other first-time protections for consumers.

The Demos survey found that the Credit CARD Act is helping households pay down balances faster and avoid fees.

One third of households are responding to new information included on credit card statements by paying their balances down faster.

The number of households who report paying late fees on their credit cards has declined dramatically. In the 2008 survey, half of households reported accruing late fees – in 2012, it was just 28 percent.

Those who did make late payments were significantly less likely to see their interest rate increase as a result: 24 percent fewer households reported interest rates increasing as a result of a late payment in 2012 than in 2008.

CableWiFi: Sharing Plan Unites 5 Providers, 50K Hotspots

2012-05-23T01:39:57Z

“CableWiFi” sounds generic, but it actually refers to a precedent-setting cooperative, with five of the biggest U.S. cable companies providing wireless Internet access to their combined customer bases.

Comcast, Time Warner Cable, Cablevision, Bright House and Cox will allow each other’s high-speed Internet customers access to more than 50,000 hotspots.

CableWiFi is the network name created as an extension of the Wi-Fi services offered by the Internet service providers.

By year’s end, the five companies will launch their 50,000 hotspots across the country, opening up access to competitors’ customers. In out-of-network areas, users will be able to log on to hotspots labeled “CableWifi.”

The first phase is already complete as Bright House Networks and Cablevision launched “CableWiFi” alongside their branded Wi-Fi networks in the New York City area and central Florida earlier this month.

“We believe that Wi-Fi is a superior approach to mobile data, and that cable providers are best positioned to build the highest-capacity national network offering customers fast and reliable Internet connections when away from their home or business broadband service,” said James L. Dolan, Cablevision’s President and CEO.

The participating cable operators combined offer Wi-Fi hotspots throughout New York City and the surrounding Tri-State area, Los Angeles, Tampa, Orlando, and Philadelphia.

The cable providers plan to continue to grow the number of Wi-Fi hotspots and expand into several additional cities. The network has both indoor and outdoor hotspots located in popular, high traffic locations, such as shopping districts, cafes, malls, arenas, restaurants, parks and beaches.

This is the largest Wi-Fi sharing effort among cable operators to date.

In early 2010, Cablevision, Comcast and Time Warner Cable entered into an agreement allowing their customers in New York City, Long Island, New Jersey, Philadelphia and Connecticut to access Wi-Fi hotspots offered by each operator in these areas.

SEC Eyes JPMorgan’s Veracity in Financial Disclosures

2012-05-22T20:40:57Z

The Securities and Exchange Commission is reviewing whether JPMorgan Chase violated rules on timely and accurate disclosures in the wake of the bank’s staggering multi-billion-dollar losing trades.

In other words, regulators want to know exactly when JPMorgan Chase executives knew about irreversible and mounting losses in its credit derivatives, disclosed publicly May 10.

“We’re investigating right now whether their earnings statements and first-quarter financial reports are accurate and truthful,” said Securities and Exchange Commission Chairman Mary Schapiro at a Senate Banking Committee hearing on implementing derivatives reform.

Both Schapiro and Commodity Futures Trading Commission Chairman Gary Gensler told lawmakers they first heard of the losses from media reports.

The CFTC is conducting its own investigation to determine if there was any fraud or manipulation in JPMorgan’s trading of credit default swaps and related indices, considered at the heart of the bank’s risky bets.

The SEC’s Shapiro said she did not have oversight of the London-based transactions that triggered the still-climbing losses that initially was pegged at $2 billion by chief executive Jamie Dimon.

But various media reports now have the losses topping $3 billion – and counting.

“If they knew something a month earlier about what was going wrong, should they have disclosed that to the SEC, CFTC?” said Sen. Richard Shelby of Alabama, the top Republican on the banking committee. “You are investigating right now: What did they know, when did they know it and what should they have divulged.”

The heads of the CFTC and the SEC used their testimony to emphasize how the bank’s losses exemplify the need to fully implement the provisions of the 2010 Dodd-Frank Wall Street reform, which includes the “Volcker Rule” for mitigating risk to federally-insured depository institutions from risky proprietary trading.

American Express: Don’t Leave FarmVille Without It

2012-05-22T18:37:47Z

American Express has forged some unique partnerships, especially within its extensive foray into social media.

The latest venture marries the venerable charge card and the Serve digital wallet with FarmVille, the make-believe society that features plastic payments as prominently as real life on Facebook or other platforms.

Under its latest partnership with Zynga, the provider of FarmVille and other social games, American Express will initially issue prepaid cards that carry both its name and that of FarmVille or Zynga.

To get a card, FarmVille users must sign up for a Serve account, which customers can fund with existing bank accounts, debit and credit cards.

“We’re thrilled to expand our relationship with Zynga and provide an easy way for players to earn Zynga virtual game cash by learning about Serve and signing up to receive the many benefits of our digital wallet,” said Dan Schulman, President of Enterprise Growth, American Express

FarmVille allows players to cultivate their Farms by plowing, planting and harvesting crops and trees.

As part of the Zynga Serve Rewards phased program, FarmVille players now have the ability to plant an interactive “Serve Money Tree” in their farms, giving them the ability to level up in game and earn Zynga “farm cash” for virtual awards redemption.

Once players place the tree, they will be prompted to take certain steps to earn “farm cash” in connection with the co-branded card through July 31, 2012.

Similar Zynga Serve Rewards programs will be introduced in additional games such as CastleVille and CityVille over the course of the year, so players can redeem rewards to purchase a variety of virtual goods from their favorite games.

For more information on Zynga Serve Rewards, visit: www.Serve.com/Zynga.

Harvard Grad Erases $90K in Student Loan Debt in 7 Months

2012-05-22T16:55:58Z

Joe Mihalic

Harvard graduate Joe Mihalic paid off his $90,000 student loan debt in a remarkable seven months, becoming a blog celebrity after his story hit most major media outlets.

His blog, nomoreharvarddebt.com, has gone from 300 hits a day to tens of thousands.

Mihalic’s success has struck a chord with a nation beset with a stunning $1 trillion in overall student loan debt.

President Obama has made easing student loan terms an issue in his campaign. And lawmakers have been trying to reach an accord on how to prevent a doubling of rates from 3.4 percent to 6.8 percent on federally subsidized Stafford loans. They must take action before July 1 to extend the lower rate for another year.

Meanwhile, Mihalic’s e-mail inbox is overwhelmed with advice seekers, students in debt and congratulatory remarks from strangers.

“Over the past few days, my inbox has been flooded with hundreds of emails thanking me for being an inspiration; some folks have asked for advice on how they can do the same thing,” Mihalic, who is from Austin, Texas, wrote yesterday in his blog.

How did Mihalic accomplish the feat of paying of $90,000 in student loans? For one, he has a good job with a six-figure salary at Dell, Inc. But he also had plenty of other expenses beside his student loan debt.

“I had a mortgage on my house and two cars and a motorcycle, and I had become accustomed to spending $1,300 per month on entertainment,” Mihalic wrote in his blog. “I wouldn’t say I was living above my means, but I certainly wasn’t living below them, either.”

Mihalic applied his savings toward lowering the debt, but it “barely made a dent.”

Here are the highlights of his journey toward a zero balance in student debt – in his own words:

During the past seven months, I haven’t gone on a single dinner date or been to the movies;
I took a flask with me every time I went out with friends;
I stopped contributing to my 401k;
I didn’t go home for Christmas;
I missed my friends’ bachelor parties and weddings;
I got better at DIY (do-it-yourself) and figured out things like how to use duct tape to repair my car and zip-ties to repair my house;
In the past seven months, I haven’t bought a single article of clothing or a single “must-have” gadget or gizmo. I’ve completely eschewed consumerism, and it actually felt pretty good;
To make extra money, I rented my spare bedrooms to strangers on Craigslist, I tried pedi-cabbing, and I started a landscaping business;
I sold my second car, my motorcycle, my roadbike, and a bunch of random junk on Craigslist. I got rid of things that I thought I could never live without, and it actually felt pretty good.

Median Home Resale Price Up 10% Over Year Ago: Realtors

2012-05-22T14:36:11Z

Existing home sales rose more than forecast in April as the median resale price for all housing types jumped 10.1 percent to $177,400 compared to a year ago, according to the National Association of Realtors.

Home resales remain above a year ago, while home prices continue to rise – a double dose of optimism for the struggling housing market if the trends hold.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – increased 3.4 percent to a seasonally adjusted annual rate of 4.62 million in April, from a downwardly revised 4.47 million in March, and are 10.0 percent higher than the 4.20 million-unit level in April 2011.

The national median existing-home price for all housing types jumped 10.1 percent to $177,400 in April from a year ago. The March price showed an upwardly revised 3.1 percent annual improvement.

It was the biggest year-over-year home price jump since January 2006.

“This is the first time we’ve had back-to-back price increases from a year earlier since June and July of 2010 when the gains were less than one percent,” said Lawrence Yun, NAR chief economist. “For the year we’re looking for a modest overall price gain of 1.0 to 2.0 percent, with stronger improvement in 2013.”

Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 28 percent of April sales (17 percent were foreclosures and 11 percent were short sales), down from 29 percent in March and 37 percent in April 2011.

Foreclosures sold for an average discount of 21 percent below market value in April, while short sales were discounted 14 percent.