It's Your Money

Inflation was tame in South Florida in 2010

Fri, 14 Jan 2011 12:25:02 -0500

Consumer prices in South Florida rose strongly as last year ended, but the region’s inflation rate was tame.

The local Consumer Price Index for Miami-Fort Lauderdale increased 0.6 percent in the two months ending in December, the federal bureau of Labor Statistics reported Friday. For all of 2010, South Florida’s inflation rate was 0.9 percent, lower than the nation’s 1.5 percent annual rate. And that was a decline from 2009, when the annual inflation rate nationwide was 2.7 percent and the local inflation rate was 1.3 percent.

The Bureau of Labor Statistics releases local inflation figures every two months and the national figure monthly. It measures the trends in Miami-Dade and Broward Counties, but not in Palm Beach County.

South Florida consumers who are paying suddenly higher gasoline prices and putting out more cash for food following recent winter weather in Florida may find the inflation report surprising. Transportation, including the price of gasoline, medical care and food prices all jumped higher in December in South Florida.

But the recent increases were not enough to move the annual rate up significantly. Miami-Fort Lauderdale region actually had falling prices at the start of 2010. Consumer prices stabilized as the summer ended.

After two years of falling inflation, the trend in 2011 may head in the other direction. Economists point out that oil and other commodities are up strongly, which could push up the overall inflation rate in 2011.

Making a budget? Here's something new for your toolbox

Fri, 14 Jan 2011 08:00:00 -0500

After saving for five years to finance an around-the-world trip, Daniel and Jill Tobias knew how to make a budget to fund something special.

But their system actually was a bit clunky.

Daniel Tobias said his spreadsheets were just too complex. “I gave a few friends copies and they never used them,” he said.

So while he was on the road – for almost two years, roaming from San Diego to South Africa and home again – Tobias tinkered with his system and came up with a better version.

Back home now in Cooper City, Tobias has launched www.doughhound.com. It’s a free, online budgeting or spending plan that has flexible budget periods and categories that users can customize for regular use or for a project or goal, like, say, financing a world tour. Users make the rules and track their own spending.

There are plenty of places online where you can create a budget. But the unique thing about Tobias’ online budgeting tool is that users don't have to reveal their bank or credit card information.

“With so much identity theft occurring, people are hesitant to put personal information on a third-party site,” he said. That's why he decided to eliminate any concerns about security.

The start-up is designed to make money from advertising.

Foreclosure: AG investigation widens

Wed, 12 Jan 2011 12:16:14 -0500

Florida Attorney General Pam Bondi’s office has expanded its investigation of foreclosure law firms beyond false court documents and the so-called “robo-signers” who were producing them in huge volumes.

Spokeswoman Jennifer Davis said, in response to questions from the Sun Sentinel, that the investigation is also focusing on allegations of misconduct by attorneys, in addition to others who worked at the large law firms that formerly handled most of Florida’s foreclosure cases.

Among the allegations she said the attorney general’s office is examining:

Law firms padding bills in order to get higher final judgments for lenders at foreclosure. The allegation is that bills submitted in court documents contained inflated fees for process serving -- the procedure for delivering legal notices to those involved in court cases -- that were higher than what the firms actually paid for this service.

Attorneys submitting blank bills in court documents that didn’t reveal the actual amount of their fees

Lawyers steering business to title companies owned by the principals in their law firms.

Law firms filing foreclosures before the lender or loan servicer shows that it has a legal interest in the mortgage.

Davis did not indicate which firms are facing which allegations. She also said there is no timetable for the investigation to be concluded.

Bondi’s predecessor Bill McCollum launched the investigation last year of four large foreclosure law firms – the law offices of David J. Stern, Shapiro & Fishman, Florida Default Law Group and the law offices of Marshall C. Watson.

Bondi won election last November and took office earlier this month.

Stern’s Plantation-based law firm, which launched a publicly traded company to handle back-office functions for foreclosure cases, has come under additional pressure as its major clients Fannie Mae and Freddie Mac pulled their business. Stern’s business subsequently laid off hundreds of employees.

Attorney Holly Skolnick of the law firm Greenberg Traurig in Miami said her client - the law offices of Marshall C. Watson - is cooperating with the attorney general’s investigation. “We expect to resolve whatever issues [are raised],” she said.

Attorney Gerald Richman, who represents Shaprio & Fishman, pointed out that it is not illegal for a laywer to own a title company. The expansion of the Attorney General’s investigation “ is very much of a fishing expedition.” He said Shaprio & Fishman “has done noting wrong.”

A lawyer for Stern could not be reached for comment, despite several attempts by phone and e-mail. A spokeswoman for Florida Default Law Group did not respond to requests for comment.

Bondi’s spokeswoman said the new attorney general has met with representatives of the Florida Bar to discuss the issues. “General Bondi has made the foreclosure crisis one of her main areas of focus,” Davis said.

Foreclosure: AG's office says process in "total disarray"

Tue, 11 Jan 2011 10:59:38 -0500

Florida’s foreclosure process has become a “virtual morass” of fake documents and faulty practices by “mill” law firms spewing out unverified paperwork, Associate Florida Attorney General Patricia Conners told the Florida Senate Committee on Banking and Insurance Tuesday.

In a legislative update on the Attorney General’s investigation of the state’s foreclosure crisis, Conners stopped short of saying what newly elected Florida Attorney General Pam Bondi will do about the situation, which developed over the last three years before Bondi took office.

But, in prepared remarks to the committee, she outlined several possible solutions:

Require loan servicers “to get the paperwork right” before filing for foreclosures;

Create incentives for lenders and investors to modify mortgages rather than foreclose;

Streamline the short sale process; and

Have lenders and investors compensate title insurers for damages or losses due to faulty paperwork.

Conners’ comments echoed an Attorney General office report issued last week that indicates the problems include instances of false paperwork, fake signatures and improper certification by notaries. The report showed that investigators have documented cases of foreclosure processors swearing to the truth of thousands of documents that they have not verified and homes being foreclosed upon by a bank that did not hold the mortgage note.

To remedy those problems, individual court circuits are becoming active. Starting Jan. 1, Palm Beach County's chief judge has instructed banks to start attaching each mortgage payer's payment record to some foreclosure case documents to double-check the official papers that banks file with the courts.

Judges in New York and New Jersey, too, have become openly critical of lenders’ foreclosure methods, in some cases citing irregularities in Florida foreclosures as the reason. And lawyers nationwide are sorting out the ramifications of a Massachusetts Supreme Court ruling last week that invalidated two foreclosures in that state because the lenders could not prove they owned titles to the properties.

Conners described the Florida foreclosure process as “total disarray “in her update on the investigation. Florida’s foreclosure problems have gained national attention because, as Conners indicated, Florida’s foreclosures represent half of all the pending cases in the 23 states that use a judicial process to resolve foreclosures.

The update did not include any specific actions that the AG’s office has taken to resolve the problems.

Conners said the office’s investigation of foreclosure law firms began with the allegations of “robo-signing” -- in which employees routinely signed huge numbers of documents without verifying the information the documents contained. But those investigations have expanded into “other apparent irregularities.” She did not give any details or did not respond to questions after the hearing.

Conners said the AG’s office is working with the attorneys general in the other 49 states on ways to restore “integrity” to the foreclosure process and reportedly discussing a possible settlement with major lenders in Florida and elsewhere.A report on that effort is expect sometime this spring.

There are also ongoing investigations into the foreclosure process nationwide by the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Housing Administration and the Justice Department.

Talk first, file foreclosure later, or never

Tue, 11 Jan 2011 08:00:11 -0500

Government-owned mortgage giants Fannie Mae and Freddie Mac are considering whether to force loan servicers in South Florida to go to mediation with some troubled homeowners before a foreclosure even begins.

The initiative would be a major new step in the process for those borrowers who cannot make their mortgage payments in Broward and Palm Beach Counties. The new procedure has recently begun in Miami-Dade for some loans.

“The writing is on the wall that foreclosures aren’t going anywhere,” said foreclosure defense attorney Roy Oppenheim. “If they are willing to engage in meaningful alternative dispute resolution, that’s good news.”

Currently, borrowers complain that they can’t get their banks to talk to them in many cases or they get caught in a maze when trying to modify their mortgages. Most mediations only happen after a foreclosure case is filed. Borrowers can ask their lenders to go to mediation in Broward before the foreclosure process begins, but there’s no requirement that they do so.

Once a foreclosure case is filed, Florida courts since last July have forced all lenders and borrowers to go to mediation for homesteaded properties.

These mediations have so far resulted in few property owners reaching an agreement with their lenders.

A major obstacle, mediators say, has been finding borrowers and getting them to participate.

Ned Pope, director of the program at The Collins Center for Public Policy, which runs the mortgage mediation program in Miami-Dade, said he is looking for better results with the pre-filing mediation program – begun last month by Fannie Mae in Miami-Dade only. It would start the mediation process quickly, about two months after a borrower stops paying the mortgage.

That jump start is a “game changer,” he said. “By the time (a foreclosure case) gets to the courts, it is eight or nine or 10 months down the road,” Pope said. The new procedure kicks in just 65 days after the loan is delinquent. “If we reach more borrowers, that will allow us to reach more settlements,” Pope said.

Fannie Mae said it was requiring all of its loan servicers to participate in the pre-filing mediation program – for homesteaded properties -- in judicial circuits like Miami-Dade where The Collins Center, a statewide public not-for-profit group, handles mediations.

A spokeswoman for the mortgage giant said it is “assessing” taking the program to other judicial circuits, including Broward and Palm Beach.

“Fannie Mae’s primary goal is to help struggling borrowers avoid foreclosure by reaching out to them early in the delinquency phase and providing information on retention and other foreclosure alternatives,” said Fannie Mae spokeswoman Janis Smith.

Brad German, a spokesman for Freddie Mac, said Monday it is considering a similar program in which attorneys handling Freddie Mac loans would begin mediation before a legal case is filed. The program is being considered for “high intensity” foreclosure areas, including South Florida, he said.

Your money Q&A: Options for cutting credit card debt

Mon, 10 Jan 2011 11:26:16 -0500

I’m struggling to pay my credit card debt. I have already convinced my card-issuer to cut the interest rate. Are there other options?

You can try a balance transfer. The options for doing this have improved recently.
A balance transfer makes sense if you can significantly lower the interest rate, which will direct more of your money toward paying off the balance. It makes even more sense if after the transfer, you don’t add any more purchases and spend your time whittling away at that balance.
There are some interesting deals being advertised. Among them: Discover More card, which has a zero percent rate on balance transfers for 12 months, plus no fee for the balance transfer.
Citi Platinum Select Master Card offers 0 percent on balance transfers for 21 months. However, that offer comes with a balance transfer fee of 3 percent and no cap on that fee.
You can shop around for card deals at Bankrate.com, CreditCards.com, CardRatings.com, LowCards.com. But be sure to look carefully. Each card comes with its own terms and conditions. The Citi card offer is only available to new customers.

Stocks: Itty bitty but positive long-term returns

Wed, 05 Jan 2011 12:06:37 -0500

Remember the lost decade?

It was the decade from 2000 through 2009 in which major stock market indexes were virtually flat.

For a few really bad years, it looked like it was going to be the down decade. Flat was at least better than that.

Doing the numbers again, let's go back to 2000 and see what's up. Primarily because of the last two years, the indexes are agead, When you add in dividends, the figures are almost strong.

The Dow, from the end of 2000 to the end of 2010, gained 7.33 percent and posted a total return -- price increases plus dividends -- of 36.38 percent
The Standard and Poor's 500, down 4.74 percent, but a 15 pecent total return.
The Nasdaq, up 7.38 percent and a 15.25 percent total return.

How can you use these figures? You can use these numbers to fend off any claims of hyped stock market returns.

If anyone tells you that stocks produce an average return of .....and you name the figure..... you should understand that the average annual returns in recent years have been small. Very small.

For the Dow, the average annual return from 200-2010 was 3.15 percent. For the S&P 1.41 percent and the Nasdaq 1.43 percent.

Foreclosure: Reforms for robo-signers, false documents

Tue, 04 Jan 2011 10:06:20 -0500

Bloomberg is reporting there might be a deal between 50 state attorneys general and five major loan servicers about reforming their foreclosure practices. You can read the story here.

Your money Q&A: How do I find a financial planner?

Tue, 04 Jan 2011 08:00:00 -0500

Where can I get a list of certified financial planners? I have some financial decisions I must make and I do not trust the companies that are trying to sell their products. I need a financial planner to get some good advice that is not attached to selling a bond or annuity or some sort of investment plan. - Barbara

That sounds very sensible, as the new year begins. You seem to know what you want, so I'd suggest you interview several planners to decide who merits your trust.

One way is to look for a certified financial planner at www.cfp.net. You put in your zip code and you are given a list of planners nearby, whether they are in good standing with the Certified Financial Planner Board of Standards and indicates if the person has any history of being disciplined.

You can expand your search by checkinig out those who have another designation, Personal Financial Specialist. That is a certified public accountant who also does financial planning. You can find local names by searching the American Institute of CPA’s list, under the “For the Public” tab at www.aicpa.org.

Jonas Brothers, my daughters and money

Mon, 03 Jan 2011 09:50:18 -0500

Once a year, I write about my family and money. Over the holiday weekend, you may have missed my column on the Jonas Brothers, my daughters, and money.

Here it is. Hope you enjoy it.

Wells Fargo to modify $2 billion in mortgages

Tue, 21 Dec 2010 12:09:24 -0500

A story in the American Banker today says Wells Fargo has agreed to modify $2 billion in payment-option adjustible rate mortgages, all of them originated by Wachovia and World Savings.

These were known as "pick-a-pay" loans and were considered especially at risk for default.

The agreement reportedly came through a settlement negotiated by California's Governor-elect Edmund Jerry Brown and will affect 14,000 homeowners there.

I've asked Wells Fargo/Wachovia whether this will impact any Florida borrowers. I'll let you know what I hear.

Foreclosures: Broward halts sales, hearings

Mon, 20 Dec 2010 10:31:55 -0500

For the holidays, major lenders are halting foreclosure evictions and some South Florida courts are canceling hearings as well as foreclosure sales.

Mortgage giants Fannie Mae and Freddie Mac plan to halt foreclosure evictions during the Christmas and New Year's holidays.

Bank of America also said it will pause its foreclosure sales and evictions from “late December through New Year's Day,” on loans in its portfolio or held by investors who will allow such a moratorium.

In Broward, the 17th judicial circuit has canceled all scheduled foreclosure auctions through the end of the year. Any foreclosure hearings set for that period must also be rescheduled, according to the courts.

In Palm Beach County, Chief Judge Peter Blanc said he hasn’t issued a smilar order, although sales can be canceled by request to the judge overseeing the case.

Major lenders last year also called a halt to evictions at this time of year.

But many loan servicers had already drastically slowed or stopped the process starting in September, to deal with shoddy paperwork and faulty legal processes.

Information from The Palm Beach Post supplemented this article.

Your money Q&A: What's the standard deduction?

Mon, 20 Dec 2010 10:06:08 -0500

What are the standard deduction and personal exemption amounts for 2010?
-Mildred, Boca Raton
There’s only one change from last year. The head of household standard deduction goes up $50 to $8,400. The rest of the standard deductions remain the same -- $11,400 for married couples filing jointly, $5,700 for singles and married filing separately.

Each personal exemption is worth $3,650.

But note: You cannot take an additional standard deduction for real property taxes. This expired last year and was not extended in the Tax Relief Act of 2010.

And one more caution: “I can understand taxpayers are eager to file their returns so they can get their refunds early,” said IRS spokesman Michael Dobzinski. “Whether you are using e-file or paper, wait for your W-2s to file. Employers have until Jan. 31 to provide W-2s.”
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Need help with a money problem?
Columnist Harriet Johnson Brackey is working with South Florida financial advisors to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA

The most-asked personal finance question of 2010

Wed, 15 Dec 2010 14:23:38 -0500

No surprise: Four of the top five questions asked at Bills.com this year had to do with mortgages. In 2009, the San Mateo, Calif.-based web site says its most-asked questions were more diversified. They were about credit cards and 401(k)s and car payments.

But houses and mortgage debt certainly have been the topics of the year. So with a drum roll, here's the most-asked of the almost 3,400 questions posed:

Can my second mortgage lender foreclose if I stay current on my first mortgage but default on my second?

And here's an answer, from me: The second mortgage lender -- for most of us, that's going to be in the form of a home equity line of credit or HELOC - usually has the right to foreclose but may decide not to do it.

Real estate attorney Shari Olefson of Fowler White Boggs in Fort Lauderdale explains, "The reason they don’t often foreclose is because they would take title subject to the first mortgage. One problem is a default on his or her HELOC would probably be considered a default under the terms of the first mortgage – the first could then foreclose if they want to."

Florida home prices, from top to bottom

Wed, 15 Dec 2010 10:41:32 -0500

Here's the prediction for the average home price in Florida, during the boom and beyond, from Moody's Analytics. It'll get any homeowner's heart pounding.

Moody Analytics is forecasting an astounding drop, from peak to trough, that is not yet over. That’s from the height of the real estate boom to the bottom, which is still six months away.

For Florida, home prices will fall 52.4 percent from the second quarter of 2006 through the second quarter of 2012. The drubbing won't be over until next summer.

In the U.S., the peak-to-trough ride is a little shorter and somewhat less rough. Moody's Analytics says it will be a 33.75 percent drop from the first quarter of 2006 (the nation peaked earlier than Florida) to the second quarter of 2012.

Home prices nationwide had never, since the Great Depression, fallen on a year-over-year basis.

Now, we’re heading into the sixth year of falling prices.