ING DIRECT Homeownership Survey

July 14th, 2009 Vijaianand No Comments »

I was contacted by ING DIRECT Corporate relation office and requested to share this informative public survey results. It is an eye opener bringing facts about Home ownership from real people.

Americans blamed low, no money down mortgages for economic downfall.

Wilmington, DE – Despite the mortgage crisis, two-thirds (67 percent) of Americans agree that homeownership is still an “aspirational” symbol of the American Dream, according to a recent ING DIRECT survey. But as lower housing prices are prompting Americans to revisit the housing market, the new survey also shows a lesson learned from the mortgage meltdown: save for a down payment.


More than four in 10 (42 percent) Americans think homes purchased with a bigger down payment in recent years could have reduced the number of foreclosures and prevented some of the current economic downturn, according to the survey.  With a larger down payment, Americans can move into their new homes with a lower interest rate, reduced debt and owe less interest over time.  In recent years, too many no-money-down mortgages were offered to homebuyers who could not afford to keep paying their mortgages after their homes lost significant value and the economy slowed.


“Owning a home is an opportunity, not an entitlement,” said Arkadi Kuhlmann, President of ING DIRECT USA.  “Sadly, that message has been lost in translation over the past several years.  Don’t trade your future for the instant gratification of owning a home you can’t afford in the long run.  It you want to own a home, save for it, and our survey shows that Americans agree. ” 


With low mortgage rates, more than 40 percent of American homeowners with a mortgage may refinance this year, according to the survey. Homeowners surveyed also indicated that they are seeking new options from the 30-year mortgage product.  Nearly four in 10 (37 percent) Americans said they are likely to consider a mortgage that allows borrowers to make bi-weekly mortgage payments at no charge.  Making payments every two weeks instead of once a month allows homeowners to pay off their mortgage faster.  


“For a saver, there is nothing more rewarding than finally becoming mortgage-free,” said Kuhlmann.  “Americans want home loans that eliminate years of payments and give them the freedom to own their homes sooner.”  
 
The national online survey was conducted within the United States by Harris Interactive on behalf of ING DIRECT between May 20-22, 2009 among 2,122 adults age 18+, 1,514 of whom were homeowners. No estimates of theoretical sampling error can be calculated; a full methodology is available.


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COBRA Subsidy – Is it helping?

July 1st, 2009 Vijaianand No Comments »

It has been 4 months since Mr. Obama signed the Stimulus bill and made American Recovery and Reinvestment Act of 2009 in Feb 17, 2009. It encapsulates number of tax incentives, extension of unemployment benefits and more bail out options. Many of those incentives and benefits are still not properly adapted and implemented by the concerned parties due to the lack clarity in the process. I talked about the incentives in my previous blog post. In this blog post, I am interested just about the unemployment benefit extension, COBRA Subsidy program which I hear many unemployed people are having tough time getting credit. 

Like Home Mortgage Modification plan when many lenders were hesitant to signup because of the complex process which is creating borrower anxiety. COBRA subsidy also fall under same category where streamlined process is not in place and employers were still looking for more instructions the government to implement.

When  announced, it was meant to help unemployed workers by reducing their burden of paying health insurance upto 65%. Is it really helping? That’s a question to be answered by Obama office and we won’t go there. I did some research and collected details on COBRA subsidy to post this blog with facts and figures.

What is COBRA?

If you are laid off, you should be aware of COBRA. Employers are required to offer COBRA by federal law to let the employee keep their health insurance plan when they lay off. If you aren’t aware and don’t remember employer offering this option, please contact your employer immediately. The coverage typically is available for 18 months but employee will end up paying the full insurance premium(with no employer discount) plus 2% admin fee.

It is an expensive coverage but helps in great extent for individuals who may not be able to obtain new coverage due to preexisting conditions. If you paid for $300 as a health premium for your family, you will end up paying $1000 + 2% fee apx when accept the COBRA coverage after you are laid off.

COBRA Subsidy

Under the new ARRA 2009 act, the subsidy will cover 65 percent of premiums for nine months. There are some caveats as usual. The subsidy will apply to premiums paid for periods of COBRA coverage beginning on or after February 17, 2009. It doesn’t do any good for self employed who has their own individual health insurance plans.


For more details, check it out at irs.org

Does it really helps?

Many people are just getting by an average unemployment weekly benefit of merely $300- $350. With COBRA, people need to pay 100% of premium + 2% fee, cost comes around $900-$1200 per month for a reasonable plan. Under the new bill considering the subsidy, they’re still looking at spending close to $400 – $500 a month out of their pocket. It helps but not to a great extent. People are going to have to think long and hard about whether they can afford to extend their coverage under COBRA.

Loop Holes and Hassles

After reading comments from people on different sites, I summarized this section to bring to attention about some holes and hassles which is creating lot of frustration.

1. You might end up paying 35% of the premium from the day when you are laid off or lost your medical coverage not when you sign up for COBRA. If you lost the job in March and signed up COBRA in Jun 2009 because of process delay or any reasons. You still end up paying premium from the day you lost your medical coverage.

2. It can take months until you get information about COBRA subsidy from your employer. Be prepared to shell out 100% premium for those months which can be refunded or credit back as soon subsidy kicks in.

Help Available

I also found these information for people who are waiting for COBRA to kick in. If you don’t have COBRA yet, during emergency, a county hospital will take you in. You will get a bill, but once the subsidy comes in, you can submit the claim to your COBRA carrier to get it refunded. 

For prescription, You can try PPA – Partnership for Prescription Assistance. Go to their website, see if your Rx is on their formulary, if they are, download and fill out the form, have your Doctor complete the rest and mail it in to the address on the form. You should get an answer within 30-days for free or low-cost Rx drugs until you get your insurance.

Check out the lastest update about the COBRA subsidy posted on  U.S. Department of Labor website. For more questions, you can also call their hotline at 866.444.3272(no charge).


Families USA, a non-profit healthcare advocacy group, has posted a page with detailed information about the subsidy.

More Resources

8 questions about COBRA Subsidy
www.retirementrevised.com

Mortgage Modification Scams

June 24th, 2009 Vijaianand No Comments »


“Pay us $1,000, and we’ll save your home.”

“File for bankruptcy and keep your home. Call us”

“Loan Modification Lawyer, Call to keep your home.”

I noticed many of these signs newly popping up along the roadside in recent days. I also saw forum questions increasing about same loan modifications scams. There are questions like “Can I use the Loan Modification Lawyer to get my loan modified?”. I want to yell them saying “Noooooo, stop it. Don’t do it”. But they won’t hear it. I decided to put a temporary brake on my previous Bargaining blog series to do some research to publish this blog post.


Scams are like virus to our community. Consider last month’s Swine flu episode. When the flu was announced as pandemic by WHO (World health organization), it sent strong signal to all countries health organizations. They were put in the alert mode. One side, we heard many victims lost their lives to the deadliest virus. On the other, it created an opportunity for scientist to prove themselves at this crunch time. Many countries medical organizations started researching about the virus in an effort to find a vaccine.

Governments started working vigilantly informing and communicating to people via various media to create awareness about the flu. More awareness creates more carefulness by people which stops the spread of the virus. 


Similarly, scams follows the same trend. People lose their money to scams and produce a shocking news. These first time victims are unavoidable. But it eventually creates an alert situation to make others alarmed and cautious. Now people will be careful to approach anyone who provides same service in the future. Government and regulatory organizations are turned to work harder to stop these scams and put more stringent rules to avoid holes on future programs.


Why Loan Modification Scam?

Scams are bad but I hate when they take advantage of already worn out homeowners who are scrambling for any outlet. As per Scammers, they are just looking for new things to tap in their culprit mindset to earn quick cash. It doesn’t matter whether economy is bad or people are going thru hardship.

Mr.Obama announced this program in Feb 2009 to help out distress home owners. It seemed really viable solution but there were hurdles in implementing this program. It took time and great deal of paper work for the lenders and mortgage companies. Meanwhile, Scammers took the time into their advantage and started advertising to work as intermediataries to help the homeowners.


Truth of the matter, you don’t need an intermediatary for loan modification program. Your lender/mortgagor servicer should be able to help you out directly because they not only going to earn great deal from the transaction. They are also paid incentives from the government for doing every loan modification. They might take more time because of too many mods but they should be able to work with you if your situation really calls for it.

Do we have help?


Government cracked down on fraud and deception by mortgage modification and home foreclosure rescue companies. 

On 4/6/2009, FTC announced five law enforcement actions targeting perpetrators of mortgage-related scams. According to the FTC, these schemes typically operate in the following way. First, they use terms like “guarantee” and “97% success rate” to mislead consumers about the mortgage modification or foreclosure relief services they can provide; they charge up-front fees for these “services” – fees legitimate nonprofit organizations do not charge; and they use copycat names or look-alike Web sites to appear to be a nonprofit or government entity. Often, after collecting the fee, these companies do little or nothing to help consumers. Please read more details at http://www.ftc.gov/opa/2009/04/hud.shtm


Consumer advisory group also started campaigns spreading more awareness  on the Obama Home Modification program and how to be cautious on scams. This advisory provides tips on how to identify scams and what you should do. Check it out.


What can you do?


1. Approach your lender or mortgagor directly for any loan modification programs. They get incentives from government to do your loan modifications. They should be very happy to help you out.


2. Paying any upfront fees or sign papers with any third party agents is a big NO NO.


3. Do proper research over the internet and check on Better business bureau or legal organization for their legitimacy before using any service.

Visit the government website http://www.makinghomeaffordable.gov/ to get more information on Home Affordability and Stability Programs.

Scams/Scammers needs to be quarantined when identified and needs to create awareness among people to save them before they become a victim.

Please help spread the word around!!

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