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Report on college loan delinquency rate raises alarms

By Don Lee, Los Angeles Times — Wed, 07 Mar 2012 17:16:00 GMT

As many as 1 in 4 borrowers was carrying a past-due student loan balance in the third quarter, a much higher delinquency rate than previously thought, according to the Federal Reserve Bank of New York.

Reporting from Washington—

Some experts have called the nation's soaring college debt load a "ticking time bomb" — a looming crisis threatening young adults, their families and the broader economy.

A new report raises even more alarms: It's likely that as many as 1 in 4 borrowers was carrying a past-due student loan balance in the third quarter, the Federal Reserve Bank of New York said Monday.

That's a much higher delinquency rate than previously thought. By a more conventional measure, the New York Fed said, 5.4 million of 37 million borrowers with student loan balances had at least one past-due student loan account — a 14.6% rate.

Many educators are concerned about the increasing financial squeeze on college students and their families and the repercussions for the nation's economy.

W. Norton Grubb, a professor at UC Berkeley's School of Education, is worried that rising debt levels are forcing some students to drop out. Only 40% to 50% of those enrolling at universities such as the California State University schools end up completing their degrees, he said.

Such figures have helped bolster a long-held belief by scholars that America's declining or stagnant college graduation rates have become an Achilles' heel in the competitive global economy.

The New York Fed report concluded that "student loan debt is not just a concern for the young. Parents and the federal government shoulder a substantial part of the post-secondary education bill."

Skyrocketing debts may be pushing some graduates into areas of work that have a bigger immediate payoff, such as finance, as opposed to what they want to do or what may produce more benefits for them and society in the long run.

"The debt levels are distorting what fields people are taking on," Grubb said.

The New York Fed said the past-due balances on student loans amounted to $85 billion, or about 10% of the total owed. The same 10% rate applies on average to other types of consumer delinquent debt, such as mortgages and credit cards.

But Fed researchers said delinquency figures for student loans understate the magnitude of the problem. That's because the calculations don't take into account that federally guaranteed loans, which make up the bulk of student debt, typically don't require repayment while borrowers are still in school and for six months after graduation.

If those who are temporarily exempt from making payments are excluded, the report said, the number of borrowers with past-due balances would jump to 27% of the total. And the outstanding balances that are late would rise to 21%. Both figures are about double the unadjusted rates.

As for private, non-guaranteed student loans, Moody's Investors Service reported recently that the default rate in the fourth quarter was 5.1%, about the same as a year earlier.

Still, that rate is about double what it was before the 2007-09 recession. Moreover, the Moody's report noted that some private student loan measures indicated that the pace of defaults is rising and that the problem isn't likely to get better any time soon.

"High unemployment will keep defaults high," Moody's said.

Economists, meanwhile, have differing opinions about the strain of student loans to the broader economy. But there's reason to be concerned on this front.

When asked about such risks by a lawmaker in a hearing last week, Federal Reserve Chairman Ben S. Bernanke replied, "Well, student loans are becoming a very large category of loans."

Indeed, the New York Fed put the latest outstanding student loan balance at $870 billion. That's more than the total credit card debt, $693 billion, and car loan debt, $730 billion.

What's different about student loans is that most of the lending is done by the U.S. government. Even so, as Bernanke noted, if federal lending isn't well managed, it could hurt taxpayers.

Bernanke, in his exchange with lawmakers, added a personal dimension to the student loan issue, saying that his son in medical school expects to owe $400,000 when he graduates.

About 167,000 people, or about one-half of 1% of all student-loan borrowers, owe more than $200,000, the New York Fed said in its report, which drew from Equifax credit data. The average balance per borrower: $23,300.

don.lee@latimes.com

Which cash-back credit cards are best for you?

Herb Weisbaum — Wed, 22 Feb 2012 07:01:00 GMT

Over the past year, a lot of banks ditched their debit card rewards programs while continuing to push their cash-back credit cards.

All cards are not created equal, but there are resources out their to find the best card for you.

According to a report from Bankrate.com, nearly half of the cash-back credit cards it surveyed pay back 1 percent from the first dollar of spending. About 14 percent of the cards pay more than 1 percent, and relatively few charge an annual fee.

"If you have a cash-back credit card and you're not getting at least 1 percent back on all of your purchases, or you're paying an annual fee, it's time to search for another card," said Greg McBride of Bankrate.com.

To encourage you to use their cash-back card, some banks haven an introductory offer that's mighty sweet.

Reach a certain spending threshold within the first couple of months and you get extra money back.

For example, with the Chase Freedom card if you spend $500 in the first three months you get a $100 cash bonus.

McBride said many cards pay 5 percent on certain shopping categories, such as gasoline, groceries and travel. These bonus categories rotate every month or every quarter.

But there's a catch: You have to sign up for the bonus.

"You get halfway through the quarter and realize you never signed up, you've missed out on that higher payout ratio for whatever purchases you've made up until that point," McBride said.

As with all reward cards, cash-back cards charge a higher interest rate than traditional credit cards.

That's why these cards are only for people who pay off the balance in full each and every month.

"If you carry a balance even occasionally, the interest charges will more than wipe out whatever reward that you've earned," McBride said. "So even if you only carry a balance once or twice a year, you need to focus instead on the lowest interest rate possible and ignore the rewards cards."

You also need to be careful that you're not tempted to spend more and bust you budget just to rack up that cash-back reward.

Here are a few good sites that make it easy to compare credit card offers: Bankrate.com, Credit.com, Lowcards.com and CreditCards.com.

Consumer Financial Protection Bureau Complaints Tallied For 2011

Ben Hallman Ben Hallman ben.hallman@huffingtonpost.comr — Tue, 07 Feb 2012 19:28:00 GMT

The new Consumer Financial Protection Bureau has received about 12,000 complaints over the past six months from consumers who had problems with their credit cards and mortgages, according to the CFPB's semi-annual report to Congress.

In the half year ending Dec. 31, 2011, the agency received 9,307 credit card complaints and 2,326 mortgage complaints through its website, by phone, and through referrals from other federal regulators, according to the report released Tuesday.

What are people upset about?

There is no clear winning category among credit card complaints. "Billing disputes" edged out "Identity theft/fraud/embezzlement," but collectively accounted for about a quarter of all complaints.

More than half of all consumers who contacted the CFPB with a complaint about mortgages reported issues over making payments, or problems they experienced when they were unable to pay, such as related to loan modification or foreclosure.

Established under the Dodd-Frank financial regulation law and launched last July, the CFPB has sought input from consumers on how it should carry out its mission, soliciting specific complaints regarding credit cards and mortgages. The number of complaints received so far should help the agency better understand consumer beefs. But, it represents just a small fraction of the universe of possible complaints the bureau could potentially receive, given the current foreclosure crisis and the more than 500 million outstanding credit card bills, according to the report.

"The consumer response system is still in its early stages," said Jennifer Howard, a CFPB spokeswoman. "We are using our website and public events to publicize the system and coordinating with other agencies to ensure consumers know CFPB is here to help. We expect that volume will pick up as more consumers learn about it."

The CFPB passed along about 75 percent of all the complaints it received to the company involved in the dispute. Slightly more than half -- 55 percent -- of those complaints were reported as "closed with relief," meaning the company resolved whatever issue it was that led to the complaint. About 30 percent were closed without relief -- were not resolved -- and the rest are pending, according to the bureau.

The bureau also provided some information in the report about how consumers felt about those actions. About 40 percent of consumers "did not dispute" the action the company took in response, while 13 percent of consumers did dispute the responses. Nearly half of all customers have not yet replied to the CFPB to tell the agency what they think about the response.

What is missing from the report is any indication that the agency was anything but a conduit for these complaints, though the agency previously said in a press release about credit card complaints that they "provide potential insights into issues within the credit card marketplace that may inform the CFPB across its full range of activities: supervision, enforcement, rulemaking, research, and consumer education."

It is also quite likely that a bank or a credit card company would take a complaint forwarded along by its regulator more seriously than one that came through directly from a consumer.

The agency's most significant public outreach thus far has been a year-long request for feedback on efforts to both make mortgage documents more transparent and also to make it easier for the housing industry to comply with various federal laws. Over seven rounds of testing, the CFPB received about 27,000 individual comments on its website providing feedback on the prototype mortgage forms. Roughly half of these comments were provided by consumers and half by industry representatives, the bureau said.

Kodak files for Chapter 11 Bankruptcy

By Steve Sink, Rochester Democrat and Chronicle — Thu, 19 Jan 2012 17:28:00 GMT

Kodak files for Chapter 11 bankruptcy

ROCHESTER, N.Y. – Eastman Kodak Co., running short of cash and unable to sell 1,100 digital imaging parents that could have rescued it, filed Thursday for protection from its creditors under Chapter 11 of the US. Bankruptcy Code.

The iconic Rochester company, whose history dates to the late 19th century and the technical and marketing genius of founder George Eastman, has been besieged for the past three months by rumors that it would make a bankruptcy filing. Those rumors had intensified in the past two weeks.

"After considering the advantages of Chapter 11 at this time, the board of directors and the entire senior management team unanimously believe that this is a necessary step and the right thing to do for the future of Kodak," CEO Antonio M. Perez said in announcing the decision.

Tackle holiday debt now, before you find you can't keep up

TERRY SAVAGE tsavage@suntimes.com — Tue, 17 Jan 2012 15:34:00 GMT

Here they come — the post-holiday credit card bills. They’re a potent reminder of the cost of the holiday season. In just the one week before Christmas, it’s estimated that Americans spent $44 billion. Much of that last-minute shopping was done in a frenzy of emotion, without thinking about the cost of the gift — or the finance charges that will accrue until the bills are paid.

How will you deal with those bills that start arriving in your mailbox this week? Well, don’t just set them aside and let them pile up, hoping to keep the holiday glow alive. Late fees are very costly, and will result in even more interest charges. Open the bills, take a close look — and add up what you owe.

Here are three Terry’s Tips for dealing with your credit card bills promptly — even if you can’t pay the full balance.

Paydown plan

Beware of that comforting little number — the minimum monthly payment. Yes, it keeps your credit in good standing if you pay only that amount, but it leaves such a huge balance that soon you’re paying interest not only on your purchases, but on the finance charges from previous months. And the way the minimums are calculated, it could take as long as 30 years to pay off your card if you make only the required minimum monthly payments!

Instead take the current minimum payment, and double it — and pay that amount. Then write that number down on your checkbook or a post-it on your computer screen — and keep paying that same amount — no matter what the next bill says. If you keep paying double the original minimum, and never charge another penny, your balance will be paid off in less than three years! This works, no matter what the size of your current balance.

Transfer balances

Another way to deal with the problem is to transfer the balance to another card. Just don’t fool yourself into thinking that by transferring your balance to another card you are making a dent in your obligation. But if you have a high interest rate card, you can save some money on finance charges — for a while — by transferring your balance.

At www.LowCards.com, there are some tempting card offers of zero percent finance charges for a period of up to a year. That will give you some breathing room while you pay down the balance.

But read the fine print on each offer. When the grace period expires, the rate could jump dramatically. And you may have to pay a balance transfer fee in the month after you transfer — so ask about how much that could cost you. And of course, if your credit is already in trouble, no card issuer wants to deal with your balance.

Get help

Don’t be a sucker twice. This is the time of year when all kinds of ads and commercials appear offering to help you negotiate your credit card balances. These companies know that in the next few months consumers will be most desperate.

But there is only one place to turn for reliable advice and help. The National Foundation for Consumer Credit has member agencies across the country. If you call their toll-free number — (800) 388-2227 — you’ll automatically be connected to the nearest local agency. Or go to their website at NFCC.org for more information.

You can make an appointment for a personal visit, or discuss your situation over the phone. The counseling is free or at a very low cost. And if you just talk to them about the best way to handle your situation, there is no record of the counseling on your credit report.

If you are truly buried in debt, they will help by putting you on a debt repayment program, where you send them one agreed-upon check every month, and they parcel the money out to your creditors, who have agreed to take a lower payment. They can sometimes reduce interest charges and get previous fees waived. This plan does go on your credit report — but can help you to a fresh start.

The agencies do receive subsidies from card issuers — but they are honest and will let you know if bankruptcy is a better alternative.

Credit card debt is a problem that grows like an untreated disease, if you don’t pay attention. Despite bankruptcies and charge-offs in recent years, Americans still have nearly $1 trillion in outstanding credit card balances. You can complain about the banks and card issuers making so much money collecting all that interest and fees. But the best way to get back at them is to use their money for a month — and then pay your balance in full. That’s the Savage Truth.

Terry Savage is the Chicago Sun-Times’ nationally syndicated financial columnist, and a registered investment adviser. Post personal finance questions on her blog at TerrySavage.com and blogs.suntimes.com/savage.

You can expect more bank fees in 2012!

Maggie Shader (consumerreports.com) — Mon, 16 Jan 2012 16:44:00 GMT

Banks will continue to experiment with fee increases in the New Year, according to our own analysis and industry experts, as they attempt to make up billions in lost revenue due to the bad economy and new regulations.

Here is some of what you can expect for 2012:

Higher penalty fees: Overdraw your account, and you’ll probably pay more. It costs banks just a few cents to handle a debit-card transaction, but when an account is overdrawn and the bank has to figure out what happened, the cost can escalate to $13.
Less-favorable rates: Banks could try to reduce their losses by increasing the interest-rate margin—the spread between what they pay to borrow money and what they charge to lend it. That could mean higher lending rates, especially on credit cards and other unsecured loans, as well as on auto loans.
Charges for premium services: Customers could see new or higher charges for premium services, such as safe-deposit boxes, online budgeting tools, or person-to-person payments, such as Chase’s QuickPay service, which allows you to send money to someone else using just an e-mail address or cell phone number.
Move toward electronic banking: Banks save when you serve yourself, just like gas stations do when you pump your own. So expect them to push computer and mobile-phone banking. That means you might pay more if you use a teller or speak with someone on the telephone. Some banks might present the changes as a perk, not a fee.
Big credit-card push: Banks are likely to encourage the use of credit cards, says Bill Hardekopf, CEO of LowCards.com, a consumer resource for credit-card information in Birmingham, Ala. They get a swipe fee when someone uses a credit card, and so far those fees have escaped regulation that has made debit cards less profitable for banks.
More relationship accounts: Banks will probably dangle more carrots and brandish more sticks to get you to consolidate your accounts at a single institution, which will mean more fees. But you can avoid them by, for example, having direct deposit of your paycheck or linking your savings and investments.

For more predicted changes, you can see our report Take on your bank, which appeared in the February issue of Consumer Reports. The full report also includes reader ratings of services at 13 national brokerages in Where to put your money (available to subscribers).

—Maggie Shader (consumerreports.com)

Obama's New Consumer Finance Chief Can Lower Student Debt

Rich Williams Higher Education Advocate, U.S. PIRG (Huff Post) — Thu, 05 Jan 2012 20:14:00 GMT

President Obama took a bold and important step this week, standing up for student consumers by making a recess appointment of former Ohio Attorney General Richard Cordray to head the new Consumer Financial Protection Bureau (CFPB). The president's action means that the CFPB now has all its powers to protect students from unfair financial practices that pile on student debt, including lenders offering dangerously expensive private student loans and aggressive credit and debit card marketing.

Every year, students graduate owing tens of thousands of dollars before they've even earned their first paycheck. The average student now graduates with over $25,000 in debt -- while student loan debt nationally has surpassed all credit card debt, reaching a whopping $1 trillion.

Even worse, hundreds of thousands of students also assume expensive private student loans before exhausting more consumer-friendly college financing options. Private student loans pile more debt on students because they provide the worst rates and terms to students with the greatest financial need. In addition, students are targets for high interest, high-fee credit cards and debit cards on campus.

The CFPB is a new kind of regulator designed to do one job and do it well -- protect Americans from toxic financial products. However, since July 21, the CFPB has been up and running, but only with partial powers. Now, with a director in place, the CFPB has additional abilities that kick in -- including the right to regulate private student lenders like Sallie Mae.

An agency to protect students from toxic financial products sounds like it should be a no-brainer with bipartisan support -- and it is. Recently, 37 state Attorneys General, on a bi-partisan basis, had sent a letter to the Senate urging confirmation of Rich Cordray.

Yet, at the behest of both the Wall Street banks, some Senators had opposed confirmation of any CFPB director. In May, 45 Senators had written the president and told him that they would block confirmation of any director until and unless the CFPB's independence and authority were first restricted. They want the CFPB weak and powerless and with a tin cup in hand. Then, on Dec. 8, 45 Senators blocked Cordray's nomination. (Final vote: 53 Aye -- 45 Nay, but 60 Ayes needed to invoke cloture (aka defeat a filibuster)).

Fortunately, President Obama has acted to protect students and rejected these outrageous demands to weaken the bureau. The president did his job with the recess appointment of Richard Cordray to direct the CFPB. Now, the CFPB can do its job, protecting students from unfair financial practices.

Gift Cards: Use Them Before You Lose Them!

Lynn Oldshue ( — Thu, 05 Jan 2012 19:55:00 GMT

The holiday presents have been unwrapped and most of us received at least one gift card. Now is the time to shop with these cards while they are still fresh in our hands.

The National Retail Federation predicts that 80% of people have purchased gift cards this holiday season and shoppers will spend an average of $43.23 per card. Total holiday spending on gift cards
in 2011 will reach $27.8 billion. That number grows each year because gift cards are the easiest present to give, saving time and shopping stress for the giver.

Surprisingly, it is also a present that goes unused. Last year, 113 million Americans received gift cards during the holidays, but at the start of the 2011 holiday shopping season, a quarter of recipients still had an unused gift card from last year (Consumer Reports).

Gift cards aren’t spent as quickly as a cash gift. We slide them into a wallet or drop them in a drawer, lose them, or forget about them. We let that money waste away. The best time to use a gift card is soon after you receive it. Use them before you lose them.”

What happens to unused gift cards? The Securities and Exchange Commission allows companies to count unused gift-card money as income once they can reasonably say the card won’t be redeemed. However, some states require unused gift cards to go to an unclaimed-funds accounts. Those states can then use the unclaimed funds for general purposes until someone claims it.

Here are some consumer tips for using a gift card:

* Use them before they expire. Merchant and bank-issued gift cards must now be good for five years, thanks to the CARD Act provisions. Reloadable cards can expire five years after the money was last added.

* Research the fees. Some cards, like bank-issued cards, also charge fees, such as a monthly fee after 12 months of inactivity.

* If you will not use the card, or would prefer to have the cash, you can resell the card. There are several sites, such as PlasticJungle.com and CardPool.com, that are a marketplace to buy, sell, or exchange gift cards. You may receive as much as 80%-90% back for your gift card. Some cards are worth more than others and the price can vary between sites.

* Turn your gift card into cash for investing or saving. GoalMine.com trades unused gift cards for cash to fund your GoalMine account. Receive 150% of the initial $50 of card value on your first card if you’re opening a new account, and market value for the rest.

* Donate your gift card to charity and get a tax deduction. Many national charities and foundations, like the Kidney and Urology foundation, accept gift card donations.

Class Action Participants

Haley — Thu, 08 Dec 2011 00:05:00 GMT

PRICE LAW GROUP CLIENT ALERT:

YOU MAY BE ENTITLED TO RECOVER $5000 FROM CREDITORS AND DEBT COLLECTORS WHO SPOKE TO YOU ON THE TELEPHONE!

The Price Law Group has teamed up with consumer class action attorneys investigating claims against the following companies:

National Recovery Agency

Northland Group

Allied International Credit

ARS

Capital Management Services

Creditors Interchange

Real Time Resolution

SST System and Services Technologies

Vanderbilt Mortgage

West Asset Management

We believe these companies have been secretly recording phone calls with consumers such as yourself without giving adequate warning. California law provides for the recovery of penalties in the amount of $5000 per call.

If you spoke to any of these companies on the telephone over the past year, you can be represented by class action attorneys without charge and hold these companies accountable.

Please immediately contact our consumer protection team at (866) 210-1720 or email us at classaction@pricelawgroup.com

We look forward to hearing from you.

P.S. Telemarketers also frequently violate this law. If you receive telemarketing calls and want to help us identify the violators, contact us and we will let you know how you can help.

Thank you and have a great day!

G. Thomas Martin, III, Esq.

Price Law Group, APC

15760 Ventura Boulevard

Suite 1100

Encino, CA 91436

Toll Free: (866) 210-1720

Email: classaction@pricelawgroup.com This is an automated e-mail and may or may not apply to you.

Visit at www.PriceLawGroup.com

Holiday Shopping Tips

Haley — Fri, 02 Dec 2011 18:15:00 GMT

The holiday season seems to entice us into overindulgence. Eating too much turkey or drinking too much spiced cider is one thing. Using your credit cards to purchase too many gifts is another.

With the holiday season upon us now and the "sales" dangled over our wallets to spend more than we can afford, some self discipline can help guide the way.

Limiting holiday credit card purchases.

Credit cards give us a false impression that you we can buy more gifts than you actually can afford.

Gifts you purchase on credit cards will end up costing you more. If you add up all the finance charges in the end you'll ultimately pay more for your gifts if you'd used cash. You're once 50% discount on those shoes your brother needed is now gone and eaten up by finance charges.

Once the season is over there may be unexpected expenses that you did not plan for, thus lengthening your credit card debt.

Avoiding Holiday Debt

As soon as you've made the choice to keep your credit card purchases within a sensible limit, here are some tips for implementing your choices:

Save up. Spending cash instead of using credit for your holiday purchases allows you to avoid holiday debt all together. If you haven't started saving start now, put aside a little each paycheck and use that to finance your holiday purchases.

Set a budget. Setting a spending limit and sticking to it will help to keep you from overspending. Be disciplined and don't go over your budget, no matter what.
Make a list. If Santa himself makes a list and checks it twice, why can't you? Even though you might feel compelled to overindulge on everyone in your life, you don't have to. Your friends and family appreciate simple and meaningful over luxurious and useless.

Use layaway. Layaway vanished for a small number of years, but a lot of big retailers, like Kmart and Wal-Mart, are bringing it back for the holiday season. Starting early means you can put a little toward your holiday purchases each month. In the end, you will walk away free and clear of debt.

Ignore "big" sales. More often than not, they're not really sales at all. Those "Buy 1, Get 1 Half Off" deals only mislead you into purchasing more than you would otherwise. Remember, stick to your list.

Shop online first and know your retailers. The internet makes it easy to shop around. It also makes it harder to buy impulse purchases. Price shop amongst retailers for the best prices, PriceGrabber.com and Retailmeknot.com are great sites for comparing prices and for coupon/promotional codes. Look for those coupons codes that stack to save extra and for free shipping.

If you can't afford it don't' buy it. When you purchase items using credit, you're barrowing against your income. You are the only one who knows your finances better than anyone. Only charge what you can afford and you'll avoid paying on your holiday debt until the next holiday season.

By sticking to a few straightforward spending principles, you can keep your holiday spending to a minimum and stay away from paying for holiday gifts 2 and 3 times over.

Happy Thanksgiving

Price Law Group — Tue, 22 Nov 2011 01:01:00 GMT

Happy Thanksgiving from your friends at Price Law Group

Real estate woes deepen as home prices face more pressure

By Diana Olick, CNBC.com — Mon, 14 Nov 2011 19:25:00 GMT

Home prices are highly seasonal, due to the different mix of homes that sell at different times of the year, but the latest reading for September shows home prices are under added pressure now; this is not just due to the high concentration of distressed properties on the market.

Prices fell 1.1% month to month, according to CoreLogic, both in seasonally adjusted and unadjusted terms. This is the second consecutive month of monthly drops, as we head into the slower fall season.

The more concerning aspect of the report is that while home prices including foreclosures and short sales fell 4.1% from September of 2010, they still fell 1.1% when you exclude distressed sales.

That has not been the case in previous months.

"The acceleration in the rate at which the CoreLogic house price index is falling reflects the slowing in the pace of job creation and wider economic growth earlier this year," says Paul Diggle of Capital Economics.

While the unemployment picture has weighed heavily on home prices all year, the new uptick in foreclosure starts will likely have a more drastic effect. Foreclosure start rates on severely delinquent loans have increased to over 10% a month in the private-label RMBS (residential mortgage backed securities) sector, according to Fitch, which is now estimating another 10% decline in home prices before they fully stabilize.

Paul Diggle doesn't agree with the 10% drop. "After all, relative to historical norms housing is now about 25% undervalued against incomes. And with mortgage rates lower than at any point in the past 40 years, mortgage affordability looks favorable," he argues.

That may be, but he's not taking into account consumer confidence, or lack thereof. 36% of Americans say that mortgage rates will go up over the next year, according to Fannie Mae's October housing survey. That's up from the previous month. They also expect rents to rise, and yet a full third still say they would rent their next home rather than buy it. More telling is that 77% say the economy is on the wrong track and an all-time high expect their financial situation will stay the same over the next year.

That's not a great atmosphere for a surge in home buying.

Foreclosures on the rise again!

Chris Isidore — Thu, 10 Nov 2011 15:33:00 GMT

NEW YORK (CNNMoney) -- The number of foreclosures climbed in October, as mortgage lenders started to work through the paperwork problems that had delayed new filings for much of the last year.

Foreclosure filings were reported on 230,678 properties nationwide in October, a 7% increase from September, reported RealtyTrac, an online marketplace for foreclosed properties. Despite the increase, filings were still 31% below year-earlier levels, though.

RealtyTrac said one in every 563 U.S. homes had either a default notice, a scheduled auction or a bank repossession filing during the month.

"The October foreclosure numbers continue to show strong signs that foreclosure activity is coming out of the rain delay we've been in for the past year as lenders corrected foreclosure paperwork and processing problems," said James Saccacio, RealtyTrac's CEO.

A year ago, several major banks -- including Ally, Bank of America (BAC, Fortune 500), and JPMorgan Chase ( JPM, Fortune 500) -- acknowledged problems with paperwork they were using to file foreclosure actions against delinquent homeowners. They announced various changes in practices and temporary moratoriums in new filings while they worked through the problems.

The states with highest foreclosure rates during the month were Nevada, California, Arizona, Florida and Michigan. Combined, these states accounted for 53% of the national total.

Las Vegas finally gave up its dubious title as the foreclosure champion, after leading all other metropolitan areas in the rate of new filings over the previous 22 months.

New foreclosure filings in Vegas plunged 36% compared to September, caused primarily by an 80% drop in new default notices. The retreat in foreclosures took it down to fifth place nationwide, and turned Stockton, Calif., into the new foreclosure epicenter.

Still the improvement in the Las Vegas real estate market wasn't enough to topple Nevada from its status as the state with the highest foreclosure rate. Its pace of one filing for every 180 homes kept it ahead of No. 2 California for the 58th straight month.

The best hope for stopping foreclosures is an improvement in the overall economy, especially the battered real estate and labor markets. But with so many foreclosed homes weighing on the market, and with unemployment still at 9% and consumer confidence low, even mortgage rates near record lows aren't enough to fix the problems caused by the bursting of the housing bubble.

Dippin' Dots Tries to Avoid Meltdown

By KATY STECH — Fri, 04 Nov 2011 20:40:00 GMT

The ice cream of the future is struggling to survive.

After a four-year battle with its biggest lender, Dippin' Dots Inc. filed for Chapter 11 bankruptcy protection on Thursday in U.S. Bankruptcy Court in Paducah, Ky., to avoid foreclosure.

Dippin' Dots, the self-described "ice cream of the future," filed for Chapter 11 bankruptcy protection. Katy Stech has details on The News Hub.

The manufacturer of the quirky and colorful ice cream beads, which are flash frozen using liquid nitrogen, owes $12 million, the bulk of it to a unit of Regions Financial Corp., which moved to foreclose on the loan this week.

The 170-worker company, which calls its frozen treat "ice cream of the future," fell into technical default four years ago at the peak of the economic crisis, when customers were no longer willing to spend the few dollars it cost for a cup.

It has about 140 Dippin' Dots retail locations, which are mostly controlled by franchisees, and agreements with 9,952 small vendors who sell the ice cream at fairs, festivals and sports games. It isn't sold in grocery stores because of its extreme cooling requirements.

Its sales woes came at the tail end of an expensive legal battle-one that the company ultimately lost-over whether founder Curt Jones properly filed the patents that protected its special freezing process.

Alamy

A patent fight preceded a sales drop for ice cream vendor Dippin' Dots.

"All of that hit us at the same time," said Steve Heisner, the company's director of administration, customer service and information systems.

Mr. Heisner said that Dippin' Dots offered Regions several proposals to pay a portion of its loan, but the bank rejected the offers before posting a foreclosure notice on Tuesday. A representative for Regions Bank declined to comment.

The company said its assets are valued at $20.2 million. It owns a 120,000-square-foot plant in Kentucky that can produce more than 25,000 gallons of frozen dots a day.

Mr. Heisner said the company doesn't expect to sell its operations, which are still mostly owned by Mr. Jones, a microbiologist who started the company in 1988. The company has been hailed as an achievement in entrepreneurship by celebrities such as Oprah Winfrey.

The company said it sales are slowly recovering. As of Thursday, it reported having $27.7 million in revenue, above last year's $26.7 million.

Company executives sought court permission to spend some of the cash collateral that secures the Regions Bank loan to enable it to continue operations. The court set a Nov. 17 hearing on its request.

"Without use of the cash collateral...[the company] will not be able to pay its vendors, and its vendors will likely cease to provide goods and services to the debtor on credit," the company's attorneys explained in court documents.

According to the company's proposed spending budget, it will need at least $23,000 to pay for liquid nitrogen alone through the end of the year. The liquid nitrogen is used to keep the ice cream dots below the necessary temperature of minus 40 degrees Fahrenheit.

BofA Threatens Family With Foreclosure Over $1 'Coding Error'

Stefanos Chen — Fri, 04 Nov 2011 17:35:00 GMT

When Shantell Curtis sold her Vernal, Utah, home last year, she expected, as a reasonable person might, that she'd paid her last mortgage payment on the house.

But her lender, Bank of America, thought differently, according to KUTV 2News in Utah. Because of a $1 "coding error" on the bank's part, the title to Curtis' home was never transferred to the new owners, making it appear as if she still owned the home. As a result, BofA initiated a foreclosure process on the home and reported Curtis to the credit bureaus, effectively obliterating her credit score.

Now Curtis is left to pick up the pieces for a mistake that was not her own, on a house that no longer belongs to her.

While BofA was prompt in identifying the problem after Curtis reported the issue, it's been more than five months and she still hasn't received a letter to confirm that the title issues have been resolved. A bank spokesperson also told her that they'd clear up her credit issues, but that could take up to three months. In the meantime, Curtis' credit score remains in the dumps.

"They said that they had to keep reprocessing it and this has been a game we've been playing ever since," Curtis told KUTV. "They just say they need to reprocess papers."

AOL Real Estate contacted the new owners of the home in question, who said they were unaware of the Curtises' problem, adding that they are current on their own mortgage. They've never received any mail from Bank of America addressed to the Curtises either, they said during a phone interview.

The new owners' mortgage is with a different lender.

When reached for comment, a spokesperson for the Bank of America told us that they will look into the matter. As of this writing, they have yet to respond.