[Categories: Washington Bankruptcy Attorney]

Previously, lenders would often use tactics to trip consumers into paying late, so that the lender could impose a late payment fee or penalty interest rate thus jacking up the interest rate to stratospheric levels. The CARD Act of 2009 seeks to prohibit and interfere with these tactics as follows:

– Prohibits credit card issuers from setting payment cutoff times earlier than 5:00 p.m.

-Requires payment due dates to be on the same day each month.

-If the due date falls on a weekend or a holiday, it is now required that a payment received on the next business day be considered timely.

-It is now required that lenders mail to you the credit card statement no fewer than twenty one days before the due date or end of the no-interest grace period.

Special thanks to the National Consumer Law Center, "Guide to Surviving Debt" 2010 edition page 79, available at www.consumerlaw.org.

Yesterday, on September 8th, it was reported in an article by KOMO News economist writer, Derek Kravitz, that fixed mortgage rates have fallen to the lowest they have been in the last six decades.

The average rate for a 30-year fixed mortgage fell .1%, going from 4.22% to 4.12%, while the average rate for a 15-year fixed mortgage changed from 3.39% to 3.33%. These are the lowest rates on records dating back to 1971 and 1991 respectively, but economists say that it is likely that these are the lowest rates ever.

Except for two weeks over the past year, the average 30-year fixed mortgage rate hadn’t peaked 5%, but real estate prices and sales were still down and holding back the economy. Mortgage rates typically coincide with the yield on the 10-year Treasury note. That being said, when investors start pulling their money from stocks and putting it into Treasurys, that yield drops, and so do interest rates.

The U.S. Treasury note fell to an all-time low this last week, but even with such low interest rates; many people are still in no position to take advantage of these rates. In today’s economy, Americans are unemployed or taking pay cuts, and even if they’re not, they are unable to qualify for the lowest rates.

Banks are only accepting credit scores over 700, and asking for 20% down payments. According to an analysis of Fair Isaac Corp. data by the Associated Press, “roughly 40% of U.S. households have the necessary credit scores to get a prime mortgage rate”, and according to the National Foundation for Credit Counseling, only half of Americans believe they will ever be able to save enough money for a 20% down payment.

Kravitz writes, “nearly a third of homeowners have nearly zero equity or are underwater in their mortgage…leaving them unable to refinance because of lender-imposed limits and the cost of extra fees.”

Many people are struggling to shrink their debt. Some very smart people think that it is slowing again and many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free 30 minute consultation at staff1 . To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

On August 31st, in an article by Gretchen Morgenson of the NY Times, it was reported that a complaint was filed with the United States District Court on August 30th. That complaint, filed by Attorney General Catherine Cortez Masto, accuses Bank of America of violating a broad loan modification agreement it presented in 2008 to state officials.

The settlement between Bank of America and several states was first reached in October of 2008, and then later with Nevada in 2009. The settlement was originally reached to satisfy accusations of predatory lending against Bank of America. Part of this deal was to help troubled borrowers with loan modifications and other financial relief. Bank of America set aside $8.4 billion for just this purpose.

Masto claims that Bank of America has not upheld their end of the agreement, and wants to end Nevada’s involvement with the above agreement. If permissions are granted, Masto states that she will be allowed to sue the bank over what she calls “dubious practices”.

These practices were uncovered by an investigation by the Attorney General’s office that started shortly after the agreement was meet, when complaints about the bank’s loan servicing methods flooded into Masto’s office from some of the 262,622 loans originated in Nevada.

The investigation claims that Bank of America raised interest rates when making loan modifications, even though they previously negotiated to lower them. Along with that claim, it is stated that Bank of America also proceeded with foreclosing on pending loan modifications, and did not offer qualified borrowers loan modifications to begin with. Bank of America also neglected to meet the settlement’s 60-day requirement on granting new loan terms. Loans would be pending for months on end with no resolution.

According to the complaint, Masto discovered that Bank of America had “materially and almost immediately violated the terms of the settlement”.

Some very smart people think that it is slowing again and many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free 30 minute consultation at staff1 . To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

Under the Credit CARD Act of 2009, lenders are now a bit more limited in how they can go about raising your interest rate for future transactions. Mind you, they can still be raised, though:

-Notice – Lenders must give you a written notice before increasing the rate. The rate applies only to purchases made on and after fourteen days following the date that the notice is sent.

– One year (first year) ban – Lenders cannot raise interest rates even on existing purchases on the account nor future purchases and transactions on the account until after one year has passed on the account unless one of several exceptions applies. The exceptions are (a)variable rate cards (e.g. prime rate plus 7.0%); (b) teaser rate cards, but the rate cannot increase for the first six months, it should be noted and (c) if your minimum payment is more than sixty days late.

-Mandatory review and adjustment every six months – Commencing August 2010, a lender increasing a rate must review the account ever six months and should reduce the rate if things have changed such that a reduction might be appropriate. Note: This should give you the opportunity to argue with them if the interest rate is not decreased.

Special thanks to the National Consumer Law Center’s "Guide to Surviving Debt", 2010 edition, pages 74-81, available at www.consumerlaw.org for a mere $20.00 or so. I highly recommend it.

[Categories: Washington Bankruptcy Attorney]

Finally, any amount that you pay in excess of the minimum payment must be applied to the balance with the highest interest rate, except in the last two months before a deferred interest plan expires.

Previously, many credit card companies would seek to apply payments to the lowest interest bearing portion of the debt. E.g., the creditor would leave high interest rate "cash advance" portions without any change, and would apply payments to the low interest rate "normal" purchases portion. Thus, you would rack up interest charges unnecessarily.

[Categories: Washington Bankruptcy Attorney]

There are now (finally!) some limits on penalty fees – such as pesky and expensive late payment and over-the-limit fees.

(1) Penalty fees must be "reasonable and proportional" – and the CARD Act requires the Federal Reserve Board to issue rules by August 2010 in order to define and effectuate this mandate.

(2) Over-the-limit opt-in. This is important! Now, no over-the-limit fees may be charged unless the consumer has agreed that the lender may approve transactions that will exceed the credit limit.

(3) Limitations on number of over-the-limit fees. Lenders may charge only one over the limit fee per billing cycle (e.g. usually just one per month). In addition, lenders may only charge the fee in the next two billing cycles unless the consumer uses the card again, or goes below the limit and then exceeds it again. This is a big improvement – you can’t be penalized again and again, billing cycle after billing cycle if your balance stays in excess of the limit.

Special thanks to the National Consumer Law Center’s publication "Guide to Surviving Debt" 2010 edition, page 78, available at www.consumerlaw.org for about a mere $20.00.

[Categories: Washington Bankruptcy Attorney]

When the prohibition against a retroactive rate increase applies (e.g. the payment is late but not more than 60 days late) the CARD Act limits how much the lender can increase your minimum payment. The lender’s options are limited. The lender may either: (1) use the existing minimum payment terms; give you five years to pay off the outstading balance at the old interest rate or (3) increase the minimum payment to no more than twice as much of a contribution to paying down the balance as the old minimum payment.

Special thanks to the National Consumer Law Center www.consumerlaw.org, "Guide to Surviving Debt" chapter 5, page 78. 2010 editions.

Eight protections (among a number of others) include the following. Here is the first protection:

– Protections against rate increases for future transactions. The Credit CARD Act prohibits credit card lenders from increasing the interest rate that applies to the balance you’ve already incurred on your credit card, a practice known as "retroactive rate increase". There are several exceptions to this rule, which are the following:

(a) Varaible rates – if it is a variable rate card, (e.g. prime plus 7.0%) then the rate can change on all purchases/cash advances when the index changes;

(b) Teaser rates – a lender may raise the rate after the expiration of a teaser rate, but only to the post-teaser rate previously disclosed. Also, teaser rates cannot last fewer than six months.

(c) Sixty-plus days late – a retroactive rate increase on existing balances is permissible as a penalty rate when you are more than sixty days late in making the required minimum payment. NOTE: You can get the old non-penalty rate back and reinstated if you make the next six months worth of minimum payments on time.

Special thanks to the National Consumer Law Center’s "Guide to Surviving Debt", 2010 edition, available at www.consumerlaw.org for a mere $20.00 or so. I highly recommend it.