From my quiet desert town of Tucson, Arizona – what a storm! 

Earlier this week, a professor of law at the University of Arizona just minutes down the road from me wrote an academic paper about the shame of the upside-down loan circumstances in which many American homeowners are drowning.  Shame on the nation’s banks was his point. 

Professor Brent White says these over-extended homeowners (estimated to be about 15 million Americans) would be better off financially if they walked away from their upside down mortgages.  He says they don’t because their moral compass won’t allow it; that it makes them ashamed to do it. 

Professor White respects that moral value but says many people are ashamed to walk away from their mortgage because they/we live a double standard.  A double standard that expects moral norms for Main Street and accepts market norms for Wall Street.  Banks operate to maximize profits.  Banks think about their interest(s) and look out for themselves.  Banks do this often at Main Street’s expense.  Professor White believes this double standard is what scares American homeowners into meeting to the market norm mentality that puts them in this upside-down home, negative equity situation.

I think he’s got a point.  And to me, the point is:  think about what’s in your best interest. 

Professor White isn’t advocating anyone walk away from their mortgage unless they feel its right for them.  White is saying American homeowners must act on economic self interest and determine what financial decision given their circumstances – is right for them.  And, he concludes, since shame doesn’t work for banks, it shouldn’t work for homeowners who are considering walking away from their homes.

This is a mind over money matters decision.  This is one of those situations where your mind over your money – matters.  If you choose to do this, know that there will be consequences.  Mortgage lenders are outraged and say it’s unethical.  They remind you – correctly – that this decision to walk away from your mortgage will stay on your credit report for 5 to 7 years. 

But advocates of this option say – your credit is already battered, you’ll have to take the steps to rebuild it anyway.  What you pay, the bank will solely benefit because you can’t keep up with the growing debt.  And to get in front of it now – is impossible.  Why throw money at a market mentality that is morally irreverent? 

It’s your money – take it personally.  Everyone’s situation is different.  There are 15 million Americans facing this right now.  It might be ok for you (or any one of them) to walk away from an upside down mortgage if it’s in your (their) best interest. 

Here’s to your health and wealth.

TAGS: default or walk away from homes, Upside down mortgages

There are small money savings that can be habit forming and profitable.  Take directory assistance for example.  Do you use it?  We all have at some point and know it can be pricey to get that information.

Well, here’s a number worth putting in your mobile phone or on your home phone speed dial:  1-800-GOOG-411.  Instant gratification!  You get free assistance with any phone number you need and the automated operator will even connect you. 

The service has been around for a while – but like all good things – not everyone knows about it.  And all of us could certainly benefit from using it.  If you dial 411 from your mobile phone for telephone directory information, it can cost you $1.49 or more per call (some carriers allow you to get up to three phone listings for that price). 

 1-800-GOOG-411 (which translates to 1-800-466-4411) is a totally free service that’s especially great when you’re on the road.  Let’s say you’re heading to a meeting at an unfamiliar location and – even if you have your GPS guiding you – you don’t have the phone number.  Program 1-800-GOOG-411 into your phone’s speed dial, hit the button, say where and what you’re looking for and GOOG-411 will connect you. 

Did I mention that it’s free?  Yes.  But let me say it again.  These days services that cost you nothing are too good not to know about and use.

 Here’s precisely how it works.  You’ll hear a voice at the other end saying:  “City and State?”  You respond.  The voice then says:  “Business, name or type of service?”  You respond.  The voice on the other end says:  “Connecting” and the location you requested answers the phone.  That’s it.  It’s nationwide and – did I already say it’s free! 

You don’t need a computer, an Internet connection or even the keypad on your phone or mobile device to use GOOG-411 because it’s voice activated.  So you can access it from any phone – mobile or landline – in any location at any time.  All for – free.  And if you’re calling from a mobile device GOOG-411 can even send you a text message with more details and a map.  Simply say “text message” or “map it”. 

Just a reminder – you should not use GOOG-411 if you need emergency help since the service isn’t able to provide your location information to emergency providers.  As always, if you have an emergency, dial 9-1-1. 

Here’s to your health and wealth

TAGS: directory assistance, Free information, GOOGLE 411

Are debt collectors calling?  Are their threatening letters jamming your mailbox?  Are you being harrassed into just paying whatever it is they say you owe because the collection notices and tactics are wearing you out?

If you get a notice of debt collection in the mail don’t rush to pay it!  If you pay the bill too soon, you could actually lower your credit score because when you pay a debt to a collections agency it becomes “updated activity”.   That debt can then be reported to the credit bureaus, which can, in turn, knock down your credit score.

Another reason not to rush to pay it:  the collection notice could be illegitimate.

One of my favorite financial services resources is Greg McBride, senior analyst at Bankrate.com ( www.bankrate.com ).  He says if you get a collection notice, the first thing you should do is pull up your credit report from all three credit bureaus to see if the alleged debt was reported.

The three credit reporting bureaus are:

• Equifax P.O. Box 740241, Atlanta, GA 30374    1-800-685-1111  
• Experian P.O. Box 2002, Allen, TX 75013    1-888-397-3742  
• TransUnion P.O. Box 1000, Chester, PA 19022    1-800-8884213  

If you find the debt listed on any of your three credit reports and know or believe it’s not yours, you should dispute it through those agencies.  It’s never a good idea to dispute directly with the actual creditor or collections agency.

Once you’ve sumitted a dispute or request, the credit bureau will contact the creditor or collections agency and they have 30 days to validate what they’re reporting about you.  If it is not validated or if there is no response, the debt will be removed from your credit report.

If after receiving a collections notice, you don’t find it on any of your credit reports, you should request that the collections agency proves you actually owe this debt.  According to the Fair Debt Collection Practices Act (FDCPA), you have the right to dispute a debt notice and to request proof that the obligation is legitimate.

You can request:

• the name and address of the original creditor
• verification of the original debt amount
• to be told whether the collections agency was assigned the debt or if they own it (in many cases, if the collections agency does not own the debt they cannot prove that you owe it to them)

If the collections agency can’t furnish proof – according to the FDCPA – they must  cease collection of the debt until they provide you the proper verification.

Proving validity of a debt could be a complicated process, and many consumers dig themselves into a deeper credit hole by trying to handle collection agencies on their own.  If faced with this dilemma, you could use the services of an accredited credit repair agency to help get creditors off your back.  An excellent resource for what you need to know about finding one, is The Privacy Rights Clearinghouse (www.privacyrights.org/fs/fs27-debtcoll.htm) which says while there is no federal license or registration required for collections agencies, in some states debt collectors must register or apply for a state license. 

 Here’s to your health and wealth.

TAGS: collection notices, credit bureaus, Debt collectors