April marked the second month in a row that more than 300,000 troubled homeowners received foreclosure notices, a jump of 32 percent over the same time last year, reports The Associated Press (“April Foreclosures Up 32% Over Last Year, Report Says,” May 13, 2009).

According to foreclosure data service RealtyTrac, more than 324,000 homeowners received at least one foreclosure-related notice in April. One in every 374 U.S. housing units received such a notice last month, the highest monthly foreclosure rate since RealtyTrac began collecting data in 2005.

“We’ve never seen two consecutive months like this,” said Rick Sharga, senior vice president for marketing at RealtyTrac. “It’s the volume that’s surprising.”

Nevada, Florida, and California posted the highest rates of foreclosure of all states, with Arizona, Idaho, Utah, Georgia, Illinois, Colorado, and Ohio rounding out the other top 10 states in the nation. In Nevada, one in 68 homeowners received a foreclosure filing, compared to 1 in 135 in Florida, and one in 138 in California, RealtyTrac data showed.

Although the number of homes repossessed by banks was down by about 11 percent since March, RealtyTrac cautions that what seems to be good news may not be as positive as it appears. The decline in home repossessions is likely the result of widespread mortgage moratoriums implemented earlier this year, in which banks suspended foreclosure proceedings as they waited for the launch of the government’s new Making Home Affordable plan in April.

Now that many of those moratoriums have been lifted, experts project that home repossessions may soon go back to their previous levels.

Whether Obama’s housing plan will actually help the projected 9 million homeowners seeking debt relief through mortgage modifications or refinancing remains unclear, as initial reports by homeowners indicate that lenders have been extremely slow or unresponsive to homeowners’ attempts to take advantage of the government programs.

Homeowners on the brink of foreclosure fear that the government’s housing plan may not do enough to help them keep their homes and stem the tide of foreclosures.

Popularity: 13% [?]

In this economy, everyone’s looking for another way to scrimp here and cut back there. When every penny counts, you want to make sure you’re saving as much as you can on basic household items and life’s bare necessities.

You’d be surprised at how much extra money you can keep in your account just by doing an audit of all your monthly expenses and making a few simple adjustments. Here are 10 tips to help you start saving more today in all areas of your life.

1. Ditch the paid checking.

Look for a bank that offers free checking with no minimum balance. You could save as much as $100 a year in fees if you’re currently paying for your checking account.

2. Don’t leave for the grocery store without coupons and a shopping list.

Avoid impulse shopping. Sticking to a list of must-haves and going in armed with coupons for the items on your list could cut your grocery bill in half. Check weekly newspaper ads, and sign up for alerts on Internet coupon sites to get notified of upcoming deals. Pay close attention to the price-per-ounce (or other unit) when comparison shopping: A similarly priced item may actually be much more expensive than you think because it’s smaller and you’re getting less for your money.

3. Resist the convenience of the convenience store.

It’s easy to pick up a gallon of milk, a loaf of bread, or that roll of paper towels you need when you stop to fill up at the gas station, but you’re paying for the convenience of that one-stop shopping: These stores often charge some of the highest prices for food and groceries. Avoid paying 50-percent markups. Find time to make your shopping runs, and get your groceries at the grocery store.

4. Audit your electricity use.

Ask your electric or gas company to check out your utility usage, or do it yourself. Depending on when your usage is heaviest, signing up for an off-hour rate program or a load management program could help you save hundreds of dollars a year on your electric bills.

5. Pore over your phone bills.

Take a fine-tooth comb to your cell and home phone bills to see if you’re paying for minutes and services you don’t need. Make adjustments so you can take advantage of plans that give you the best rate for times when you tend to use the most minutes. Consider getting rid of your landline altogether: Most cell phone providers offer monthly packages with lots of minutes and free roaming and long distance for less than what you’re paying to maintain both a cell phone and a landline.

6. Keep your car in shape.

A regular engine tune-up and something as simple as making sure your tires are properly inflated can help you save around $100 a year on gas.

7. Insist on fixed bids for repair services.

Only hire people and companies for home repairs who offer fixed-price bids for work. Home repair servicers often draw complaints, many times for trying to charge more than they initially quoted once they’re midway through the repairs.

8. Cut back on car insurance coverage.

To save money on your monthly premiums, unless you’re on the road a lot, consider raising the deductible on your collision and comprehensive coverage to at least $500 or, if you have an older car, getting rid of collision completely.

9. Get new homeowner’s and renter’s insurance quotes.

Call around or get quotes online from sites like Esurance and 2Insure4Less.com. You could find a lower rate with a new provider or use competitors’ lower quotes to negotiate a better rate with your current insurer. Check your state insurance department to make sure you aren’t paying more for insurance than typical rates in your area.

10. Shop around for the best prices on your prescriptions.

You may end up having to get different medications at different locations, but the savings can be huge. Consider trying mail-order pharmacies, and, if possible, always opt for generic versions of your prescriptions.

For even more money-saving ideas, check out the Federal Citizen Information Center’s 66 Ways to Save Money.

Popularity: 15% [?]

New York State Attorney General Andrew Cuomo has subpoenaed 14 debt settlement companies and one law firm as part of an investigation into the debt settlement industry, a move that has been labeled a “P.R. stunt” by an industry lawyer, The New York Times reports (“An Inquiry Into Firms That Offer to Cut Debt,” May 8, 2009).

Robby H. Birnbaum, a debt settlement lawyer who is also on the board of an industry trade group, said late last week that the debt settlement companies named in the investigation were placed in an awkward position when they first learned of Cuomo’s inquiry via the media.

“The press release was issued before any of these companies even received subpoenas,” Birnbaum said, so initially the debt settlement organizations would have had nothing to respond to. The companies in question didn’t receive their subpoenas until after Cuomo’s office generated its press release.

Companies’ Services May Not Be Living Up to Their Advertising

According to The Times, Cuomo will be investigating to what extent the subpoenaed debt settlement firms provide the debt relief services described in their advertisements by examining the companies’ fee structures and client base. Debt settlement organizations negotiate with credit card companies to reduce a client’s debt balance and typically charge a fee of about 15 percent of the client’s debt.

“With all of the problems we face in this time of economic distress, it is outrageous that these firms are targeting those who are the most financially vulnerable,” Cuomo said through an aide.

The purpose of the inquiry is to “ensure that people are not victimized when faced with financial hardship,” Cuomo’s office stated (“N.Y. Attorney General Probes Debt Settlement Firms,” Reuters, May 7, 2009).

Cuomo’s new investigation stems from a previous inquiry by the attorney general into two firms, Texas-based Credit Solutions, the nation’s largest alleged debt settlement firm, and Nationwide Asset of Arizona. Credit Solutions was accused of engaging in “false, deceptive, and misleading acts and practices” in a March suit against the company, and Nationwide will soon be named in a suit and be accused of fraud.

Several Firms Welcome Industry Investigation

Cuomo’s current suit targets several debt settlement companies located across the nation and a single law firm:

American Debt Foundation Inc., American Financial Service, Consumer Debt Solutions, Credit Answers L.L.C., Debt Remedy Solutions L.L.C., Debt Settlement America, Debt Settlement USA, Debtmerica Relief, DMB Financial L.L.C., Freedom Debt Relief, New Era Debt Solutions, New Horizons Debt Relief Inc., Preferred Financial Services Inc., U.S. Financial Management Inc. (operating as My Debt Negotiation), and Allegro Law.

Several of the 14 firms named in Cuomo’s investigation have said they would welcome an investigation into the industry, which includes as many as 2,000 debt settlement companies nationwide. Some of these companies even went as far to say they would embrace tougher regulations in their industry, one that critics claim is under-regulated.

“The only companies that will suffer are those that don’t offer genuine value,” said Jeff Takle, a spokesman for a Massachusetts debt settlement firm.

Robert Linderman, general counsel for one of the firms named in the investigation, Freedom Debt Relief of San Mateo, Calif., echoed Takle’s sentiments and said, “We’re delighted the attorney general is seeking information from the industry.”

Popularity: 8% [?]

In one of the largest collection awards ever granted by a jury, a California couple has been awarded $500,000 in damages for being harassed and threatened by the debt collection agency Credigy Services Corporation, reports insideARM (“Jury Awards $500,000 to California Couple in FDCPA Case,” May 5, 2009).

Under the Fair Debt Collection Practices Act, which protects consumers against abusive collections tactics by debt collectors, Manuel and Luz Fausto were awarded $100,000 for actual damages and $400,000 in punitive damages, granted by a jury for “malicious and reckless disregard of the couple’s rights.”

The award stems from a dispute over the couple’s Wells Fargo charge card debt they thought they had paid off in the late 1990s, said the Faustos’ lawyer, David Humphreys of Humphreys Wallace Humphreys, P.C.

During the mid-1990s, the couple realized that their credit card balance was continuing to rise even though they were making payments on their account, but a local Wells Fargo branch denied their request to have the account frozen.

To resolve the situation, the Faustos went to a local debt settlement company that promised to negotiate a payoff of the credit card balance. The couple thought the account had been paid off in the late 1990s, after they made two money order payments.

Then in 2006, the couple was contacted by Credigy with a demand to pay $17,000. Even after a cease-and-desist notice was sent to a Brazilian affiliate of Credigy, the debt collection company still made over 90 threatening calls and sent innumerable letters to the Faustos’ home.

Debt collection attorney Manny Newburger says the jury award in this case is one of the largest given to a consumer under the FDCPA, noting that usually “there is little or no evidence of actual damages presented by the consumer.” In this particular case, however, the Faustos were able to document the harassing nature of Credigy’s practices, including the company’s baseless threats, having recorded the last phone call from the collector.

Newburger believes that the verdict in the Fausto case was based largely on state legislation and doesn’t think that the size of the award will motivate more consumers to sue debt collection agencies in the future.

“I think this verdict is indicative of what this jury thought of this particular case,” Newburger said, “but not of anything else.”

Correction: May 8, 2009

This post has been revised to reflect the following correction: The original post mistakenly referred to the $500,000 jury verdict as the largest award conferred upon a consumer under the Fair Debt Collection Practices Act. In fact, the $500,000 decision is among the largest FDCPA findings on behalf of a consumer, but not the singular largest.

Popularity: 9% [?]

Illinois Attorney General Lisa Madigan has filed lawsuits against two debt settlement companies for allegedly misrepresenting their services to consumers and failing to follow through on their obligation to settle their clients’ debts, according to a press release from the Illinois attorney general’s office (“Attorney General Madigan Sues Two Debt Settlement Firms,” May 4, 2009).

Madigan has charged debt settlement firms Debt Relief USA, Inc. and SDS West Corporation with violations of the state’s Consumer Fraud and Deceptive Business Practices Act, accusing the companies of deceptively marketing their services and of misrepresenting the impact those debt settlement services would have on clients’ credit.

According to one lawsuit, SDS West, along with its partner Nationwide Support Services, did not adequately inform its customers that their monthly payments would be applied to the company’s fees before the company would provide any of its promised debt settlement services — negotiations with a customer’s creditors for reduced payoff amounts. SDS West also failed to explain to its customers that they would have to make several months of payments before they would accumulate enough funds for the company to begin negotiating these settlement payoffs with the customers’ creditors.

In the second lawsuit, Madigan alleges that Debt Relief USA, which enrolled at least 470 Illinois customers in its debt settlement program between 2005 and 2008, did not “negotiate substantial reductions on most consumers’ accounts” and that most of its clients, having already paid the company’s nonrefundable fees, dropped out of the program before the company settled any of their debts.

Madigan is asking for permanent injunctions against both Debt Relief USA and SDS West that would prohibit them from engaging in debt settlement in the state of Illinois, along with court orders requiring each company to pay restitution, civil penalties of $50,000, and an additional $50,000 for each one of their violations that included intent to defraud.

Popularity: 6% [?]

With a vote of 45 to 51, Senate Republicans defeated a measure that would have allowed bankruptcy judges to modify mortgage terms for bankruptcy filers, dealing a blow to the Obama administration’s foreclosure rescue program, which has yet to make a noticeable dent in the number of families losing their homes, The Washington Post reports (“Senate Defeats Measure to Allow Bankruptcy Judges to Change Mortgage Terms,” April 30, 2009).

The defeated measure would have allowed bankruptcy court judges to modify the mortgage terms of a bankruptcy filer’s primary residence with the possibility of having the filer’s interest rate or principal balance lowered in a process known as a “cramdown.” Currently bankruptcy judges can only modify mortgages for second homes or investment properties.

While opponents of the bill, including the nation’s biggest banks and Republicans in the Senate, argue that the bankruptcy modification provision would increase lending costs for future homebuyers and, therefore, destabilize the housing market even further, supporters of the cramdown measure contend that it would help more than 1.7 million struggling homeowners to stay in their homes.

In spite of the defeat, the measure’s sponsor, Senator Dick Durbin, D–Ill., is determined to keep pushing for cramdown legislation that he says is needed. In the time since he’s been campaigning for bankruptcy code reform, Durbin says home foreclosures have jumped from 2 million to 8 million.

“I’ll be back. I’m not going to quit on this,” Durbin said. “At some point, the Senators in this chamber will decide the bankers shouldn’t write the agenda for the United States Senate.”

The measure is part of a larger Senate housing bill that includes a provision to revamp the Hope for Homeowners program and a proposal to temporarily increase the deposits guaranteed by the Federal Deposit Insurance Corporation, and which still has to be reconciled with the House’s version of the bill. House Democrats will most likely remove the cramdown measure from the bill to help get it passed by both houses of Congress.

Popularity: 4% [?]

In what is turning out to be the worst recession since the Great Depression, many Americans are struggling to pay their bills as companies continue to shed jobs and the economy continues to contract.

In this recession, costly expenses like medical bills are taking a backseat to daily expenses like water, electricity, food, car, and mortgage payments. Now, as with credit cards, consumers are struggling to keep up with their medical bills and increasingly letting more and more of their bills go unpaid.

The Commonwealth Fund, a healthcare research foundation, reports that in 2007, 41 percent of adults were struggling to pay their healthcare bills, up from 34 percent in 2005 (“When Medical Bills Outpace Your Means, Seize Control Swiftly,” The New York Times, April 25, 2009). And it’s not just the uninsured who have fallen behind on their payments, nearly two-thirds of people with medical debt actually have health insurance.

Experts say, however, that there are ways to manage your medical debt even if you aren’t capable of paying it off right away.

1. Communicate with your creditor.

If you know you’re going to be late on one or more of your medical bills, let your creditors know. Just talking with them won’t obligate you to make a payment, but if your creditor is aware that you’re trying to stay on top of your debt you may be able to avoid collections, at least temporarily, and protect your credit.

2. Review your bills.

Keep a running tab of your doctor visits and medical procedures to accurately review your bills when they come in. Errors in medical billing can occur often, so if you find a discrepancy call your provider for an explanation. And remember that it can never hurt to resubmit bills to your insurer if you’ve been denied coverage.

3. Bring in extra help.

Try negotiating with your provider for a discount or for some leeway on repayment. If your creditor still won’t work with you, consider hiring a billing specialist who may be able to help you find errors in your medical bills and better understand the often-complex language of medical billing.

4. Avoid the plastic.

Don’t react with panic when you receive a late-payment notice by transferring your medical bill debt onto your credit card. Chances are if you can’t pay your medical bill now, you’re not going to be able to pay the credit card bill when it comes in later. And medical bill charges that stay on your credit card will immediately start earning interest, not to mention that charging a large sum to your credit card could negatively affect your credit score, if you’re carrying too high a debt load.

5. Know your rights.

Just because a medical bill goes to collections, doesn’t mean creditors have free rein to hassle you into paying; they have guidelines and rules to abide by — they can only call between 8 a.m. and 9 p.m. and they can’t scare you into paying the debt. Ask for the caller’s name and request that they send you the name of the creditor and the amount you owe in writing. Visit the Privacy Rights Clearinghouse for a guide to debt collection.

Popularity: 10% [?]

In response to the rising number of mortgage scams in his state, Missouri Attorney General Chris Koster announced a “zero tolerance” policy for companies engaging in misleading mortgage refinancing practices, according to press release from Koster’s office (“Attorney General Koster declares ‘Zero tolerance’ on Mortgage Scams,” April 20, 2009).

“This Attorney General’s office will have zero tolerance for any mortgage broker or refinancing lender that uses deception to lure consumers into doing business with them,” Koster said. “The Attorney General’s office will use all its powers to investigate and prosecute businesses that use deception and fraud in advertisements to Missouri consumers.”

Under the new campaign, Koster has already sued two businesses, Goldstar Home Mortgage and Oxford Lending Group, for sending misleading direct mail advertisements to consumers that encouraged homeowners to refinance their home loans.

Goldstar’s mail piece included the name of the homeowner’s bank at the top of the letter, which Koster argues made the homeowner’s own bank appear that it was encouraging homeowners to refinance with Goldstar. The company also marketed loans that were “inappropriate” for homeowners — loans that, in at least one case, would have left the homeowner with a mortgage worth more than the home itself.

Oxford Lending’s direct mail pieces stated that homeowners had a special opportunity to refinance under the “Economic Stimulus Act of 2008.” Oxford also used the U.S. Department of Housing and Urban Development’s label and name to suggest that the letter was coming from the government and not Oxford.

Koster warned Missouri homeowners to be cautious of any mail having to do with mortgage refinancing, loan consolidation, mortgage modification, and foreclosure relief. With interest rates at historic lows and foreclosures at record highs, Koster says homeowners, seniors in particular, who looking to save their homes are particularly vulnerable to these mortgage scams.

“Increasingly, mortgage brokers are using deceptive ploys to draw Missourians back into the refinancing game,” Koster warned. “Our goal is to alert consumers that these scams are out there and to sue every mortgage broker who crosses the line.”

Popularity: 7% [?]

California’s unemployment rate hit a record 11.2 percent in March, leaving 2.1 million people jobless — the highest level since World War II, according to a report released last week (“State Unemployment Rate Highest Since 1941,” San Francisco Chronicle, April 18, 2009).

The March figure surpasses the 11 percent unemployment rate the state reached during the early 1980’s recession, says Patti Roberts, spokeswoman for the state’s Employment Development Department. The March unemployment rate approaches the 11.7 percent unemployment rate the state had in January 1941.

While last month’s unemployment rate for the state was significantly higher than the national figure of 8.5 percent for March, California had the 4th highest rate of unemployment in the country, perhaps due to the decline in real estate.

“California’s higher rate of job loss is primarily the result of greater exposure to the housing downturn,” said Stephen Levy, director and senior economist at the Center for the Continuing Study of the California Economy in Palo Alto.

Forecasters Vary on Outlook

The unemployment rate is grim and many Californians have been affected by job losses, “But on the other hand things are not really as bad as you might think,” said Chris Thornberg of Beacon Economics, a California real estate and economic forecasting firm.

Thornberg believes that these job losses can be attributed to the slump in consumer spending over the last year, and sees spending starting to stabilize in the near future along with the job market.

But Jerry Nickelsburg, an economist with the UCLA Anderson Forecast, believes that in all likelihood, the job market will continue to get worse before it gets better. He predicts California’s jobless rate will reach a high of 12 percent before it begins to decline sometime in 2010.

“Unemployment will likely creep up through the end of the year,” Nickelsburg said, “because employers will want to see that the increase in demand is strong before they hire.”

Popularity: 5% [?]

William Spellman, a 44-year-old IT professional from Indianapolis, has come to the realization that the old adage “what goes around, comes around” isn’t true in today’s recession. Spellman has been repeatedly denied a loan for his daughter’s summer school classes by some of the very banks who have been bailed out by his tax dollars, ABC News reports (“Banks Take Billions From TARP, but Give Fewer Loans,” April 21, 2009).

“They need my help, but now they’re unwilling to help me,” Spellman said.

The 21 banks receiving the most bailout money from the Troubled Asset Relief Program made or refinanced 23 percent fewer loans in February than in October when TARP funds were first distributed, according to Treasury Department numbers. And excluding mortgage refinancing, consumer lending amongst these banks fell by one-third during that same time period, both of which suggest that “jawboning by federal officials for banks to use TARP funds to boost lending is having a limited effect” (“TARP Cash Isn’t Moving Forward,” The Wall Street Journal, April 16, 2009).

Banks Say They’re Lending, Just Not As Much As Anticipated

Investigators for the Congressional Oversight Panel on TARP, the independent agency that’s in charge of analyzing how banks are spending their $200 billion in government funds, suggest that consumers like Spellman shouldn’t be so quick to write the bailout off as a failure just because they haven’t personally seen a change in lending.

Neil Barofsky, the Treasury’s special investigator for TARP, said the program has allowed banks to lend more than they would have been able to without the government assistance but that banks just haven’t increased lending as much as the government had hoped.

“A lot of banks have indicated that because they received the TARP funds, they were able to maintain or not reduce lending as much as they would have otherwise,” Barofsky said.

Banks Say Slack in Lending Is Out of Their Hands

Bank executives contend that they haven’t been able to expand lending to meet government and consumer expectations because demand for loans is down.

“I think one of the huge misconceptions out there is that banks aren’t lending,” said JPMorgan Chase CEO Jamie Dimon. “The lending balances are up and down based on demand…”

Dimon also pointed out that the non-bank lenders that have accounted for 75 percent of all lending have all but disappeared in this recession. Now-defunct lending giants Bear Stearns and Lehman Brothers created a huge lending void when they folded, taking their large balance sheets and capital out of the financial markets. Wachovia and Washington Mutual also stepped out of the picture when they failed and were consumed by other banks.

Financial experts, on the other hand, attribute this slack in lending to the simple fact that lenders’ fear of rising consumer defaults have changed the way they lend; a good credit score is no longer enough to secure a line of credit. To this end, banks are tightening their lending restrictions and, before they issue any new loans, are analyzing consumers’ debt-to-income ratios and looking at how efficiently consumers pay off their debts, in addition to just looking at credit score.

Popularity: 5% [?]