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Personal Finance News 10/2010



Faulty Foreclosures May Prolong the Slump (BusinessWeek)
BusinessWeek - Howard Cohen hasn't paid the loan on his Tukwila (Wash.) home in a year, and when he heard in mid-September that Ally Financial's GMAC Mortgage unit was suspending foreclosure evictions in 23 states, it gave him hope. "Maybe I'll stay in my house, too," says Cohen, a 57-year-old commercial-loan broker whose business fell off after the financial crisis. Cohen was encouraged even though his mortgage servicer, Bank of America , hasn't reported any irregularities.

Not All Dividend Stocks Are Created Equal (The Motley Fool)
The Motley Fool - Nowadays, everyone wants stocks that pay dividends -- especially dividends that have grown throughout a company's history. But before you pick a stock simply because of its dividend history, take a closer look; not every such stock makes a good investment.

What Are Low Bond Yields Trying to Tell Us? (The Motley Fool)
The Motley Fool - The yield on government bonds in the U.S., U.K., and Germany is at or near record lows, yet investors continue to snap them up.

Washington wealthy clash over income tax on rich (AP)
AP - The state that produced America's richest man has never taken a cut of its residents' income. Microsoft co-founder Bill Gates and his father would like to change that.

The New Reverse Mortgage: 4 Things You Should Know (U.S. News & World Report)
U.S. News & World Report - The Federal Housing Administration has formally approved a new reverse mortgage product that sharply cuts upfront payments by home owners but also significantly reduces the percentage of a home's equity that can be paid to owners under the program. Reverse mortgages insured by the government are available on homes where the youngest owner is at least 62 years old. The program is called a Home Equity Conversion Mortgage (HECM). Here are four things you should know about the new reverse mortgage:

Fund sues Goldman over Hudson CDO (Reuters)
Reuters - A fund manager who invested in a Goldman Sachs Group Inc subprime mortgage-linked security called Hudson Mezzanine sued the firm for fraud over the product, which is the subject of several investigations.

5 Reasons To Stop Saving for Retirement (U.S. News & World Report)
U.S. News & World Report - I'm a huge proponent of saving for retirement early and often. But there are times in our lives when it might not make sense to save money for retirement, if only for a short time. As a caveat, I would never advise someone to pass up an employer's 401(k) matching contribution. Try your best to take advantage of a 401(k) match, regardless of the situation you are in. Here are five situations when it may not make sense to save for retirement.

Washington wealthy clash over income tax on rich (AP)
AP - The state that produced America's richest man has never taken a cut of its residents' income. Microsoft Corp. co-founder Bill Gates and his father would like to change that.

Summary Box: Treasurys flat following reports (AP)
AP - INCOME UP: The government reported that personal income rose in August. The good news: the 0.5 percent income gain was the fastest pace in five months. The bad news: nearly half of the increase came from unemployment benefits.

Foreclosures bungle could hit US banks (AFP)
AFP - Already fragile US financial firms are facing a raft of law suits and potential fines after three major mortgage lenders admitted to mishandling thousands of home foreclosures.

AIG cut Asian unit IPO value to court investors: report (Reuters)
Reuters - AIG has lowered its valuation for the planned initial public offering of its Asian life insurance business, AIA, to secure a $1 billion commitment from the Kuwait Investment Authority and other cornerstone investors, the Financial Times reported on Sunday.

Kuwait commits $1 billion to AIA IPO: source (Reuters)
Reuters - American International Group Inc received a $1 billion commitment from Kuwait Investment Authority for the IPO of its Asian life insurance unit, according to a source, the first major investment inked before the roughly $15 billion share sale launches.

3 Year-End To-Dos You Should Do Right Now (The Motley Fool)
The Motley Fool - You might think that the beginning of October is a bit early to start worrying about taking care of year-end business. But with these three must-dos, getting an early start doesn't just let you cross a chore off your list -- it can actually put some extra money in your pocket.

3 Surefire Approaches to Saving More (U.S. News & World Report)
U.S. News & World Report - A good number of young professionals in their twenties are either deep in credit card debt and student loans, or are living from paycheck to paycheck. However, there are some who have learned to rein in their finances. They don't have special secrets, they just learned from time-honored financial practices that their grandparents lived by.

5 Major Money Issues for Seniors in 2011 (U.S. News & World Report)
U.S. News & World Report - The Great Recession may technically be over. But there has been no recovery, let alone a Great Recovery. Businesses still do not want to invest or hire. Consumers don't want to spend and are still slowly digging their way out of the mountain of mortgage and personal debt that helped fuel the downturn. Beyond these broader concerns, here are five big money issues that will affect seniors in 2011:

Summary Box: Foreign buyers see opportunity (AP)
AP - INTEREST FROM ABROAD: Individual investors from Europe, South America, Asia, Russia and the Middle East are picking up cheap property across the U.S. Many plan to rent these houses and condos and then sell them once the housing market recovers.

7 ETFs for the Perfect Portfolio (The Motley Fool)
The Motley Fool - With new exchange-traded funds coming out all the time, ETF providers want you to believe that you can't invest well without the latest gimmick fund. Unless you're looking to make extremely concentrated bets on a narrowly focused group of investments, you can stop poring over every new fund offering. You'll do better with tried and true funds instead.

Senator demands lenders reveal foreclosure errors (AP)
AP - A key lawmaker is demanding that more than 100 mortgage companies determine whether foreclosure documents they approved contain errors and reveal their findings.

Calif. lawmakers want foreclosure investigation (AP)
AP - More than 30 House members from California are calling on federal regulators to investigate whether mortgage companies broke the law by using paperwork that may have contained errors.

AG Biden asks 3 banks to freeze foreclosures (AP)
AP - Delaware Attorney General Beau Biden's office sent letters Tuesday asking three mortgage lenders to suspend all pending foreclosures until the banks can review their policies.

Home loans for purchases rise 9.3 percent (AP)
AP - Applications for mortgages to buy homes rose last week to the highest level since May, while overall applications were down slightly.

NC AG investigating 15 lenders over foreclosures (AP)
AP - North Carolina's attorney general is investigating the state's 15 largest mortgage lenders, questioning them about procedures used in foreclosure.

5 Savings Mistakes to Avoid (U.S. News & World Report)
U.S. News & World Report - You know that have a savings plan is important. Whether you are saving for retirement or college, it's important to consider your options and stick to your plan. Unfortunately, there are some obvious, and some not so obvious, pitfalls that could cost you dearly. Here are five savings mistakes to watch out for.

Vanguard cuts fees by expanding share class (AP)
AP - Vanguard is expanding access to its lowest-cost mutual fund share class for individual investors, a move that will bring fee reductions to nearly 2 million clients of the nation's largest fund company.

Citi selling $1.6B consumer finance assets to GE (AP)
AP - Citigroup is selling $1.6 billion in retail sales finance assets to GE Capital as the bank continues to restructure its business to focus on core consumer banking operations.

Ohio AG to file suit against major loan servicer (AP)
AP - Ohio Attorney General Richard Cordray plans to announce a lawsuit against a national mortgage company, alleging fraud that could involve hundreds of foreclosures in the state.

Wells Fargo to pay $24M to end mortgage probe (AP)
AP - Wells Fargo is paying $24 million to end an investigation by eight states probing whether lenders acquired by the company made risky mortgages to consumers without disclosing their perils.

The Downside of the Roth IRA (The Motley Fool)
The Motley Fool - It's hard to argue with the appeal of the Roth IRA: Sock away post-tax dollars now, then withdraw your years of accumulated growth tax-free in retirement! Unfortunately, most investors don't realize that the rules now enshrining that promise of tax-free goodness could change at any time.

10 Reasons to Open a Roth IRA (U.S. News & World Report)
U.S. News & World Report - Young people and workers in low tax brackets have a lot to gain by saving for retirement in a Roth IRA. But this year, for the first time, high-income retirement savers also have access to Roth IRA accounts. And in 2010 only, investors can delay the taxes due for retirement account balances that are converted to a Roth. Here are more reasons you should consider contributing to a Roth account.

Ohio AG sues Ally Financial over foreclosures (AP)
AP - Ohio's attorney general is suing Ally Financial Inc. and its GMAC Mortgage division, alleging the company violated state fraud laws in handling foreclosure cases.

AG Holder says Justice looking into foreclosures (AP)
AP - The government is looking into allegations that mortgage lenders in the foreclosure crisis have been evicting homeowners using flawed court papers, Attorney General Eric Holder said Wednesday.

Bank foreclosure cover seen in bill at Obama's desk (Reuters)
Reuters - A bill that homeowners advocates warn will make it more difficult to challenge improper foreclosure attempts by big mortgage processors is awaiting President Barack Obama's signature after it quietly zoomed through the Senate last week.

U.S. Justice Dept. probing foreclosure processes (Reuters)
Reuters - The U.S. Justice Department said on Wednesday it was probing reports the nation's top mortgage lenders improperly evicted struggling borrowers from their homes as part of the devastating wave of foreclosures unleashed by the financial crisis.

Smaller firms could have run U.S. toxic funds: audit (Reuters)
Reuters - The Treasury Department's program to soak up toxic mortgage assets may have unnecessarily excluded smaller, well-qualified fund managers to the detriment of taxpayers, a U.S. bailout watchdog said on Thursday.

Ahead of the Bell: Consumer Credit (AP)
AP - Consumer credit likely fell again in August, acting as a further drag on a sluggish economy.

Bank foreclosure cover seen in bill at Obama's desk (Reuters)
Reuters - A bill that homeowners advocates warn will make it more difficult to challenge improper foreclosure attempts by big mortgage processors is awaiting President Barack Obama's signature after it quietly zoomed through the Senate last week.

Arizona part of mortgage aid pact with Wells Fargo (AP)
AP - Hundreds of Arizonans with a type of adjustable-rate mortgages will be eligible for principal reductions and other relief under an agreement with Wells Fargo & Co., Arizona Attorney General Terry Goddard announced Wednesday.

The Foreclosure Mess Could Last for Years (BusinessWeek)
BusinessWeek - The dimensions of the foreclosure crisis keep expanding. Lenders and loan servicers including JPMorgan Chase and Ally Financial are facing an explosion in homeowner lawsuits and state attorney general investigations of claims of falsified mortgage documents. Lawmakers in both houses of Congress have called for investigations. And procedural mistakes in the handling of mortgage documents have clouded titles establishing ownership of the homes, a problem that could plague both buyers and sellers for years. "This is going to become a hydra," says Peter J. ...

Officials call for halting some Mich. foreclosures (AP)
AP - Michigan should join the list of states where mortgage companies are freezing home foreclosures, two Detroit congressional members and a gubernatorial candidate said Wednesday.

The Rogue Traders' Gallery (The Motley Fool)
The Motley Fool - In 1987's Wall Street, experienced trader Marvin says to rookie Bud Fox, "We're all just one trade away from humility."

Mortgage rates fall to decades-low of 4.27 pct. (AP)
AP - Rates on 30-year mortgages fell to the lowest level in decades for the ninth time in 12 weeks, pushed down by traders anticipating a move by the Federal Reserve to pump more money into the economy.

Mortgage rates at record lows (Reuters)
Reuters - U.S. mortgage rates reached new record lows in the latest week as economic data raised the appeal of safe-haven government debt, according to a survey released on Thursday by Freddie Mac, the second-largest U.S. mortgage finance company.

(AP)
AP - Consumer borrowing falls again in August, marking two years of monthly drops for credit cards.

Iowa atty general seeks to halt foreclosures (AP)
AP - Iowa Attorney General Tom Miller on Thursday called on three giant mortgage companies to halt foreclosure proceedings in the state while he investigates problems with documents filed with the courts.

Consumers cut credit card borrowing for 24th month (AP)
AP - Consumer borrowing fell again in August as consumers cut back on credit card use for the 24th consecutive month.

Ford Bulls, Don't Ignore This Key Trend (The Motley Fool)
The Motley Fool - A lot of people have been jumping on the Ford (NYSE: F - News) bandwagon of late, and a few have been on it for quite a while, like our co-founder David Gardner. The company has certainly made a remarkable turnaround from the depths of total collapse as shares traded near $1 toward the end of 2008. Those who bought into the turnaround story early have made quite a hefty profit, with shares now trading over $13.

Senate leader calls for Nevada foreclosure halt (Reuters)
Reuters - U.S. Senate Majority Leader Harry Reid has called for the largest mortgage servicers to suspend foreclosures in hard-hit Nevada.

The Money's in Manhattan. Manhattan, Kansas (BusinessWeek)
BusinessWeek - Manhattan has weathered the recent economic downturn better than most other metro areas in the U.S. Per capita personal income has jumped 4.8 percent over 2009, according to the U.S. Bureau of Economic Analysis (BEA). But good luck trying to walk in Central Park or shopping at Bloomingdale's. If you want to do so, you'll have to drive about 21 hours due east.

4 Disasters You Must Prepare For (The Motley Fool)
The Motley Fool - In these worry-ridden times, it's easy to fret about statistically improbable events: hurricanes, nuclear meltdowns, or even asteroid strikes. But these unlikely possibilities often distract us from very real -- and far more likely -- catastrophes that may be lying in wait for us. Luckily, just like buying flood insurance can help protect you if Mother Nature turns wrathful, a little advance preparation can make the following potential disasters far less painful.

How Your FICO Score is Calculated (associatedcontent)
associatedcontent - Unfortunately, how your credit score is calculated is similar to asking for the secret recipe for the Colonel's fried chicken. In short, the people behind your credit score, The Fair Issac Corporation, aren't going to let you in on their little secret. They guard this information to keep competitors at bay, knowing that if they reveal the exact credit score formula and how it works, they will lose their edge and jeopardize their dominant position in the marketplace.



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