These are not the well-known debt management plans offered through nonprofit credit counseling agencies. These are the card issuers’ own internal hardship programs. They typically include the ability to lower the interest rate, lower the minimum payment or reduce fees and penalties. They’re either short-term (often six months to a year), or permanent (until the card balance is paid). Read more.
Monthly Archives: October 2011
A handful of Bronx home attendant programs are shutting down this month due to changes in New York’s Medicaid system. Under contract until now with the city Human Resources Administration, Christian Community employs roughly 1,000 home attendants and housekeepers who care for frail and elderly Bronx residents. The agency is shutting down because home attendant programs will no longer receive Medicaid reimbursements directly. Rather than contract with HRA, the programs will be forced to contract with HMOs. The HMOs will bill Medicaid and then reimburse the home attendant programs. Read more in the Daily News.
With record numbers of families teetering on the verge of homelessness, Congress should be shoring up the precious few federal programs that provide affordable housing for the poor, the elderly and the disabled. Instead, both the House and Senate are considering cuts to the Department of Housing and Urban Development budget, which would hurt cash-strapped states and communities in sheltering the most vulnerable citizens. Read more in The New York Times.
A Manhattan couple who slipped their eight children out the back of a foster care agency in Queens and absconded with them for a week pleaded guilty on Tuesday to second-degree custodial interference. Judge Elisa Koenderman of Queens Criminal Court indicated she would sentence each parent to 90 days in jail and three years’ probation. Sentencing is scheduled for Nov. 10. Taking into account time served, their lawyer said he expected them to spend a little more than a month longer in jail. Read more in The New York Times.
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The demand for food is so great The Salvation Army finds itself without enough resources and has had to close two food centers in East Harlem. Read more in Albor Ruiz’ column in the Daily News.
“Why won’t the bank just reduce the amount of my loan instead of taking my home and then selling it to someone else for way less than I would have been happy to pay?” It’s a question that gets asked repeatedly these days, especially by people who are facing foreclosure or are upside down on their mortgages.
Guttentag believes that lenders have been too stingy when it comes to reducing loan balances. Private lenders have offered loan reductions only sparingly, he says, and Fannie Mae and Freddie Mac not at all.
Here’s the professor’s take on why homeowners can’t catch a break on loan reductions.
1. The buck stops there.
The decisions to reduce principal loan amounts are made by the firms that service mortgages — the same folks who brought the country the robo-signing scandal. As servicing firms, anything they decide must be in the financial interest of their client — that’s your lender, not you. If they depart from customary practice — and writing down loan balances is a departure from customary practice — the buck stops with them, Guttentag says. In other words, who’s going to take the risk of reducing Joe Homeowner’s loan amount and then have to explain it to the boss? To take Nancy Reagan out of context: They just say no.
2. Banks are in the business of making money.
No lender is going to write down the balance of a loan in default just because you owe more than the home is worth. Truth is, there is no benefit to the lender to helping Joe Homeowner keep his house instead of selling it to the next guy. Plus, to help Joe would eliminate the possibility that the bank could also get a deficiency judgment against him. Banks are in this for the squeeze and think of Joe as just the orange. Nothing personal, of course.
3. In this economy, you will likely default anyway.
Sure, you want to believe that the economy is going to turn around and the value of your home will again rise to what you paid for it. After all, hasn’t listening to a fairy tale been a surefire way to fall asleep?
From the lender’s standpoint, the only reason to write down a loan balance is that it will reduce the chance that you will default. And evidence has shown that people who are heavily underwater — that’s deep in negative equity territory — are more likely to default than those who aren’t. Truth is, negative equity discourages people from making their mortgage payments. They figure: Why keep throwing good money after bad?
4. Banks are short-staffed and the staff they do have is untrained.
Most interactions between mortgage borrowers and servicers are handled by computers or relatively unskilled employees, says Guttentag. Borrowers in serious trouble are referred to a smaller number of more skilled and specialized employees, but until you enter the red zone, you are likely to encounter frustration.
Guttentag says that at the onset of the mortgage crisis, servicers were caught short-handed and the sheer volume of foreclosures in the pipeline hasn’t allowed them to catch their breath.
5. Mortgage insurance works against you.
When mortgages carrying mortgage insurance go to foreclosure, banks are protected up to the maximum coverage of the policy, which generally is enough to cover all or most of the loss. This discourages modifications, says Guttentag. Why would a bank do a modification for $15,000 if the $40,000 foreclosure cost is going to be paid by the mortgage insurer? Even if the insurance coverage falls short of the foreclosure cost, the shortfall has to exceed the modification cost before modification becomes financially more attractive.
So there you have it. A five-point plan for keeping homeowners on the hook for that hefty loan balance.
Chelsea residents are blaming the Bowery Residents Committee’s new homeless shelter on 25th street for a unwanted street activity, including masturbating and defecating and aggressive harassment of women, according to the New York Post.
The New York Times reports that smaller homeless shelters known as Safe Havens have been successful in reducing the number of street homeless in the Bronx. The article cites the work of BronxWorks.
Even as Occupy Wall Street stokes debate over income inequality, Gov. Andrew M. Cuomo dug in his heels on Monday against extending a so-called millionaires’ tax on high-earning New Yorkers, saying the income tax surcharge would place New York at a competitive disadvantage with neighboring states. Read more in The New York Times.