ConsumerAffairs.com recently completed an investigation into BlueHippo, a credit provider that takes advantage of wide-eyed consumers looking to purchase “one of those computer things.” We haven’t seen the commercials ourselves, but a blue hippo romping around with upside-down signage sure does sound appealing. As a credit lender? Maybe not, but I assume I am not the target audience.
Apparently even “celebrity” can’t save you. Dustin Diamond, a/k/a Screech from Saved by the Bell, is facing foreclosure. He’s selling t-shirts to raise money to redeem his mortgage.
The story is a bit disjointed, but sounds similar—minus the “old friend with lots of connections—to the stories we hear all the time from non-famous consumers facing foreclosure.
Sharon McCann, a guest contributor at Tort Deform, posted about her painful journey through the American Arbitration Association’s (“AAA”) arbitration process as a result of her builder skipping out on building her house in mid-project. After six months or so, McCann says, she finally won, but what?
Freakonomics blog suggests alternatives:
Next year, if you need a gift for a strict rationalist, consider cash. If you want to appeal to someone’s wild self, you’ll have to use your imagination. And if you’re hoping to send a little something extra to the shareholders of Best Buy or the Gap or Tiffany, consider a gift card.
I received a $20 iTunes gift certificate for a wedding shower present. It was a nice idea, but neither my wife nor I have an iPod or use iTunes, so it isn’t particularly useful. We will either regift it to our friends, who just got matching iPods for Christmas, or it will sit unused until it expires. Typical, apparently.
Okay, January 9th is a bit late to be making resolutions, but we can’t help ourselves. Besides, it’s never to late to make financial resolutions.
The new year (and tax time) is a great time to sit down and look over your budget. It’s easy. Take a piece of paper (or use Excel, if you like your computer), and write down all your income in one column. In another column, write down all the expenses you require to live. For most people, this will include things like utilities, groceries, etc. It the internet a utility? You decide. In a third column, write down all the money you like to spend on non-essential things like cable TV, eating out for lunch, your car payment, etc.
Total up each column. Subtract your expenses from your income, and you should have the balance of your savings account (minus things you spent your savings on, like retirement or fabulous trips to Europe). If you don’t, or if you end up with a negative number, start cutting up your credit cards.
We see a lot of this. Someone comes in for a consultation who is in trouble financially. They can’t afford mortgage payments, and so they come to see me with a story about how their mortgage broker predatorily convinced them to get the mortgage loan. As evidence, they point to their vastly overstated income on the loan application. When they do this, we point to their signature at the end of the loan application.
Was the broker breaking laws and preying on the consumer? Probably. The problem is that the consumer—on paper, at least—was complicit in the fraud, which was perpetrated primarily on the lender (i.e., the bank who actually writes the check), not on the consumer.
The moral? Don’t sign loan applications that overstate your income. If you can’t afford the loan, don’t get it. Mortgage brokers are paid at closing. They don’t care if you ever make a payment on the loan. They are not looking out for your best interests, but for their own. They are paid on commission not (usually) by you, but by the lender.
This is another reason to get an attorney of your own, but the bottom line is don’t overstate your income—or anything else—on a loan application. Instead, buy a cheaper house. Or keep renting until you can actually afford to own.
Mary Pawlenty, wife of Minnesota Governor Tim Pawlenty, has taken a job as general counsel of the National Arbitration Forum. She is presently a Dakota County District Court judge, but will resign effective next month.
Apparently she doesn’t agree with Richard Neely, a retired West Virginia judge who described his experience with the National Arbitration Forum this way:
Thus I learned how Godless bloodsucking banks have converted apparently neutral arbitration forums into collection agencies to exact the last drop of blood from desperate consumers.