States offer foreclosure rescue loans

By Marcie Geffner •

Homeowners who need to refinance a burdensome mortgage may be heartened to hear that more U.S. states may soon offer home loan refinancing programs similar to those already available from the federal government and at least nine states. The existing programs are limited in scope, but do give some homeowners another option to avoid foreclosure.

So far, Connecticut, Delaware, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio and Pennsylvania have set up refinancing programs, according to "Defaulting on the Dream: States Respond to America's Foreclosure Crisis," a study published by the Pew Center on the States, a research organization in Washington, D.C. Collectively, these states have committed at least $450 million to help homeowners refinance loans they couldn't afford or take out short-term emergency loans to tide themselves over during temporary financial difficulties.

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U.S. government may buy mortgages

Proposed bailout plan intended to protect economy.

By Marcie Geffner - September 24, 2008

Top officials in the federal government have been working on a new plan to strengthen the country's financial system.

The plan would allow the U.S. government to buy mortgage-backed securities and other assets from banks and financial institutions. The U.S. Treasury would then be able to sell those assets or keep them as investments. The goal of the bailout plan is to protect the nation's economy.

Treasury Secretary Henry M. Paulson, Federal Reserve Chairman Ben Bernanke and members of Congress have been working on the plan this week. The plan needs approval from Congress and the President's signature to go forward.

The plan would be cheaper than other alternatives and would "fundamentally and comprehensively" address the root causes of the stress in the financial system, Paulson explained in a statement.

“When the financial system works as it should, money and capital flow to and from households and businesses to pay for home loans, school loans and investments that create jobs,” he said.

What the plan means for borrowers
The plan isn't designed to bolster home prices or help homeowners who can't afford their mortgage payments. Rather, it’s intended to unfreeze the financial sector, which could indirectly strengthen the housing markets over time. If that happened, homeowners would benefit.

The plan also could affect interest rates that borrowers pay on mortgages and other consumer loans, but right now it's difficult to predict what the effect on interest rates will be. The government's purchases of mortgages and other financial assets might make interest rates lower. But the government will need to borrow a lot of money to put the plan into effect, and that could push interest rates higher.

Given that uncertainty, borrowers should focus on their own personal financial situation.

As always, it’s important to:

● Educate yourself about loans and loan products.
● Figure out how much you can afford to borrow.
● Consider your own short- and long-term goals.
● Shop around for a loan that meets your needs.
● Read your loan documents before you sign them.

© 2008 LendingTree, LLC. This story, "U.S. Government May Buy Mortgages," is reprinted by the author with written permission of LendingTree, LLC.

The state of foreclosure prevention

Inman News

Homeowners who can't afford their mortgage payments may not find much in the way of rescue or relief in the U.S. government's $700 billion bailout of the financial markets.

But while the feds have fearfully sat on their hands and watched a severe credit crunch turn into a major crisis, a number of states have introduced their own foreclosure prevention programs, as detailed in "Defaulting on the Dream: States Respond to America's Foreclosure Crisis," a report by the Washington, D.C.-based Pew Center on the States.

"The jury is still out about whether and to what extent (these approaches) will be effective. Still, several states among those hardest hit by foreclosures also have been among the most assertive in trying to address the problem," the Pew study stated.

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Better credit can save cash

Improving your credit - and paying your bills on time - can save you money.

By Marcie Geffner -

Want to save an easy $105 this year? If you’re an average consumer, that’s how much you could cut your annual finance charges if you improved your credit score by just 30 points, according to a new survey released by the Consumer Federation of America (CFA) and Washington Mutual Bank.

Boosting your credit score by a mere 30 out of several hundred points might be much easier than you’d think it would be. According to the survey, these five strategies may be among your easiest opportunities for improvement:

● Pay all of your bills on time and in full every month.

● Don’t max out, or get close to maxing out, the limits on your credit cards or revolving credit accounts.

● Pay off your debts, rather than transferring your balances from one account to another.

● Don’t open multiple new credit accounts all at one time or in rapid succession.

● Check your credit report annually and take action to correct any mistakes that might have been made.

The survey also found that in some ways consumers have become better-informed about credit scores in recent years. But in other ways, consumers still harbor misconceptions and misunderstandings.

With that in mind, here are a few important points to remember:

● Your credit score is based on your history of using credit and paying your debts. Your personal characteristics such as your income, age, marital status, home state, education or ethnicity have no effect on your credit history or credit score.

● You can improve your credit score by using credit responsibly. For example, your credit score can increase if you pay off a large credit-card balance, but decrease if you make a late payment on a credit-card or max out your limit on a credit-card.

● You’re legally entitled to a free look at your credit report (but not your credit score) once each year. If you also want to find out your score, you’ll have to pay a small fee. An exception occurs if you’ve been turned down for a mortgage loan or credit-card. In that case, you’re entitled to a free credit score as well.

The bottom line is that the more you know about credit, the better prepared you’ll be to use credit wisely--and that can be easier on your wallet.

© 2008 LendingTree, LLC. This story, "Better credit can save cash," is reprinted by the author with written permission of LendingTree, LLC.