Marc's Mortgage Matter's

The MacArthur Foundation gave out its annual 'genius' awards last week. This year's awards went to a journalist, a mental health scientist, and a couple who sold their house three years ago.

There was a story in Reuters yesterday saying that “lawmakers have said they are considering extending or expanding the tax credit. Senate Majority Leader Harry Reid backs a bipartisan bill to extend the credit for six months. A Senate Republican plan would expand it to $15,000.” As one can imagine, NAR, NAHB, and the MBAA are all lobbying strongly for some type of extension. As we have seen, the Federal government would rather continue to stabilize the economy rather than upset it, and taking away the credit would be a move toward “upsetting the apple cart”.

The Wall Street Journal reports that, due to the federal tax credit to buy high-mileage cars, the Federal government is now paying Americans to buy golf carts. As it turns out, the IRS has ruled that golf carts qualify for the electric-car credit as long as they are also road worthy. The federal credit “provides from $4,200 to $5,500 for the purchase of an electric vehicle, and when it is combined with similar incentive plans in many states the tax credits can pay for nearly the entire cost of a golf cart”. At a list price of $8-10,000, and a top speed of 15 to 25 miles per hour. "The Golf Cart Man" is offering a deal where “you can buy the cart for $8,000, get a $5,300 tax credit off your 2009 income tax, lease it back for $100 a month for 27 months, at which point Golf Cart Man will buy back the cart for $2,000. ‘This means you own a free golf cart or made $2,000 cash doing absolutely nothing.’”

Congress blundered badly when it gave the credit card industry as long as 15 months to phase out the deceptive and predatory practices that were outlawed in a new law enacted in May.

Instead of backing away from exploitation, credit card companies have intensified it. For starters, they have driven up already outrageous interest rates by an industrywide average of about 20 percent, according to a report scheduled to be released next week from the Pew Charitable Trusts’ Safe Credit Cards Project. The companies also have used sleight of hand to more than double rates on customers who spent prudently and paid their bills on time.

The Credit Card Accountability, Responsibility and Disclosure Act would end a great many odious practices. The companies, for example, could no longer deluge broke and unemployed teenagers with credit cards, driving them deeply into debt that they have no way of paying off. Credit card companies will have to verify the young person’s ability to pay or get a signature from a responsible adult before credit is issued.

The law prohibits arbitrary rate increases, penalties for customers who are late paying an unrelated bill — known as universal default — and the all-too-common scams in which companies charge cardholders new interest on debts that they have paid a month or two earlier and rig due dates so that payments are late by definition and subject to a hefty penalty.

The Federal Reserve chairman, Ben Bernanke, acknowledged recently that moving up the effective date to Dec. 1 would allow consumers to get benefits and protections sooner. But he also expressed misgivings that the move might be difficult for companies that need to create new billing and accounting systems, along with other changes.

Mr. Bernanke’s opinion will hold less sway in the House than in the Senate, where lawmakers are notoriously deferential to regulators and to the banks and credit card companies whose biddings those regulators so often do. But pressure for action in this matter is clearly building in the House and among the voters, who have grown weary of being gouged, especially at a time when many of them are having trouble feeding and housing their families.

In any case, it is time that Congress looked out less for the credit card companies and more for American consumers. That means passing bills in Congress that would move up the effective date of the credit card law.

As a side note, I can relate as we were notified last week that our CITI and AT&T credit cards rates is going up to a whopping 29.99%. Why I asked? Because we need to make up for all the lost profit so we are penalizing evevryone paying on time! Huh? WTF? Needless to say, I am still blue in the face!

Mortgage rates managed to finish a fairly turbulent week in the markets at a level unchanged from last week. There was a bit of underlying volatility to the stock and bond markets, though, which suggests that the quiet demeanor of rates this week probably won't last.

An artist asked the gallery owner if there had been any interest in his paintings on display at that time.
I have good news and bad news, the owner replied. The good news is that
a gentleman inquired about your work and wondered if it would appreciate in value after your death. When I told him it would, he bought all 15 of your paintings.
That's wonderful, the artist exclaimed. What's the bad news?
The guy was your doctor.