Gift cards have become a common and convenient way for busy shoppers to remember friends and loved ones, while avoiding the hassle associated with fighting mall traffic and trying to guess what your recipient wants. Gift cards are convenient, but a staggering number of gift cards go unspent, with the balances reverting back to the retailers and banks who issued the cards. Last year, Best Buy cleared $38 million and Home Depot cleared $37 million – all from unused gift card dollars.
A New York Times article from December, 2009 reports that this year (2009) an estimated $5 billion of gift card value will go unused and revert back to the issuer. Some of the cards are lost, while others lose value month by month through inactivity fees. One gift card vendor promotes its services to retailers by claiming that that rotating gift card display may be the store's most profitable square foot of space in the location.
Responding to consumer complaints, Congress has stepped in with sweeping regulations that limit inactivity fees and restricting expiration. Disclosure requirements have also been enhanced. But, bowing to pressure from retailers and banks, these new rules do not go into effect until August, 2010 – meaning that they do not apply for the 2009 Christmas season.
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Time Magazine's recent story entitled Where are All the Foreclosure Lawyers? reveals to the country what many Florida residents already know – Florida's foreclosure laws are convoluted and confusing and most struggling homeowners cannot afford representation to mount a defense.
Because there is generally no financial aid for homeowners facing foreclosure, many mortgagees are unable to defend their homes from bank actions. Chapter 13 bankruptcy can stop a foreclosure, but it ought not be a homeowner's only recourse.
Mortgage modification programs, loudly touted by mortgage industry lobbyists fighting legislation in Congress that would allow bankruptcy judges to modify the terms of a mortgage in a bankruptcy, have done little to stem the tide of foreclosures. Time notes that the Boston-based National Consumer Law Center reported that many large banks and other mortgage servicers have decided it's cheaper to foreclose than to offer more affordable loan terms.
Because foreclosure in Florida requires court involvement, it is always in your best interest to seek legal counsel to discuss your options. Consumer firms like Clark & Washington offer no-cost consultations, while firms that specialize in foreclosure defense may charge a nominal fee. Either way, do not assume that you have no choices and do not wait until the last minute before acting.
Filed under Foreclosure issues, Mortgages by
*Note: For those unfamiliar with the bagel reference, you can find the explanation in this NY Post article along with some additional modern bankruptcy cultural history in this NY Observer article.More on Bankruptcy Bill's Bankruptcy Humor
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The Associated Press reports that the Federal Reserve Bank will be offering a "relief plan" to qualified homeowners whose loans were guaranteed by Freddie Mac and Fannie Mae. Under the Fed's new foreclosure prevention effort, homeowners may get a reduced interest rate, longer loan term or a lower total mortgage amount. The Federal Reserve policy statement is set out in general terms at the Federal Reserve web site.
It is unclear exactly how the Fed's policy will be implemented, or when regulations and procedures will be published. Further, according to the AP story, the amount of mortgage securities in question, valued at up to $74 billion, pales in comparison to the $1.75 trillion in outstanding risky loans, according to trade publication Inside Mortgage Finance.
It will be interesting to see if the Federal Reserve policy has any signfiicant impact on the foreclosure or bankruptcy rate.
Filed under Foreclosure issues, Mortgages by
As much as it would be nice to believe that everything about bankruptcy is predictable, in fact, there are many gray areas where your treatment depends as much on the parties involved as the situation itself.
One such situation arises if you file Chapter 7 but do not enter into a formal written reaffirmation with your mortgage company. Reaffirmation, as you may know, is the process by which you renew your contractual obligations with your lender. In the case of mortgage debt, if you do not reaffirm, in theory you will no longer have any personal liability with your mortgage lender.
Section 521(a)(2) of the Bankruptcy Code requires all Chapter 7 debtors to submit a statement of intention in which they assert their agreement to reaffirm or surrender secured property. In theory, if you do not reaffirm your mortgage, Section 521(a)(6) provides that the automatic stay shall be lifted and that the creditor can foreclose on the property.
In reality, however, some debtors submit a statement of intention providing for surrender, but they continue to make payments and remain in the property. In other cases, debtor submit a statement of intention providing for reaffirmation but they never execute the documents. Often, there is no equity in the property and the mortgage lender would rather have the monthly payment than to foreclosure and add yet another home to their inventory of houses. In yet another scenario, your budget may not support a reaffirmation because it does not show enough cash available to pay the mortgage and your attorney may advise you not to submit reaffirmation paperwork.
If you do not reaffirm your mortgage, you will have no personal liability to pay the debt, but the lender retains a lien interest on the property. Because there is no personal liability, most lenders will not report timely payments as a positive on your credit reports. Should you fall behind at some point in the future, or if property values were to rise unexpectedly, the mortgage lender would arguably be within its rights to initiate foreclosure proceedings months or years from the end of your bankruptcy.
The point here is that if you choose not to reaffirm your mortgage obligation, you need to discuss with your lawyer what such a decision means, both in the near term and in the long term. Do not assume that "things will work out" because that does not always happen. Proceed with a plan and understanding of your situation.
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