Tuesday, January 22, 2008
Appraiser Sues Washington Mutual [finance]
Jennifer Wertz is a home appraiser who began working for Washington Mutual (NYSE: WM) through a third party about 18 months ago. In court papers filed in Superior Court in California (Sacramento), Wertz claims that she was designated a "preferred" vendor whose work was "proven".
Since then, however, things have gone downhill, and now the financial giant has a David and Goliath situation that would naturally turn even uglier if other Davids (or Jennifers) showed up alleging similar behavior.
Wertz's suit against WAMU is neatly summarized in two allegations (#17 and #19 in her January 10, 2008 filing):
17. On or about May 21,2007, RICHTER [ed note: previously identified as a Washington Mutual Sales Manager] informed Plaintiff that a loan for which laintiff
had prepared an appraisal report had been declined because Plaintiff had indicated in her report "declining" market conditions. RICHTER insisted that Plaintiff change her appraisal report to indicate "stable" market conditions so that the loan could be approved. RICHTER, however did not provide any evidence to contradict Plaintiffs opinion and the facts supporting the decline of market conditions. RICHTER then told Plaintiff that if she did not change the appraisal report, that,she RICHTER would have Plaintiff blocked or prevented from doing any WAMU appraisal work.
and
19. On or about June 13,2007, LSI informed Plaintiff that Plaintiff had been blocked by WAMU, that WAMU would not give Plaintiff any more appraiser work because of two of Plaintiffs appraisal reports.
It has certainly be an old saw, if not an axiom, that home appraisers favored by lenders bring in high appraisals so that borderline lending situations are not quite so close. In our informal poll today, homeowners gravely nodded when we shared the story. Those who had refinanced believed that appraisers helped the process because they were friendly with the lender or wanted to stay in the lender's good graces.
The latter is simply poor judgment if it occurred. But what Ms. Wertz is alleging is much more serious. This would be the smoking gun zealous consumer advocates (yes, we're supposed to be one too, but we believe in stories having two sides) use to prove that the subprime mortgage crisis led to an economic crisis and was caused by greedy lenders.
And the ankle bone is connected to the.....
We still say greedy consumers had more than a share in creating this mess. Ms. Wertz's day in court will be interesting and closely watched, however, and heaven help us all if she is not the only appraiser to make similar allegations.
Labels: appraisal, mortgage, WAMU, Washington Mutual, Wertz
Friday, January 18, 2008
Saving Money On Your Electric Bill [finance]
As the South gets hit this week with snow, prompting widespread panic and oil slowly retreats from its all time high, today's
Arizona Republic has a great story with tips on
how to save on your electric bill.
You likely know many, if not all, of these tips, but we thought the list was worth linking to although we still are not being into the notion that the economy is on the brink of recession. Still, electricity is expensive and folks with electric heat are really getting walloped.
We have a couple of quibbles with the Republic's list. For example, consumers are urged to "Enroll in a plan that averages consumption over the year, taking the seasonal swings out of electric bills." That idea often gets a lot of play and makes many financial planners recommendation lists. We don't like the idea for the same reason we don't like 15 year mortgages.
With proper financial discipline, consumers should not be paying more for electricity during because they do so at the peak. We're not thinking about some super-nifty pre-purchase of electricity at a locked-in price. We're thinking of the bill that runs $100 every month except for two months when it runs $200.
Under that scenario, a consumer pays eight $300 invoices ($2400) and four $600 invoices ($2400) -- a total of $4,800 for electricity in the year. Some financial planners and almost all utility plans urge consumers to
pay a monthly average and may even offer a one time incentive to do so.
That is an awful idea. In our scenario, the consumer pays $400 each month. The notion is that the sting of the $600 bills will be mitigated. That's the same silly notion that causes consumers to overpay their taxes, giving the government an interest free loan, so they "get" a refund in the spring. Such plans simply cost your money.
To optimize your financial situation, plan separately and create a budget for each month. Save the extra $100 in an interest bearing account or some other way until its time to pay your utility bill.
There is no reason to overpay a company for convenience.
The same holds true for a 15 year mortgage. Don't lock yourself into a higher monthly payment. Make sure you don't have a pre-payment penalty and then start paying down your mortgage every month. In that month where the kids needs braces, the washing machine breaks and you happen to have a $600 utility bill, that extra cash flow might help you.
The smartest thing to do right now to cut your heating bills? Make sure your home is properly winterized (no cracks, gaps, drafts, etc.) with storm windows where appropriate. Then have a good quality HVAC (heating and air conditioning) contractor check your system. Older systems are less efficient and can cost you more money. Don't fall for an automatic upgrade, but don't bury your head in the sand by thinking you can get away with
if it ain't broke, don't fix it.
Check with your local utility. Many offer programs that let you buy new energy efficient appliances at discounts or even provide loan programs for them. If you can't pay cash, and the utility savings justify the cost, go ahead and take a loan. Your utility or credit union may even offer a low cost loan.
But whatever you do, don't pre-pay your electric bill. Pay bills (not loans, bills) when they are due, not before.
Labels: financial, saving money, utility
Friday, January 11, 2008
IRS Collection Agents For Hire Collect Less Than 5% Of Assigned Accounts
We have railed against the
Internal Revenue Service using private tax collectors for a long time. At the very least, having tax data in non-IRS control is just bad policy especially since we read every so often about the agency's own employees being terminated for snooping around tax files belonging to celebrities or neighbors.
We hate the notion that a collection agent, regardless of how many documents are signed, can be given access to the same kind of information. We know that the information is given when taxes are allegedly owed (although dispute issues still remain unclear), but having federal tax information in the hands of private companies incentivized to collect revenue gives us a bad feeling.
Things are looking up, however, because even IRS Taxpayer Advocate Nina Olsen reported to Congress that the
private debt collectors are "falling far short" of the IRS' goals. We were worried about privacy issues, but we should have been worried about the program's management.
Olson reported to Congress that the private collection agencies only managed to collect $31 million of more than $180 million expected.
Worse, the program cost more than it took in. The IRS sold this program to legislators by claiming that the program would generate $1.5 billion to $2.2 billion over a 10 year period. Right now, the program is only $1.47 billion behind for the next 9 years.
To her credit, Olson continues to call for the program to end. To buttress her argument, she shared that the collection agents are not required to divulge the scripts their agents use when calling potential debtors, or as we like to call them, citizens. The IRS is reportedly blind to the scripts used (which none of us who have ever hired a call center would ever allow) and the program continues on in 2008.
Are you outraged yet? Good. Contact your local legislators. If you're not sure who to contact, here are links for the
House of Representatives and the
U.S. Senate. Tell your representatives that you won't tolerate gross financial mismanagement, lack of accountability from private contractors doing government work you pay for and taxpayer information released to non-government employees.
Labels: collections, IRS, taxes
Thursday, January 10, 2008
Baltimore Sues Wells Fargo Over Mortgage Discrimination
Kudos to Baltimore Sheila Dixon (left). When data reached the City of Baltimore that they believe showed a major finance company was targeting minority neighborhoods and creating foreclosures based on "illegal practices", they took decisive action and sued.
The City and Mayor Dixon didn't just find any old company to pursue. Instead, they filed suit in U.S. District Court against Wells Fargo & Company (NYSE: WFC), the $100 billion financial giant. The
suit claims that Wells Fargo targeted minority neighborhoods and engaged in "predatory lending practices" including unsuitable products and terms and deceptive practices.
The result, the suit alleges, is that Wells Fargo "has one of the highest rates of foreclosure of any lender in Baltimore, and its foreclosure rate in majority African American neighborhoods is four times the rate in majority white neighborhoods, and twice the City average."
But Mayor Dixon and the government have not filed for damages alone. Instead, the suit will ask for punitive damages sufficient to cover past and future losses and enough "to deter" Wells Fargo from engaging in such behavior in the future.
Other suits from cities caught in a housing crisis caused by foreclosed mortgages are expected, including one from Cleveland versus multiple lenders.
Labels: Baltimore, discrimination, mortgage, Wells Fargo
Wednesday, January 09, 2008
Rate The Restaurant? How About Rating A Radiologist?
Zagat, the favorite foodie survey company that has become ubiquitous online, has moved its technology to a new area -- health care.
Anthem Blue Cross and Blue Shield has announced that a partnership with Zagat that allows consumers to rate their physician experiences. Insurers and managed care companies have compiled physician and hospital metrics for years, and many web sites offering physician "report cards" have launched in the last few years, but the program links two brand name organizations in a new field.
The service will initially be available only in parts of Ohio, but with both companies having national partnerships, one can easily imagine the program spreading if successful.
The results can be a mixed bag, warns Consumer Help Web's George Bounacos. "We find that extreme emotions, either positive or negative, compel people to review or comment on goods and services," said the consumer advocate. "There is a danger inherent in crowd rating versus traditional market research that bias can move the results to consumers who feel strongly about a physician one way or another."
Bounacos advises that the ratings should be a part of a consumer's research and not serve as the only measure to determine whether someone should see a specific physician.
Labels: Blue Cross, customer satisfaction, medical, survey, Zagat
Tuesday, January 08, 2008
PeoplePC To Issue Refunds
New York Attorney General Andrew Cuomo continues following on the heels of Governor Spitzer, who used crusading as an AG to successfully run for Albany.
New to Cuomo's resume is a victory over PeoplePC, an Earthlink (NASDAQ: ELNK) subsidiary that also partners with AARP. Cuomo accused the company of making false and deceptive statements that resulted in consumers being overbilled.
More than 50,000 New Yorkers may now be eligible for refunds and one wonders if other states will jump on the bandwagon. New York consumers have until May 8, 2008 to file a claim, which Cuomo's office says should be done directly with the company.
If you think you're eligible, the
claim form can be downloaded from the New York government's site. How do you know if you're eligible? Cuomo's office says, "New York customers who incurred charges by using telephone access numbers suggested by PeoplePC are encouraged to submit claims for refunds."
That's good enough for us. Give it a shot.
Labels: Cuomo, Earthlink, marketing, overcharge, PeoplePC
Thursday, January 03, 2008
Airline Service Improves During Last November, Government Says
As consumer reports begin to filter to Consumer Help Web about holiday travel horrors, the U.S. Department of Transportation says that November 2007 airline performance was better than in the past.
November, including that awful Thanksgiving travel period, had fewer delays (20%, down from 23.% a year ago and 21.8% the prior month) and fewer cancellations (1% versus 1.6% a year ago and 1.2% in October).
Even more astonishing with full flights criss-crossing the country was that the missing luggage rate plummeted. Despite the improved performance, complaints rose more than 30% from the prior November. Also not discussed in the government report was the Bush administration's decision to open air corridors typically reserved for the military during the peak Thanksgiving time.
So which airlines were the best and worst?
The airline arriving on-time most often were:
1. Hawaiian Airlines -- 92.4 percent
2. Aloha Airlines -- 91.6 percent
3. Delta Air Lines -- 85.6 percent
Atlantic Southeast Airlines posted the lowest mark of all airlines with a 76.7% rate.
In a marked improvement from their horrible February, JetBlue joined the ranks of the airlines canceling the fewest number of flights:
1. Frontier Airlines -- 0.1 percent
2. Continental Airlines -- 0.2 percent
3. JetBlue Airways -- 0.2 percent
The highest rate of cancellations, meanwhile, was Mesa Airlines, which canceled 2.9% of all flights.
But what about specific flights? There are some you may want to consider based on their November 2007 performance. According to the Department of Transportation, the most frequently delayed flights:
1. ExpressJet Airlines flight 2979 from Hartford, CT/Springfield, MA to Newark, NJ -- 88.5%
2. Continental Airlines flight 1532 from Houston Bush to New York LaGuardia -- 87.5%
3. ExpressJet Airlines flight 2076 from Newark, NJ to Indianapolis -- 85.2%
3. Mesa Airlines flight 7462 from Washington Dulles to New York LaGuardia -- 85.2%
5. American Airlines flight 350 from Chicago O’Hare to New York LaGuardia -- 83.3%
5. American Airlines flight 1497 from Newark, NJ to Chicago O’Hare -- 83.3%
5. ExpressJet Airlines flight 2717 from Newark, NJ to St. Louis – 83.3%
Labels: airline, customer satisfaction
Wednesday, January 02, 2008
Millions of Consumers Face Tax Filing Delay
If taxes are, along with death, certain, than consumers anticipating a refund are also almost certainly anxious to file as soon as possible each new year.
Tax refunds are never a good thing. Receiving a tax refund means that a consumer has essentially given the federal government an interest free loan. Worse, if the consumer is carrying debt and uses the refund to help pay that debt, accruing interest could have been avoided by having the proper amount withheld.
Yet another wrinkle occurs when consumers are subject to the Alternative Minimum Tax (AMT). As a result of tax code changes enacted in December, the rules covering who is affected by AMT and by how much have changed. IRS computers will need to be re-programmed according to the tax collection agency. As many as 4 million consumers could potentially be affected by these changes, with the biggest change being that their federal returns cannot be filed until February 11, 2008.
That date is being called a "target date" by the IRS and is obviously subject to change. Consumer Help Web will keep you posted on new announcements.
More
tax return delay information is available at the IRS site.
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Important Note: This information is presented for news and information purposes. Consumer Help Web, Inc. is not a tax preparation entity, nor is this legal or financial advice. Consult your tax advisor or the Internal Revenue Service for more information on how this delay could impact you.Labels: IRS, taxes
