Think that after a multimillion dollar lawsuit and settlement that the big banks would start playing by the rules and treating their customers right? If so, the bridge salesman convention would LOVE to have you drop by.

Get ready for the next mortgage scam by the banks.

Single Point of Contact Scam

One of the things that the big mortgage banks were supposed to do to help their customers and stop mortgage foreclosure fraud was provide a single point of contact for borrowers to deal with on issues like mortgage modification, refinance or foreclosure avoidance. Before, borrowers were forced to call some 1-800 number where a faceless phone drone would do the standard dance. The borrower provided all of his or her information, and then the person on the phone would tell them what they needed to do.

Unfortunately, customers found that they had to start over every time they called. One mortgage modification specialist would say that they needed certain documents, then another one would say that they needed additional, or different documents, until finally, one day, a foreclosure notice showed up in the mail because the borrower had “failed” to comply with the necessary procedures.

By having a single point of contact, borrowers were supposed to be able to avoid this mess and lenders were supposed to be prevented from taking advantage of it by constantly changing the rules. However, the big lenders have found a way around this rule by, naturally, obeying the letter but not the spirit of the law.

How Banks Still Don’t Provide a Single Point of Contact

It turns out that getting around the requirement to provide a single contact for borrowers is all too easy.

First, the lender sends out a notice. That notice provides a name of a bank employee who will be the single point of contact for that borrower all through the mortgage modification process. This letter complies nicely with the law.

The scam starts when the borrower actually tries to contact this person. A single employee, of course, only works certain hours each day. If those hours happen to be 7:00 to 3:00 Eastern time and the borrower is on the West Coast where that is 4:00 A.M. to 12:00 noon, well that’s too bad. Not that it matters, because the so-called point of contact will never answer their phone anyway.

Many borrowers report that they can’t even leave a message because their contact’s voice mail box is always full. Those who can leave messages report that they are never called back, no matter when they leave a message or how many times they call.

The only answer?

Press to be transferred to another representative who will “try to help” and once again, mortgage customers are playing phone roulette with the banks and their representatives about what documents they have to provide, and to whom, and by when, and so on.

If you get stuck in this situation, documentation is your friend. Keep a journal of each and every call you make, including the time and date, who you make it to, and whether or not you leave a message. Be sure to leave a message with every call. Assuming your point of contact is a real person (maybe) and that he or she has not been instructed to not deal with you (maybe), then being an aggressive squeaky wheel might just get you the actual contact you need. When you do transfer to another representative make sure you tell them that you have called your contact many times and never gotten a return call. Those calls are recorded, and your constant communication that your single point of contact is not doing what they are supposed to be doing may eventually be helpful to your case whether in a foreclosure hearing or other legal process.

Do your best to follow the process and get your loan fixed, but if it gets too far out of hand, report the lender to your state’s Attorney General, and to consumer groups. You may even reach out to a reporter. Remind them of the settlement and the requirement that there be a single point of contact and then offer them your meticulous records detailing how your lender isn’t following through.

In the end, pay when you can, and keep all of your options open and hopefully, you’ll come out of the situation O.K.

Related posts:

1. Government Mortgage Help Programs Scams and Deceptive Marketing and Mailings
2. Good Enough Checking From Your Bank or Brokerage

Bank Mortgage Scams Continue originally published at Personal Finance Blog - FinanceGourmet.com

Credit Karma has made waves in the financial industry by offering both free credit scores and free credit monitoring to its customers. At first, a lot of people were worried that Credit Karma might be a scam. But, after an in-depth Credit Karma review, it seems that the company is legit. However, it is important to understand just what it is that they offer.

Credit Karma vs FICO

To understand whether Credit Karma scores are accurate, you first have to understand what credit scores are and where they come from.

First, a credit score is nothing more than a number calculated from information in a person’s credit report. The idea behind a credit score is to determine algorithmically how good of a credit risk someone is without actually have to read through the details of a lengthy credit report. The resulting number is only as good as the math that created it. The more statistically accurate the number is, the better the score is.

However, in the real world, there is really only one credit score that matters. Fair Issac was the first company to popularize the concept of a credit score. Over the years, it has demonstrated that its credit score algorithm is accurate enough statistically for financial investors to use it in determining risk. Since then, there have been other companies using other statistically models to generate their own credit scores. Most notably, the three major credit bureaus have all tried to push a credit score of their own, but without much success. When it comes to actual lending, the gold standard is the FICO score.

That leads to another type of mathematical attempt at creating a credit score. Since the only credit score anyone really cares about is their FICO score, that is the score that people want to know. Since that score is a proprietary product of the Fair Issac company, they are the only company than can calculate your actual FICO score.

However, the company was forced by Congress to provide a little bit of transparency into the process of calculating a score by providing some general information as to what a FICO is based on, and just as importantly, what it is not based on. Starting from there, numerous entities have tried to develop an algorithm for creating credit scores that generates a similar score to the official FICO score. Doing so requires reverse engineering the mathematics that go into the score. No one has exactly duplicated the score, but many alternate scores provide a close approximation.

Credit Karma does not provide a true FICO score. Doing so would be prohibitively expensive for a free offering, even with the revenue generated by advertising and referral fees.

How Accurate is Credit Karma Score

The Credit Karma score accuracy question comes down to how typical you are as a user of credit. If your credit profile is one with typical amount of debt, income, ratios, and payment history, your CreditKarma.com score will be pretty accurate. This type of credit profile has been reverse engineered more than any other and therefore the alternate algorithms are better at predicting this kind of score. If, on the other hand, your credit profile is unusual, your score may be significantly off.

For example, if you have a very short credit history, but very high income your score might not be very accurate. Likewise, people with a long, but atypical credit history might find their score way off.

Either way, the best use of any free online credit score is to track the MOVEMENT of your score over time. If your score is going up, then the chances are very good that your actual FICO score is doing the same. The reverse is also true. If you do something like open a new credit card, or cancel an old one, and your Credit Karma credit score goes down, you might want to consider reversing course.

Regardless, knowing your “real credit score” when you are not applying for credit is not very useful. Your score changes every day, so even if you get your official, 100% accurate, FICO score on Monday, but Friday, your score may be up or down several points, just like your CreditKarma.com credit score might be off by several points. In other words, don’t stress out about the exact number. Instead, focus on making the number go higher, or at least stay the same.

See also:

• What is FICO Score?
• How FICO is calculated

Related posts:

1. Credit Karma Scam or Legit Free Credit Scores?
2. Credit Karma Review – Good Deal?

Credit Karma Accuracy originally published at Personal Finance Blog - FinanceGourmet.com

Use your debit card from Bank of America even once and you’ll be charged a $5 fee. That’s on top of other fees that BoA charges.

The bank that is hardly the top of the most customer friendly list has decided that it can no long afford to be in the banking business without money grabbing fees. The company blames recent rules that limit the amount that can be charged to merchants accepting debit card transactions. However, BoA is charging everyone, regardless of whether they make a debit card (limited fee) or credit card (unlimited fee) transaction. In other words, they want to charge the fee to as many customers as possible.

Obviously, Bank of America customers who are not fools are better off opening another banking account with a credit union or less greedy bank (or one that knows how to actually make money being a bank) and using the debit card from them.

One option for those who don’t want to hassle with another brick and mortar bank is to open an online banking account. Most online checking accounts offer a free debit card. Transfers between banks such as Bank of America and Ally or ING Direct are typically free. Just transfer your funds to the online bank and use their debit card instead. You don’t even have to close your BoA account or change your direct deposit to another bank.

Customers with brokerage accounts may wish to check for checking or debit card options there as well. Fidelity, for example, offers free checking and a free debit card. Again, funds can be easily (and freely) transferred between the bank and the brokerage.

Finally, people who don’t want to pay Bank of America’s $5 debit card fee tax can also take advantage of a PayPal account with a debit card. Not only is the debit card from PayPal free, it offers one percent cash-back, paid monthly and credited directly to your account, no waiting.

In other words, you can pay Bank of America $5 per month for no reason, or you can earn 1 percent on every transaction you make. If you are sticking with using your Bank of America card, then you get what you deserve. As they always say, the markets will sort it out. In this case, the markets will separate the suckers from those who are smart enough to actually care about their money.

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Bank of America Charges $5 Per Month For Debit Card originally published at Personal Finance Blog - FinanceGourmet.com

When it comes to protecting your privacy online, nothing is more important than a good browser data clearing tool. Deleting your cookies through a web browser’s interface hasn’t been good enough for a long time.

Fortunately, utilities like CCleaner and Glary Utilities as well as Firefox add-ons and Chrome extensions fill the need to completely clear your private data from browser cache, flash cookies, and so on.

What we need now is a way to manually and selectively protect certain cookies from cleaning.

A lot of banks and financial institutions are requiring users to take an extra step when accessing their account information from a new computer that has never accessed the site before. For example, Chase Bank, which handles the Amazon Rewards Visa Card, requires users to get an authentication code via text message or email to one of the numbers or addresses on record with the account in order to log in from a new computer.

Bank Login Register Computer First

Online banking customers at ING have to answer one or more of their extra security questions in order to access their high-interest online savings account or online checking account.

This extra layer of security helps prevent hackers from gaining access to your account even if they have your username and password. That makes this extra security precaution a welcome addition for most users.

However, neither banking customers nor credit card companies are interested in making it harder to manage your finances online. After successfully completing the extra security checks, users can "register" the computer that they are using so that they do not have to go through the additional security levels the next time they access the website. This registration occurs by the website placing a cookie on the computer that is used to validate the machine during future login attempts.

Unfortunately, these cookies, like all others, are wiped clean by the best privacy tools resulting in the user having to go through the whole process again.

There are ways around the issue. Everything from creating a separate profile or using a different browser to access financial data can work, but they represent an unnecessary extra step when all you want to do is check your checking balance to ensure that you don’t end up with any high overdraft protection fees from your debit card.

A better solution would be for developers to incorporate a vault or protect option in their products whereby a user could manually protect specific cookies through the program interface. To protect abuse, cookies should not be allowed to be added programmatically, or via API, or clicking on a web-based button or JavaScript.

The first solid privacy utility available with a cookie protection feature will be my new top choice for protecting private data online.

Related posts:

1. Best Online Bank Rates
2. In-Depth Information on Banking Crisis

Online Banking Security Internet Privacy originally published at Personal Finance Blog - FinanceGourmet.com

Lot of people have been getting notifications from their bank or credit union about overdraft protection for debit cards. These notifications sound urgent and tell you that unless you respond that your financial institution will have to turn off overdraft protection on your debit card soon. While it sounds like your bank is trying to take care of you, the opposite is likely true.

Debit Card Overdraft Protection

You may be aware that recent banking reform legislation shut down some of the worst abuses that banks and credit unions used to generate big fee income at the expense of their customers. One of those banking abuses was so-called overdraft protection, which in reality is just a way to charge you big fee.

When you write a check, that check gets sent to your bank. Your bank pays the amount on the check out of funds in your checking account. Overdraft protection turns on when you don’t have enough money in your checking account for the check to clear. Most people assume that if there is not enough money in their account to pay a check they wrote that the check bounces, but not if there is overdraft protection.

The way overdraft protection works is that instead of returning the check you wrote for insufficient funds, your bank pays the check, and gives you a negative checking account balance. If this were free, or even reasonably priced, then you would say thank you and be grateful that your bank takes such good care of you. Unfortunately, this is not the case.

Instead, your bank charges you a fee for using the overdraft protection "service". That fee is often just as high as the fee charged for bouncing a check. The bank gets to collect a big fat fee. The only thing the customer gets out of it is that you don’t have to deal with the merchant you wrote the check to and pay any bounced check fees from them. Reasonable people can disagree on whether or not that is a service worthy of the fee charged for it.

When it comes to debit cards, however, overdraft protection is almost always a scam.

Normally, when you try and use your debit card to pay for something and you do not have enough money in your linked checking account, the transaction is declined. The cashier hands you back the card, and most people use a different card instead. Then, you would know that there is an issue that you need to check into right away. While potentially embarrassing, this situation is free, and there is no financial harm to you.

When your debit card has overdraft protection, then your bank MAY approve the transaction even if you don’t have enough money in your checking account. Of course, for using the overdraft protection service they charge you a $35 overdraft protection fee, and you never have any idea that there was a problem. In fact, you might go on to use your card four or five more times that day, and each time you will be charged another $35 fee. You could rack up over $100 in fees easily thanks to your bank’s "service."

Imagine that you don’t realize that your paycheck didn’t direct deposit on the day you thought it would. You use your debit card to buy lunch for $10, pay for some books $15, and then rent a few movies at Redbox $3. You spent $28 for day, except you actually ended up spending $118 for the day because you are nailed for three overdraft protection fees of $30 each.

In a world where most people have more than one way to pay, it is slimy and underhanded for banks to pretend that they are doing you a favor by charging you $30, $40, or even $50 to approve a transaction on your debit card. What is worse, is that nobody ever explains this to you, AND, they enroll you in this money draining "service" automatically when you sign up. Sure, it is "disclosed" to you, in the 30 pages of fine print you get with your account.

You can see why Congress tried to ban this behavior. Powerful banking lobbyists succeeded in getting the rule watered down, but now you have to "opt-in" to overdraft protection on your debit card. That is why all of those notices have started showing up.

Unless you have no other credit cards or debit cards and never carry cash, DO NOT opt-in to overdraft protection on your debit card. Just use another means of payment if your card is ever declined. You’ll save lots of money.

No related posts.

Overdraft Protection For Debit Cards originally published at Personal Finance Blog - FinanceGourmet.com

Refinancing a mortgage or getting a new mortgage isn’t necessarily just about finding the lowest interest rate.  But, you definitely want to know what interest rates are in general when shopping around for a mortgage.  That way, you know who is way out of the ballpark, and who is worth looking into a little bit further.

One of the best tools around for information on current interest rates is a website called Bankrate.  Bankrate.com publishes a survey of national mortgage interest rates every Tuesday morning.  Even more useful, is a weekly expert analysis of mortgage rates.  This analysis can include everything from whether or not they think rates will be going up or down in the near future, to commentary on what happened last week and what affect it had on mortgage rates for the current week.

This information can be a simple way to get a handle on financial news that you may have missed or not fully understood from the week before.  For example, whether or not a scary unemployment number you heard about the last week affects mortgage rates or not is the kind of thing that you’ll find explained in the analysis.

Using Bankrate

No tool covers every single thing you need to know, and Bankrate is no exception.  However, when used properly, Bankrate can be the best starting place for your mortgage research.

1. Check the Weekly Mortgage Rate – There is a big blue box prominently displayed on the Mortgage page.  That is the “National Overnight Averages”.  While useful, that survey is subject to more fluctuation.  Find the Mortgage Rate Trend Index.  It will be a regular link in the “news” area.  It comes out on Thursdays, so if you are on the site on Tuesday or Wednesday it might not be on the front page anymore.
2. Read the Analysis – Don’t just look at the numbers, read the analysis.  This will give you an idea of what to expect.  Remember, this is last week’s data, so the numbers you hear this week will be different.
3. Jot Down the Rates for Your Mortgage – There will be a lot of numbers.  You don’t need them all.  If you are looking for a 30-year fixed mortgage, the rate on the 15-year mortgage is irrelevant.

The Next Step

The next step is to start shopping around.  We’ll discuss that in an upcoming post.  Subscribe to the Finance Gourmet Feed to make sure you don’t miss anything.

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Finding the Lowest Mortgage Interest Rates originally published at Personal Finance Blog - FinanceGourmet.com

The much ballyhooed law passed a few years ago that was supposed to address all the privacy concerns out there regarding banks, brokerages, utilities, mortgage companies, and other companies that you do business with requires that all companies send you a privacy notice at least once per year.  In that privacy notice you mush be given the right to opt out of certain kinds of information sharing between subsidiaries, and even information being shared with other unrelated companies. 

Legally Required Annual Privacy Notice

Don’t remember seeing any of those?

That is no coincidence.  Jammed into the same envelope as your year end statement and/or certain tax forms will be a very plain looking piece of paper printed with dense black and white text.  Unlike the piles of glossy full-color materials you get in those envelopes year round, this one is designed to NOT be read.  The plain text and simple font will make you assume that it isn’t something that you care about, just more legal mubmo-jumbo from the bank.  And that, of course, is exactly what the companies are hoping for.

You see, tucked somewhere in that boring piece of “junk” that you throw in the recycle bin without a second thought are all the ways those companies collect private information about you, and what they do with it.  For some, it is exactly what you think it should be.  The bank has your name, address, and phone number because it has to communicate with you and they don’t share or sell that information with anyone else.  But, some of them would shock you.

There are plenty of banks, brokerages, and credit card companies whose privacy statement says that not only do they collect way more information about you than you might be comfortable with, but that they share that information with every other business unit, subsidiary, and parent company even remotely associated.  Even worse, many of them will flat out state that they routinely disclose that information to unrelated third-parties without your consent and without notifying you.

How can they get away with that?

You didn’t read yours did you?  Do you think anyone else read theirs?

Even if you do read it, opting out is not made easy.  For companies that bend over backwards for you to sign up for online statements and access, they seem surprisingly uninterested in you being able to go online to opt out of having every detail of your personal information being sold to anyone and everyone.  Instead, you’ll have to fill out a form in pen and paper and send it back to them.  Is there an envelope included?

You must be joking.  Just finding the right address can be a chore.

Still in this day and age of rampant identity theft and computer break-ins (and based on my mail an alarming number of lost and stolen corporate laptops), the fewer places that have your personal information the better. 

So, gather up your mail as it comes in and look for the words “Privacy Notice” or “Privacy Update” or something like that.  Put them all in a basket somewhere and then one day, sit down and go through them one at a time and opt out of every single one.  Don’t assume that a big brand name bank isn’t engaged in these kinds of tricks because they are just as much as that fly-by-night mortgage broker who sold you that negative amortization adjustable rate mortgage a few years ago.

Spread the word to your friends and family.  Maybe if enough people opted out and spoke of their outrage companies would change their behavior.  But that day is far in the future, because for now, most people just throw their privacy in the trash.

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No related posts.

Here Comes Your Annual Privacy Notice originally published at Personal Finance Blog - FinanceGourmet.com

I was going through my stack of mail to look at (separate from the stack that has things that actually need taken care of) and came across an offer for Fidelity’s mySmart Cash Account.  Intrigued, I decided to take a look at the Fidelity checking account that they were so proud of that they included a glossy little flier to advertise it.  The result?  What the—?

Regular Bank Checking Sucks This Bad?

The Fidelity myCash account boasts exactly two features that do not count as minimum basic features for a checking account.  First, it pays interest.  How much interest?  Well, this is where Fidelity gets a little weasel-ish.  The flyer says that I will “Earn three times the national average…”  Um, OK.  How much is that?  Folks, it isn’t even in the fine print, that’s how much the rate must be worth!

A visit to Fidelity’s website reveals the depressing answer.  A balance of less than $5,000 in a myCash checking account will earn a whopping 0.20% APR.  Whoo hoo!  But wait!  Maybe if you have over $5,000 it is worthwhile?  Survey says? 0.20% again.  Yes, go through all of the steps and take the time to open a Fidelity mySmart Cash Account, and you too can earn a whole 0.20% interest.

Ironically, you can actually earn something in the neighborhood of 2% by using a money market fund, but when you are pandering to the fear of the people who can’t be bothered to read anything more than headlines by really pushing the whole FDIC insurance thing, you can’t switch gears and point out the much better rate that you can get in what is still a pretty safe account.

Oh, the other value added feature is unlimited ATM fee refunds.  That is nice, but hardly a huge deal anymore if you know what you are doing.  In other words, the Fidelity cash account is good enough, but nothing better.

This leads to the inevitable question.  Are regular bank checking accounts so bad now that this counts as a great deal, or is Fidelity just dutifully pushing another product in an effort to meet a marketing projection or to make their services more “sticky”?

Credit Union Free Checking Accounts

The reason I’ll have to do some research is that I have had my checking at my local credit union for many years, so I honestly have no idea what kind of shenanigans banks are pulling these days.  The free checking account at my credit union offers:

• FREE Online Bill Pay
• FREE Downloads into Quicken® and Microsoft® Money
• FREE Online Check Images
• UNLIMITED ATM withdrawals without any credit union fees (though they do not refund the fees charged by the ATMs)
• UNLIMITED check writing
• A FREE Visa Check Card
• No Minimum Balance
• No Monthly Fees
• No Annual Account Fees

Granted there is no interest paid on this account.  They do have an interest bearing checking account if you have a certain minimum balance.  It pays 0.15% starting at under $2,500 and by $5,000 it pays either 0.25% or 0.50% depending upon which version you have.  Guess there is no reason to try out that Fidelity cash management checking account thing after all.

Bummer.

No related posts.

Good Enough Checking From Your Bank or Brokerage originally published at Personal Finance Blog - FinanceGourmet.com

When considering refinancing your home mortgage, the first step is to get all of the details on what you have now.  Sure, you have vague numbers in your head, but that won’t help you answer all of the loan application questions, or make a real hard-numbers based calculation about the value of refinancing.  What exactly do you need to know before you dive into looking for low interest rates and refinancing your mortgage?

Required Information Before Researching Interest Rates and Refinancing

• Current Balance of Home’s First Mortgage – Not a ballpark, an exact number according to your last statement.
• Current Balance of Home’s Second Mortgage or HELOC – Again, the number from the last statement.
• Current Interest Rate – What are you paying on your mortgage right now?
• ARM or Adjustable Interest Rate Features – When does your rate go up? (The actual date, not just the year.)  How much can it go up in the first year?  The second year?  Each year after that?  Is there a floor (minimum)?  Is there a ceiling (maximum)?
• When Did Your Mortgage Start? – What day did you close on?
• Current Home Value? – Check Zillow and Trulia to get a ballpark.  Print those pages out so you have them for reference.  Keep in mind that these values are based on public information at your county’s records office, so they won’t include any improvements you have made to the house.  Don’t worry about it too much unless it was something major.  This is just for your calculations not for the application yet.
• Credit Score? – If you don’t know, call your banks first and see if one of them will tell you what it is.  Make sure they tell you the date it is from too.  Many banks and credit unions will get your credit score on a regular basis both to keep your records up to date and to be able to offer you services you might qualify for.  So, a teller or loan officer might just be able to pull it up for you as a courtesy.  If not, put looking into a better bank on your to-do list.

Ok, now you are ready to get started with some research.  Having this information up front will not only make your research easier but also more accurate.  It is a huge let down to do a bunch of research based on “remembering” that you mortgage balance is $315,000 when it is actually $350,000, only to find out you will have to start over with the real numbers, or worse, just go with the wrong research because you don’t want to start over.

One important thing to remember is the limit for Jumbo mortgages.  Right now, this number is $415,000 in many places, but that number is adjusted based on where you live and the cost of homes there.  For example, this number will be much higher in San Francisco. It is important to know this number for your area because the rules change if you are getting a jumbo mortgage versus a regular mortgage.

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Related posts:

1. Refinancing the Mortgage to Take Advantage of Lower Interest Rates
2. Fed Cuts Interest Rates to Zero – How Does This Affect Your Mortgage, Home Equity Line, and Credit Cards

How To – Refinancing a Home Mortgage Steps and Tips originally published at Personal Finance Blog - FinanceGourmet.com

Ok, it’s time to look at refinancing the old homestead’s mortgage.  I’ve been putting it off because of holidays and the fact that rates can still go lower even though the Fed recently cut rates to zero.  Now, it’s time to take a serious look at refinancing and how it might work out for my family.  I’ll be posting a series of articles here on Finance Gourmet to help guide you through the process.  By writing these articles in “real time” with my refinance adventure, you can see the whole process from A to Z and use it as a guide for your own refinancing now, and in the future.

To make sure you don’t miss out, I recommend grabbing the RSS feed.  If you aren’t familiar with RSS or “feeds”, they are basically a way to get the article pulled from here by a RSS reader which is just software that goes and gets articles from the websites you ask it to watch.  That way, you don’t have to remember to open your bookmarks to get back here.  It is kind of like the old idea of subscribing to emails that updated you on website content, but this way, all of your articles are kept separate and your inbox does get filled up with article postings from a bunch of web sites.

If you have never used RSS feeds before and you have a Google account, you can just use Google’s feed reader.  That way, you don’t have to install any software, and if you decide to junk the whole thing, you can just delete your feed reader subscriptions and you’re done.

Related posts:

1. Finding the Lowest Mortgage Interest Rates
2. How To – Refinancing a Home Mortgage Steps and Tips

Refinancing the Mortgage to Take Advantage of Lower Interest Rates originally published at Personal Finance Blog - FinanceGourmet.com