Price of FHA loans set to boost again

Last year, the Federal Housing Authority made getting their low-cost mortgages even more expensive. April 18, 2011, the cost will increase again. Low-cost federal mortgages could be impacted by this change. For some borrowers, this means a more costly mortgage choice. Source for this article – Cost of FHA loans set to increase again by MoneyBlogNewz.

Getting an FHA loan

There are home loans offered by the Federal Housing Administration. These are for specific home mortgage situations. Instead of directly providing bad credit personal loans not payday loans, the FHA insures mortgages from other loan companies. A huge down payment isn't required with an FHA-insured loan. Usually the down payment, instead of the standard 10 percent requirement, just has to be between 3 and 6 percent. FHA mortgages can be taken out for any amount up to $729,750. There are many that want to own a home however can't make a down payment. Generally they can nevertheless make a mortgage payment though.

FHA loan costs

Getting a Federal Housing Administration loan isn't different from a regular mortgage loan for any borrower. Borrowers are required to pay mortgage loan insurance with FHA loans so that the federal government will repay the lender if something goes wrong. For many years, FHA loans required a 0.5 percent premium be paid as mortgage insurance. Last year, that amount went up to 0.9 percent. There was a rise of another 0.25 percent in April to a total of 1.15 percent. For FHA borrowers, this essentially adds 1.15 percent to the mortgage interest rate to be paid each month. For a $157,000 mortgage, this increase will cost slightly less than $400 per year extra.

The improving portfolio of the FHA

The FHA wrote mortgage insurance for the first quarter of 2011 for $72.1 billion in loans. This is fewer mortgages than in previous years, though the FHA also wrote more refinancing loans. The good news is that fewer FHA loans are currently entering default. There is also bad news. In order to stay solvent, the FHA will have to raise rates nevertheless. Borrowers should expect increase in mortgages. This will occur on average. This might be an indication the housing sector and the economy are recovering, or it might be an indication the federal government is nevertheless nervous about the status of mortgage lending. There won't be low interest rates for long though. They’ll likely end soon.

Citations

Tampa Bay Times

tampabay.com/news/business/realestate/fha-raises-mortgage-fee/1159586

Total Mortgage

totalmortgage.com/blog/fha/fewer-fha-loans-going-bad/11172

Where will Social Security Disability be in four years?

In 2005, the Social Security Disability Insurance fund started to dish out more money than it was bringing in via tax receipts. That trend has continued each year – plus the number of Social Security beneficiaries grew by 489,488 in 2010, the highest one-year increase in history. Within 7 years, experts see a bankrupt Social Security Disability Insurance, writes the Wall Street Journal. Article resource – Social Security Disability Insurance may go dry in 4 years by MoneyBlogNewz.

Paying out $22 billion more than it makes with Social Security

By 2015, projections indicate that Social Security will spend $153 billion in benefits and other costs. Americans may have to face the problem that comes with this considering $22 billion less is expected to be taken in with this. The Social Security retirement fund is expected to last until 2040 while Medicare is only anticipated to last until 2029. Government auditors explain that change has to take place. This is the only way that Social Security Disability Insurance could be able to last more than seven years.

Applicants more than Social Security can handle

Because of the recession, more people have wanted Social Security. They have been applying like crazy. Over the past decade, numbers swelled from 6.6 million beneficiaries to 10.2 million. Numerous U.S. and territories depend upon SSDI funds. In the last 10 years, there has been an 85 percent increase in Texas enrollment while, at the same time, New Hampshire has had a 69 percent growth. West Virginia gets more SSDI than any state when considering the percentage of total population.

There are problems that agriculture and manufacturing states are facing. Manual labor health troubles have been increasing. Social Security is needed quite a bit in United States territories for instance Puerto Rico considering military bases and factories keep closing. Also, the states have lots of unemployed. Typically these are some of the highest numbers reported. In the case of Puerto Rico, political corruption is also an issue.

Doctor determines Social Security Disability Insurance

Social Security and Medicare are both age-based programs. Social Security Disability Insurance, on the other hand, is about medical opinion over other things. In these cases, someone else pays for what is going on. That means there is no reason for local medical officials to stop allowing enrollment. In 2009, payments were around $1,064 in Social Security Disability Insurance benefits although they can be modest. SSDI expert David Autor of the Massachusetts Institute of Technology estimates that such additional programs amount to an average of $300,000 paid out per person over the lifetime of someone who receives SSDI benefits regularly.

Are higher taxes on the way?

Without increasing taxes, Congress could help SSDI for a short time. The Social Security fund would have to be used for this. Retirees would lose benefits pretty easily since the retirement fund would be lost. Something has to be done nevertheless, says Social Security Works' Nancy Altman.

“This is a program of crucial importance to every working American and his or her family,” she said.

Citations

ssdi, social security, social security disability insurance, social security bankrupt

Where will Social Security Disability be in four years?

The SSDI fund first started to pay out more than it was making back in 2005. As almost half a million people went on Social Security last year, an obvious financial problem arises. This has led experts to predict that SSDI will exhaust surplus funds in 4 to 7 years, reports the Wall Street Journal.

$22 billion deficit for Social Security

By 2015, projections indicate that Social Security will spend $153 billion in benefits and other costs. That’s $22 billion more than it is expected to take in, underscoring an issue that many Americans will soon face. With no changes at all, the Social Security retirement fund will last until about 2040 (and Medicare until 2029). Federal intervention could be required to keep Social Security Disability Insurance alive for more than 7 years, say government auditors.

Social Security applicants over the top

The recession sent a huge wave of new applicants into the Social Security program. There has been a huge increase in the last decade of the number of individuals getting Social Security. This number increased to 10.2 million individuals from 6.6 million. Numerous U.S. and territories depend upon SSDI funds. In the last 10 years, there has been an 85 percent increase in Texas enrollment while, at the same time, New Hampshire has had a 69 percent growth. Measuring the amount of SSDI a state gets is done with the percentage of total population that has it. In this way, West Virginia gets more Social Security Disability Insurance than any other state.

There are troubles that agriculture and manufacturing states are facing. Manual labor health issues have been increasing. United States territories like Puerto Rico heavily depend upon Social Security, considering the rash of factory and military base closures in recent years. The highest unemployment is generally reported in these states also. Puerto Rico politics are another issue. There is a lot of corruption.

Only allowed Social Security Disability Insurance if a doctor states so

Unlike age-based programs like Medicare and Social Security retirement benefits, Social Security Disability Insurance is closely tied to medical opinion. As someone else pays the bills, local medical officials don’t have the immediate incentive to keep enrollment numbers down. While Social Security Disability Insurance benefits can be modest in scope – payments averaged $1,064 per month in 2009 – participants gain access to other government benefits, which increases the cost for taxpayers. About $300,000 per person in these benefits with the additional programs are paid out to regular Social Security Disability Insurance patients, according to MA Institute of Technology's SSDI expert David Autor.

Are higher taxes on the way?

Without increasing taxes, Congress could help SSDI for a short time. The Social Security fund would have to be used for this. Retirees would lose benefits quite easily since the retirement fund would be lost. Something has to be done nevertheless, says Social Security Works' Nancy Altman.

“This is a program of crucial importance to every working American and his or her family,” she said.

Citations

Social Security Online

ssa.gov/disability/

Wall Street Journal

online.wsj.com/article/SB10001424052748703752404576178570674769318.html

Milton Friedman on Social Security: Save your money

youtube.com/watch?v=rCdgv7n9xCY

Social Security Online

ssa.gov/disability/

Wall Street Journal

online.wsj.com/article/SB10001424052748703752404576178570674769318.html

Milton Friedman on Social Security: Save your money

youtube.com/watch?v=rCdgv7n9xCY

Freddie Mac and Fannie Mae could return to making revenue

After years of dismal performance, mortgage houses Freddie Mac and Fannie Mae finally have some good news attributed to them. The two troubled firms are creeping back toward solvency. The government had to take control of the two troubled firms in 2008, and has lent both houses collectively more than $130 billion. However, dark clouds are on the horizon. The government intentions to possibly get rid of the two government sponsored enterprises and a fresh round of foreclosures is on the horizon.

Staying in business is the goal of Fannie and Freddie

During the federal bailouts that have been happening, Freddie Mac and Fannie Mae have gotten a lot of the money. Between the two home loan companies, $130 billion was lent. This was so the real estate sector would not go under. However, the two toxic corporations are starting to hemorrhage less money, according to ABC. During the last quarter of 2010, the period from Oct to December, Fannie Mae posted a loss of only $2.1 billion and Freddie Mac posted a loss of only $1.7 billion. In 2009, during this same quarter, the deficits were much heavier. Freddie posted $7.8 billion in deficits while Fannie had $16.3 billion in losses. However, Fannie and Freddie have both requested additional loans, with Fannie asking for a further $2.6 billion and Freddie seeking another $500 million.

Stopping the home loan titans from ruling

Freddie Mac and Fannie Mae are really well known. The real estate industry has needed them. The 2 corporations purchase home loans and resell them as investments to be able to free up capital for loan companies to lend more mortgages. The government is attempting to discover ways to get Freddie and Fannie out of the mortgage sector. Just reducing involvement might help a lot. Treasury Secretary Timothy Geithner has admonished Congress to have a serious plan ready before attempting to vote on anything, in accordance with USA Today. The housing finance industry might get destabilized while the real estate market might have other difficulties from these programs getting cut, Geithner warned. Geithner thinks a gradual program should be used. This is if a program is used at all.

Darkest before dawn

It’s anticipated that Fannie and Freddie won't get much better. They are expected to get hurt even more soon. Though Freddie and Fannie own roughly 50 percent of all mortgages in the United States, and 90 percent of all mortgages originated in the past few years, there’s a growing backlog of foreclosures that cannot be completed until foreclosure reforms linked to the “robo-signing” scandal are resolved. Reuters explains that Freddie and Fannie will not make too much of a difference to housing prices, states Geithner. He expects that the prices will go up a little bit. So that greater stability is there, home buyers are being told to put down more money on homes because of housing conditions.

Information from

ABC News

abcnews.go.com/Business/wireStory?id=12995329&page=1

USA Today

usatoday.com/money/economy/housing/2011-03-01-fannie-freddie-geithner_N.htm

Reuters

reuters.com/article/2011/03/01/us-usa-housing-geithner-idUSTRE72000P20110301?pageNumber=1

Profits down at H&R Block because of decrease of reimbursement cash advance product

H&R Block has been losing money this tax season, as the loss of the opportunity to offer customers a cash advance against refunds has cost the firm consumers. The nation’s largest tax preparation service recently released an income report. The information indicated the company is earning far less during tax season than in previous years. Regulatory action by the FDIC forced the chief financing partner with H&R Block to drop the loan solution, which forced Block to follow suit. Resource for this article – Loss of refund cash advance product cuts H&R Block revenues by MoneyBlogNewz.

This year's tax season slow

Getting tax returns prepared is something that H&R Block has lost out on this season. CNBC accounts that fewer individuals have paid for tax returns to be prepared for them. In the middle of February, activity started again although January earnings can be close to breaking even. From Jan. 1 to Feb. 15, online returns prepared through H&R Block increased by almost 28 percent, though total digital tax returns only registered a 7.3 percent increase since the launch of the year. H&R Block is no longer offering reimbursement anticipation loans as a cash loan. This has probably caused part of the 7.6 percent decrease in preparation fees.

Lending against reimbursement stopped

Short term loans against tax refunds are similar to payday loans, in that a customer is advanced money quickly instead of having to wait for their tax reimbursement. The reimbursement is signed over to Block, and borrowers receive lower than the total refund because fees are deducted. The lower and middle income consumers really liked the anticipation financial loans which H&R Block declared it wouldn't offer in Dec. 2010. The financing partner of the financial loans, HSBC, did what the Federal Deposit Insurance Corporation required. That means they could not lend either. In 2010, about 17 percent of Block customers came for the loan.

FDIC countersued by refund loan lender

A prominent tax refund lender has sued the Federal Deposit Insurance Corporation for interfering in the tax reimbursement loan business, according to Business Week. The FDIC is getting sued by Kentucky based Republic Financial institution and Trust for overstepping boundaries by saying the financial loans were "unsafe and unsound" after the Republic was ordered to stop the loans. About 836,000 individuals got $4 billion in refund financial loans last year from Republic. There was only a 2.13 percent default rate. The suit alleges the FDIC is intending to coerce lenders into dropping a product that government officials do not like, even though the product is popular.

Articles cited

CNBC

cnbc.com/id/41747080

Business Week

businessweek.com/ap/financialnews/D9LN4P5G0.htm

Wall Street bonuses fall as executive incomes rise

In 2010 bonuses on Wall Street averaged eight % less over the year prior. Wall Street bonuses dropped, yet profits grew. Salaries increased commensurate with profits to push executive compensation upward.

Would not it be nice to get a Wall Street bonus?

In the financial services industry last year, the Wall Street bonuses averaged $128,530. New York State Comptroller Thomas DiNapoli explained these figures. That is an eight percent drop from the year before in Wall Street from the $140,730 average. In 2010, the Total Wall Street bonuses totaled $20.8 billion which, from 2006 before the financial crisis, was $34.3 billion meaning a 33 % drop. In 2010, Wall Street profits were at $27.6 billion which is second to 2009 only when profits were at $55 billion due to government bailouts and record low rates of interest.

Making Wall Street bonuses look various

The decline in Wall Street bonuses for 2010 is not a signal of professional compensation in decrease. Because of the professional compensation during the financial crisis, the public got really upset which meant smaller bonuses were handed out. DiNapoli explained that Wall Street financial service compensation went up last year. It went up by 6 % total. Financial reform regulation, along with the controversial nature of obscene bonuses, has motivated big banks to change the way they pay employees. Base incomes are larger than bonuses now.

The next way to stay away from taxes

Some of the compensation is being deferred by Wall Street firms. This will make financial regulators think that short-term gain is exchanged for long-term profitability. Smaller sized bonuses make it easier for Wall Street firms to avoid taxes too. This brand new way of tax deterrence was found. About 20 percent of the tax revenue in New York before the financial crisis came from tax revenue from the financial sector, DiNapoli states. That number has fallen to 13 %. The tax revenue from Wall Street went down to 7 percent last year from 13 percent in NY City.

Articles cited

CNN Money

money.cnn.com/2011/02/24/news/economy/wall_street_bonus/index.htm

Wall Street Journal

blogs.wsj.com/metropolis/2011/02/24/wall-street-bonuses-dropped-in-2010/?mod=google_news_blog

NPR

npr.org/2011/02/24/134017725/wall-street-bonuses-fell-from-2009-level

DOMA no longer supported by Justice Department

The United States Department of Justice has announced that it will not any longer defend the Defense of Marriage Act (DOMA) in the courtroom. Defense of Marriage Act, passed during the Clinton administration, established that the federal government did not have to recognize a very same sex marriage. An ongoing discussion between the president and the Attorney General resulted in the conclusion the law was unconstitutional. Source of article – Justice Department to stop defending Defense of Marriage Act by MoneyBlogNewz.

White House and Justice Department declare DOMA unconstitutional

ABC states that the lawsuits that are about the DOMA, or Defense of Marriage Act, will not be pursued by the Department of Justice anymore, the Attorney General told Congress. Defense of Marriage Act, passed in 1996, mandates that states and territories of the United States don’t have to recognize a same-sex marriage, regardless of whether the same-sex marriage was legally executed. The objection isn’t to the act itself, however rather Section 3 of DOMA, which legally defines marriage as a union between a man and a woman as far as the government is concerned. President Obama agrees with what Attorney General Holder feels. It’s unconstitutional to have Section 3 of Defense of Marriage Act.

Question of scrutiny

The government had to choose whether to uphold DOMA due to 2 pending lawsuits, Pedersen v. OPM and Windsor v. United States. The New York Times reports that each of these lawsuits is in the courtroom districts without previous cases on same sex marriage and challenge Section 3. The Justice Department reviewed those cases using the legal tests of “rational basis” and “heightened scrutiny.”. The reason for a "rational basis" test is to see if a law has no rational purpose. This is done on constitutionally legal laws. A “heightened scrutiny” test is to determine whether an unconstitutional law serves a legitimate governmental purpose. It’s discriminatory to have the homosexual marriage law, the White House and Justice Department suggested. This makes it unconstitutional because there is no government purpose to do so that is legitimate.

DOMA not going quietly

The DOMA law hasn't been repealed even though the Justice Department refuses to pursue any more lawsuits. The Defense of Marriage Act, including Section 3, remains in effect for the moment. The act is "flawed" in accordance with Obama. He states that, to a certain extent, he is still expected to uphold it constitutionally. To be able to see if legislation is worth protecting in court, the president can make orders. This would be to the Justice Department.

Information from

ABC

blogs.abcnews.com/politicalpunch/2011/02/president-obama-instructs-justice-department-to-stop-defending-defense-of-marriage-act-calls-clinton.html

NY Times

nytimes.com/2011/02/24/us/24marriage.html

Justice.gov

justice.gov/opa/pr/2011/February/11-ag-223.html

Roeper pulls no punches with this year Oscar picks

On February sixteen, Richard Roeper of the Chicago Sun-Times and “Starz Inside” gave University of Central FL students a piece of his mind when it comes to literature and the upcoming Academy Awards. Roeper was consistently candid in his opinions, reports the Orlando Sentinel. Roeper’s views on movie critics standing behind their views were perhaps most influential to the welcoming audience. Article resource – Richard Roeper pulls no punches with 2011 Oscar picks by MoneyBlogNewz.

Everyone can write, Roeper states

An iPad was used by Roeper. He said "Now, everyone's a writer" to anybody who would listen. Everyone can blog or tweet their opinions; the trick is finding somebody willing to pay for it, said Roeper. Part of this involved discussing the Academy Awards. The movie critic wrote about which movie would get the Best Picture Oscar. "Inception" was nominated for Best Director. Nevertheless, the Christopher Nolan film was Roeper's favored. Traditionally, such a snub indicates the movie in question won’t win Best Picture, though “Inception” is nominated in the category.

Best Picture: A two-horse race

At the 2011 Academy Awards, Roeper thinks that Best Picture should go to David Fincher's movies about Facebook and Mark Zuckerberg (Eisenberg) called "The Social Network." It’s a movie that has great performances and an excellent script while being great enough to be put next to "Inception". Roeper believes that "The King's Speech" will do well. It will come really close if not win the Oscar. Roeper explained the movie that is all about Lionel Logue (Geoffrey Rush) and King George VI of England (Colin Firth) is “what the Academy loves: British actors talking about British things.". In other words, he sees it as a more genteel movie that will appeal to the mild, old majority of Academy voters. Only a groundswell by younger voters could send “The Social Network” to the top.

The great and poor writing out there

Roeper impressed upon the aspiring youthful film critics and filmmakers in the audience that film criticism is entirely subjective. Richard Roeper says there is only one thing that changed whether a movie is universally great or universally bad:

“What makes a really good movie is the script,” he said. “There’s no chance for a good movie without one.”

Citations

Central Florida Future

centralfloridafuture.com/cab-hosts-an-evening-with-richard-roeper-1.2474306

Orlando Sentinel

articles.orlandosentinel.com/2011-02-22/community/orl-ucf-richard-roeper-speaks-on-film-critique_1_young-critics-richard-roeper-film

Richard Roeper’s pick for best pic

youtube.com/watch?v=U3GHF03Klao