Clinton Gets How to Fix the Mortgage Mess, Why Doesn't Obama?

Too bad we can't re-elect President Clinton because he has some idea's I think will help start turning our mortgage mess around. In an interview with Fortune managing editor Andy Serwer, President Clinton discusses what he would do fix the mortgage market.

I cannot emphasize the boost I think it would give the economy if we had a system that said to people whose homes are worth less than the mortgages that you can write down your mortgages to the value of your home if you can make the payment. Or you can extend the mortgage out and lower the interest rate. I don't think we ought to keep dumping these houses on the market when it's so depressed. Can we get the votes to do it? I don't know. When the Tea Party started, they seemed to object to the bailout of the big banks, claiming they were being protected from their own mistakes. That was true, but irrelevant. If a financial collapse had happened, we would have all paid. Now a lot of people argue that you shouldn't rewrite these mortgages because people never should have taken them out in the first place. There's a big problem with that thinking. The market is so depressed that it's hurting everyone else.

He hits it right out of the park. We're past the point of people loosing their homes because they took out loans that they shouldn't have. We are now facing homeowners just walking away because they are paying for something that isn't worth what they're paying for it. Is a McDonald's McDouble worth $1? Sure, but would you pay $30 dollars for one? Probably not and McDonald's would be out of business. Start making homeowners feel like they are getting there money's worth and have a feeling of wealth and things will turn around.

There are all these options and I don't think we ought to keep dumping these houses on the market right now when it's so depressed. I'd like to see them converted into rental property in an aggressive, comprehensive way, and let people rent it for the price of the utilities, the taxes, and the maintenance, just to maintain the housing stock. Then as the economy picks up, you can put it back on the market in a way that will support economic growth, not undermine it. That's what I think should be done.And in a larger sense, the market is so depressed that it's hurting everyone else. It used to be as a rule of thumb, people would say, well, if the mortgage is foreclosed on your block, it will drive down the value of your house because it's on your block, by 10, 15, 20%.But now there are so many houses that have been foreclosed on, it's driven down the value of almost everybody's houses, except -- let's talk about the upside -- the people that are in the prosperity centers of America: in Silicon Valley, in San Diego, in Orlando, and places where the economy is booming. Except for those places, this is a problem.I can't -- I think it would really get us going in a hurry if we could flush this out

Another great idea. Keep people in their homes, instead of dumping these unlived in, unkept homes on the market and driving property values down further is the way to go.

We must stop home prices from falling any further and keep homeowners in their homes. This is the only way we are going to claw our way out of this economic disaster.

(via CNN)

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Where Has Financial Elite Gone?

We're still here, but have been extremely busy. There has also been some thought of changing the direction of the blog and discuss just how the Financial Elite have an effect on our very financial lives. Stay tuned to what happens next.

In the meantime, so far this year we have paid down additional $12,000 of debt and our debt snowball is about to really get rolling as we will be paying off our first two credit cards in July. After that we'll start applying the money that was going towards the paid off cards and put it towards the next card in line.

We're happy how fast the year is going. Not that we are wishing our lives away, but this time next year we will have at least three credit cards paid off and will have made the last of our car payments. At that time our snowball will be huge and we can knock each debt out right after the other.

Good things are here and more to come soon.

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Civil War Coming from Declined Loan Modifications

I received a call today from a long time friend of mine, who is in the process of having his families home sold due to the on going Great Recession, and was not happy. Why you ask? Because the whole loan modification program is a joke.

So, let me back track a little with my friends situation. About a year ago my friends financial house of cards had collapsed. Because of his income decreasing he was charging excessively to continue to keep his household going and make his mortgage payments, but eventually he had reached his max. Credit cards maxed out and a continuing declining income situation had him and his wife considering bankruptcy. They decided against this option and instead settled on their credit cards. While during this settlement process, they also started looking into getting a loan modification. A year later and a long story short, they were declined for the loan mod. Well, not really, but they might as well have been.

My friend eventually lost his job and was offered a loan modification from Freddie Mac (Chase is the servicer of the loan). You might be thinking well, what's wrong with that? The thing that is wrong with that is, his unemployment is $1,400 a month, but Freddie Mac offered him a payment of $1,600. That's better than nothing, but $200 over his total monthly income. So, of course, they declined the offer.

They then were offered a short sale and began the process of putting the house up for sale. The good news is the house sold quickly. They other good news is they qualified for HAFA. Under HAFA you may qualify to get back $3,000 from the sale of your home for moving expenses. Today they learned they didn't qualify.

To be eligible for HAFA, homeowners must first apply for a loan modification through the Home Affordable Modification Program, or HAMP. Owners who do not qualify for a loan modification or miss payments during the initial loan modification period qualify for HAFA. Hence, Freddie MAc declined to pay the $3,000 for moving expenses. My thinking is they weren't actually denied a modification. They were offered it, but the declined the offer. In reality they probably should have taken the the deal and then defaulted again on the re-structured loan.

My friend went on to say he couldn't believe someone has not gone into a bank and started shooting it up. I am in no way condoning this behavior, but it seems like more people have been killed themselves over losing their home then taking others out with them.

I continue to hear more and more about unsuccessful loan work outs and there seems to be a common denominator and that seems to be Freddie Mac. As I have learned that not all loan mods are created equal and there is definitely a difference when it comes down to Fannie and Freddie Mac, with Fannie being the more easy going parent than Freddie. People may not go around shooting up banks, but I feel if there isn't something done soon to turn this mess around, there will be a revolt on a civil war scale.

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Financial Elite Has Not Been Forgotten...For Now

Fear not citizens. We're still on duty. Since we've returned from vacation, however, things have begun to take re-shape in our lives.

Blogging has been put on the side burner for a minute as we have shifted our priorities. Now this doesn't mean finance is no longer a priority. As it most certainly is still our focus to be debt free in the next 3.5 years as well as rebuild our wealth, but things in our lives are shifting. Shifting so that we can more efficiently and more quickly payoff our debt, spend more time with family and friends, and explore new opportunities.

As this new year continues on, so does our business. Business continues to improve and sales are continuing to rise month after month. We are also looking into offering other services and maybe even create new businesses altogether. We are also concentrating on our other passions and these other passions may be part of those new business opportunities. A move may also be involved, but how soon that will take place is uncertain. However, wherever the trail leads us, we will soon let know what that is. Until then sit tight. We'll be right back after these messages.

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Want to Know How to Become a Millionaire? Ask Jaime Tardy

Ever dream about becoming a millionaire? According to the research firm Spectrum Group, only 7% of American households actually become millionaires, and Jaime Tardy is working on becoming one of the financial elite. We've followed this debt buster since her first videoblog  describing how she paid off $70,000 of debt. Lately, this eventual millionaire has been popping up on financial sites everywhere and spreading the word on financial freedom.

However, in an interview posted on Yahoo, I was appalled at how many negative comments have been posted about Jaime's accomplishments. I have to think that this negative thinking is the reason that there are so few millionaires in our country or the world for that matter. Because people are not willing to do what it takes to become one. I remember when "The Millionaire Mind" came out and how so many raced to pick up a copy, only to be surprised that most millionaires are just average people, but worked hard, saved regularly, and invested wisely. I guess instant gratification is more important to most people rather than financial freedom. Anyway, I say, "Great job Jaime! I am looking forward to joining you in being one of the financial elite." You can read Jaime's latest interview HERE.

Here are some interesting statistics about millionaires:

• 14% of millionaires say their parents were wealthy.
• 42% say they don't feel wealthy.
• 95% say hard work is how they made their million. 83% say smart investing, 81% frugality, 67% say risk taking, and 41% say luck is how they made their million.
• 90% of millionaires are college graduates.
• The median price of a millionaires car is $31,400.
• States with the highest amount of millionaires includes: Alaska, California, Connecticut, Hawaii, Maine, Maryland, New Hampshire,  New Jersey,  Washington D.C., and Virginia. Hey, Jaime Tardy lives in Maine. 
• Millionaires invest on average $39,300 a year.
• 61% say they still have a great deal to learn about investing.
• 1 in 6 millionaires are single.
• Millionaires give up to $13,000 annually to charity.

Here are some other articles I found interesting this week:

• How Much Interest We're Paying - March 2011 @ Debt Free Adventure- Keeping track how much money going down the drain by having to pay interest is a great debt control device.
• Secrets to Building Wealth @ Life and My Finances - This is right in line of what we just talked about and becoming a millionaire and building wealth.
• Plan, Do, Check, Adjust Your Way to Financial Freedom @ Passive Family Income - I love this concept and it can be used in  all aspects of your life. Wash, Rinse, Repeat.
• Get Out of Debt by Blogging? Introducing the "Get Out of Debt" Blog Network @ Debt Kid - Blogging about debt is fun.
• Credit Card Debt - Debt Down But Not Out  @  Yes, I am Cheap - Everything isn't always as it appears. Credit card debt is going down, but it may be due to charge off and not actual payoffs.  

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