August 2011

2021 Midwest Road, Suite 200, Oak Brook, IL 60523

Month: August 2011

We're all aware that one of the biggest problems of today and hindrances to economic recovery is DEBT. How did this happen? Are people these days less fiscally responsible? Is it consumerism? I'm in the middle of reading Elizabeth Warren's The Two-Income Trap: Why Middle-Class Mothers and Fathers are Going Broke and it really sheds light on how we got to the predicament we're in today. Though she covers many factors of the economic downturn, she goes over two myths: the over-consumption myth and the evil debtor myth. The bottom line is that our perception that our society consumes itself into debt then tries to get away with paying that debt off is incorrect.

What is rarely discussed is how banks have changed over the past few decades - namely that they have been deregulated. Also, in 1978, the Supreme Court in Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp., 439 U.S. 299 (1978), held that state anti-usury laws are unconstitutional because they violate the interstate commerce clause. Now, people are struggling to pay interest that simply continues to mound. No wonder we can't get out of debt — our debt grows exponentially. And banks profit on that. In her book, and in the documentary Maxed Out, Ms. Warren discusses how CitiBank hired her as a consultant and demonstrate to the bank how they can minimize their losses and decrease defaults. When she suggested that banks not lend to debtors who are in obvious financial trouble, ...
On July 21, 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act was officially signed into law. So, as a consumer, what should you know? What are your rights? A recent Fox Business article outlines 'seven hidden gems' of this new financial reform:

  1. Office of Financial Education (Sec. 1013) This new law creates a new Office of Financial Education to 'improve the financial literacy of consumers' through financial counseling and education programs. It will provide information regarding handling savings accounts and other mainstream financial transactions to financial aid applications for students.
  2. Six Months' Notice to Reset Hybrid ARMs (Sec. 1418) As you know ARM loans allow borrowers to keep monthly payments low for a set period of time, after which monthly payments essentially shoot up. Consequently, many borrowers are caught up surprise. Under this new law lenders must inform homeowners at least six months ahead of time of an introductory mortgage-rate reset. Along with the notice, lenders will have to include an explanation of how the new mortgage rate will be set, a good faith estimate of the monthly payment, a list of alternative financial options and contact information for credit counseling agencies.
  3. Consumer Hot Line (Sec. 1013) That's right... a Hot Line. When you've been burned, you now can call a toll-free telephone number in case you encounter unfair or deceptive lending practices. Complaints will be routed to the appropriate federal or state agency and must be responded to in a 'timely' fashion, according to