Podcast of the May 12, 2012 Show – Word of the Day “Opps” – Chase’s $2 Billion Blunder, Case Studies for the Elderly and Debt Issues

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News on Detroit & Financial Manager *** Steve Hood joins Ken Gross on The Financial Crisis Talk Center on 3/31/12

Host of Detroit Wants to Know, the popular local TV show airing Sundays at 11:30 AM – On WADL TV 38 – joined Ken Gross and David Einstandig live in the 1270 Talk Radio Studio on Saturday March 31, 2012 for a candid look at the Detroit Fiscal Financial Crisis. Hood – identified Detroit’s problem as being poor management – from the current Bing Administration and dating back to the Colman Young era – where while there was controversy, Hood indicates there was competent management in place.  No stone was left unturned in this 1 hour broadcast – how race is a factor to some and how core services for the City is a factor to all of its residents. You can catch the broadcast via podcast – Podcast of FCTC 3/21/12 Show

News on John Conyers – Congreemsan Affirms Support for Principal Reduction on Mortgages – on Financial Crisis Talk Show 3/24/12

U.S. Congressman John Conyers, the featured guest on The Financial Crisis Talk Center on March 24, 2012 - which aired on Talk Radio 1270, affirmed his continuing support for principal reduction on mortgages as a necessary element to regain economic stability in the housing market. Congressman Conyers also pointed out that he was a strong advocate of the legislation passed by the House to allow cram down of first mortgages on principal residences in Chapter 13 bankruptcy. When asked by host, Ken Gross, of the Talk Center, why the Senate failed to pass the bill when it had the opportunity, the Congressman acknowledged with Gross that the White House, at that point, did not aggressively support the effort and unfortunately the Senate failed to gain the necessary votes. The Congressman affirmed that the law should be changed, but agreed that it will not get through the House with the present majority held by the republicans. To hear the entire interview, go to www.facebook.com/FCTalkCenter or www.financialcrisistalkcenter.com/videos-podcasts/

Reflecting Back And Looking Forward – The Fuller Brush Man by Ken Gross

From the Detroit Jewish News – March 15, 2012

Two weeks ago, Fuller Brush Co. filed for Chapter 11 bankruptcy. The story generated a trip down memory lane. With vivid recall, I remember the doorbell ringing and the friendly man visiting with his wood box containing an assortment of real brushes — made of wood and finely tuned bristles.

My next thought was that I have not heard nor thought of the Fuller Brush man for at least 30 years and had no clue that the company even existed in today’s world!

Next, I thought of the Sealtest and the Twin Pines Delivery trucks rolling down the street and, of course, Murray the ice cream man and the Good Humor Man. I also recalled Twin Pines were two businesses competing head-to-head for the same customer base — as was Murray competing against the Good Humor Man. As a pre-teen, why would I have thought about such things when there were more important issues to address, such as tee-ball and four square?

Yes, those were fun days. I tend to think of them as the “pre-Kennedy era.”

Why? The innocence and clarity of the ’50s and early ’60s abruptly left, leaving us with a world in which there is little innocence. Of course, in 1963, I was oblivious to the great inequities that existed in the world, and I recognize that without question we have, as a nation, progressed in greatly reducing racial divisiveness.

Fuller Brush’s bankruptcy filing emphasizes that businesses and individuals in today’s world must adapt to changing times and environments — both social and business. If you, like me, have not heard recently of Fuller Brush, that, itself, emphasizes that they failed to adapt to the changing business world. It is actually surprising to me that they still exist.

For many years, people lived by rules that said “be a good citizen, work hard, buy a home (the biggest you can afford), pay your bills and good things will come.”

These rules worked well for many years. In fact, they worked until the end of 2008, when the financial crisis took hold and the economy hemorrhaged. Three years later, we find that our homes are worth 36 percent to 40 percent less today than in 2008, and many of us owe far more than our homes are worth.

The times have changed. Working hard, buying a home and being the “good citizen” do not assure success in the face of an economic and political world that tips and turns on the price of a barrel of oil.

The smart play is to adapt to the times. This means if you are under water in your home or carrying too much debt, you need to strive to find a strategy that preserves your future income. If that means taking affirmative action to strategically exit your home or get rid of debt, then that is what you need to do.
Be a good citizen, but define your family as your constituency. In today’s world, you don’t want to be the Fuller Brush person. ■
Ken Gross is an attorney with Thav Gross and host of the Financial Crisis Talk Center, which airs weekly at 10 a.m. Saturdays on Talk Radio 1270 WXYT-AM.

Ken Gross Comments on $25 Billion Settlement in Michigan Lawyers Weekly

MICHIGAN

LAWYERS WEEKLY

State to share in $25B settlement

Michigan one of 49 states to sign on to compensate for ‘abusive practices’

POSTED: 11:02 PM Friday, February 17, 2012
BY: Carol Lundberg

Michigan will share in a settlement said to be worth $25 billion, but it’s not exactly raining cash on Michigan’s foreclosure problem.

Michigan joined 48 other states in a $25 billion settlement with the country’s five largest mortgage lenders.

The settlement, intended to hold mortgage servicers accountable for what U.S. Attorney General Eric Holder said were “abusive practices,” will provide some relief to homeowners struggling to pay mortgages that are more than their houses are worth.

But the amount of relief is so small, too small to stabilize the country’s still-crippled housing market, said Matthew Heron of Clark Hill PLC in Detroit.

“If you think about it, how could it really solve the problem of $700 billion worth of underwater mortgages?” he asked. “The reason the housing market isn’t recovering yet is a function of the economy, of the free market.”

Heron represents lenders. Though the settlement doesn’t cover the damage to state budgets and individual borrowers as a result of the foreclosure crisis, it does give states’ attorneys general a little bit of resolution without requiring them to invest a lot of resources in investigations.

“The investigations by the attorney generals haven’t resulted in significant settlements, and they do put a burden on the states, which are having economic problems,” Heron said.

But the states and borrowers certainly aren’t going to receive $25 billion worth of relief.

Of the $25 billion, the banks — Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and GMAC/Ally — are paying about $5 billion in cash to federal and state governments, or approximately 1 percent of their combined market capitalization.

Of that, $1.5 billion will be used to establish a Borrower Payment Fund to provide payments to borrowers who lost their homes to foreclosure, according to Michigan Attorney General Bill Schuette. The payments will be as much as $2,000, though details have not yet been worked out.

The payments to state and federal governments will be used to repay public funds lost as a result of servicer misconduct, and to fund programs such as legal aid and housing counseling that the states are providing. The settlement excludes borrowers with Fannie Mae and Freddie Mac mortgages, who make up approximately half of the homeowners in the U.S.

Schuette said in a press release that Michigan residents will receive approximately $500 million dollars, but the only hard cash flowing into Michigan will be $101 million, which will be paid mainly to the State of Michigan. (See “Settlement details,” right.)

That payment is not meant to make up for a foreclosure,” said attorney general spokesman John Selleck. “It’s a punishment for poor customer service by the banks. We were getting calls from people who would be on the phone with a mortgage servicer trying to get some kind of help with their payments, at the same time that the bank was foreclosing on them.”

He said that when the housing market crashed in 2008, it crashed very hard and very fast.

“The banks just didn’t handle their customers the way they should,” Selleck said. “The settlement is to address two main thrusts — horrendous customer service by the banks, and robosigning, which we are still criminally pursuing.”

Michigan has been particularly hard-hit by the foreclosure crisis. Last year, a California-based analytics firm, CoreLogic, reported that 35 percent of Michigan homeowners are underwater in their mortgages.

The deal does nothing to solve the problems in the housing market, which will continue to be a drag on the economy because small business owners aren’t able to create jobs when they have no equity in their real estate, said Kenneth Gross of Thav Gross PC in Bingham Farms. Gross represents borrowers.

What would help borrowers the most, he said, is principal reductions, something the banks have been reluctant to do.

“This settlement doesn’t address any of that. It’s extremely limited to the issues of robo-signing and fraudulent foreclosures,” Gross said.

“Basically what’s going to happen is everyone in the world going to call my office wondering how to get their $2,000,” Gross said. “But no one knows yet who will be eligible to receive what. There have been 1.9 million foreclosures with another 1.9 million still to come.”

The settlements will not prevent individual borrowers from suing their lenders if they have a cause of action, Heron noted.

“What this does do is to free up the attorney generals and their resources to decide what they want to dedicate their time to,” Heron said. “The public settlement funds are being used to prop up the services the states would have a hard time providing.”

If you would like to comment on this story, please contact Carol Lundberg at (248) 865-3105 or carol.lundberg@mi.lawyersweekly.com.

From CBS Detroit – Banks In $25B Deal To Settle Foreclosure Abuses

Banks In $25B Deal To Settle Foreclosure Abuses

February 9, 2012 4:07 PM

BINGHAM FARMS (WWJ) – Michigan is among 49 other states to receive a chunk of cash from a landmark $26 billion settlement from five banks for alleged foreclosure abuse.

Some borrowers in Michigan could get between $1,500 and $2,000.

“States across America have worked hard to present a united front in the fight to help stabilize the housing market in the aftermath of harmful mortgage lending and foreclosure practices,” said Michigan Attorney General Bill Schuette. ”As a result, Michigan residents who were hit hard by this crisis will now receive assistance.”

Attorney Kenneth Gross with Thav Gross in Bingham Farms, who represents homeowners going through the foreclosure process, said the settlement is disappointing.

“We’re very disappointed with it, because I think the banks did a lot that they should be called upon to pay for, and I don’t think they are,” Gross said.

How will borrowers get their hands on the cash?

“I’ll research it and once it’s out there I’ll put it up on our website,” said Gross. “It certainly isn’t going to be something that somebody goes to hire an attorney to try and get this $1,500 or $2,000. I don’t see how they’re gonna come out ahead after paying attorney fees.”

“So, it’s gotta be something where you can exercises self  help and get it done.” he said.

The five banks in the settlement include Bank of America, Citi Group, J.P. Morgan Chase and Wells Fargo.

“I’ll research it and once it’s out there I’ll put it up on our website,” said Gross. “It certainly isn’t going to be something that somebody goes to hire an attorney to try and get this $1,500 or $2,000. I don’t see how they’re gonna come out ahead after paying attorney fees.”

“So, it’s gotta be something where you can exercises self  help and get it done.” he said.

The five banks in the settlement include Bank of America, Citi Group, J.P. Morgan Chase and Wells Fargo.

Sadness … profound and complete

Life is so complicated. Why can’t it be simple? We want simplicity. We want to go to work, do good things and we want good thing to come. Many days  — that is precisely the outcome. Then out of the blue …the hammer hits. Lost job, death of a family member, death of a friend, acquaintance or famous person.  This weekend is one of those weekends. Jeffrey Zaslow – a writer, a father, a husband, an acquaintance – was a simple man – he loved his family and life. Boom – one ice patch and gone. Just like that  — gone. Not like a home run — like the worst lightening strike you could imagine.

Spin forward one day — then flash – Whitney Houston — the purest voice we have ever heard — gone. Albeit via problems – but who cares – the loss is the same.

I wish i could understand why life is so tough. Is it not enough to deal with the day to day trauma.?

I guess not. Tomorrow will come – and then we get to Monday, and it begins anew.

So sad. I hope on Monday when it all starts again, I can pause and remember what a nice guy Jeff was, and that pure, resonate voice that was so Whitney …

This has nothing to do with the Financial Crisis … this is about the life we live. So shed a tear for the sake of what is right ——

Your Credit Score – Don’t Sweat the Small Stuff

I know you’ve heard it before – “Don’t sweat the small stuff.” This truism applies to every facet of our lives. We often make the mistake of over dramatizing issues in our personal relationships – between spouses, between partners and between parents and children. Most of the time – it’s a situation where for one reason or another, we allow the moment or the event to take on greater significance than we should. In personal matters – this often gives rise to hurt feelings, family quarrels and anguish. From one event to the next, the mistake is commonly repeated until we learn or experience a greater trauma that causes us to snap back to reality. We say to ourselves – “Gee, I have to chill out and just be thankful for the boring, mundane days when there is nothing monumental and adverse going on in my life.” The lesson – don’t let the “small stuff” govern your life.

I find this issue also arises frequently in the context of how people assess their financial situation and the options presented to them when it comes to strategies to shed debt and preserve future income. In this instance, what is the “small stuff?” The “small stuff” in the context of shedding debt and preserving future income is “your credit score.” Let me repeat – the “small stuff” is your credit score. There are differing views. The banking industry wants you to believe that your credit score is “your most valued asset” – and that your world will crumble if your credit score tumbles. It is true that if  you short sale a home, go through a foreclosure, file a bankruptcy or settle your credit card debt for pennies on the dollar – your credit score will take a hit. The fallacy is – in the context of the gain you will realize by getting out from under debt and the outrageous never ending interest – the credit score is a short term decline that is insignificant in the context of the big picture.

I tell clients, over and over, “When you’re 75, would you rather have lived your last 30 years with a 790 credit score and have $40,000 in the bank to retire along with the paltry social security you will receive or would it be better if your credit score took a 75-100 point hit for about  1 ½ years, and at 75 you have $950,000 in saving to live off of with social security? The numbers are simple – if you pay off $100,000 of debt at $2,500 per month with interest at 26%, you will pay $235,000 over the 94 month period.  Instead, if you could settle this debt for $30,000, by using the$ 2,500 per month you would pay the first year, and then invest $2,500 per month for each of the next 82 months, tax deferred at 6%, you will have $300,566. If you then allow this savings to accumulate for another 10 years, you will have $546,849. Better yet, if you continue to save $2,500 per month during the last 10 years, you will have $958,596. This is “big stuff.”

Being afraid to make the right move because of concern over your credit score, is worse than “sweating the small stuff” – it’s letting the “small stuff” steal your future. You still need to plan. For example, if you have a short term need for credit – such as buying a car – then buy the car before making your move. In all events, you should  resist the effort to be brainwashed by an industry that earns billions advancing this myth. Simply look at the numbers – that’s the big stuff and plan your future.

Ken Gross is an attorney with Thav Gross and host of The Financial Crisis Talk Center, a radio program that airs weekly at 10:00 AM on Saturday mornings on Talk Radio 1270 WXYT AM.Don’t Sweat the Small Stuff (2.1.12)

“Dump the Debt” – Ken Gross and Thav Gross announce Free Seminar on Wednesday, February 29, 2012

The Goal – Preserve Future Income for You and Your Family – So that you cash goes in the Bank and NOT to the Bank.

Learn the latest new in the Housing Market – Short Sale? Loan Modification? Principal Reduction? What to do….

What do you do if your house is under water? If you owe $300,000 on  your home and today it is only worth $170,000. Are you just going to “stay the course” and pay for the house over the next 20 years – paying $130,000 plus interest for air? If you have $50,000 of credit card debt, at 19.9% interest – are you going to just “stay the course” and pay the interest and payments over the next 19 years and 3 months (that is if you make the minimum payments) paying a total of $99,109 to payoff the debt. THIS IS WHAT THE FINANCIAL INDUSTRY WANTS YOU TO DO. If you do this, your credit score may be 725 now and 725 every day for the next 20 years – but you’ll have nothing in the bank for savings and retirement. There is an alternative – by exiting the house underwater and shedding the credit card debt  – you can put yourself in a position that rather than “staying the course” you “create your course” – the result – you begin to save the $2,000 per month you were paying on the credit card debt and you bank the $1,000 per month you will save by reducing your housing costs so that you are paying for housing based on TODAY’s market values.  You must realize that 2008 values – are in the words of the great, Ernie Harwell, “Lonnnnng Gone.” Saving the $3,000 per month over 20 years, with a modest return will yield you over $1,000,000 in savings.

The choice – a reduced credit score for 1-2 years and becoming debt free and having a savings account of $1 Million – or reaching 70, with nothing in the bank (but, oh yes, a perfect credit history). When you need food to eat or shelter when you’re 72, just try and pay for it by giving them some of your credit score points! Sound harsh – this – is the reality of today’s world. This economy, as miserable as it is – does create opportunity. The hard part for many – is recognizing the reality and taking action.

If you want to learn how to do this – attend the FCTC and THAV GROSS’s free Financial Crisis Management Seminar on Wednesday, February 29, 2012 at 7 PM. Sign up on the Website or call our offices at the numbers listed.

THIS IS YOUR CHANCE TO RECLAIM YOUR FUTURE – SO THAT YOU PRESERVE YOUR FUTURE INCOME FOR YOU AND YOUR FAMILY

Living By Default

Fantastic Article in the New Yorker – identifies the hypocrisy the lending industry is attempting to pull off on the homeowner. If you’re wondering whether it makes sense to short sell your underwater home or find an exit strategy – EVEN IF YOU CAN AFFORD TO MAKE THE PAYMENTS – you need to read James Surowiecki’s terrific article. The Talk Center salutes this article

We normally say that a company “went bankrupt,” implying that it had no choice. But when, recently, American Airlines filed for bankruptcy, it did so deliberately. The airline had four billion dollars in the bank and could have kept paying its bills. But it has been losing money for a while, and its board decided that it was foolish to keep throwing good money after bad. Declaring bankruptcy will trim American’s debt load and allow it to break its union contracts, so that it can slim down and cut costs.

American wasn’t stigmatized for the move. Instead, analysts hailed it as “very smart.” It is now generally accepted that when it’s economically irrational for a company to keep paying its debts it will try to renegotiate them or, failing that, default. For creditors, that’s just the price of business. But when it comes to another set of borrowers the norms are very different. The bursting of the housing bubble has left millions of homeowners across the country owing more than their homes are worth. In some areas, well over half of mortgages are underwater, many so deeply that people owe forty or fifty per cent more than the value of their homes. In other words, a good percentage of Americans are in much the same position as American Airlines: they can still pay their debts, but doing so is like setting a pile of money on fire every month.

These people have no hope of ever making a return on their investment in their homes. So for many of them the rational solution would be a “strategic default”—walking away from the mortgage and letting the bank take the house. Yet the vast majority of underwater borrowers keep faithfully paying their mortgages; studies suggest that perhaps only a quarter of all foreclosures are strategic. Given how much housing prices have fallen, the question is why more people aren’t just walking away.

Part of the answer is practical. Defaulting (even in so-called non-recourse states) is still a lot of trouble, and to most people it’s scary. In addition, homeowners are slow to recognize how much the value of their homes has dropped, and have inflated expectations of how much it will rise in the future. The biggest hurdle, though, is social: while companies get called “very smart” for restructuring their contracts, there’s a real stigma attached to defaulting on your mortgage. According to one study, eighty-one per cent of Americans think it’s immoral not to pay your mortgage when you can, and the idea of default is shaped by what Brent White, a law professor at the University of Arizona, calls a discourse of “shame, guilt, and fear.” When the housing bubble burst, the banking industry was terrified by the possibility that homeowners might walk away en masse, since that would have stuck lenders with large losses and a huge number of marked-down homes. So strategic default was portrayed as the act of dishonorable deadbeats. David Walker, of the Peterson Foundation, waxed nostalgic about debtors’ prisons, and John Courson, the head of the Mortgage Bankers Association, argued that defaulters were sending the wrong message “to their family and their kids and their friends.”

Paying your debts is, as a rule, a good thing. But the double standard here is obvious and offensive. Homeowners are getting lambasted for doing what companies do on a regular basis. Walking away from real-estate obligations in particular is common in the corporate world, and real-estate developers are notorious for abandoning properties that no longer make economic sense. Sometimes the hypocrisy is staggering: last winter, the Mortgage Bankers Association—the very body whose president attacked defaulters for betraying their families and their communities—got its creditors to let it do a short sale of its headquarters, dumping it for thirty-four million dollars less than the value of the building’s mortgage.

When it comes to debt, then, the corporate attitude is do as I say, not as I do. And, while homeowners are cautioned to think of more than the bottom line, banks, naturally, have done business in coldly rational terms. They could have helped keep people in their homes by writing down mortgages (the equivalent of the restructuring that American Airlines’ debt holders will now be confronting). And there are plenty of useful ideas out there for how banks could do this without taxpayer subsidies and without rewarding the irresponsible. For instance, Eric Posner and Luigi Zingales, of the University of Chicago, suggest that, in exchange for writing down mortgages in hard-hit areas, lenders would take an ownership stake in a house, getting a percentage of the capital gain when it was eventually sold. Lenders, though, have avoided such schemes and haven’t done mortgage modifications on any meaningful scale. It’s their right to act in their own interest, but it makes it awfully hard to take seriously complaints about homeowners’ lack of social responsibility.

Of course, many borrowers made bad decisions and acted irresponsibly. But so did lenders—by handing out too much money and not requiring sensible down payments. So far, banks have been partially insulated from the consequences of those bad decisions, because Americans have been so obliging about paying off overinflated mortgages. Strategic defaults would help distribute the pain more evenly and, if they became more common, would force lenders to be more responsible in the future. It’s also possible that a wave of strategic defaults—a De-Occupy Your House movement—would get banks to take mortgage modification more seriously, which would be all for the better. The truth is that banks have been relying on homeowners to do the right thing. It might be time for homeowners to do the smart thing instead. ♦

Read more http://www.newyorker.com/talk/financial/2011/12/19/111219ta_talk_surowiecki#ixzz1hUcoqYYr