Trecia Cooke

New Fed rule will bar banks from charging overdraft fees without customer consent

• By Christopher S. Rugaber, AP Economics Writer
• On 4:02 pm EST, Thursday November 12, 2009

WASHINGTON (AP) -- Banks will have to secure their customers' consent before charging large overdraft fees on ATM and debit card transactions, according to a new rule announced Thursday by the Federal Reserve.

The rule responds to complaints from consumer groups, members of Congress and other regulators that the overdraft fees are unfair because many people assume they can't spend more on a debit card than is available in their account. Instead, many banks allow the transactions to go through, then charge fees of up to $25 to $35.

For small purchases, such as a cup of coffee, the penalty can far exceed the actual cost of the transaction.

Under the Fed's new rule, which will take effect July 1, banks will be required to notify new and existing customers of their overdraft services and give customers the option of being covered. If customers don't "opt in," any debit or ATM transactions that overdraw their accounts will be denied, Fed officials said.

Many consumers do want checks and regular electronic bill payments to be covered in the event of an overdraft, Fed officials said. As a result, those transactions aren't covered by the rule.

Banks earn as much as $25 billion to $38 billion annually from overdraft fees, Fed officials said, but that total includes check overdrafts.

Many larger banks, including Bank of America Corp., JPMorgan Chase & Co., U.S. Bank and Wells Fargo & Co. began instituting similar "opt-in" plans in late September after coming under fire for the fees.

But consumer groups and other regulators, including Federal Deposit Insurance Corp. Chairman Sheila Bair, said new rules were still necessary to ensure smaller banks followed suit.

Many lawmakers have criticized the Fed for failing to provide sufficient consumer protection in the past, a defect they say contributed to last year's financial crisis. Sen. Christopher J. Dodd, D-Conn., on Tuesday introduced a bill that would strip the Fed of its consumer oversight.

Dodd also proposed legislation last month that would have imposed limits similar to the Fed's on the banks' ability to charge overdraft fees.

Question: What do you think of the new policy? How has this particular situation affected you in the past? Do you think it was needed?

I thought this was an interesting article to share.

-Trecia Cooke, Realtor Exit Realty Group- Tomball, TX

RISMEDIA, October 9, 2009-The best available tool for sustaining the still-fragile housing market is the $8,000 home buyer tax credit, and it is essential that Congress extend the credit into 2010, the National Association of Realtors® testified at a hearing of the U.S. House Small Business Committee recently.

The tax credit expires November 30.

NAR Regional Vice President Joseph L. Canfora, a broker-owner with Century 21 Selmar Realty in East Islip, N.Y., also told the panel that a major stumbling block for consumers has been the implementation of appraisal processes spurred by the Home Valuation Code of Conduct, which is causing delays in closings, as well as cancelled sales that led to artificially low existing-home sales numbers for August, reported last month.

"The credit is working," Canfora said, pointing out that the 355,000 to 400,000 transactions directly attributable to the credit made a significant dent in the housing inventory and will help to stabilize home prices. Further, the credit has provided a huge indirect benefit to local governments, shoring up property tax bases in particularly hard-hit areas.

Further, NAR data has estimated that every home purchase pumps into the recovering economy about $63,000- the equivalent of one new job added to the employment figures. But, Canfora said, the threat of more foreclosures coming to the market caused by mortgage rate resets, job losses, and by lender's unburdening themselves of additional properties to take advantage of today's more stabilized prices could disrupt the fragile recovery.

In a "normal" market, optimal housing inventory is about six to seven months, he said. When the tax credit was enacted in February, inventory was 9.1 months. Because of the spurt in homes sales since then due to the tax credit, inventory declined to 8.2 months in August, closer to "normal" than at any time since 2007.

In urging Congress to extend the credit, Canfora said, "The more robust the credit and the greater its duration, the greater the chance that the housing market can perform its traditional role of helping the economy move out of a recession."

"But problems arising from the implementation of the HVCC may reverse the market's positive momentum at a time when the real estate industry is just starting to show signs of a rebound in many markets," Canfora said. According to an NAR survey of its members, approximately 40% of Realtors report having lost at least one sale since May 1 because of appraisal problems due to the HVCC rules. Twenty percent say they have lost more than one sale.

The culprit, he said, was that appraisal management companies, which have gained prominence because of the HVCC, have assigned appraisers to areas where they lack geographic competence. That has resulted in unreliable appraisals. It is not uncommon that second and third appraisals have to be done to ascertain fair market value. Appraisal fees have also risen and are being passed on to consumers.

Both Fannie Mae and Freddie Mac have issued guidance on appraisals, but NAR is calling upon the mortgage giants and the Federal Housing Administration to issue a consolidated guidance that should be codified and incorporated into the existing policy to ensure proper information on appraisals is available to the real estate industry.

FHA Commissioner David H. Stevens has asked FHA staff to explore that recommendation with Fannie and Freddie. Last month, Stevens reaffirmed FHA appraisal policy, taking into consideration the unintended consequences that have burdened Fannie and Freddie, and issued two Mortgage Letters focusing on appraisal changes. The policy reaffirms appraiser independence and geographic competence.

The FHA announcement also included timely steps to protect taxpayers: implementing credit policy changes to enhance risk management; hiring a chief risk officer for the first time in the agency's history; and shifting responsibility for mortgage brokers away from taxpayers to the lenders who use mortgage brokers.

Canfora told the committee that FHA has performed remarkably well through the housing crisis. "The reason the FHA capital reserve ratio fell below 2% had nothing to do with FHA's current business activities. It is simply a reflection of falling housing values in their portfolio." He cited an FHA announcement that a 2009 audit will show that even if FHA does nothing, the cap reserves are expected to rise back to that required level within a few years. He also pointed out that FHA total reserves are not in as dire straits as some have reported since the cap reserve fund is not the only FHA reserve fund- FHA also has a separate cash reserve that is higher that it has even been- and the combined assets total $30.4 billion.

For more information, visit www.realtor.org ^[1].

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^[1]RISMEDIA, October 7, 2009-"The environment will be one of the great challenges of the 21st century. Soon it will dominate virtually all aspects of life in North America-socially, politically and economically. Today's great leaders and entrepreneurs must look at environmental problems as an opportunity to set themselves apart from the competition."

- Steve Morris, Founder and CEO, EXIT Realty Corp. International

The green real estate movement is today's mantra for everything from energy-efficient appliances and toxin-free building materials to all-natural cleaning supplies or water-saving products. Everywhere we turn, marketing screams for our lives to "go green!" Whether it's the bag you pack your groceries in, separating recyclables before putting out the garbage or checking the tags on what you buy to ensure it's organic, day-to-day living centers around being-or quickly becoming-eco-friendly.

One of the most important things to buyers and sellers today is the environment. And in order to meet the demands of first-time home buyers (whose average age, according to the National Association of Realtors®, is 30), agents must become savvy, green-educated professionals. Age 30 is between the Gen X/Y era where green is not a consideration to that demographic-it's a lifestyle. Environmentally-friendly features are deemed as very important by 90% of buyers, according to NAR. The stats make perfect sense since owning a green home is said to be good for your health, will save you money and benefit the environment.

If that's not enough motivation, green homes are expected to account for 10% of new-home construction in 2010, up from 5% in 2005, according to McGraw-Hill Construction. Not to mention that while the average U.S. home lost 5.7% of its value in 2007, eco-friendly homes have actually held their value, some even appreciating in price. According to the Appraisal Institute, green properties typically appraise for 10% to 15% higher than comparable conventional homes (depending on region and upgrades).

Buying green real estate is more affordable than ever before. The premium is minimal compared to what it used to be and can be easily offset by the long-term savings on things like energy-efficient furnaces, for example. That alone could save you $570 annually, according to the U.S. Department of Energy.

What qualifies as a green home to one might not necessarily make the cut with another, but the key is recognizing the significance of the green movement in real estate and heading aggressively in that direction. The green housing market is creating a tipping point in the real estate industry. Realtors® that don't get on board the green train will get left behind.

At EXIT, It's All About Our Agents
EXIT recognizes the value in making this educational opportunity available because, like everything else we do, our agents are the focal point of our company. With that in mind, at the 2009 EXIT Annual Convention, EXIT announced the launch of our green initiative, "Teal is the New Green," which includes training, resources and other tools to assist our agents in marketing themselves as proficient green Realtors®. By aligning ourselves with EcoBroker® International, the world's first and largest green designation program for real estate professionals, we keep giving Realtors® more and more reasons to choose EXIT for a successful career.

EcoBroker's® green designation training and communications will provide EXIT agents with the resources to be constructive green ambassadors in an ever-changing business and consumer world. They will be able to knowledgeably assist clients in their pursuit of properties that provide affordability, comfort and a healthier environment. EXIT-EcoBroker certified professionals will also help sellers effectively market their properties with green features.

Because EXIT offers only the very best in training and education, EcoBroker® is the only designation that is taught by experts in both the green industry and the real estate industry. With over 5,400 agents trained worldwide, they are the largest green designation program for real estate.

"We are also the only green certification program that requires our members to take four hours of additional education each year," says John Stovall, Vice President of business development for EcoBroker® International. "Our annual Advantage Course will keep EXIT-EcoBrokers on top of the latest information in the world of green real estate." EXIT has negotiated special pricing that is not available anywhere else in the industry, so our agents can affordable become certified.

EXIT-EcoBrokers will be equipped with additional energy and environmental information as well as tools to help them provide added value to all of their real estate transactions. "This training helps our agents address the newest topics in real estate, such as green home certification programs like ENERGY STAR®, says Tami Bonnell, president of EXIT's U.S. Organization. "It also provides practical solutions to assist them in working through issues that may arise in any real estate transaction, such as mold, radon, or poor indoor air quality, just to name a few."

By becoming an EXIT-EcoBroker, our agents will be able to grow their client base by attracting the green-minded consumer and providing valuable energy and environmental information to all consumer types.

For more information about EXIT Realty Corp. International or the "Teal Is the New Green" Program, contact Amy Youngren, Green Program Representative, at ayoungren@exitrealty.com ^[2].

Article by: RISMedia.com

Posted by: Trecia Cooke, Exit Realty Group - Tomball, TX. Contact me if you would like more information about EXIT Realty.

What a difference nine months make. In the not-long-ago credit-card binge days, one of the "in" things was to own a TV the size of a bus. Today, it's to have six months of living expenses saved in case you get laid off.

Until recently, buying was the social norm-"having stuff, having name brand stuff, having the new, the bigger, the more," said George Barany, director of financial education for America Saves, a Washington-based educational nonprofit. Today, he said, wearing last season's clothes or holding onto a car longer is more acceptable among consumers.

Tough times have also altered one financial planning basic-that consumers with considerable credit card debt should divert money away from savings to those balances. Today, experts say, if you don't have six to 12 months of living expenses saved, pay the minimum on card balances and grow that kitty. Experts say interest will add up, but if you do not get laid off, you can use some of the fund to help pay down debt once the economy picks up.

People talk about saving for a rainy day, but "it's raining right now," said Jon Gaskell, co-founder and head of business development for SmartyPig.com, a virtual piggy bank that combines a savings program with social networking so users identify savings goals and set up automatic deductions from checking accounts.

How to save

You can't beat the autopilot approach, experts say. Assuming it's an option, ask your employer to automatically deduct a certain amount each week and deposit it in a savings account, preferably one to which you don't have too easy access, said John Tweedy, a Floral Park certified financial planner. Some employers also allow you to earmark all or a portion of future raises to savings.

In these tough times, don't neglect the off-the-radar-screen approach says Ethan Ewing, president of money portal Bills.com. That's regularly socking away a small, almost unnoticeable, amount, such as stuffing a dollar bill every day into a jar or piggy bank or regularly dropping your small change into a coin jar.

While many people wait until the end of the month to see how much is left to save, Galia Gichon, a financial expert in Manhattan, suggests you work in the opposite direction. Plan ahead for weekly out-of-pocket expenses, take out enough cash, commit to living within those confines, and save the rest, Gichon said.

How much?

As a rule of thumb, money experts suggest putting 10% of take-home pay toward long and short-term savings/investing. But that depends on individual circumstances.

What's most important, said Barany, is to start saving on a regular basis-whatever the amount. You don't have to "go from zero to 100 in one step," said Barany, who added that it's crucial for singles and families alike to maintain a minimum of $500, preferably closer to $2,000, to cover unexpected expenses.

Paying with cash can often save you money. If you have the cash to buy new tires for, say, $300, you can say to the merchant, who has to pay a service charge on credit card transactions, "I have the cash right here. Can you give me a discount?"

Roberta Schroder, chairwoman of the economics and finance department at Nassau Community College, said she suggests students have a safety cushion of three months' living expenses. They often feel that just one month will do as, "my mother will pay for it." But these days, Schroder reminds students that mom may have her own financial headaches.

Where to put emergency money

For money you may need to access quickly, Tweedy suggests researching online money market accounts that pay the highest interest rates, ones that are insured by the Federal Deposit Insurance Corp. Check rates at Bankrate.com.

Ann Diamond, a chartered financial consultant in Manhattan, who also coordinates financial literacy programs, suggests the following: Those with emergency funds of nine to 12 months of expenses, invest:

- Three months in an online money market fund - recently Bankrate showed a high rate of 2.53%
- Three months in a slightly higher-yielding short-term CD, with a recent six-month CD rate of 2.57%
- Three more months in a longer-term slightly higher paying CD, with a recent nine-month CD at 2.71%, and so on.

Cut back on 401(k)?

Experts say don't do it unless it is temporary and to build up ready cash. If your employer matches your contributions, the "plan is the best deal in the world. It's free extra money, nontaxable, and if you do the math, you'll see why," said Michael Kresh a certified financial planner in Islandia, NY. That's even if, like so many, you've seen your balance plummet. This year employees can put in up to $16,500, with those age 50 and up allowed a further $5,500 as a catch-up.

"Think of your retirement savings as a forest," he said. "After the wildfire passes through, when it seems like there's nothing left, the forest returns, slowly and steadily ... a retirement portfolio can recover if you continue to fund it." Even if your employer stops matching your contribution, as many have, "you should still be saving as much as you possibly can," he said.

Investing

"First, do not let fear overtake you," Kresh said.

When it comes to stocks, look for companies that don't have a lot of debt and do have cash flow at the end of the day.

Also, "people still need to buy food and household goods. The future of this country depends upon infrastructure and an expanding green technology and energy sources," Kresh said. "Fear is driving down the prices of companies that will be very successful in the next three to five years. Let those who sell in fear give us bargains now."

Copyright © 2009, Newsday, Melville, N.Y.
Distributed by McClatchy-Tribune Information Services.

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