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Mortgage Forgiveness Debt Relief Act Set to Expire: Underwater Homeowners will likely Face New Tax Bill

Posted on December 19, 2013by Admin

Beginning in January, homeowners with “underwater” mortgages will likely face a new tax bill if they sell their house, modify their mortgage or lose their home in foreclosure. The 2007 federal law that waived income taxes on unpaid mortgage debt is set to expire December 31, 2013.

Without the waiver, homeowners will be forced to pay income taxes on any mortgage amount forgiven by the lender, including foreclosure. Homeowners also will have to pay tax on mortgages that are unpaid because of a short sale or a loan modification, which lowers monthly payments. So this means that a typical homeowner who sells a house for $100,000 but still has a $200,000 mortgage could face a tax bill of $28,000.

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Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Timothy Kingcade Posts

College Executive Pay Soars at the Expense of Students

Posted on December 18, 2013by Admin

40 college presidents took in more than $1 million each in 2011, according to a recent report published by The Chronicle of Higher Education. The data provided in the report outlines the compensation provided to 550 chief executives at 500 private nonprofit colleges in the U.S. during the 2011 calendar year.

Out of the 550 college executives, 180 of them received more than $500,000 in compensation during 2011, while the top 42 received more than $1 million. Much of the compensation came from bonus pay, deferred compensation, and nontaxable benefits, similar to how many corporate CEO’s are paid.

Robert Zimmer, the president of University of Chicago, was the top earner of 2011 receiving a total compensation of $3,358,723. His base pay, $917,993, made up only 27 percent of his total earnings. Joseph Aoun of Northeastern University took in $3,121,864, making him the second highest paid college president. His base pay was $674,498, a mere 21.6 percent of his total compensation.

Meanwhile, a report published recently by the Institute for College Access & Success Project on Student Debt reported that the average college graduate in 2012 left school with an average of $29,400 in student loan debt. This amount increased from an average of $26,600 in 2011. In addition, it was reported that seven of every ten college seniors graduated with student loan debt, one fifth of which was owed to private lenders who charge exorbitant interest rates.

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If you are in a financial crisis and are considering filing bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Credit, Foreclosures, Timothy Kingcade Posts

Trend Alert: U.S. Mortgage Trouble Threatens

Posted on December 17, 2013by Admin

Mortgage trouble threatens as U.S. borrowers are reportedly missing payments on home equity lines of credit taken out during the housing bubble. The loans are a problem now because many are hitting their 10-year anniversary, at which point borrowers usually are required to start paying down the principal on top of the interest, they have been paying all along.

This trend could deal another blow to the country’s biggest banks, as more than $221 billion of these loans from Bank of America Corp, Wells Fargo & Co, Citigroup Inc, and JPMorgan Chase & Co will hit this mark over the next four years. Approximately 40 percent of the home equity lines of credit are now outstanding. This shift could more than triple the average consumer’s monthly payment. Another problem, these loans usually carry floating interest rates.

For example, a consumer with a $30,000 home equity line of credit and an initial interest rate of 3.25 percent would see their required payment jumping to $293.16 from $81.25, analysts from Fitch Ratings calculate.

Banks aggressively marketed home equity lines of credit before the housing bubble burst. Big banks, including Bank of America Corp, Wells Fargo & Co, Citigroup Inc, and JPMorgan Chase & Co have more than $10 billion of these home equity lines of credit on their books each, and in some cases more than that.

That is why the loans are starting to be problematic: For home equity lines of credit made in 2003, missed payments have already started increasing. A high percentage of home equity lines of credit went to people with poor credit — more than 16 percent of the home equity loans made in 2006, for example, went to people with credit scores below 659, seen by many banks as the dividing line between prime and subprime.

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Bankruptcy Law, Credit, Timothy Kingcade Posts

$34 Million Settlement Received for Consumers Victimized by Medical Credit Cards

Posted on December 15, 2013by Admin

GE Capital has agreed to pay up to $34 million to resolve allegations that it misled consumers about the terms for credit cards offered by doctors to pay for medical procedures. This is the first settlement of its kind involving medical credit cards, which doctors and dentists offer to patients to finance expensive treatments, typically not covered by insurance. While these medical credit cards resemble other credit cards, there is a critical difference: they are marketed by caregivers to patients, often at vulnerable times, such as when those patients are in pain or when their providers have recommended care they cannot afford or insurance will not pay for.

The recent settlement comes as the Consumer Financial Protection Bureau is scrutinizing deferred interest financing plans, under which borrowers pay no interest for a set period of time, but are later hit with higher interest rates, oftentimes much higher than traditional credit cards. Credit card issuers have come under fire over disclosures for marketing medical credit cards, which often come with initial interest rates of 0% that later jump to double-digit rates if the amount owed is not paid off in full before the promotional period ends. Deferred interest cards, increasingly common in medical offices, are also offered widely by retailers with deferred financing terms for big purchases.

CareCredit, a division of GE Capital, is the largest issuer of medical credit cards with around four million cardholders and 175,000 participating medical offices. The CFPB said CareCredit placed borrowers in a financing plan without ensuring that the medical office staff selling the plan gave a thorough explanation as to the terms and conditions of these cards. The bureau said many consumers believed they were not being charged interest, when they were actually being levied nearly 27% interest after an initial interest-free period.

The settlement has resulted in GE Capital having to notify more than 1.2 million consumers that they can file a reimbursement claim for interest charges and fees. In addition, CareCredit must contact new consumers directly within 72 hours of taking out a credit card loan to explain the terms and conditions to them.

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Bankruptcy Law, Credit, Timothy Kingcade Posts

Tips for Smart Holiday Spending: Part II

Posted on December 13, 2013by Admin

With the holiday shopping rush officially here, we thought it was important to do a follow-up posting on our smart holiday spending series. We hope these tips will help you make smart financial decisions this holiday season and help plan financially for the New Year.

1.) Create a realistic and affordable budget. Decide on an amount you are willing to spend per person and do not exceed it.

2.) Shop with cash and use a ledger. This will keep you in touch with your spending; you could even spend up to 20 percent less.

3.) Avoid impulse buying and last-minute shopping.

4.) Pay off any holiday debt as soon as possible, so you do not accrue additional interest. This is especially important with store credit cards.

5.) Think outside the box. Consider gift alternatives like a breakfast, lunch or just a day together. Handmade gifts are also cost effective.

6.) In the New Year, start saving the amount you spent this year on holiday gifts and open a separate account for next year’s holiday expenditures.

7.) Comparative shop and take advantage of Christmas discounts immediately after the season. This is the best time to purchase gifts for the following year.

Bankruptcy Law, Credit, Timothy Kingcade Posts

South Florida Trails in Consumer Debt

Posted on December 12, 2013by Admin

A recent report from Equifax concludes that a lack of mortgages is what has lead to a decline in consumer debt in South Florida. Debt is down by 4.2%, the greatest drop among the country’s 25 largest metropolitan areas. Out the 25, six posted gains in consumer debt as more people took out mortgage loans and home equity lines of credit following the housing market crash.

Experts say that when it comes to credit card balances and other household debt, the South Florida region has a noticeably smaller share of debt tied to residential real estate. Florida’s large number of foreclosures has significantly effected the rankings since bank seizures essentially wipe out a consumer’s debt on a property. Experts also attribute this to the large number of recent cash purchases in South Florida’s real estate market. These type transactions, that do not create mortgage debt, could also be skewing the numbers.

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Foreclosures, Timothy Kingcade Posts

LA Sues Wells Fargo, Citigroup Alleging Mortgage Discrimination

Posted on December 11, 2013by Admin

The Los Angeles city attorney has sued Wells Fargo and Citigroup alleging the companies engaged in mortgage discrimination that led to an increase of foreclosures in minority communities during the housing crash.

The city attorney’s suits allege a “continuing pattern of discriminatory mortgage lending practices” in Los Angeles that violates the federal Fair Housing Act. They claimed Wells Fargo and Citigroup at first refused to grant mortgages in minority neighborhoods- a practice known as redlining. Later, they targeted black and Hispanic neighborhoods for predatory loans, a practice known as reverse redlining.

The lawsuits contend that “vulnerable, undeserved borrowers” denied by years of redlining jumped at the chance to obtain subprime home loans they could not afford, then were hit with foreclosures when the housing bubble burst and they were denied refinancing.

Both lawsuits seek unspecified reparations and damages. A report by the Alliance of Californians for Community Empowerment and the California Reinvestment Coalition is cited in the lawsuit that estimated the mortgage crisis resulted in more than 200,000 foreclosures from 2008 to 2012, with $481 million in lost property tax revenue to the city, and $1.2 billion in Los Angeles for “increased costs of safety inspections, police and fire calls, trash removal and property maintenance.”

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Foreclosures, Timothy Kingcade Posts

South Florida Home Prices Increase Giving Underwater Homeowners a Sense of Hope

Posted on December 10, 2013by Admin

South Florida home prices have increased by more than 20 percent in the past year, giving many underwater homeowners a sense of hope. According to Zillow.com, in the third quarter alone, more than 25,000 homeowners in Broward and Palm Beach counties saw their home values rise above what they owed, freeing them from “underwater” mortgages.

After peaking at $391,100 in November 2005, Broward County’s median home price plunged by more than 50 percent by the time the market finally hit bottom in early 2012. Palm Beach County’s peak median, $421,500, fell by nearly 60 percent for the same period. The steep declines, unleashed a wave of foreclosures. Many underwater homeowners opted for short sales, others were just stuck, continuing to make mortgage payments and unable to sell.

The market began to stabilize when investors and other buyers began looking for bargains. This rush eventually forced housing prices back up. Median prices in Palm Beach and Broward counties have jumped by double digits in every month this year, though the year-to-year increases have slowed since the summer. Analysts expect home values to appreciate closer to the traditional 4 percent a year by 2014.

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Foreclosures, Timothy Kingcade Posts

Top U.S. Banks Fail to Correct Foreclosure Abuse Practices

Posted on December 5, 2013by Admin

A report this week revealed that some of the top U.S. banks, including Bank of America and Citigroup, have failed to fully comply with the government settlement to correct mortgage servicing abuses. Bank of America failed to file accurate documents in bankruptcy proceedings and Citigroup’s mortgage unit failed to notify borrowers about missing documents within 30 days of a request for a short sale.

According to the monitor, the two banks have submitted plans to fix the problems and are in the process of correcting the failures. JPMorgan Chase was also cited in the recent report. The report revealed that the bank failed in some instances in 2013 to make decisions on borrower applications to modify loans within a timetable required, and it failed a test that measures whether a pre-foreclosure notice sent to customers was accurate.

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Bankruptcy Law, Credit, Timothy Kingcade Posts

Judge Gives Green Light for Detroit to proceed with Bankruptcy

Posted on December 4, 2013by Admin

A federal judge has granted the city of Detroit the ability to proceed with its bankruptcy filing. This is the largest municipal bankruptcy in history. The recent ruling, opens the door for the city to cut billions of dollars in payments that are owed to city employees, retirees, investors and other creditors.

Unions and pension funds argued that Detroit did not negotiate with its creditors in good faith in an effort to reach a deal on its liabilities. In his ruling, however, Judge Steven Rhodes found that such negotiations were impractical for Detroit because of the huge number of creditors, which total more than 100,000. Therefore, he concluded that the city filed its petition properly.

The American Federation of State, County & Municipal Employees, a major union, has plans to appeal the decision.

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