3 Diamonds and a Dog #12

Oct 29, 2012 by

In each post of the Money Counselor “Diamonds & Dogs” series, I pick three items—could be an article, a website, a video, an image—that in my humble opinion would be especially valuable—the Diamonds—in helping Money Counselor readers make better money choices. And to balance the three Diamonds, I pick just one lame item—the Dog.

money idea gems3 Diamonds

  • If you’re the type who likes to print and post on your fridge “words to live by,” check out “6 Must Decisions for Your Financial Success” by Shilpan at the blog Street Smart Finance. An immigrant to the U.S. who has succeeded the old fashioned way—by earning it—Shilpan’s perspective is always refreshing and worth reading.
  • We’ve been thinking of putting a small greenhouse in your backyard, and this article at Yes, I am Cheap by Sandy has inspired me to get it done, and make it a hydroponic system. Like Sandy, I like to experiment and tinker. If you’re the same and are interested in growing a bit of your own food, you’ll enjoy “I’m Growing Food in My City Back Yard with Hydroponics”. And you don’t need to install a greenhouse to have fun with hydroponics. Tabletop systems work too!
  • Miss T and the excellent blog Prairie Eco-Thrifter tackles the debate between Rechargeable vs. Disposable Batteries. She makes a strong case in answer to two questions: Which type of battery costs less, and which is greener? When the answer to each question points in the same direction, that’s nice! I hate choosing between saving money and being green.


lame money adviceA Dog

This edition’s Dog: Big Banks that appear to be forgiving debts that no longer exist, though the banks refused to work with the very same customers when the debt did exist, perhaps to manipulate the terms of the National Mortgage Settlement Agreement to the banks’ advantage.

A September 29 article titled “How to Erase Debt That Isn’t There” by Gretchen Morgenson in the New York Times explains what’s happening:

In February five U.S. Big Banks agreed, under the National Mortgage Settlement, to pay $25 billion to settle state and federal claims related to their mortgage practices. Under the Agreement banks receive a credit against the amount they must pay toward the settlement for helping borrowers who are in trouble. In other words, if Bank of America helps Joe Mortgagor to refinance even though his mortgage is underwater and in the process Bank of America ‘eats’ $50,000, then that $50,000 counts toward Bank of America’s settlement payment. This seems sensible.

But Ms. Morgenson highlights several cases of these Big Banks forgiving mortgage debt that’s long gone, and she theorizes the banks are pursing this strategy in hopes of sneaking through undeserved credits against their mammoth settlement amount. From the New York Times piece:

“We are canceling the remaining amount you owe Chase!” says a letter that JPMorgan Chase sent recently to thousands of home loan borrowers. “You are approved for a full principal forgiveness of your Home Equity Account,” says another, from Bank of America.

Jackie Esposito, of Guilford, Conn., got a letter like that. But she wasn’t elated — because she doesn’t owe the money anymore. She and her husband filed for bankruptcy three years ago. The roughly $64,000 they owed Chase has been legally wiped out.

Ms. Morgenson goes on:

A borrower in Florida received word this month that Chase was erasing $190,065.10 of debt that had already been wiped out. Bank of America told a Virginia resident that a $231,767 home equity loan was being forgiven, even though the debt was discharged last May.

The supreme irony of banks now forgiving loans they don’t own to exploit the terms of a Mortgage Settlement which came about in large part because these same banks foreclosed on loans they didn’t own is irritating to those affected, to say the least. But there’s potentially a more tangible impact. Letters sent by Chase and Bank of America warn that the loan forgiveness will be reported to the I.R.S., which means the former debtors could be hit with a big tax bill, as the IRS considers forgiven debt over a certain amount to be income. Where does this leave the already beaten down middle class taxpayer? Holding the bag, once again.

Nominations Please

Do you have a nomination for a Diamond or Dog? Send it to me please using the Free Advice link at the top of the page. I’ll give you credit if I use it in a “3 Diamonds and a Dog” post.

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