Thursday, October 28, 2010

Financial Literacy: A Necessary Component of Education

by Mary Jane Town, SVP Marketing, Monroe Bank & Trust

Last February, The Monroe County Learning Bank Network formally opened its doors at Monroe Bank & Trust’s former branch location in the Orchard East area of Monroe. The Learning Bank is the result of collaboration between many local resources including MBT, Monroe County Community College, Monroe Adult Education, Bedford Adult Education, SEMCA, Michigan Works! and the United Way.

The Learning Bank’s main purpose is to provide additional GED preparation and testing for area residents and then to help transition graduates to college or career programs in nursing, ophthalmology, and other fields. The end goal is not just job placement but growth into rewarding and sustainable careers.

In order to graduate from the Learning Bank, financial literacy training is also required – supplied by Monroe Bank & Trust’s growing MBTeach program.

For the second year running, Michigan State Senator Randy Richardville joined Monroe Bank & Trust’s financial literacy instructors yesterday at the Learning Bank where he and two “MBTeachers” walked 20 adult learners through the FDIC’s comprehensive “Get Smart About Credit” course.

The exercise helped participants learn basics including what credit scores are, how they affect lending, how to repair damaged credit and why credit is important to individuals and businesses.

As an added extra, Richardville remained on hand after the course to answer questions from participants covering a broad range of issues. It was impressive to see the interaction between students and one of their elected officials and to get a feel for concerns and worries.

What was particularly gratifying for the MBTeachers was the sense that their efforts resulted in practical help for people who just needed some information, training and advice to get their lives back on track financially. Some people just needed to understand better that past financial hardships or mistakes could be overcome.

As bankers, MBTeachers take their commitment to providing education very seriously. We know that successful lives and families are built, in great part, upon successful and responsible money management. It’s our hope that MBTeach provides tools to enable our friends and neighbors to improve their financial management skills and the quality of their lives and communities.

Friday, October 22, 2010

Topic A: Beyond a Moratorium

By Bob Davis, EVP, Mortgage Markets, Financial Management and Public Policy

This time last week there was a frightening increase in the number of politicians calling for a nationwide moratorium on foreclosures. Thanks in part to statements by leaders on the left and right, the talk has shifted -- at least for now.

Most reasoned minds currently agree that a halt on all foreclosures, including legitimate ones whose paperwork is in order, would grind the housing market recovery to a halt and jeopardize the economy.

That’s a relief. But considering that elements of the problem may not be quickly resolved, there are bound to be more rash solutions floated before the nation’s top mortgage lenders finish their own internal reviews. Consumer activists also are unlikely to relent in their quest to stop all foreclosures. How can we keep the discussion rational and avert draconian measures that could do more harm than good?

Staying focused on facts will help. I’ve been encouraged to read acknowledgments in several prominent media stories that, while some -- potentially many -- foreclosure proceedings have been marred by short-cuts and incomplete records, few have been launched unfairly. At the end of the day, when the “i”s have been dotted and titles verified, the vast majority of the foreclosed-upon will still be in default and still face eviction.

In response to those who think banks should be forced to make more aggressive modifications, The Atlantic’s Daniel Indiviglio wrote, “banks may have been negligent in their bookkeeping, but that doesn't suddenly mean defaulted homeowners are suddenly reincarnated as creditworthy borrowers who can now afford their houses.”

The sad reality is that foreclosures are a necessary element of mortgage lending. Without lenders' ability to expeditiously collect on their collateral when mortgages are in default, no one would make a mortgage loan.

This is true around the world. Countries with poor private property rights and limited foreclosure options have very limited mortgage and housing opportunities. It would be a disaster for the American family if policymakers wandered down that path.

The sooner foreclosed properties can be turned over, the better. Ask anyone in a neighborhood plagued by vacant homes or littered with foreclosure signs. But it’s just as important to get the process right, or the efficiencies gained by an expedited process will be lost to delays and re-do’s, and markets and the economy will suffer from uncertainty.

The lenders that have imposed their own foreclosure moratorium, pending a review and possible correction of their processes, get that. They have every incentive to move swiftly and reestablish any corners that may have been cut in their haste to process a record number of foreclosures.

ABA, which urged opposition to a moratorium in a letter to House and Senate banking panel leaders this week, will continue to urge policymakers to resist calls for a mandatory foreclosure freeze while this review takes place. A thoughtful, fact-based review of the mortgage servicing process can lead to housing market improvements that benefit all. By contrast, a drastic, knee-jerk change in foreclosure rights could lead to a housing market where buyers have to pay cash or inherit from a rich relative. That's not the kind of housing that builds strong communities.

Thursday, October 14, 2010

Owe Back Taxes? Tax Relief Companies Can Result in More Pain than Gain

  • We've helped thousands of people settle their tax debts for a fraction of the amount owed.
  • We can stop wage garnishments, bank levies, tax levies, property seizures, and unbearable monthly payments.
  • We can significantly reduce your tax debt. Call for a free consultation.

Fact or fiction?


Tax relief companies use the radio, television and the Internet to advertise help for taxpayers in distress. If you pay them an upfront fee, which can be thousands of dollars, these companies claim they can reduce or even eliminate your tax debts and stop back-tax collection by applying for legitimate IRS hardship programs. The truth is that most taxpayers don't qualify for the programs these fraudsters hawk, their companies don't settle the tax debt, and in many cases don't even send the necessary paperwork to the IRS requesting participation in the programs that were mentioned. Adding insult to injury, some of these companies don't provide refunds, and leave people even further in debt.


Some taxpayers who filed complaints with the Federal Trade Commission (FTC) reported that, after signing up with some of these companies and paying thousands of dollars in upfront fees, the companies took even more of their money by making unauthorized charges to their credit cards or withdrawals from their bank accounts.


If you owe back taxes and don't know how you're going to pay the debt, the FTC, the nation's consumer protection agency, says don't panic, take a deep breath, and consider your options. If you are having trouble paying bills, it's often better to try to work out a payment plan with the creditor yourself than to pay someone else to negotiate a plan for you. The same is true when you owe money to the IRS or your state comptroller.


IRS Help for Taxpayers


If you can't pay your taxes or your payments are late, the IRS charges you penalties and interest. It also has several tax relief programs to help people who owe back taxes:
An Installment Agreement is generally available to people who can't pay their tax debt in full at one time. The program allows people to make smaller monthly payments until the entire debt is satisfied.


An Offer in Compromise (OIC) lets taxpayers permanently settle their tax debt for less than the amount they owe. The OIC is an important tool to help taxpayers in limited circumstances; taxpayers are eligible only after other payment options have been exhausted and their ability to pay has been reviewed by the IRS.


In very limited circumstances, the IRS may offer a penalty abatement to people who haven't paid their taxes because of a special hardship. If the taxpayer meets very narrow criteria, the IRS may agree to forgive the penalties. An interest abatement is even more limited and is rarely provided.


According to the IRS, you can apply for an Installment Agreement, OIC, or a penalty or interest abatement without the help of a third party. If you prefer third-party assistance in negotiating with the IRS, only certain tax professionals — Enrolled Agents (federally-authorized tax practitioners who can represent taxpayers before all administrative levels of the IRS), Certified Public Accountants (CPAs), and attorneys — have the authority to represent you. Their services should involve a face to face meeting where they explain your options and their fee structure.


You can contact the Taxpayer Advocate Service, an independent organization within the IRS that provides free help to people who are experiencing financial difficulties or who need help resolving a problem with the IRS. Call 1-877-777-4778 or visit irs.gov/advocate.

State Tax Relief Programs


The process for tax settlements with the states is very similar to the process with the IRS, although it varies from state to state. In some states, for instance, a taxpayer's penalties can be waived, but interest can't. In other states, interest can be waived, but penalties can't. And in some states, legitimate tax debt can't be reduced at all. For more information, contact your state comptroller. For a state-by-state listing, visit the National Association of State Auditors, Comptrollers and Treasurers (NASACT) at nasact.org.


Taxpayer Tips

If you owe back taxes and you are having trouble meeting your tax obligation:

  • read your notices from the IRS or your state comptroller. Ask about collection alternatives.
  • save yourself some aggravation by ignoring promises from companies that say you are "qualified" or "eligible" for a tax relief program to resolve your tax debt. Only the IRS or your state comptroller can make that determination.
  • walk away if a company requires a fee in advance for tax relief services. Check them out with the IRS.
  • For More Information

Visit Monroe Bank & Trust's website at http://www.mbandt.com/ or: The FTC has free materials about dealing with debt and other money management issues at ftc.gov/moneymatters.
The IRS has information on the collection process and payment options at irs.gov.

Courtesy of the FTC's Consumer Alerts

Thursday, October 7, 2010

HOW TO DECIDE WHETHER TO BUY OR RENT

It may be a “buyer’s market” in southeast Michigan but current fluctuations in the economy and the housing market can complicate the decision whether to buy a home or rent. How do you know what’s right for you? We recommend that potential buyers ask themselves several key questions before making this important decision.

1. What will monthly costs be, and can I afford the payments? Keeping mortgage payments under 30 percent of your gross monthly income is a good rule of thumb. If you can’t keep mortgage payments to less than that percentage, you may be better off renting for awhile.

2. What other debt do I have? Total rent or mortgage payments plus credit obligations should not exceed 35 to 40 percent of gross monthly income.

3. What is my credit score? Can I qualify for a good interest rate? A high credit score indicates strong creditworthiness, and that qualifies you for better interest rates on your loans – whether they are mortgage loans or credit card loans. Maxing out on your credit lines and paying bills late will lower your credit score. The impact of your credit score on an interest rate can be significant. Lower interest rates also mean lower monthly payments. If your credit score is low, you may want to delay buying a home until you can improve your score.

4. How much will taxes, monthly maintenance, or other fees cost? Owning a home means you’ll have to pay real estate taxes and other carrying costs like insurance and maintenance. On the other hand, owning a home brings big tax savings at the end of the year. As a renter, the owner pays those costs for you.

5. How many years will I stay here? Generally, the longer you plan to live someplace, the more sense it makes to buy. You’ll build equity in your house and its value will increase over the years.

Talk with your MBT mortgage banker to determine what might be right for you. Or use some of the many web-based tools available.

Visit our link to learn more: http://www.mbandt.com/MBTWeb/About/Finance+Tips+and+Topics+for+all+Ages/FinancialCalculators.htm