Deal for mortgage raises questions

Herbert A. Freeman said when he bought his double-wide manufactured home in 2001, the seller asked a favor.

For $5,000, the seller — Dennis D. Williams — wanted to use Freeman’s name and credit to also buy himself a home.

Freeman, a school custodian, agreed. He signed a $420,750 mortgage in his own name for Williams’ house.

The transaction is one of dozens of questionable deals tied to the troubled neighborhood of Windy Pines South.

At the time, Williams was president of Fintech Homes, a company that sold land-home packages in the subdivision south of Hope Mills. Freeman came to Williams about buying one of the double-wides.

Williams wanted to purchase a luxury home in the Buckhead neighborhood, off Raeford Road, Freeman said. He offered Freeman the $5,000 if he would buy it for him, with an agreement that Williams would make all the payments and pay the taxes, Freeman said.

Deeds show the transaction took place October 2001. Freeman obtained the loan to buy the house at 604 Humboldt Place. Freeman’s name is also on the sales deed as the purchaser.

The closing attorney, Andre Barrett, has since been sentenced to prison for unrelated real estate fraud. Barrett did many of the other closings in Windy Pines South, where homeowners found problems with their mortgages and ended up in foreclosure.

A week after the transaction, deeds show, Freeman got his own home in Windy Pines South with a mortgage of $89,200. Barrett closed that deal, too.

Although loan applications are supposed to list a borrower’s financial obligations, Freeman’s application for his own home makes no mention of the $420,750 loan, which would have carried monthly payments of $3,770, according to paperwork. Freeman said he earned no more than $2,800 per month as head custodian at Gray’s Creek Elementary School and with other part-time jobs.

Williams declined to answer questions about the deal.

But real estate records indicate Williams probably had credit problems. Deeds show a bank had begun foreclosure proceedings against Williams and his wife on a $345,000 home in the Kingsford subdivision that they bought in August 1999. Their mortgage — with adjustable interest that started at 12.75 percent and would go up after three years — was the same type of costly loan that sunk many homeowners in Windy Pines South.

The Williamses’ loan also carried a prepayment penalty, which meant the bank could charge fees if they sold the home before the interest rate went up.

Freeman, 54, said he had good credit. The Buckhead mortgage — in Freeman’s name — appeared to have good terms: no adjustable interest, no penalties.

Freeman liked Williams. When Freeman fell behind with his own payments in Windy Pines South — the $600 mortgage kept going up, like everyone else’s in the neighborhood — Williams gave him $6,000 to catch up, Freeman said.

“I went to Dennis, and he gave me the money to get current,” Freeman said. “I’m thinking everything is OK.”

In June 2003, deeds show Freeman extended to Williams an option to buy the Buckhead home. Freeman gave Williams power of attorney to deal with Equibanc Mortgage regarding payments and balances.

In December 2005, a deed shows, Freeman sold the property to Williams for $500,000. Freeman said no money changed hands. The home, with a swimming pool, remains in the Williamses’ name.

Freeman wasn’t so lucky. He fell behind again. The bank eventually foreclosed. He lost his home when the bank auctioned it in August 2004.

He was devastated.

“To me, it was the most embarrassing thing I ever had to do,” Freeman said. “I stayed over there a while and I got to know the people and stuff, and then when my foreclosure came, I had to move out.”

More than two years later, he’s still paying off bankruptcy debts. He rents an apartment near Bonnie Doone, off Bragg Boulevard.

“It was a waste of my time, and a dream of a home went down the tubes,” Freeman said.
Staff writer Matt Leclercq can be reached at leclercq@fayobserver.com or 486-3551.

Small Cap and Big Cap Investing

To be honest, it doesn't matter what type of pillory we put in. Park stock with small capitalization (defined as having market capitalization of $ 500 Million or less) and large capitalization (market capitalization of $ 5 Billion or more) can give you oversize tax returns provided that you bought it under just value. But if you were only given one choice, which one would you prefer?

Small cap common stock historically returned a higher rate of tax return than its large cap counterpart. All household name calling that you are familiar with were a small cap stock. Microsoft, Dell, IBM, Samuel Samuel Johnson & Johnson were all small companies. When a company is small, a few billions of further sales may lend to explosive growing in earning. Therefore, the reward of investment in small cap stock is high. How about the risk? The hazard is plenty. 90% of all new business will neglect during the first five old age of operation. The statistic for the number of small cap populace companies that neglect are not widely available. But, my conjecture is it may affect about one-half of the publicly traded companies.

Big cap stock is a bigger and steadier companies. For some, bringing in one billion dollar of sales may not travel the net income meter. Therefore, earning growing have slowed and the possible tax return is lower than small cap investing. The hazard in investment in large cap pillory however is low. Sure, some companies neglect from clip to time. Polaroid, Enron and Worldcom came to mind. But for most occasion, large cap pillory can turn the ship around when they are in trouble. The phrase 'they are too large to fail' come ups to mind. IBM, Altria, Bestbuy, General Electric, Walmart, Chevron have got its ups and downs. All of them recover. Some of them were acquired later on. Therefore, the hazard of failing is lower with these companies. Perhaps, it is as low as 10 - 20 %.

Now, it is your determination time. Which one make you prefer? I am more than comfy in investment in large cap stock. I still had plenty of investment clip but large cap stock assists me kip better. It matters more than to me than higher potentiality return. The best solution of course of study is to blend your portfolio with both large cap and small cap common stocks. However, make not over diversify to the point where your tax return will be poor no matter what your stock terms do.

Your Prey for 2006

As 2005 come ups to an end, investors celebrate the approaching new twelvemonth and convey new outlook with it. As investors, we seek to sell our losing investing before the twelvemonth stops and sell our winning investings after the new year. This is to have the benefit of early tax tax deduction and deferring our tax liability. Either way, after merchandising your investment, you have got some trim cash to invest. Therefore, you would need some thought on where to put your money.

Scouring the 52 hebdomad low is normally a good topographic point to start. Tax loss merchandising have made many pillory to do the list. This is great for us, small investor. Barring any cardinal news, cheap pillory that get cheaper volition be a good investing candidate. Turnaround investors look for pillory that are touching 52 hebdomad low and starts researching them. Many of them bounces, providing investors with outstanding return. Examples for this twelvemonth include: ATI Technologies Inc. (ATYT, up 39% from the low), Seagate Technology (STX, up 29% from the low), Omnivision Technologies (OVTI, up 68.8% from the low) and even Maxtor Corp. (MXO, up 45% from the low before being acquired). Maxtor is now trading 120% above its 52 hebdomad low.

While pillory touching new 52 hebdomad low, make not always bounce, this is a good topographic point to begin your research. Therefore, your quarry for 2006 should at least include companies that have recently touched 52 hebdomad low. These are respective ideas to get you started for 2006.

Pier One Imports Inc. (PIR). The retail supplies specializing on piece of furniture and other cosmetic accessories, are experiencing client desertion this year. Same shop sales have been declining and there is small indicant that it will change. Robert Penn Warren Buffett used to have a piece of this company. He have since cut back on his interest late this year. It have recently fallen to $ 8.90 per share from the 52 hebdomad high of $ 19.98, a 55 % hair cut.

Shanda Interactive Entertainment (SNDA). For overseas exposure, especially China, Shanda should be on your ticker list. It supplies online gambling to the Chinese community, especially Massively Multiplayer Online Function Playing Games (MMORPG). Don't allow the word scare you. It is basically an online gambling portal where it allows gamers fight/play with other gamers. A good manner to further customer's loyalty is through the interaction with other individuals. Online Gambling supplies Shanda with that opportunity. It have fallen to $ 15.00 from its 52 hebdomad high of $ 45.40, a 67% hair cut. The appealing thing about Shanda is its strong balance sheet (more cash than long-term debt) and the possible growing of its market. Furthermore, the company is profitable. Those cash heap will go on to turn if that happens.

Navistar International Corp. (NAV). This company do and administers commercial motortrucks and busses. Competitors include Paccar, Volvo and the like. It is sporting a forward P/E of 6 and nice balance sheet. If it can keep a 0% growing in profits, the stock terms won't merchandise at $ 28.80 for very long.

Verizon Communications Inc. (VZ). The largest babe bells of all are having a nice twelvemonth on the net income line. However, concerns about competitions and high debt load, have reduced its stock terms for twelvemonth 2005. It is currently trading at $ 30.27 per share with dividend output of 5.30%. Currently, dividend is about one-half of its annual profit, which is considered safe. If Verizon can reiterate its net income performance, the dividend for 2006 will be safe. However, it currently have a high debt loading of $ 34.3 Billion. The company have tried to reduce its debt using its cash flow from operations. On December 31st 2002, long term debt stood at $ 44.8 Billion. Therefore, balance sheet have actually improved while stock terms travels nowhere.

Fresh Del Monte Produce Inc. (FDP). The shapers and distributers of fresh fruit green goods is not having a good year. Pricing weakness, combined with the higher than expected cost, have decimated its stock price. Recently, management have reportedly engage JP Morgan to run an auction bridge for the company. It can be sold to as high as $ 1.8 Billion according to TheDeal.com. This translates into $ 30.70 per share. FDP recently merchandise at $ 23.64 per share. If the deal travels through adjacent year, you have got the possible of a 29.9% return. However, the fact that management is exploring the buyout, bespeaks that business aren't so good at this company. If the deal doesn't travel through, stock terms may see additional depreciation.

Mutual Fund Versus Stocks

If you have money to invest, you might contemplate investing in mutual fund. What is mutual fund? Mutual fund is simply a collection of stocks that are bought using money pooled from various individual investors. Historically, average mutual fund returns 2% less annually than a stock market index.

While the return is less than stellar, there are several advantages of investing in mutual fund. They provide diversification, economies of scale and liquidity. So, the question you want to ask yourself is whether you want to have a smaller return for the advantages mentioned previously.

While two percent difference looks small, it is not pocket change. Investors who set aside $ 1 a day, would have $ 562,000 of savings in fifty years if he invests in stock index fund growing at 10.5% per annum. The same investors would collect 'only' $ 271,000 if he invests in average mutual fund that grow at 8.5% per annum.

There are also disadvantages investing in mutual funds. There is a problem on how to choose the 'right' mutual fund. If average mutual fund returns 8.5% annually, the below-average fund will give you less than that. Just like picking a stock, you would find some stocks that outperform the average and other stocks that do not perform well.

The next question would be if we investors can do better than stock market index fund of 10.5%? A lot of people believe they can. But, the path ahead is full of obstacles. First, you need to get educated about stocks in general and how to calculate the fair value of a common stock. Next, you need to open a brokerage account to execute your buy and sell order. Finally, you need to keep abreast of new developments. Business comes and goes. Industry rises and falls. Examples of industry that used to dominate are: typewriters, cassette players, sewing machine and traditional camera. If you don't read often, you may predict that certain stock has a high fair value even when the entire industry is collapsing.

It all comes down to individual investors. Would they want to learn more and get a few more percentage return each year? Or would they let someone else manage their money? Me, I prefer to learn how to manage my own investment. Sure, it is time consuming. But giving a little bit of your time may give you the potential to double your retirement money in fifty years. The potential is rewarding and someday you might even manage someone else's money.

Book Value Of A Company

Book Value of A Company is defined as the sum of money of money of all assets subtracted by the sum of all liabilities/obligations. In other words, this is what shareholders will get if the company is to discontinue trading operations immediately. The reality, however, is different from that. Book Value makes not always reflect what shareholders will get in the event of liquidation. For example, stock list is stated at full cost (100% value). But, who would desire to purchase a clump of Pentium four bits if the company is not going to be tomorrow?

Therefore, we cannot trust on book value to happen the value of a company during liquidation. The remainder of the article will assist you conservatively foretell the just value of all the assets when the company Michigan its operations.

Cash & Cash Equivalents: This is the amount of money held in the company's checking and economy accounts. Cash is cash. The just value of this is 100% of the declared balance sheet value.

Short Term Investments: Short term investings is the money invested by the company for a continuance of less than one year. Examples include: stocks, chemical bonds or certification of deposit. Short Term investings can be sold at 100 % of the declared balance sheet value.

Net Receivables: Receivables is the money owed by the company's customers. Some of them may pay it back, some of them won't. Net Receivables normally can be sold at 50% of the declared balance sheet value.

Inventory: Inventory is the supply of commodity that a company is going to sell to its customers. Depending on the industry, stock list normally can be sold at 50 % of the declared balance sheet value.

Long Term Investments: The definition for long term investing varies. But, it is commonly referred to as investings with long term of one twelvemonth or more. This includes an 18 calendar month certification of deposit, investing in property and so forth. The settlement value of long term investings is 100 % of the declared balance sheet value.

Property Plant And Equipment: This includes machinery, mill equipment, company vehicles and others. Basically, it is equipment that assists the company functions. In liquidation, property works and equipment normally gets only around 25 % of the declared balance sheet value.

Goodwill: This is the value obtained when a company acquire other companies above the nett plus value. Good Will is abstract, meaning that it makes not have got a physical form. Good Will have a 0 % value during liquidation.

Intangible Assets: This is an plus from patent of invention protection, trade name name or other copyrights. Intangible assets have no physical visual aspect and its value depends on the cash flow generated by those assets. During liquidation, however, intangible assets should be valued at 0 % balance sheet value.

Liabilities: All liabilities need to be paid in full. Therefore, liabilities need to be paid 100 % of the declared balance sheet value.

Minimize Your Risk First

Different investors have different investing styles. Some are aggressive some are not. But to me, the most important thing to do in investing is to minimize your risk. Why is it important? Simple. Because, we as a human, hate losing. Research has shown that investors tend to hold losing positions for too long and sell winning investments far too soon. The general consesus is that you have not lost when you do not sell your losing investments.

Aside from that, taking care of risk first is critical to your investment success. This is because it takes you to gain larger percentage in order to cover your loss. Look at the list below for clarification.

% loss: 25%, % gain to break even: 33%
% loss: 33%, % gain to break even: 50%
% loss: 50%, % gain to break even: 100%
% loss: 75%, % gain to break even: 400%
% loss: 90%, % gain to break even: 900%

Let's use the following example; If stock A fell 50% from $ 100 to $ 50, A needs to rise 100% from $50 in order for investors to break even. If you go down the list, the climb gets harder. If you invested in stocks that lose 90% of its value, it needs to climb 900% for you to break even. Wow. This demonstrates the importance of controlling your risk.

Here are a few checklists to help you to reduce risk in stock investing:

Positive Net Cash. Companies having positive net cash has less chance of bankruptcy and hence, your risk of incurring large percentage of losses. In bad time, the company can use the extra cash to defend its position rather than selling off its valuable asset to cover debt payment.

Dividends. Companies giving out dividend is a sign of strength. Without strong cash flow generation, companies cannot pay generous dividend to its shareholders. Furthermore, companies giving out dividend has less room to fall since value investors will quickly snap it up if share price goes down too deep.

Modest Price Earning Ratio. Companies trading at modest P/E ratio implies modest expectation. Stock price will be less volatile to 'beating the expectation' game. This protects you from volatile price swings. As a result, you reduce your risk of losing out huge amount of your investment.

Investing Idea

Besides educating yourself, the best manner to happen undervalued investment is to have got tons of investing idea. Having investing thought allows you to compare investment options and pick the best one.

People sometimes lamentation that they seldom happen pillory that fill the criteria as undervalued. How can you happen a 0% growing stock at a P/E of 13.4? A batch of companies are trading at a P/E of 20 or more. How can you happen companies that have got positive network cash? Tons of companies have got got more than debt than they have cash.

All of the above is true. Most companies make not merchandise at undervalued territories. A batch of them also incur a batch of debt and their balance have a negative network cash balance. And that is why you will be rewarded when you can happen undervalued stocks. Think about it. If a 0 % growing stock is traded at a P/E of 10 and its just P/E value is 13.4. This is a 34% potentiality return.

To get that screen of possible return, investors need to sort out good companies from the bad and be more than selective in purchasing a stock. This is where investment thought come ups into place. When you have plenty of investment idea, you can be more than selective in purchasing the common stock. So, where can you happen investment idea?

One good investing thought beginning is pillory that autumn near its 52 hebdomad low. Businessweek screener looks to supply a nice neatly arranged results. For links, you can see our commentary subdivision and read this article. Another good beginning for investment thought is by reading financial intelligence from assorted publications such as as The Assortment Fool, CNN, thestreet.com and smartmoney. Pillory that autumn hard are sometimes mentioned here.

Finally, a good beginning of investment thought is by regularly visiting our commentary subdivision at: http://www.noviceinvesting.com. You may not hold with our averment but at the very least it will open up your head about other possibilities and industries. The best thing of all is that it is free ! You can access utile commentary from assorted beginnings with zero cost. What else can you inquire for?

The Power of Stock Buybacks

Company with excess cash flow has two options to return the money to shareholders. One is to give out dividends. The other one is to initiate a stock buyback program.

Stock buyback is a program where a company use its cash to buy back its own stock at an open market. The purpose is to reduce the amount of shares outstanding and thus causing the remaining shares to be more valuable. Company initiating a stock buyback program will be able to grow revenue more rapidly and afford to pay bigger dividends. Let's use an example to illustrate. Ready? Please write it down on a piece of paper if you must.

Company A is trading at $ 20 per share with 100 Million of shares outstanding. It earns $ 2 per share at recent years and it is giving out $ 1 per share of dividends. If you do the math, this translates into $ 200 Million of annual profit and $ 100 Million of dividend payments. Now, let's assume that company A is distributing all its profit to shareholders. With $ 100 Million used for dividend payment, management decide to use the rest of $ 100 Million to buy back its own shares. Meanwhile, the company manages to grow its profit by 5% in the following year to $ 210 Million. What is the effect of the buyback? The following table will illustrate. (The table can be viewed at http://www.noviceinvesting.com/Research71.php)

Looking at the result, stock buyback obviously increases the growth in earning per share. In an actual basis, earning grew from $ 200 Million to $ 210 Million, or a 5 % growth rate. Earning Per Share (EPS) however, grew at a much faster rate. It grew from $ 2.00 to $ 2.21 representing a 10.5 % growth rate. Meanwhile, dividend payment shrank due to the shrinking number of shares outstanding. The company still gives $ 1 per share dividend but it costs them $ 5 Million less now.

Do it over a longer time frame and the EPS increase will be much larger, assuming that the stock price remains stagnant at $ 20 per share.

There is several lessons that we can learn from stock buyback. One is that investors won't have to worry if the stock price remains stagnant. The company can keep buying back its shares, reduce its share count and increase Earning Per Share even faster.

The second lesson is that stock buy back will reduce the cost of distributing dividends. As less shares are available, the company can afford to increase its dividend per share even when the total dividend distributed remains constant.

The third lesson is that the cheaper a stock price is, the larger amount of shares the company can buy back. This is positive for shareholders! If the company buy more shares at a low price, the effect of EPS increase will be higher with the same amount of dollars. Thus, investors often applaud companies that initiate stock buy back when their stock price is depressed.

What kind of companies can afford to buy back its own stock while initiating dividend? These are mainly companies that require less capitals to fund its ongoing business and they should be profitable. In other words, they have excess cash. Buying companies with positive net cash also helps. Management may decide to buy back its own stock when they cannot find better use of its cash.

Buying Company That is Down

I trust you cognize how to distinguish a company that is out and a company that is down. We have got discussed these in the past and you are welcomed to check it out at our commentary section. Today, though, we are going to speak more than about grounds to purchase company that is down.

Why should we as investors purchase companies that are down? Why don't we purchase company that is out or company that is doing fine? Here are respective grounds why:

Cheap. Company that is down usually sells at a discount. A company denotes bad intelligence and then the share terms will drop as a result. If the company is solid and your long term image have not improved, then the company that is down can be bought at a cheaper terms than other similar companies.

Dividend. Company that is down normally have a long history of profitability. If the company is not in danger of going out of business, then it can go on paying its dividend to shareholders. Buying company that is down will give you higher dividend output owed to the driblet in the share price. On the contrary, company that is out cannot afford to pay off dividend to shareholders.

Take Over Potentials. Companies would love to make a scoop up other companies at a low valuation. Company that is down normally have got depressed share terms while its core business stays intact. This is appealing to possible competitors. A batch of large investors and companies purchase company on the cheap. For example, Carl Icahn the celebrity investor, bought Time Charles Dudley Warner Inc. (TWX) cheap and he is trying to unlock values for the company.

High Potential Return. This is one ground investors should put in companies that are down. The down share terms will have got a opportunity to retrieve once its short-term problem is sorted out. Company that is down normally have got a low P/E ratio, many in the single digits.

It is important to cognize whether a company is down or out. There are a batch of companies selling at single figure P/E ratio, giving dividends and yet their endurance is in question. These are companies that is out and not down. While, it might be hard to identify, I can give you respective illustrations of companies that are down: pharmaceutical companies, banking industry and companies selling hard drives. The demand for their business stays integral despite the short term downswing in the industry. However, each company within an industry is different as well. Please usage the guidelines mentioned on the past article to distinguish company that is down and out.

Why Invest In Stocks?

Have you ever wondered why investors behave the way they do? For example, why do people invest in bonds or stocks or not at all? Since I am an advocate of stock investing, let me make the case for stock investing.

So, why invest in stocks? No, I won't just invest in any kind of stocks. There are goals associated with investing in stocks. For starter, stock investors would want to be compensated more than if they put their money in the bank. Anything else? Yes. Stock investors would want to be compensated more than the risk free interest rate which currently yield around 4.7%. For your information, risk free interest rate here is the 10 year Treasury bond which is backed by the United States Government. These bonds are deemed to be free from the risk of default.

Therefore, when we invest in stocks, we would want a return in excess of 4.7%. How much more? That varies within individuals. Some wants a 5% return. Others are satisfied with 6% return. Personally, I would want at least 7% return for my stock investment. There are reasons for this. Stock investing is relatively volatile and full of uncertainty. Interest rate goes up and down which will hamper our return as stock investors. For example if interest rate rises to 8%, would aiming a 7% return for your stock investment worth the risk? Probably not. In this case, most people prefer to put their money in the bank and enjoy the higher return.

Having said that, we need to know how much stocks have given investors historically. For the US stock market, the return for the last century has been in the neighborhood of 10%. That, my friend, is the sole reason to invest in stocks. Not because you want to own a piece of corporate America. You invest in stocks because historically it gives you a better return that other investing alternatives. No other investments boast that high of a return over the last century, not even real estate.

Risk Versus Reward

In all investment situations, we will be confronted with both hazard and reward. I cannot believe of any investings that offer no hazard with large reward. The most common investing chance I have got seen is low hazard - low reward, low risk- high reward, large hazard - large reward, large hazard - low reward.

Big hazard - low reward chances are everywhere. Buying a stock at any terms will represent a large hazard - low reward investing opportunities. The odd is even worse than gaming where the house have a 55-60% opportunity of winning.

You might be wondering how you can quantify risk. Reward is easier to quantify. If you purchase stock A at Ten terms and it have risen to Y, then your reward is the difference between your merchandising terms and purchase price. Some hazard can be quantify while others aren't.

Let's usage an illustration for elucidation purpose. What is the hazard of purchasing Merck Carbon Dioxide & Inc. (MRK)? The hazard is well publicized. Investors' hazard would be the possible Rofecoxib liability that stems from lawsuits. How much makes MRK have to pay? Cipher cognizes for sure. We can only estimate. Some states $ 5 Billion. Another states $ 50 Billion. This is uncertainness and this is risk. You can reduce this hazard by reading more and then do a conservative estimation regarding this issue.

Are there other hazards associated with Merck? Sure. Patent termination is one. Its best merchandising drug, Zocor, is slated to lose patent of invention protection in 2006. Cipher cognizes what other drugs can replace Zocor's revenue. Competition is also one word form of risk. Competitors can always outsmart a company and do a merchandise obsolete. These are all uncertainties. These are risks. Since the hereafter is always uncertain, the hazard is always there. What we can make as investors is merely to reduce the hazard by making better estimate and knowing as much as you can.

Bankruptcy Reform: Designed to Protect Big Business

Who will profit from the new bankruptcy reform laws? The financial services industry and other large business groups, that's who.

These groupings contributed billions of dollars to elect Shrub and other Republican
campaigners in 2000 and 2004, with the end of overhauling the bankruptcy system. They and other large business groupings have got continued to pass millions, rage
statements and anteroom persistently for bankruptcy reform. In March 2005, with the
House and Senate loaded top heavy with Republicans, they succeeded.

The financial services industry includes the banks, credit unions, the American Bank
Association, credit card companies and retailers.

Big business groupings pressuring for statute law include auto shapers such as as the John Ford
Motor Company, General Motors, and DaimlerChrysler. These groupings were willing to
pay billions of dollars and pass many old age lobbying for bankruptcy reform. The
car makers, unhappy with the manner auto loans are handled when an individual data files
for bankruptcy, pushed for reform.

Others who lobbied heavily for reform were car dealers, record labels, and gambling
interests such as as as casinos, many of whom stand for large corps and premier
lenders, such as MBNA Corporation and American Express Company, who
contributed billions not only to stack the political likelihood in favour of the bankruptcy
reform bill, but to elect campaigners sympathetic to their goals. MBNA Corp. and
American Express Co. are among the top donees of the bankruptcy reform.

Bankruptcy reform protagonists reason that debtors seeking relief through bankruptcy
are either purposely gambling the nation's bankruptcy system or they are
irresponsible Spenders who should pay at least a part of their measures if they are
able to. In fact, about one-half of the claims filed for bankruptcy are attributed to
medical costs.

Bankruptcy reform will necessitate most filers to have credit counseling and lessons
on how to better their financial management skills. Bankruptcy reform states that
filers pay for the counseling themselves.

Included in the new measure is a proviso requiring that credit card charge statements
include an illustration of the clip it would take to pay off the balance at a peculiar
rate of interest. Charge statements are also required to provide a toll free number for
the consumer to name and inquire about the length of clip it would take to pay off
the balance if they are only making the minimum monthly payments.

Dangerous Debt Consolidation Loans

On the surface, debt consolidation loans offer cash-strapped consumers some relief from high interest rates. Looking deeper, consumers should be wary of both the pros and cons of this fast growing practice. In their simplest forms, debt consolidation loans are refinance agreements, second mortgages, or home equity loans.

All three loan options allow homeowners to cash out part of the equity in their homes in order to pay off other debts. For borrowers who have watched their homes appreciate in value, a debt consolidation loan can eliminate the burden of multiple monthly payments without significantly affecting the amount of their monthly mortgage payment. On a mathematical level, debt consolidation loans can make much sense. A home owner who struggles to make the monthly minimum payments on her 21% interest rate credit cards can roll those balances into her 7% mortgage. The debt doesn't go away, but the rate goes down by two thirds. In many cases, she would only continue to pay about the same amount per month for her mortgage, freeing up her cash flow for other uses. As a side benefit, borrowers can deduct a portion of their mortgage interest payments from their income taxes each year. Though not a huge savings, many taxpayers love the opportunity to look forward to a larger tax return.

The danger lies in the borrower's loss of security on two levels. First, if a home should suddenly depreciate, a debt consolidation loan customer could quickly find himself or herself "upside down" on the loan, owing more than what the house is worth. As long as that borrower continues to make payments, they'll survive. But, they will be unable to sell their home without absorbing a loss.

For families who need to move in order to accept job transfers or pursue educational opportunities, this can be a devastating blow. Second, although the lending bank handles paying off the customer's outstanding debt, the customer must personally close their old credit accounts. For many customers, the temptation to keep those accounts open is far too great, and they find themselves deeper and deeper in debt. In effect, the debt consolidation improved their cash flow, but reversed their financial course.

Without immediate intervention, these customers often find themselves on the road to bankruptcy. When investigating debt consolidation loans, consider your long-range plans. If you intend to stay in your current home for a long time and can handle the potential risk of depreciation, and if you can exert the willpower to close out your paid off charge accounts, then a debt consolidation loan may be a reasonable option for you.

Preventing Foreclosure

A stitch in clip salvages nine. If you acted in time, Foreclosure Prevention is quite in your reach. But the action that you take needs to be a meticulously crafted one with such as a formula that is based on basics of sound economics. I am certain it must have got crossed your head that so much of planning is not for you. It is only natural for you to state this given the fact you are already under tremendous emphasis facing foreclosure. But come up to believe of it. No financial planning was ever easy in this world. And neither is planning to forestall foreclosure nor was owning that home.

Is it really Possible to Prevent Foreclosure?

Well, the reply to this prevarications in many factors and many of them bear on you after all it is your home you dreamt of. Your financial problems have got not started over night. You knew before manus that foreclosure was imminent. It is this clip you need to handle as an chance if you desire to get out of this slap. Here are a few stairway you can take to assist your self.

Keep cool. Panicking only makes more than harm. Bash not resign your home as long as there is no mark of an constructive eviction order. This tin strip you of some makings like one clip payment grant from Federal Housing Administration insurance. Visit your lender and talking to the officer that deals with your case. There is a just opportunity of him seeing a point in your petition if you have got a program of action to recovery. Lenders are not in the business because they foreclosed many a home in the past. They might hold to give you a chance.

You need to work out many options simultaneously. If you are certain your place retrieves in a twelvemonth or two you can seek a refinance and a existent estate broker might just assist you with this. You can work out a remodeling of the debt, you can make this with your lender’s help. Both of you together can calculate out a new practical budget with reduced monthly payment. Looking at your current financial position, the lender may even allow a saving grace time period estimated on your blunt admittance and assurance level. You no longer need to pay during this time period when you are attempting to turn around. They name it patience in their parlance. This is allowed at lender’s discretion based on your mortgage delinquency being not more than than 12 months.

United States Department of Housing and Urban Development can pay the lenders if they register for partial claims. You will be required to subscribe an interest free promissory short letter in order to availing this.

If you make not see you making a bend around or no aid is coming your way, you can not maintain your home. You have got to acknowledge that financial aids name for some way to recovery. If such as a solution is far from sight then it is advisable that you sell off your home. Because it can at least forestall you from a foreclosure suit. A existent estate agent from your local country with an faultless record can not just sell it for you but bring a good value to see you will not confront a lack suit.

Ultimately your attorney may counsel you to register for bankruptcy.

Peace of Mind for Home Inspections: Choose the Right Inspector!

As sure as the spring flows at The Fountain of Youth, home inspecting provides a stream of knowledge to wash away the fears of home buyers. But fear may be replaced by frustration if the wrong inspector is chosen! Some pointers on selecting your next home inspector will go a long way toward making the process a happy one.

Be sure to ask how long the inspector has been in the inspection business. Longevity gives comfort that the company will be with you in the future as new needs and issues arise.
How many inspections has the inspector personally performed? This is important! An inspector may have been in business for 5 years but inspected less than a dozen homes. Your home buying decision is far too important to be a practice place for a part-time inspector.
Confirm that your inspector has experience in homes similar to the home you are having inspected. All homes have some systems and features in common, but new home in Eagle Harbor has risks and issues that differ from an historic beauty in St. Augustine. Only someone who has walked the walk and crawled the crawl numerous times in similar homes can sleuth out those important items.
Did the American Society of Home Inspectors (ASHI) certify the inspector? In Florida, the business of home inspection is unregulated. This makes it especially important to verify professional credentials and experiences before making a selection.
Ask when the report will be delivered. Often the buying decision is time critical, you want to be sure you will receive your completed report in time to read, review, and respond. The best companies can deliver the report to you right at the home as the inspection is completed.
Does the completed report include photographs? Often the report will contain descriptions of damage or defect in locations of the home that only the inspector was able to access, like rooftops or crawl spaces. You will want pictures of these areas to make your understanding of the scope and location of the damage clear. It also makes repairs simpler to get estimated when a photograph is available.
Lastly, be sure to attend the home inspection, watch the process, and ask lots of questions - the history of your home will unfold before your very eyes! St. Johns County, as well as the rest of our beautiful area, is rich in homes and heritage, and your home inspector can help you to know the past and enjoy the future in your new home.

Copyright © Florida HomePro, Inc. and Wallace J. Conway. All rights in all media reserved.

The Folly of PEG Ratio

Price Earning Growth (PEG) Ratio is the ratio of a company's P/E with its growing rate. A batch of analysts have got concurred that a stock is fairly valued when its peg ratio equal one. This agency that if a stock have got a P/E of 10 with a growing rate of 10%, then the stock is trading at just value.

How many of you have seen this sort of statement? I have got seen it plenty of modern times and I believe it is silly. This is a relatively simple reasoning. Let's think of it for a second. If a stock will turn its earning for 8%, then to attain just value, the stock have to merchandise at a P/E of 8. How about a stock with growing rate of 5%? Its just value is a P/E Of 5. How about a company with 0% growth? Oh, right. According to this theory, the company should have got a P/E of 0, or worthless. Bashes this brand sense? Heck, no. But there are a batch of articles regarding this peg theory. Here are respective beginnings of commonly misunderstood peg ratio:

http://www.moneychimp.com/glossary/peg_ratio.htm http://www.fool.com/School/TheFoolRatio.htm http://www.investopedia.com/articles/analyst/043002.asp

For a 0% growing company, the just P/E ratio for the company is not 0. Rather, it is a few percentage above risk-free interest rate or a 10 twelvemonth exchequer bond. If a 10 twelvemonth chemical bond is yielding 4.6%, then the just value of a common stock is at 7.6% yield. Inverting this yield, we get a P/E ratio of 13.2.

Anything else is incorrect with using peg ratio to determine the just value of a common stock? peg presumes infinite growing rate in earning per share. No company can turn at the same rate forever. If we presume company A volition turn at 10% rate for the adjacent five old age and then growing slows to 2% indefinitely, what is the just value of the common stock using peg ratio? The reply is it can't make that. peg ratio is manner too simple to single-handedly delegate a just value for a common stock. It is misleading and simply incorrect to utilize peg ratio for our just value calculation.

Common sense orders that a stock with higher growing rate should be valued at a higher P/E ratio. There is nil incorrect with that. But using a simple peg ratio of one as a just value of a common stock is simply wrong. I don't have got an accurate manner to cipher this but an estimate can be read on other articles entitled Calculating Carnival Value with Growth and Carnival Value with Negative Growth.

Having A Goal In Investing

Having a end is critical to your investment career. Goal gives you directions. It will also put your head to attain that goal. So, before putting any money into stocks, the first inquiry you should inquire is what make you desire to accomplish with stock investing?

For most investors, the end is not to be charitable. Charitable have its topographic point and time. They desire to earn tax return on their investment. So, how much money make you desire to have got at retirement age? Let's presume that we all privation to retire by the clip we are 65. How many more than old age before retirement age? Twenty? Twenty five? How much nest egg make you have got right now? All these factors will change your investing strategy.

Let's see respective scenarios. The first scenario is a 40 twelvemonth old investor. He have got nil in his portfolio and his end is to have $ 1 Million by the clip he retires. As of right now, he can put about $ 300 per month. That is a good end but is it achievable? Well, let's see. If he can fit the stock index tax return of 10.5% annually, his nest egg would have got grown to $ 381,787 by the clip he is 65. Obviously, he fall short of his goal. If he can't salvage more than than $ 300 a month, the lone manner he is going to get $ 1 Million is to have got his investing turn by 17% twelvemonth in and twelvemonth out.

For this gentleman, his end is to accomplish 17% tax return on investment. Obviously, investing in index monetary monetary fund will not do because historically, index fund will only give you a tax return of 10.5%. Having this end do him more than focused in his investment career. Instead of thought that he can attain $ 1 Million by investing in index fund, he now have to happen other ways to hike his investment tax return to 17% annually.

The second scenario is a 40 twelvemonth old investor who had amassed $ 100,000 in nest egg that he had accumulated since his workings days. His end is to have got a $ 1 Million by the clip he retires too. He would have got an easier clip than a second gentleman. Our computation shows that he can attain that end without even having to add a penny more to his savings. Furthermore, his investing makes not have got to earn 17% annually. He can still attain his end by investing in index monetary fund which historically have returned 10.5%.

There is nil incorrect with having an investment goal. Goal assists you to focus. While having a end will not automatically hike your investing return, investors with a end will happen a manner to hike their investing return. Finally, investors should put a realistic end too. Expecting a 50 % annual tax tax return on your investment might not be accomplishable if you just begin investing or if your past return had been less than 10%.