Twila Van Leer

Mortgage Rates Are Down

May 12, 2014 By Twila Van Leer

Anyone who has ever ventured into the world of home buying has learned something about the interest rates that are an integral part of the deal. They yo-yo up and down almost daily. In early May, they hit the lowest level they have been for awhile, at 4.21 percent for a 30-year fixed rate house loan. That was a decline from 4.29 percent the previous week. For a 15-year loan the rate 3.32 percent, a drop from the 3.38 percent of the previous week. The 15-year option is popular for those refinancing existing mortgages.

These rates were the lowest since last November.

The question for most lay folk not privy to the ups and downs of the housing market, the question is: What causes the swings? Why do they rise and fall so consistently and so fast?

Believe it or not, such things as global unrest and a weak U.S. economic recovery from the recent recession are major factors. What happens in Africa and Russia and China sends shock waves into the American economy and affects transactions at the most basic levels. The old saying that it’s a small world is especially true when it comes to the fluctuations in the American housing market.

Negative economic effects in other places on the globe contribute to the ongoing bid for Treasury debt, which drives yields down, with a subsequent dip in mortgage rates as well, financial gurus say. That’s good news for those in the market for a home. The practical effect is a lower house payment. For instance, on a $200,000 home with a 30-year fixed rate mortgage, the monthly payment would be $979 a month at rate of 4.21 percent. At the norm of 6 percent, the home buyer could expect to shell out about $1,200 per month. Though the fractional increases or decreases in the interest rate seem negligible, they make a big difference when you’re making a long-term loan.

There are, of course, other factors at play. Stricter lending standards have to some extent limited the impact of the lower interest rates, according to data compiled by the National Association of Realtors. A high credit score can even the effect. But for those with lower scores, credit is still very tight, the association reports. Many of those who would like to jump into the housing market can’t find financing, despite the attraction of a lower interest rate.

The best solution for those whose credit is marginal is to work on improving the credit score to make themselves more appealing to those who made loan decisions.

Identity Fraud Victim List Going Up and Up

May 9, 2014 By Twila Van Leer

Identity fraud can be devastating. Don't let this happen to you. — Identity fraud can be devastating. Don’t let this happen to you.

In case you want to be scared before Halloween, just take a look at the latest statistics on identity fraud. That’s the unauthorized use of your personal information by someone who wants financial gain at your expense. According to the Javelin Strategy and Research organization, there’s a new victim every two seconds. The 2013 data included in the update issued in February 2014 include these disquieting items:

The number of identity fraud victims rose to 13.1 million, an increase of more than 500,000 over the previous year.

A dramatic increase in account takeover was reported.

Data breaches became even more damaging. Information has been stolen from eBay, PayPal, Amazon and other Internet accounts. One in three people who received a data breach notification during the year was added to the growing list of victims.

About the only good news in the 2013 report is that the amount of money taken in identity fraud incidents was down to $18 billion, a $3 billion decrease over the previous year-end well below the high of $48 billion that occurred before counter-measures were begun. That’s small consolation to the millions who have suffered losses.

Fraud can range from simple unauthorized use of another person’s information to make purchases to elaborate schemes of taking control of existing accounts or opening new accounts. Javelin Strategy and Research contacted 5,634 U.S. consumers to compile its data.

The decrease in the total money impact of fraud in 2013 was attributed to education and other steps that are fighting the problem, said Al Pascual, senior analysts of Security, Risk and Fraud for the researchers. In response, criminals appear to be adapting their approach to focus on account takeover, which becomes easier when there are major breaches in huge accounts. There is no room for letting down defenses, he said. “Any complacency will provide fraudsters renewed opportunities.”

Data breaches have become by far the greatest risk factor for identity fraud, allowing criminals more latitude for their ever-more-sophisticated schemes.

Javelin offers these safety tips for consumers, who are advised to work with established institutions to fight the problem:

Keep your personal data private. Use and frequently change passwords and keep personal information locked in a storage device at home, at work and on your mobile device. Don’t mail checks to pay bills unless they are printed on high security paper. Shred documents that contain information. Monitor accounts and use updated security software. Use a trusted and secure Internet connection rather than a public Wi-Fi site when transmitting personal or financial information. Have regular income checks direct-deposited.

Use two-factor authentication when possible. Some institutions offer this added layer of security, beyond username and password. You will then be notified each time someone tries to access your account. You can deal with suspicious incidences in real time.

Resist any requests for your Social Security Number. The great majority of banks and credit card issuers will allow access to your account to someone using your SSN. The numbers can’t be changed so they’re valuable to fraudsters. Ask your financial institution to put a note on your account that you will never provide your SSN when identification is requested. Then if someone attempts to get access to your account with this information he or she will automatically be identified as a fraudster.

Be proactive and enlist others in the effort to stem fraud. Sharing alerts issued by banks can reduce the risks for more people. An array of services are offered to consumers who want extra protection, including payment transaction alerts, credit monitoring, credit report fraud alerts, credit freezes and database scanning.

Take any perceived data breach seriously. If your financial institution or retailer provides free monitoring after a breach, take advantage of the offer, closely monitor your accounts and ask that a fraud alert be attached to your credit report.

Report problems immediately, even if your only suspect fraud. Contact your financial institution to see what resolution services they offer, including loss protections and methods to secure your accounts. Quick action can reduce the likelihood of losses and help law enforcement agencies to pursue fraudsters.

Do everything you can to avoid becoming an addition to the fraud statistics for the next reporting period.

When Rent Payments Are Too High

May 8, 2014 By Twila Van Leer

Rent. When Is It Too High?

Are rent payments more than 50% of your income?

Depending on where you live in this country, you could be putting up to two-thirds of your income into rent. That’s twice the percentage usually advised by the financial gurus. But, what are you going to do?

One in three Americans is now shelling out the standard one third of income for rent, but for many, for instance those in the Bronx borough of New York City, it is more typical to see 66 percent of the household’s income disappear into the hands of landlords. That’s the worst it gets, according to RealtyTrac. To add to the woes of the Bronx dwellers, the overall median income is under $35,000, with the average rent at $1,800 per month.

The dilemma is spreading to other some cities, the realty oversight company says, with growing numbers of pockets of low-income renters. In Philadelphia, Brooklyn, Baltimore and Miami many must part with 50 percent of their income monthly to keep a roof over their heads.

The fallout from the recent recession is contributing to the problem. The crisis in foreclosures turned millions of former homeowners into renters. And the continuing uncertain economy has discouraged many renters from becoming homeowners, according to Harvard’s Joint Center for Housing Studies. Increased demand has seen rents climb by 21 percent since the housing market peaked in 2006.

At the same time, real income – after inflation – has dipped by 14 percent, creating a double whammy for the renters. The Harvard center found that about one in four renters overall is paying more than 50 percent for housing. The result is inevitably that there is less to spend on food, healthcare and retirement.

The rent reality becomes a factor when a person considers a job change that has, initially, less pay but offers more opportunity in the future. The immediate demands may trump the potential. Additional education also may be sacrificed even if, in the long run, it would improve an individual’s future prospects. Saving for a new home becomes difficult, if not impossible. Bottom line: Reasonable rents contribute to the overall financial health of the country.

Women Today Earn Nearly Three Times What Their Mothers Did

May 5, 2014 By Twila Van Leer

"More women are in the labor force now than a generation ago, and they are working longer hours and earning more money than mothers did." — “More women are in the labor force now than a generation ago, and they are working longer hours and earning more money than mothers did.”

Today’s working woman probably makes three times what her mother did. But they don’t earn on par with their dads, or their brothers. So the male component retains the more frequent breadwinner status, with the female members of the families supplying supplemental income.

A study by the Pew Economic Mobility Project compared what women who were about age 40 earned in the late 1960s and early 1970s earned, in comparison with their daughters in the same age group in the 2000s.

“Increases in hours worked and wages translate into higher annual
earnings: Women today earn nearly three times what mothers did.”

The research showed that a higher percentage of women work today and they work longer hours at higher wages. Four times more women work outside the home now than did in the earlier time frame. Men’s jobs suffered more in the Great Recession, making women’s income more important to the family’s well-being.

All wages are adjusted to 2009 dollars. Daughters’ and sons’ characteristics are measured from 2001 to 2009 and mothers’ and fathers’ from 1968 to 1972.

At every income level, today’s women outstripped their mother’s earnings by at least 50 percent, the project learned. The wage differential between fathers and sons was lower, but the sons emerged as the group that leads in earnings.

Daughters have made big advances, but in comparison with their dads, are still at the bottom of the earnings ladder. Their per-hour income is less than Dad’s was thirty years ago, the study showed. Women leaving the workforce temporarily or permanently to be mothers accounts for some of the difference.

The Pew researchers, however, look ahead to trends that show the wage differences will continue to shrink. Women are graduating from college at higher rates now than men. The wages of the youngest women in the sampling are more on a parity with their male peers, assuring that their financial contributions to their families in the future will be even more important.

Your Zip Code Tells All

May 3, 2014 By Twila Van Leer

Zip Codes can determine retirement communities and then market hearing aids to residents.

Zip codes do more than tell the postman where to deliver your mail.

Data companies and retailers use the zip to accumulate an amazing amount of personal data you thought only you and your hairdresser knew for sure. Such as your body type, your marital status, your health habits, educational level, how many children you have (including if you are expecting) and their age groups, if your home is for sale, your political preferences, if you are getting divorced, etc., etc., etc.

Acxiom, one of the country’s biggest data brokerages, for instance, reports that it has information generated by zip codes on 190 million Americans. The company’s largest competitors, Datalogix and CoreLogic, have similar databases.

These companies can tell, by combining the swipe of your credit card and your zip code, whether you are the Jane Doe who lives in Denver, or the Jane Doe who resides in Cascade, Montana. They can use the information to predict what you are likely to buy next. It’s called predictive analysis or predictive modeling. For instance, if you’re buying maternity clothes, the merchant knows that baby supplies are next. He can start bombarding you with specifically directed ads.

Those who use the data say it’s good business. It helps the merchant to target advertising to certain customers, saving advertising money and giving better service to those who buy. On the other side of the scales are those who argue that the trade-off in indiscriminate use of personal information is unacceptable.

Once the information gets into their databases, the users may swap among themselves so that you go from the merchant to the insurance salesman to the financial institutions, hotel chains, auto manufacturers and even Facebook. “Some of these data brokers know us better than we know ourselves,” said Pam Dixon, executive director of World Privacy Forum.

What makes it easier for retailers is of major concern to folks such as Dixon whose primary objective is to protect your privacy. They are concerned not only that your personal information is up for grabs, but at the prospect of what could happen if it gets into the wrong hands.

A growing number of merchants, including the grocery store and even the gas station, are asking for the customer’s zip code. You probably don’t have to give it. In Massachusetts, the Supreme Court ruled that zip codes are personal information that purchasers don’t have to share. California has a similar law. It’s possible to ask that the data brokers not share your information, but few people know that or act on the knowledge.

The Federal Trade Commission has become involved and is asking the nine major data brokers to explain how they collect, store and share the information they gather. Most of the companies report that they don’t reveal information such as Social Security or drivers license numbers. But the oversight agency wonders what would happen if the databases were hacked, opening a huge can of identity theft concerns.

With technology finding new and interesting ways to learn everything there is to know about everyone in every context, striking a balance between information and privacy is likely to get more attention.