The Week: Most Recent Business:Personal Finance

The $26 billion foreclosure fraud settlement: By the numbers

The Week — Thu, 09 Feb 2012 14:00:00 -0600

After months of difficult negotiations, government authorities announced Thursday that they have reached a $26 billion settlement with five of the nation's biggest banks over their flawed and fraudulent foreclosure practices. The deal is intended to help troubled borrowers by lowering their mortgage rates and the amounts they owe on their homes. It also will provide restitution to people hit by mortgage-related abuses, such as the "robo-signing" of documents to speed up foreclosures. Who will the deal help, and how much relief will they get? Here, a brief guide to the settlement, by the numbers...

The 12-year-old who saved his grandmother from foreclosure

The Week — Thu, 09 Feb 2012 11:36:00 -0600

Noah Lamaide is not your average 12-year-old. Since he was 9, the Wisconsin boy has been active in community service, largely inspired by his grandmother, Janice Sparhawk, who has served as a foster parent to hundreds of local children. When foreclosure threatened his grandmother's century-old house recently, the young altruist leapt into action. Here, a short guide to this unusual story:

What exactly happened?
After taking out a 2010 loan to put a new roof on her circa 1900 home, Janice Sparhawk, 72, fell behind on the mortgage payments. Eye surgery and complications from asthma forced Sparhawk...

Short sales: The answer to America's housing crisis?

The Week — Wed, 08 Feb 2012 13:40:00 -0600

Banks are stepping up their efforts to get troubled mortgages off their books by offering delinquent homeowners cash incentives to sell their properties at a loss. Are these "short sales" a smart way to clear out the glut of houses in danger of foreclosure and start a housing industry rebound — or will they just depress prices further? Here's what you should know:

What exactly is a short sale?
A transaction in which a house sells for less than the amount the owner owes the bank. The bank agrees to let the homeowner off the hook, and considers the loan paid in full, even though it's not...

Obama's mortgage plan: Who really benefits?

The Week — Thu, 02 Feb 2012 10:36:00 -0600

President Obama on Wednesday unveiled a new mortgage relief plan for an estimated 3.5 million struggling Americans who owe more on their homes than the properties are worth — and, therefore, can't get new loans at today's low rates. By securing these people federally insured loans at reduced rates, Obama says, the program would save borrowers an average $3,000 a year. A new tax on big banks would cover the program's cost — $5 billion to $10 billion — a strategy Republicans oppose. Could Obama's plan really help Americans who are "underwater" on their mortgages?

Helping underwater...

The stock market's 'melt up': Will the rally end painfully?

The Week — Tue, 24 Jan 2012 13:24:00 -0600

Even as European economies flirt with disaster, the U.S. stock market is proving "surprisingly buoyant." The Dow Jones Industrial Average has risen by 19 percent since October, a "melt up" that some market analysts say defies logic, given that the global economic outlook is rather grim and the American economy has yet to make a clear recovery. Do American investors see bright spots others are missing, or are they walking blindly off a cliff?

A disaster is brewing: The European Central Bank is buying massive amounts of bonds, says Michael Sivy at TIME, to prevent interest rates from rising and crushing...

Verizon's 'greedy' $2 bill-pay fee

The Week — Fri, 30 Dec 2011 15:30:00 -0600

Verizon confirmed Thursday that starting Jan. 15, it will charge its customers a $2 "convenience fee" every time they make a one-time payment to the wireless carrier online or over the phone. (Customers who pay by mail or who sign up for automatic bill payments won't be charged.) Verizon's customers are not pleased, flooding Twitter and other internet forums with virtual howls of outrage over the "greedy $2 fee," and threats to ditch Verizon for a rival wireless carrier. Similar backlashes have damaged Netflix and Bank of America in recent months, forcing BofA to cancel a proposed $5 monthly debit...

Real estate crisis: America underwater

The Week — Fri, 02 Dec 2011 10:50:00 -0600

How many homeowners are underwater?
Nearly 29 percent of U.S. homeowners with mortgages owe more on their homes than their properties are worth — the definition of "underwater." That's about 14.7 million borrowers, and they collectively owe $700 billion. The problem is particularly acute in states where the housing bubble sent prices and new construction soaring in the 2000s: In Nevada, 60 percent of mortgaged homeowners are underwater; in Arizona it's 49 percent, and in Florida, 45 percent. After the housing bubble popped in 2008, home prices plummeted, and are down an average of 33 percent...

Buy a house, get a visa?

The Week — Fri, 21 Oct 2011 13:55:00 -0500

Two senators — Republican Mike Lee and Democrat Charles Schumer — are proposing a novel way to give the housing market a boost. On Thursday, they introduced a bill that would give three-year residence visas — but not work visas — to foreigners who invest at least $500,000 in homes in the U.S., provided they live in one at least six months a year. Is selling visas to anybody with a spare half million in the bank a smart, and fair, way to give the housing market a lift?

We should be aiding Americans, not selling visas: "I like the idea of giving incentives to real estate investors...

Bank of America's $5 debit fee: How bad will the backlash be?

The Week — Fri, 30 Sep 2011 16:35:00 -0500

Bank of America, proclaiming that its bottom line is hurt by new legislation that limits how much money banks can charge retailers for the privilege of letting customers pay with debit cards, announced that it will make up for those losses by charging customers a $5 monthly fee. The fee takes effect in 2012 and affects any customer who makes debit purchases. ATM and credit card transactions will remain free. Predictably, the bank's customers are not happy. Fox Business Network's Gerri Willis even cut up her debit card on air. The company's stock tumbled Friday morning following the news...

Is investing in stocks too frighteningly risky?

The Week — Thu, 29 Sep 2011 14:41:00 -0500

The stock market has been alarmingly volatile lately, rising by hundreds of points one day only to fall sharply the next. The looming debt crisis in Europe is largely to blame — and the fear that Greece and other struggling governments will default on their loan payments has already scared many investors away from stocks and toward the relative safety of U.S. government bonds. Is it time for smart investors get out of stocks altogether?

Yes. Investors need shelter from the coming crash: One way to measure the value of the stock market is to compare it to the size of the economy as a whole...

Why free checking is 'on the endangered list': 3 theories

The Week — Tue, 27 Sep 2011 13:11:00 -0500

"Remember back in the good old days when you could just walk into any old bank and get free checking?" asks Al Olsen at MSNBC. Well, "the times they are a changin'." According to a survey by Bankrate, only 45 percent of non-interest checking accounts are free of charges, down from 65 percent just a year ago and 76 percent in 2009. You can still often get banks to waive the fees by maintaining ever-higher minimum balances or signing up for direct deposit, but once-plentiful free checking accounts are going "on the endangered list." Why? Here, three theories:

1. The government meddles too much...

Global market meltdown: Are stocks going to crash?

The Week — Fri, 23 Sep 2011 12:20:00 -0500

Finance ministers from the world's leading economies are pledging to do whatever it takes to keep banks from failing and financial markets from crashing, but global stocks continued to head down Friday after Thursday's massive plunge. Markets in many foreign nations have already entered bear market territory — defined as a 20 percent drop from their peak. U.S. stocks aren't quite there, but many investors fear the worst is yet to come as worries of another global recession build. Is this a crash in the making, or should smart investors just sit tight?

The "perfect economic storm" is about...

The stock market's history of September swoons: By the numbers

The Week — Wed, 07 Sep 2011 11:47:00 -0500

Historically, the stock market performs most miserably in September (no one is quite sure why), and this month doesn't seem likely to reverse the annual trend. The S&P 500 drooped 3 percent last Thursday and Friday — the first two days of the month — and slipped another 0.7 percent Tuesday. "If history is any guide, for it's never gospel, we may be in for another rough ride," says Standard & Poors' Sam Stovall. Here, a brief guide, by the numbers, to the dreaded September swoon:

0.8
Average percentage that the S&P 500 has lost each September, from 1950...

Are stocks really a bargain right now?

The Week — Mon, 15 Aug 2011 11:32:00 -0500

Last week, the Dow Jones industrial average swung like a violent pendulum, gaining or losing hundreds of points by the day. As of Monday morning, stocks are on the rise, thanks, in part, to unexpectedly positive news about Japan's economic growth. Still, given the market's volatility of late, analysts can't decided if investors should go on a bargain-hunting buying spree or stuff the money under the mattress. Is now really a good time to buy?

Yes, stocks are trading below earnings: It's still a great time to buy, says Andrew Bary at Barron's. Sure, "stocks went on an extraordinary ride last week...

The Dow roller coaster: When will it stop?

The Week — Fri, 12 Aug 2011 12:06:00 -0500

On Monday, the Dow Jones Industrial Average plunged 634 points. On Tuesday, it skyrocketed 429 points. On Wednesday, it took another dive — this time, a 519-point drop. And on Thursday, the Dow rallied to climb 431 points. Never before in the Dow's history has the market seen four straight days of 400+ point swings. In trading Friday morning, the Dow was up triple digits again. How much longer will this roller coaster go on?

Expect market volatility until Western economies improve: "We are going to continue to be in a choppy period with these big swings" for some time, says Margaret Patel...

Stephen Colbert's evisceration of the New York Post's Dow cover

The Week — Thu, 11 Aug 2011 15:34:00 -0500

The video: On Wednesday, the New York Post blindly applied its trademark saucy headline treatment to the recent stock market turmoil. The nonsensical result — "Crazy stox like a hooker's drawers…UP, DOWN, UP" — quickly drew a chorus of media ridicule led by Stephen Colbert . (Watch the video below.) "This is analysis that everyone can understand," Colbert joked on his Comedy Central show , before pointing out that a hooker's clients generally prefer her panties to be down and testing out the Post's strange analogy on other big news stories, including the...