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Personal Finance News 11/2010

Firm that pushed "teaser rate" loans settles suit (AP)
AP - A mortgage company that advertised home loans with low initial "teaser rates" without disclosing their risks will pay $1.15 million to Arizona to settle a lawsuit.

Why Bill Nygren Is Buying Stocks Now (The Motley Fool)
The Motley Fool - Many of Wall Street's greatest investors seem to agree: Now is a great time to buy stocks.

Summary Box: Dutch watchdog's mortgage probe (AP)
AP - THE ISSUE: The Netherlands' market regulator NMa has started an investigation of banking margins on mortgages, which have been fatter than in neighboring countries since mid-2009.

SEC eyeing JPMorgan, hedge fund roles (AP)
AP - Wall Street bank JPMorgan Chase & Co. confirmed Monday that federal regulators are investigating whether it allowed a hedge fund to improperly choose assets for a $1.1 billion mortgage securities deal.

The Only Way to Beat Inflation (The Motley Fool)
The Motley Fool - Investors have always looked to protect themselves from the impact of higher prices. When inflation-indexed bonds first came out more than 10 years ago, they filled a huge void for those investors. Yet although their returns are still based on price changes, these investments haven't fulfilled their promise of being a viable way for long-term investors to preserve and build their wealth.

When "Success" Is Actually Failure (The Motley Fool)
The Motley Fool - You might think that we could all agree on the definition of financial success. But some people choose the wrong metrics to mark their progress toward a healthy fiscal future -- and in so doing, put their retirements at risk.

Are You Overexposed to Stocks? (The Motley Fool)
The Motley Fool - Say the value of your portfolio dropped 10% today, how would that affect your plans? Would you have to postpone retirement? Would you have to downsize your lifestyle? What about 20% or 30% or 50%?

Fannie, Freddie seize documents from Fla. law firm (AP)
AP - Mortgage buyers Fannie Mae and Freddie Mac are revoking thousands of foreclosure cases from a Florida law firm under investigation for falsifying documents used to complete foreclosures.

How to Save One-Third of Your Income (U.S. News & World Report)
U.S. News & World Report - One of the main arguments in my book, Generation Earn, is that we need to drastically increase the amount of money we're saving. On average, we should save about one-third of our income in our twenties, thirties, and forties for retirement, emergency funds, and big goals such as purchasing a home. I've gotten a lot of questions about that--how is it even possible? What did you give up to do that? Are you doing that right now? I wanted to share some of the ways I saved that much and explain why I think it's necessary.

Freddie Mac says net loss $4.1 billion (Reuters)
Reuters - Freddie Mac, the second-largest provider of U.S. residential mortgage funding, on Wednesday said ongoing weakness in housing resulted in a $4.1 billion third quarter net loss and another draw from the Treasury to maintain positive net worth.

Freddie Mac posts $4.1B loss for Q3 (AP)
AP - Mortgage buyer Freddie Mac on Wednesday posted a narrower loss of $4.1 billon in the July-September quarter.

A Shadowy Risk for Shareholders (The Motley Fool)
The Motley Fool - With the midterm elections finally over, a new risk may appear in next year's proxy statements. If the companies in your portfolio get called out for controversial political contributions, your investments could face a whole slew of dangers.

Why the Fed's Quantitative Easing Is Overblown This Time (U.S. News & World Report)
U.S. News & World Report - When the Federal Reserve outlined an aggressive "quantitative easing" plan in March 2009, investors were startled. The Fed had already embarked on a plan to buy about $500 billion worth of government securities, which Fed chairman Ben Bernanke had described as "credit easing" meant to pump money into banks so they'd lend more. Then the Fed dramatically raised the stakes, announcing it would buy an additional $1 trillion worth of government debt and mortgage-backed securities to further stoke the economy.

Mortgage rates rise to 4.24 pct, near record low (AP)
AP - Rates on 30-year fixed mortgages edged up this week to an average of 4.24 percent, still close to their lowest level in decades.

Good and Bad News for Your 401(k) (The Motley Fool)
The Motley Fool - Let's start with the bad news: 401(k) contribution limits won't rise in 2011, for the second year in a row. Fortunately, the existing limit is nothing to sneeze at.

Will You Run Out of Money in Retirement? (The Motley Fool)
The Motley Fool - Let's face it -- we're often really lousy at making judgments about ourselves. In their book Nudge, behavioral economists Richard Thaler and Cass Sunstein note that 90% of all drivers think their driving is above average, and 94% of professors at large universities think they're better than the average professor. But when it comes to finances, such an unrealistic outlook can lead you to serious trouble.

Banks face $31 billion loss on mortgage buybacks: report (Reuters)
Reuters - The top U.S. banks could face up to $31 billion in losses from buying back bad mortgages, Standard & Poor's said in a report on Thursday.

5 Ways to Take Advantage of Low Interest Rates (U.S. News & World Report)
U.S. News & World Report - Interest rates have never been lower. It seems that just about every week mortgage rates set a new low. And this week the Fed is expected to undertake a second round of quantitative easing, QE2 for short, by buying up more government debt. As a result, incredibly low interest rates may go even lower.

Court blocks Wash. AG from releasing mortgage docs (AP)
AP - The Washington Supreme Court on Thursday blocked the attorney general's office from releasing certain financial information related to the investigation of a mortgage company, in a case that balanced federal privacy laws with the state Public Records Act.

AIG posts massive loss on sale and goodwill charges (Reuters)
Reuters - Bailed-out insurer American International Group lost more than $2 billion in the third quarter as charges for the discount sale of its consumer finance unit offset growth in its general insurance business.

What Everyone Should Know About Financial Advisors (U.S. News & World Report)
U.S. News & World Report - There is no shortage of advice on the Internet that attempts to help individuals select a financial advisor, but a lot of it is centered on weeding out the crooks. This is great information, and certainly relevant given the buffoonery uncovered over the past two years.

Bank of America rejects call to buy back mortgages (AP)
AP - Bank of America said it will not buy back bad mortgages from a series of high-profile investors who complained defaults are being handled improperly and homes not being foreclosed upon fast enough.

Consumer borrowing posts rare gain in September (AP)
AP - Consumer borrowing increased in September for the first time since January even though the category that includes credit cards dropped for a record 25th straight month.

Why Ford's Success Could Be Accelerating (The Motley Fool)
The Motley Fool - It's not surprising that October was another sales success story for Ford (NYSE: F - News), with the Blue Oval's U.S. sales up 19% year over year. That was well ahead of the 14% industry average, as Ford continues to gain ground in a recovering economy. But it's just another data point in what has been a happy trend for the automaker: Year to date, Ford's sales are up 21%.

BofA, Citi, Wells warn of mortgage lawsuits (AP)
AP - Large U.S. banks are saying they could face rising costs related to litigation related to mortgage loans.

AP Exclusive: New Kan. gov. eyes income tax cuts (AP)
AP - Kansas Gov.-elect Sam Brownback said Friday he's looking for bold action on taxes next year and sees lowering the state's individual income taxes as crucial for economic growth.

Fannie Mae asks for $2.5B in new US aid (AP)
AP - Government-controlled mortgage buyer Fannie Mae is asking for $2.5 billion in additional federal aid after posting a narrower loss in the third quarter.

Fannie Mae asks for $2.5 billion in new US aid (AP)
AP - Government-controlled mortgage buyer Fannie Mae is asking for $2.5 billion in additional federal aid after posting a narrower loss in the third quarter.

Homeowners say loan mods led them to foreclosure (AP)
AP - Grocery store owners William and Esperanza Casco were making enough money to stay current on their mortgage, but when JPMorgan Chase & Co. offered a plan that reduced their payments, they figured they could use the extra cash and signed up.

The Shifting Sands of Saudi Real Estate (BusinessWeek)
BusinessWeek - After five fruitless years of seeking a mortgage in Riyadh, 28-year-old Abdulaziz Al-Salem has some advice for his peers: forget it. "Homeownership in this country is nothing short of a nightmare," says the father of one. "If you're not descended from a wealthy family nor have an extremely successful business, you probably should give the whole thing a pass."

Conversations With a Nigerian Scam Artist (The Motley Fool)
The Motley Fool - The following series of emails attempts to playfully document one of the world's most infamous cons: the Nigerian Email Scam, aka the 419 scam, aka the advance-fee fraud.

Does the Stock Market Favor the Rich? (The Motley Fool)
The Motley Fool - Some people think that the stock market favors investors who started off rich. But in my opinion, the stock market is one of the few ways that ordinary people can make themselves rich.

Goldman lost money on two trading days: filing (Reuters)
Reuters - Goldman Sachs Group Inc lost money on only two trading days during the third quarter, despite an industry-wide slump in trading volumes, according to a regulatory filing published on Tuesday.

Goldman fined $650,000 for disclosure lapse (AP)
AP - Industry regulators have fined Goldman Sachs $650,000 for failing to disclose that two of its brokers, including the executive accused of leading the mortgage securities deal that brought civil fraud charges against the firm, were under investigation by the government.

Banks' mortgage practices reap more lawsuits (Reuters)
Reuters - Lawsuits against banks over their mortgage lending and foreclosure practices continue to pile up, with JPMorgan, PNC Financial Services and Ally Financial disclosing suits on Tuesday.

Bullish Sentiment Creeps Up (The Motley Fool)
The Motley Fool - Since the beginning of September, the bulls have been in charge of the U.S. stock market. The incredible run, fueled by improving economic data, strong earnings reports, and another round of quantitative easing, has sent the S&P 500 soaring by more than 16%, only to be outdone by the Nasdaq's 22% gain as of Monday's close.

Quinn beats drum for tax increase after election (AP)
AP - Gov. Pat Quinn said Tuesday that an income tax increase to help fund Illinois schools is the top priority as the state struggles with a budget deficit that could soon reach $15 billion.

No let-up for Irish debt; pressure grows (Reuters)
Reuters - Clearing house LCH.Clearnet hiked margin requirements for Irish debt on Wednesday and Ireland's central bank said it would take a closer look at banks' residential mortgage books as concern mounted about the country's finances.

Mortgage application volume rises last week (AP)
AP - Applications for mortgages to buy homes rose last week for the third straight week.

Deficit panel leaders' plan curbs Social Security (AP)
AP - The leaders of President Barack Obama's bipartisan deficit commission launched a daring assault on mushrooming federal deficits on Wednesday, proposing reducing annual cost-of-living increases for Social Security, gradually raising the retirement age to 69 and taking aim at popular tax breaks such as the mortgage interest deduction.

AP IMPACT: Bypassing county fees may cost banks (AP)
AP - It used to be that every time a bank sold a mortgage, the county land recording office received a fee. It wasn't much — $30 or so — but then real estate boomed in the 1990s and banks pooled millions of mortgages into securities that investors bought and sold.

6 Strategies for Funding Your 401(k) (U.S. News & World Report)
U.S. News & World Report - The tax break that workers get for saving for retirement in a 401(k) is a valuable reason to participate. But that's not the primary reason most investors direct a portion of their paycheck into a retirement account. Getting a 401(k) match is the factor that motives the most retirement savers to utilize these tax-deferred accounts, according to a new ING Retirement Research Institute survey. Here's a look at how workers choose how much to deposit in their 401(k) each year.

How and When to Start Saving For Retirement (U.S. News & World Report)
U.S. News & World Report - Despite the fact that it's better to start saving for retirement at a young age, most people don't begin to think about their retirement needs until much later in life. To stress the importance of retirement saving, many financial experts recommend you begin saving for retirement right now, no matter what. But the reality lies somewhere in between. If you are foregoing basic necessities now for the sake of the future, then now is not the time to start saving for retirement.

Who will be upset by panel's proposal on national debt? Nearly everyone. (The Christian Science Monitor)
The Christian Science Monitor - The co-chairmen of President Obama’s deficit-reduction panel issued a draft proposal Wednesday outlining ways to achieve a nearly $4 trillion reduction in national debt over the next 10 years. Among other things, they urge deep cuts in domestic and military spending, raising the retirement age to 69, and ending or curbing popular tax breaks such as the deduction for mortgage interest.

Deficit targets: Social Security, mortgage breaks (AP)
AP - In a politically incendiary plan, the bipartisan leaders of President Barack Obama's deficit commission proposed curbs in Social Security benefits, deep reductions in federal spending and higher taxes for millions of Americans Wednesday to stem a flood of red ink that they said threatens the nation's very future.

AP IMPACT: Bypassing county fees may cost banks (AP)
AP - It used to be that every time a bank sold a mortgage, the county land recording office received a fee. It wasn't much — $30 or so — but then real estate boomed in the 1990s and banks pooled millions of mortgages into securities that investors bought and sold.

AP - Mortgage rates drop to their lowest levels in decades on Fed's program to buy Treasurys.

The True Cost of 12b-1 Fees (The Motley Fool)
The Motley Fool - Here at the Fool, we've written quite a bit in the past few weeks about the use of 12b-1 fees in many mutual funds. 12b-1 fees are marketing and distribution expenses that fund shops charge investors. These fees are used to pay for advertising and marketing efforts, including commissions paid to financial advisors for recommending the shop's funds to clients.

Mortgage rates fall to fresh lows this week (AP)
AP - The mortgage rate bar is even lower, but few homebuyers are making the jump.

7 Ways to Become Your Own Retirement Planner (U.S. News & World Report)
U.S. News & World Report - I support the concept of being your own retirement and financial planner or at least being in full control of the process. It is your money at risk and your retirement future being planned. You are best qualified to understand your risk tolerance and your retirement goals.

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