As featured in The Wall Street Journal, Money Magazine, and more!

Beginning in January 2014, the Consumer Financial Protection Bureau, or CFPB, issued new rules to protect mortgage borrowers. The rules deal primarily with what is known as the “servicing” side of the mortgage process. That’s everything that happens after a mortgage closes, from setting up escrows and crediting payments to foreclosures.

There are nine rules in all. Their purpose is to “provide homeowners and consumers shopping for a home mortgage with new rights and greater protection from harmful practices.” Let’s see what each one is about.

1. Periodic Billing Statements

Mortgage lenders must provide periodic statements to borrowers for each billing cycle. These should reflect information on payments currently due and previously made, fees imposed, transaction activity, application of past payments, contact information for the servicer and housing counselors , and, where applicable, information regarding delinquencies.

The periodic statement does not apply to fixed-rate mortgages, as long as the the servicer provides a coupon book. Also, the coupon book must contain certain information as specified in the rule and that information must be made available to the consumer.

2. Interest Rate Adjustment Notices for ARMS

If a loan is an adjustable rate mortgage (ARM), it contains provisions for periodic changes in the interest rate. If you have such a loan, the lender must provide you with written notice of a rate change between 210 and 240 days before the initial change is set to take place. They are then required to provide notice of subsequent rate and payment changes, between 60 and 120 days in advance of the change. The notice must include an estimate of both the new rate and the new payment.

3. Payment Crediting and Payoff Statements

Lenders must credit loan payments from borrowers as of the day of receipt. However, if a payment is received for less than the full amount, the payment may be held in a suspense account. When the amount in the suspense account covers a periodic payment, the servicer must apply the funds to the consumer’s account.

The lender is also required to deliver an accurate payoff balance to a consumer when requested. They have no later than seven business days from  receipt of a borrower’s written request to provide that information.

4. Force-place Insurance

In the past, lenders engaged in a practice known as force-place insurance. That was a practice in which the lender would get a homeowner’s insurance policy on the property securing the mortgage, if it believed that the borrowers had allowed their policy to lapse. This sometimes resulted in high-priced policies, which were then charged to the borrower.

Under the new rules, lenders are prohibited from charging a borrower for force-place insurance unless the lender has cause to believe the borrower has failed to maintain insurance. They must also provide the borrowers with required notices.

The lender must provide the borrower with written notice of the force-place policy at least 45 days before charging the borrower for the coverage. They must also provide a second notice at least 30 days after the first, and at least 15 days before charging the borrower for the coverage.

If the borrower provides proof that a homeowner’s insurance policy exists, the lender must cancel the force-place policy. They must also refund any premiums paid on the policy during overlapping periods of coverage. In addition, the cost of the force-place policy must be reasonable for the amount of coverage in force.

If there is an escrow account attached to the loan which includes the payment of homeowner’s insurance premiums, the lender is prohibited from obtaining force-place insurance. If the servicer can continue the borrower’s homeowner insurance, even if they need to advance funds to the borrower’s escrow account to do so, they must go that route.

5. Error Resolution and Information Requests

Lenders are now required to respond to written requests for information, as well as complaints of errors. The lender must comply with error resolution procedures for mistakes that are spelled out in the new rules. This includes any errors that are the result of the servicing of the loan.

Lenders are required to acknowledge receipt of the borrower’s written notification within five days of receipt. Lenders then have 30 to 45 days to respond to the borrower’s request. Within that time, they must either correct the error claimed by the borrower, or conduct an investigation to determine that no error exists. If the latter occurs, they must then inform the borrower in writing.

If information requested by the borrower is not available, the lender must notify the borrower in writing. This notice must include an explanation as to why the information is not available.

6. General Servicing Policies, Procedures and Requirements

Lenders are required to establish policies and procedures that are designed to comply with the new rules. That means they must spell out how they will accomplish the following:

  • Accessing and providing accurate and timely information to borrowers, investors, and courts
  • Properly evaluating loss mitigation applications in accordance with the eligibility rules established by investors
  • Facilitating oversight of, and compliance by, lenders
  • Facilitating transfer of information during servicing transfers
  • Informing borrowers of the availability of written error resolution and information request procedures

Each lender must also maintain certain documents and information for each mortgage loan. This must be done in a way that enables them to compile it into a servicing file within five days.

7. Early Intervention With Delinquent Borrowers

Lenders are required to intervene in the event that a borrower may be heading for default. The lender must make “good faith efforts” to establish live contact with borrowers by the 36th day of their delinquency. They are required to promptly inform borrowers that loss mitigation options may be available. The lender must also provide the borrower written notice with information about loss mitigation options by the 45th day of a borrower’s delinquency.

8. Continuity of Contact with Delinquent Borrowers

Lenders are now required to make early contact with borrowers who are at risk of default. That contact must also be on a continuing basis. Once again, the lender must be fully prepared to assist the delinquent borrower with loss mitigation options where they are available.

The lender must make reasonable efforts to ensure that personnel are assigned to a delinquent borrower by the time written notice of early intervention is required. This can be no later than 45 days after a borrower’s delinquency.

In addition, the assigned personnel must be accessible to the borrowers by phone to assist with loss mitigation options. This includes advising the borrower on the status of a loss mitigation application, as well as expected timelines. Those personnel are also expected to have access to all of the information surrounding the borrower’s situation. This information can be shared with other personnel who are responsible for evaluating the loss mitigation options available to the borrowers.

9. Loss Mitigation Procedures

This rule gets to the heart of the attempt by the CFPB to provide the borrowers with more options and protections in the event of foreclosure. The borrowers must be given every opportunity to avoid foreclosure through loss mitigation.

The lender must follow specific loss mitigation procedures. For example, the lender is required to acknowledge the receipt of a loss mitigation application in writing, within five days of receipt. They must also inform the borrower whether or not the application is complete. The borrower must be apprised of any missing information.

If the completed loss mitigation application is received more than 37 days before a foreclosure sale, the lender is required to evaluate mitigation options within 30 days. This must include options that will enable the borrowers to retain their home. It must also include non-retention options, such as a short sale.

The lender is required to provide the borrowers with written notification of the decision in regard to loss mitigation. This includes the reasons for denying the application. The borrower must also be able to appeal the denial, under the provision that the complete loss mitigation application is received at least 90 days before the scheduled foreclosure sale.

This rule also prevents what is known as dual tracking. That’s a practice in which the lender is simultaneously evaluating a borrower for loan modifications or other mitigation options, at the same time that it is preparing to foreclose on the borrower’s property. The rule prohibits the lender from making the first notice or from filing requirements for the foreclosure process until the mortgage account is more than 120 days past due.

But even if a borrower is more than 120 days late, the lender may not begin foreclosure proceedings if the borrower has submitted a completed loss mitigation application before the foreclosure process has begun. This rule applies unless any of the following takes place:

  1. The lender notifies the borrower that they are not eligible for any loss mitigation option. Also, all appeals have been exhausted
  2. A borrower rejects all loss mitigation offers
  3. A borrower fails to comply with the terms of a loss mitigation option, such as a trial modification

However, if the borrowers submits a completed loss mitigation application after the foreclosure process has begun, but more than 37 days before a foreclosure sale, the lender may not move for a foreclosure judgment or order of sale, or conduct a foreclosure sale, until one of the three conditions above has been met.

In general, the CFPB Mortgage Protection Rules are designed to improve the working relationship between borrowers and their mortgage lenders. And it is ultimately hoped that the rules will make the foreclosure process both less likely and less painful.

(Sources: What mortgage servicing rules apply to me?, What the new CFPB mortgage rules mean for families and homeowners, and Summary of the final mortgage servicing rules)

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Retirement is a huge financial undertaking, as we all know. It requires plenty of planning to ensure that all of your needs will be met once your career, and working income, ends. It needs to be able to cover your costs of living, some fun money to actually enjoy your years, and expenses such as healthcare. Of course, the latter become becomes even more important as we age, but many seem to overlook the magnitude of this expense in their planning.

The average person between the ages of 55 and 74 with retirement savings has only $104,000 to $148,000 tucked away in a defined benefit account. What’s even more concerning is that this statistic only reflects 48% of American households. The rest of them have no retirement savings at all.

Those with retirement savings tend to also have other resources to depend on, such as non-retirement investment accounts. On the other hand, those without retirement savings tend to have less of those resource, too.

What does this mean for costs associated with retirement? It means that many Americans will struggle to afford to retire at the standard age of 65. And those who do will have trouble meeting their monthly expenses, including health care.

In fact, 74% of married partners said they worry about unexpected medical costs in retirement. With the cost of health care in retirement being such a big concern, it’s important to consider the actual numbers and plan accordingly.

How Much Does Health Care Cost In Retirement?

According to a 2015 study conducted by Fidelity, a couple, both aged 65, can expect to spend about $245,000 on health care during their retirement. That’s over $12,000 a year — or $1,000 a month — based on average life expectancy!

Why is this so expensive? When you factor in copays, out-of-pocket costs, and dental and vision care, you’ll easily see how the numbers add up quickly. That’s exclusive of any insurance premiums, too.

Speaking of health insurance, here’s a breakdown of how insurance provided by the government works:

Medicare Part A

Hospital Insurance

As long as you or your spouse paid Medicare taxes while working, you won’t have to pay a premium for this coverage.
It mainly covers hospital inpatient care, skilled nursing facility care, hospice care, and home health care.
Medicare Part B

Medical Insurance

Most people will pay $104.90 per month.
It mainly covers services from doctors, outpatient care, durable medical equipment, and some preventive services.
Medicare Part C

Medicare Advantage Plus

Monthly premium varies greatly, but can be up to $200 per month.
It mainly covers everything in Parts A and B and is run by Medicare-approved private insurance companies.
Medicare Part D

Prescription Drug Coverage

Monthly premium varies greatly, but can be up to $100 per month.
It mainly helps cover the cost of prescription drugs.

As you can see, if you opt for all parts of government-provided medical insurance, you can pay up to $400 in monthly premiums per person. This is exclusive of the other costs associated with health care as mentioned above: copays, out-of-pocket expenses, and auxiliary care.

There are ways plan for these expenses, however. The main thing you can do is start saving early.

How To Plan For Health Care Costs In Retirement

Your first plan of attack should be your employer’s retirement account, if one is offered. According to the American Benefits Council, nearly 80% of full-time workers have access to an employer-sponsored defined benefit account, such as a 401(k)/403(b). So if you’re one of many offered this benefit, make sure you take advantage.

Saving even just a small percentage of your salary will make a big difference if you start early. You can begin by saving a mere 3% of your salary, then gradually increase your contributions until you reach 10%. This is generally considered the target amount to save.

This is just a recommendation though. If you can contribute even more, by all means do so.

If you max out your 401(k)/403(b) by contributing $18,000 in 2016 ($24,000, if over the age of 50), investing in an individual retirement account (IRA) is a great next step. Although the annual contribution limit for IRA’s and Roth IRA’s is much lower than that of 401(k)s/403(b)s, the extra savings will help you cover cost of your future health care.

Lastly, saving money in a Health Savings Account (HSA) is a great way to plan for covering medical expenses in retirement. If you are currently enrolled in a high-deductible health insurance plan, you are eligible to contribute to an HSA.

HSAs offer a triple tax benefit. First, HSA contributions are tax deductible. Second, the interest earned on money in an HSA is tax-free. Third, you can withdraw money from your HSA for qualified medical expenses tax-free, as well.

HSAs can be considered retirement funds because there is no carry-over limit, unlike Flexible Spending Accounts. So, the money you contribute today can be used for health care costs in retirement years later.

How To Offset Health Care Costs Once In Retirement

In today’s economic environment, retirement doesn’t necessarily meaning relaxing on sandy beaches. The unfortunate reality is that many people must continue to work in order to supplement Social Security and their minimal retirement savings.

Working a part-time job during the early years of retirement can greatly offset the cost of health care. In fact, you could even save some of your earnings from your part-time job and put it into a retirement savings account to use in future years.

Here are a few ideas of part-time jobs you can take up that won’t be taxing on your health:

  • Consultant: Transfer all the skills you accumulated from your day job over the years and use those expertise to help other companies accomplish their goals.
  • Freelancer: Use your talents to do one-off assignments for businesses. This could include graphic design, writing, proofreading, and much more.
  • Blogging: It can take a while to make money from a blog. But once you get the ball rolling, this gig can bring in a lot of income.

Other Things To Consider

Aside from Medicare, Social Security, and your retirement savings, there may be other ways to cover the cost of health care in retirement.

One thing to consider is COBRA. Under the Consolidated Omnibus Budget Reconciliation Act, federal law requires that companies with more than 20 employees give them the option to continue receiving coverage under the employer’s health plan for at least 18 months.

With COBRA, however, you’ll be responsible for the entire cost of the health plan. While working, your employer likely paid for a large percentage of the premium. This expense will be wholly your responsibility with COBRA.

You may want to consider continuing your employer’s health plan before enrolling in Medicare. Your employer’s health plan will likely cover more medical expenses.

On that note, if you want a more comprehensive health insurance plan after your COBRA benefits end, you can consider enrolling in a Marketplace health insurance plan. If you don’t enroll in Medicare, you may qualify for lower out-of-pocket costs and premium tax credits. You could also use the two in combination; but you won’t receive the same tax credits for the Marketplace health insurance plan.

Wrapping Up

There is a lot to consider on the topic of health care costs in retirement. If you’re young, the lesson here is to start saving early, because the cost of health insurance and medical care is only increasing. If you’re approaching retirement age, you may want to consider working part-time during your early retirement years, in order to offset the costs of health care. And if you’re already retired, it wouldn’t hurt to tuck away any extra money each month, in case unexpected health concerns pop up.

How are you planning to cover your health care expenses in retirement? Is it a big concern to you yet?

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We all know about the history of salary disparity between genders. But do you know where our country currently stands, and whether women have gained the upper hand in any industries?

Let’s start with the bad news. There is no country in the world where, on average, women make more than men. In fact, the global average pay gap suggests that women are paid 24% less than men.

The granular picture is somehow even more painful. Average pay gaps, on a national level, run from the frankly shocking 36.6% gap in South Korea, to the best of the bunch: a still-alarming 5.6% in New Zealand. So, even in the most equitable country in the world, a woman is paid, on average, 94.4 cents in the dollar compared to a man — a difference that mounts up quickly over a working lifetime.

In the USA, the big headline number is a 21% pay gap. However, we all know that statistics can mask a multitude of issues. Whatever else you can say about gender pay disparity, you certainly can’t describe it as simple.

So for American women (as with those all over the globe), salary parity with men will depend on a whole raft of other factors as well. Ethnicity, working hours, age, location and whether or not you have children shift the pattern significantly.

AAUW explains, for example, that in the USA:

“Women typically earn about 90 percent of what men are paid until they hit 35. After that median earnings for women are typically 76–81 percent of what men are paid.”

So the chances of salary parity vary from country to country, and state to state. But they also vary based on the type of industry and role in which women work. Here, perhaps, is a small light burning at the end of the tunnel.

Jobs with Salary Equality

A recent report by Glassdoor looked at over half a million salaries shared on their site, and examined this data by gender and sector. Salaries were ‘adjusted’ to ensure that like was being compared with like, as closely as possible.

It found the adjusted gender pay gap in the USA was largest in the following roles:

  • computer programmer
  • chef
  • dentist
  • C-suite professionals
  • psychologist
  • pharmacist
  • CAD designer

However, the gender pay gap was reversed — meaning that women are actually paid more than men — for certain occupations, such as:

  • social worker
  • merchandiser
  • research assistant
  • purchasing specialist
  • physician advisor
  • communications associate

In total, eleven of the occupations reviewed showed women’s pay was higher than men, with the highest margin in social work and merchandising (7.8% and 7.6% respectively). To put that into perspective, this means that a female social worker in the US is paid $1.08 for each dollar her male counterpart is paid.

It’s true that the reverse pay gap in these industries is nowhere near high enough to bring the overall average (negative) pay gap down. It is also true that many of these positions are relatively low paid, and in typically ‘female’ industries.

Ultimately a pay gap in either direction is undesirable. Gender should not affect remuneration at all. Current predictions say that it will take a century to wipe out the pay gap entirely, at current rates of progress. As such, any positive movement is welcome.

Does it matter?

So there are some industries and roles in which women may hope to be paid the same, or even more, than men doing similar jobs. But does it really matter?

On an individual level, it makes much more sense to go into a sector that holds genuine personal appeal, and where you can deliver a truly great job. Pay gap stats are all about averages. The top performers in any role will always be rewarded better than average. So for women considering a career move, perhaps the choice of an industry or segment which is pay biased in favor of women is not so important.

What you can do, however, is keep your skills and qualifications updated. Be sure to deliver an exceptional-quality job, whatever you do. You can learn to negotiate for salary without embarrassment (something men still do far more readily than women). And you can call any discrimination if you see it.

That way, perhaps, we will profit as individuals, but also by contributing overall to the progress being made in pay equality for ourselves and our daughters.

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On September 7, 2016, Apple unveiled the new iPhone 7 and iPhone 7 Plus. Trendsetters will have been eagerly awaiting today, the 16th, when the new iPhones start being shipped; preorders started on the 9th.

There is no doubt that this launch will be successful. Apple occupies 40% of the smartphone market share — the largest majority. This market control coupled with Apple’s customer-brand loyalty makes it easy to expect the iPhone 7 phones to be a big hit.

iPhone 7 Features

Let’s take a look at the key features of the iPhone 7 — some of which are standard among all iPhones and some of which are new and upgraded.

Design:

  • The sleek design is standard among iPhones in general.
  • What’s new is the water and dust resistance. The water resistance, especially, should give you peace of mind when in wet environments such as the rain or bath.
  • Colors include: jet black, matte black, silver, rose gold, gold, and space gray. The jet black and matte black are new.

Headphone Jack:

  • It’s gone! Apple nixed the headphone jack in the iPhone 7 edition
  • Instead, customers will receive “Lightning EarPods” that fit in the same port as the charger. Customers can also opt to purchase wireless Bluetooth headphones. Apple has released its own wireless Bluetooth headphones, called AirPods.

Camera:

  • Apple has overhauled its camera technology for the iPhone 7. The rear camera is 12 megapixels; and the front camera is 7 megapixels.
  • The rear camera is touted to let in 50% more light than the iPhone 6 did. It is also 30% more energy efficient and 60% faster.

Battery:

  • Apple claims that the iPhone 7 will have the longest-lasting battery ever. It will generate two more hours of battery life than the iPhone 6.
  • Apple claims the iPhone 7 can offer 13 hours of wireless audio, which is pretty nice.

Display:

  • The iPhone 7 has the same screen size as the iPhone 6: 4.7 inches.
  • The iPhone 7 has a brighter display than the iPhone 6 with a resolution of 1334×750.

iPhone 7 Price

The retail prices for the iPhone 7 phones are as follows:

iPhone 7 32GB $649
128GB $749
256GB $849
iPhone 7 Plus 32GB $769
128GB $869
256GB $969

 

There are ways to offset these large price tags, however. First, if you have an older model iPhone, you can trade it in for an Apple gift card and then use that gift card towards the purchase of the iPhone 7. Here are the estimated trade-in values (information from Apple’s website):

  • iPhone 4s: $50
  • iPhone 5, 5c: $75
  • iPhone 5s: $125
  • iPhone 6: $225
  • iPhone 6 Plus: $250

Another way to offset the cost of the new iPhone 7 is pay for it in monthly installments through one of the large cell phone service providers. For example, Verizon is offering a monthly installment plan of $27.08 per month for 24 months.

Wrapping Up

Is the new iPhone 7 worth the large price tag? For technology trendsetters, the answer is a surefire “yes”. For most of us, the answer may not be that clear.

The features are definitely attractive. But when you take a closer look at just the new features, you may realize that the iPhone 7 isn’t that much different from the iPhone 6 to justify shelling out another $600 to $900. If you have an older model iPhone, trading it may work out to be a good deal for you.

Ultimately, the decision to purchase the new iPhone 7 will come down to your wants versus your needs. Do you have the room in your budget right now for the phone? Are you willing to sacrifice additional savings to have the newest technology? These are just a couple of questions you’ll want to consider before making the purchase.

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2016 Federal Income Tax Brackets and Marginal Rates

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Can you believe we’re already in September? The year has flown by, and IRS Tax Year 2016 will soon be coming to a close. While your filing deadline isn’t until April 17, 2017 (the 15th will fall on a Saturday), now is the perfect time to begin thinking about your taxes, maxing out your retirement […]

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Former ITT Tech Students Find Hope in Available Options

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After 50 years of providing higher education services, ITT Technical Institute closed its doors abruptly in September, without offering its students a fall semester. With more than 8,000 ITT Tech employees now jobless and all students left without a clear plan, this news comes as a shock to many. Exactly What Happened? In a news […]

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Standard Deductions and Exemptions for Federal Income Tax

by Luke Landes
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Most taxpayers can choose between itemizing tax deductions to reduce taxable income, which requires accurate record-keeping and support, and taking the standard deduction. The standard tax deduction is a fixed amount that reduces the amount of money on which year-end taxes are calculated. Generally, if you can show that you’ve had more deductible expenses than […]

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Wells Fargo Fined for Creating 2 Million Fake Accounts to Collect Fraudulent Fees

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Wells Fargo

Everyone hates bank maintenance fees. (If you don’t, email me – I have a few you’re welcome to take.) So, what would you think if you discovered that your bank had been charging you fees for an account you never opened? In fact, THEY secretly submitted an application and opened that account on your behalf. […]

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Why 60,000 Morgan Stanley Employees are Suing Over Their 401(k) Accounts’ Management

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If you’re unhappy with your 401(k), rest easy… you’re not alone. In fact, on August 19, over 60,000 employees joined up and filed a class action lawsuit against their employer, Morgan Stanley. Their reason: questionably managed and poorly performing 401(k) plans. It’s one thing to ask workers to stay late or forget to restock the […]

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Another Insurance Giant Withdraws from Obamacare — What Does This Mean for You?

by Stephanie Colestock

This year has been a rough one for health insurance companies of all sizes. With the recent news of Aetna withdrawing from most of its Obamacare exchanges, many Americans are beginning to worry about their shrinking options, skyrocketing premiums, and where they’ll even find services. Scarily enough, Aetna is not alone in its decision, and […]

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