Ilyce Glink Show May 2, 2010

This week’s news:

1. Greece’s bailout makes me wonder if this is the future of America: Huge debts requiring savage cuts in pensions and benefits with years of possible recession. Larry called from Pensacola, FL to say that they tried to close down a post office that wasn’t needed, and we’re so used to having our elected officials bring home the pork, that the local congressman “saved” the post office. If we can’t even close an unneeded post office, Larry wonders, how will we ever do what we need to in order to pay off our huge debts? Great question.

2. Home Buyer Tax Credit Is Over. What will happen to the housing markets this summer? I’m predicting a serious slowdown thanks to the ending of the home buyer tax credits. There are still some great reasons to buy a property for investment purposes or to live in. I’ve blogged about this on Take a look at the blog post and let me know what you see if your neighborhood.

3. The FDIC shuttered seven more banks this weekend, costing the FDIC fund $7 billion. For those of you who like to play along at home, that’s 64 banks shut down this year by the FDIC, with another 150 closures possible (or more). According to the FDIC’s website, the seven banks included:

Frontier Bank, Everett, WA
BC National Banks, Butler, MO
Champion Bank, Creve Coeur, MO
CF Bancorp, Port Huron, MI
Westernbank Puerto Rico, Mayaquez, PR
R-G Premier Bank of Puerto Rico, Hato Rey, PR
Eurobank, San Juan, PR

The closure of Frontier Bank alone will cost the FDIC fund $1.37 billion. And, as I discussed at the end of the show today, these smaller banks have dozens and sometimes hundreds of local investors, many of whom will take a bath when a bank goes under. Their net worth may never recover from the loss, and that has a trickle down effect, as they spend less, sometimes much less, in their communities.

The failure of a local bank can be catastrophic on so many levels, even as the FDIC takes a multi-billion dollar hit.

This week’s calls to the Ilyce Glink Show:

Joan was married for 17 years and has four kids. She got divorced two years ago and made a lot of bad mistakes with her money. She is chasing her ex-spouse in court over child support and has a job that pays a little (but she feels lucky to have one). She has rung up a lot of credit card debt and has a car loan at 17 percent that isn’t affordable, and doesn’t know what to do.

Ilyce says: I encouraged her to call CCCS of Greater Atlanta (also known as Anyone can get a free budget session by calling 404-527-7630 or going online.

Jeff called the show a couple of months ago. His mother-in-law offered him $100,000 to help financially while she moves in to help care for his sick wife. He received a loan modification offer from the bank, but all they agreed to do is put his missing payments at the end of the loan. His Congressman’s office says to keep negotiating.

Ilyce says You can call back and see if they’ll agree to do something else, or you can take the deal and use the money from your mother-in-law to help make the missing money you don’t have from your payment each month. Your credit is already ruined by not making payments, so you don’t have a lot left to lose.

Jay called because his house in Clayton County dropped in value. But last year, the lender asked him to pay $200 per month more for his taxes. He had a shortage and wound up being reported as one month behind. They negotiated to $100 per month up but not the bank wants more. What can he do?

Ilyce says: Work with your lender to be sure that you’re paying the right amount on your taxes. Go to the tax assessor and pull last year’s tax bill and this one. Then, get the bank (if they have made a mistake) to report you correctly. Otherwise, it will take years for your credit history to improve.

We also had questions about financing franchises, selling timberland, down payments on more expensive properties, how open equity lines of credit can affect refinancing, and 3/1 ARMs.

Tune in to hear all of these questions and my complete answers. We should have the show podcasted later this week.


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