Clark Howard Show Notes January 3 2011 – Personal Finance Resolutions for 2011, Economic Outlook, Mortgage Market Outlook

Personal Finance Resolutions

January: State of the State: Your Finances

February: Deal with Holiday Credit Hangover

March: Get Your Taxes Ready

April: Plan for Summer Break

May: Insurance Check-up

June: Start Holiday Saving Account

Wall Street Opens 2011 With A Bang

(Reuters) – Stocks rose on Monday, lifting the Nasdaq 100 to a 10-year high, as investors bet a 2010 rally would continue in the new year and factory and housing data pointed to a strengthening recovery.

The Institute of Supply Management’s manufacturing survey grew for a 17th straight month in December, adding to recent evidence the recovery was picking up steam, while the Commerce Department said construction spending increased to its highest level since June.

“We are starting the year off on the right note here. Everybody’s back and suddenly everybody realizes that the economy is pretty good,” said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

“There is a lot of money in cash, a lot of money in bonds that would like out of bonds, and it’s only natural with the economic improvement it’s finding its way to equities.”


Bank of America to Buy Back Bad Loans From Fannie Mae and Freddie Mac

NEW YORK (Dow Jones)–Bank of America Corp. (BAC) expects to take a provision of about $3 billion in the fourth quarter to buy back bad loans from Fannie Mae (FNMA) and Freddie Mac (FMCC) that were issued by its troubled Countrywide Financial unit.

The move represents the latest effort by the Charlotte, N.C.-based banking giant, which acquired mortgage originator Countrywide in 2008, to respond to the housing crisis. Countrywide’s mortgages turned into some of the worst mortgages issued during the crisis and, ever since Bank of America bought the lender, the bank has had to handle growing loan losses.

Fannie and Freddie have been stepping up demands that lenders take back defaulted loans when they find that the mortgages didn’t conform to their lending guidelines. The two giant mortgage buyers have been operating under federal conservatorship since September 2008. Keeping them afloat has cost taxpayers about $134 billion so far.

Last week, Fannie reached a $462 million settlement with Ally Financial Inc. to cover potential repurchases on $292 billion in mortgages.

Taken together, the Ally Financial and Bank of America settlements will result in a recovery of $3.3 for taxpayers, the Federal Housing Finance Agency said.

“While these agreements are an important step, (Fannie and Freddie) have other outstanding claims across a range of counterparties and they are being pursued,” said Edward DeMarco, acting director of the housing agency, in a statement.

Bank of America also said it has received confirmation from the Federal Reserve that the company fulfilled its commitment to boost its equity by $3 billion, a condition of its repurchase of $45 billion in preferred stock in December 2009 acquired as part of the Troubled Asset Relief Program. It faced a year-end deadline to raise the equity and sought to raise the capital by selling assets.

READ MORE: Bank of America to Buy Back Bad Loans From Fannie Mae and Freddie Mac

READ MORE: Bank of America Press Release Announcing Buy Back of Bad Loans From Fannie and Freddie

Manufacturing and Construction Tick Up

NEW YORK (TheStreet) — Manufacturing activity in the U.S. expanded in December, led by strength in new orders and production, according to the Institute for Supply Management’s Manufacturing Report on Business.
More on Economy

The Purchasing Managers’ Index, or PMI, rose to 57% from 56.3% in November. That was in line with estimates. Economists expected the index to rise to 57.3%. A reading over 50 indicates expansion. The index is based on a survey of purchasing and supply managers nationwide.

And from the Commerce Department:

Construction spending in November 2010 was $810.2 billion, up 0.4 percent from October 2010 but down 6.0 percent from November 2009.

Not great news, but you wouldn’t know it from the stock market, which soared on the first trading day of 2011.


Pay Down Your Debt In 2011, Says David Bach

Debt has reached epidemic proportions in America. As of early 2010, 54 million American families owed a total of $866 billion to credit card companies alone – an average of over $16,000 each. At the same time, home equity has dropped and 7 million American families have fallen behind in their mortgage payments.

Good debt used to be debt to pay for higher education (college, masters’ degrees) and bad debt was credit card debt. But the thinking now is that any debt you can’t afford is a bad debt. So, it’s time to pay it down.

Take the David Bach Debt Free Challenge. Best-selling author David Bach wants to get 1 million Americans to pay down $1 billion in debt. You can take the Debt Free Challenge by going to and receive a free 30-day trial of Debt Wise (from Equifax, Bach’s partner in this) and a free downloadable chapter of “Debt Free For Life: The Finish Rich Plan for Financial Freedom.

Find David Bach at the Equifax Personal Finance Blog soon.

HSH Mortgage Outlook for 2011

Mortgage information publishers HSH have come up with a list of 8 factors that will affect the mortgage market in 2011, including:

  1. Creation of the Consumer Finance Protection Bureau.
  2. Fannie Mae and Freddie Mac proposal for change
  3. Improving Economy
  4. The return of the homebuyer
  5. Distressed real estate
  6. The end of Making Home Affordable (HAMP)
  7. Record low mortgage rates
  8. End of the QEII (Federal Reserve’s Quantitative Easing Part II)

READ MORE: HSH Mortgage Outlook for 2011

Small Business Taxes Made Easy by Eva Rosenberg, Taxmama

Eva Rosenberg works with me at the Equifax Personal Finance Blog where she writes about tax issues. She is also the author of several books, including Small Business Taxes Made Easy, 2nd Edition.

If you’re a small business owner, you’ll find no better resource than this book. Eva makes it easy to understand what you have to do to stay on top of all kinds of small business tax issues.

Clark Howard Show CALL OF THE DAY

Randi called wanting to find out how to contact the CEO of a major bank about her loan modification. I’ve blogged extensively about this on my CBS Home Equity blog. But, here are three important posts (with links to more):

Loan Modification Hell – Join The Club

With 863 comments, this is the post that began the conversation.

Loan Modification Hell – All The Posts

Loan Modification Hell: How to Find Your Mortgage Lender or Bank CEO

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You should be. Find Ilyce at CBS