The main things to watch out for are:

– High fees on prepaid credit cards. These can include fees for everything from a fee to activate the card, to a charge every time you load money on it. and even a fee to call customer service.

– Fees and high interest on loans like payday loans.  Some banks are now offering loans you pay back from your next check.  Interest rates on these loans can run to 300% when you include fees.

If you need these products you may have no choice, but try to make sure that you check your alternatives.  Do not assume your bank will offer the best deal.

The evidence is not in yet, but the CFPB could be an easy way to get your problems resolved.  If you complain about a creditor, it’s likely that the creditor is going to be more careful with a complaint that comes in from the CFPB than one from a lone consumer.
You have to go online to file.  The form they have seems easy to use.  Click here to the CFPB Complaint Form.

Fannie Mae and Freddie Mac have similar programs, but there is one major catch to all of them:  You cannot have a second mortgage on the home.   If you have a line of credit or a Home Equity Loan, unless you can talk the mortgage holder into giving up that mortgage, no one will make the deal.

The big advantage of these programs is that they let you stay in your home, but another good thing is that handing over the deed in a situation like this will hurt your credit less than a foreclosure would.

The BofA program is a pilot program and they will let you know if you are eligible to participate, but if your home mortgage is held by Fannie or Freddie, you can apply for their “Deed for Lease” program.

You must live in the home as your primary residence, not qualify for mortgage modification, and be released from any second mortgages.  You can check to see if your mortgage is held by Fannie or Freddie at the Making Home Affordable site set up by the Federal Government.

I advise against dealing with debt collectors.  And we have a debt collector’s letter template you can send that will force them to leave you alone .  But before you waste money on a certified letter, tell the debt collector that you want them to send you evidence of the debt, as required by law.

Debt collectors often do not have anything more than a spread sheet with your information, the name of the original creditor, a date and an amount of money; and they will usually go away rather than waste time getting account numbers and the reason for debt.

If they do send the information you should save it to prevent more than one debt collector from trying to collect on the same debt.

Long ago I found out that cancelling your credit card does not stop the card companies from accepting charges that you agreed to before you canceled the card. People who could not cancel their AOL subs found out that cancelling the card did not stop the bills — and the interest and late penalties if not paid promptly.

What you have to do is cancel the subscription to whatever it is, and until that sticks, you have to take the monthly bill when it appears (you will get a bill even if the card is cancelled) and file a complaint, in writing, to have that one charge removed. (They may refuse to do it unless you show some proof of your attempt at cancellation).

This to me is a totally unfair practice. If you paid by check and cancelled the check before it got cashed, the bank would not honor it. The credit card companies should not honor charges after your card has been cancelled.

But eventually, like everyone did, everyone learns the downside of leaning on your credit card. The interest rate on credit cards is astonishingly large – consumers with bad credit can pay as much as a 35% APR, while even those with good credit often stick to an interest rate of upwards of 18% for far longer than they need to. Compare that to a used car loan, the other form of loan most often considered a terrible investment – the average APR is about 5%. Very often its more cost effective to get a payday loan than to use a credit card.

Businesses also rely heavily on credit cards that can get them into financial trouble when they’re not careful. A small business with good credit and a bit of savings can quickly go into the red from a financial mis-step, lawsuit or other financial issue if they put big expenses on their credit card. Its better to pre-spend on things like insurance from a place like BusinessInsurance.org and to take out bank loans at reasonable interest rates for expenses that you can predict in advance.

Lets not miss the point here, ladies and gentlemen – credit cards are a raw deal. A free flight once every six months almost never pays for itself, and if it did, would the credit card companies offer it to you? No. If you’re using credit, you should be taking advantage of lower interest rates offered by banks and other programs for your finances – not using credit cards and wasting your money.

The site also has a lawyer referral service that will list members within so many miles of any location you set.  Remember most consumer bankruptcy attorneys will give you a free exploratory session.

Over the next nine months these banks are supposed to identify their borrowers who qualify for help and let them know.  There are three programs:

Principle reduction.  To qualify for this program your loan has to be held by the bank in most cases and not involve Fannie Mae or Freddie Mac (they have their own programs about which we have written).  You  have to be behind in payments and be in imminent danger of defaulting. To make it possible for you to keep paying your mortgage, they will reduce the principle on both your first and second mortgages.  How much they will knock off your principle is not clear.

Refinance Program.  This is for “underwater” mortgages when the borrower is current in all payments.  Again, the mortgage must be owned by the bank.  Your interest rate can be reduced to 5.25%.  Not all that exciting, I think.

Previously foreclosed.  If these banks foreclosed on you between 2008 and 2011, you could get a check for somewhere between $1,500 and $2,000.  Not that much.

For more information on the programs, including phone numbers of the banks involved, check out National Mortgage Settlement.

The program is described briefly here in our post Underwater Mortgage Refinance: New Rules and if your mortgage is on the Fannie or Freddie list you should look into the process now.

If your mortgage is not with Fannie or Freddie the new program (if passed as proposed) would let you refinance, as long as you are current with your loan. It is estimated that 3.5 million homes would qualify and that they would save an average of $3,000. The catch is that unlike the first program, this one has to pass Congress, and the Republicans don’t like it. If you would like to see this happen, let your Congressional Rep know.

The requirements are more than they are under the Fannie and Freddie programs.

– Eligibility requires that you be current on your mortgage payments for the last six months and that you have missed no more than one payment in the previous six months.

– You need a credit score of at least 580.

– You cannot be more than 40% underwater on your loan, owing, say, $210,000 on a home now worth only $150,000.

Lenders who go along would get a mortgage that is insured by the FHA, so they cannot lose money if you decide to walk in the future. Claims under this feature would be paid with a small tax on banks.

Also, the loan process would be streamlined under the proposal. Banks would need only to confirm that homeowners have a job. (Unemployed homeowners also would be eligible for the refinancing plan, but would be required to provide more detailed financial information.) Borrowers would not need to submit tax returns or get a new appraisal of the property.

The program would be open only to mortgages below the FHA’s conforming loan limits, which are $271,050 in low-cost areas and as much as $729,750 in Southern California and other high-priced markets.