‘‘Credit Card Accountability Responsibility and Disclosure Act of 2009’’

AMENDMENT TO TILA.—Section 127 of the Truth in Lending Act (15 U.S.C. 1637)

Credit card users saw the passing of new laws designed to help protect them from the credit card industry. These laws were enacted because of the misuse of the credit industry against hard working consumers. The new laws may mean more transparency and easier-to-understand terms. President Obama signed the Credit CARD Act of 2009 into law May 22, 2009. What will the credit card law mean for cardholders? Millions of credit card users will avoid retroactive interest rate increases on existing card balances and have more time to pay their monthly bills, greater advance notice of changes in credit card terms and the right to opt out of significant changes in terms on their accounts. That will take the surprise out of “gotcha” fine print and give consumers time to shop around for better deals if they don’t like the new terms. The requirements are being phased in. The first batch took effect Aug. 20, 2009, and the majority of provisions start Feb. 22, 2010, while some begin in August and December 2010. Once in effect, the law will also fundamentally change the way credit card issuers market, bill and advertise credit cards.

Here are the highlights of the credit card law:

Limited interest rate hikes: Interest rate hikes on existing balances would be allowed only under limited conditions, such as when a promotional rate ends, there is a variable rate or if the cardholder makes a late payment. Interest rates on new transactions can increase only after the first year. Significant changes in terms on accounts cannot occur without 45 days’ advance notice of the change.

Limited universal default: “Universal default,” the practice of raising interest rates on customers based on their payment records with other unrelated credit issuers (such as utility companies and other creditors), would end for existing credit card balances. Card issuers would still be allowed to use universal default on future credit card balances if they give at least 45 days’ advance notice of the change.

The right to opt out: Consumers now have the right to opt out of — or reject — certain significant changes in terms on their accounts. Opting out means cardholders agree to close their accounts and pay off the balance under the old terms. They have at least five years to pay the balance.

More time to pay monthly bills: Under the credit card law, issuers would have to give card account holders “a reasonable amount of time” to make payments on monthly bills. That means payments would be due at least 21 days after they are mailed or delivered. Consumers have complained about due dates that change without notice or are moved up, giving them less time to pay their bills and increasing the likelihood of late fees.

Clearer due dates and times: Credit card issuers would no longer be able to set early morning or other arbitrary deadlines for payments. Cut-off times set before 5 p.m. on the payment due dates would be illegal under the new credit card law. Payments due at those times or on weekends, holidays or when the card issuer is closed for business will not be subject to late fees.

Highest interest balances paid first: When consumers have accounts that carry different interest rates for different types of purchases (i.e., cash advances, regular purchases, balance transfers or ATM withdrawals), payments in excess of the minimum amount due must go to balances with higher interest rates first. Current industry practice is to apply all amounts over the minimum monthly payments to the lowest-interest balances first — thus extending the time it takes to pay off higher-interest rate balances.

Limits on over-limit fees: Consumers must “opt in” to over-limit fees. Those who opt out would have their transactions rejected if they exceed their credit limits, thus avoiding over-limit fees. Fees charged for going over the limit must be reasonable.

No more double-cycle billing: Finance charges on outstanding credit card balances would be computed based on purchases made in the current cycle rather than going back to the previous billing cycle to calculate interest charges. So-called two-cycle or double-cycle billing hurts consumers who pay off their balances, because they are hit with finance charges from the previous cycle even though they have paid the bill in full.


Actual Letter
Just one more example of the manipulation and deceit these banks will tell you to misrepresent the truth. Making money is always more important than being honest.
Thanks for being so honest with me Bank of America. I really value our relationship…Not!

Update on Loss Mitigation changes

There have been some changes to the way banks are handling the influx of modification applications and short sales due to the financial crisis. Please pass this information on to others who may find it of value.

Bank of America has recently issued a change to its policies regarding loan modification applications for homeowners who are not in default. Bank of America, under its (MHA) Making Home Affordable program has issued a new “Imminent Default Checklist” for homeowners who are still current on their payments but believe that they will soon fall behind. The document goes into detail about the review process for eligibility. It covers a number of requirements including loan amount, date of loan origination, if other properties are owned by the homeowner, principal balance amounts, mortgage payment ratios, impounds, and finally a new calculation for payment to income ratios. Now the gross monthly payment goes up from 31% to as much as 40% depending on your income.

Remember: The MHA program is just a guide for the lenders to use, it is ‘not” etched in stone and the lenders may deter from those guidelines. Additionally, contrary to popular belief, even if you loan is not backed by Fannie or Freddie, we can still renegotiate with the private Note holder.

Wells Fargo has indicated they will no longer work with any third party companies unless the negotiators are HUD approved. This will do two things. 1. It will force schemers out of business who are taking money up front, or provide little to no results. 2. It will force the legitimate negotiation firms to become HUD approved which means courses and knowledge of guidelines which will help everyone including the homeowner get results.

Further changes are underway such as licensing for all individuals who negotiate with banks on behalf of homeowners regarding their mortgage. Licensing has already been in place for mortgage originators and that did not curtail the sale of bad loans in the past. It appears our legislators still do not understand that it’s not licensing that matters, but more the ability to report the firms that take money with no results, fine them, and drive them out of the market.

If you know anyone who can use honest objective advice, please send them to our website at http://www.HowToSaveMoney360.com for a wide range of educational materials.