Insurance: Having home inventory will help in filing claim

via Insurance: Having home inventory will help in filing claim

PDF: Home inventory 1Home inventory 2

It’s a tragic picture that’s repeated much too often: A family finds itself on the street, staring shell-shocked at the smoldering ruins of their home, or trying to pick their way through the wreckage after a tornado rampages through their town. What follows is a seemingly endless and gut-wrenching process that can take months or even years as the family tries to regain some sense of normalcy.

In the aftermath of such a calamity, there are a lot of decisions to make and things to do. Homeowners’ insurance is designed to take the brunt of losses and help you get your life back, but most homeowners are ill-prepared to deal with the inevitable question raised by your insurance adjuster: “Do you have a home inventory?”

Simply put, a home inventory is an itemized list (the more detailed, the better) of your home’s contents. Using photos, videos and supporting documents can speed up the claims process. And technology such as smartphones can make the process much easier, but most of us are just not taking the time and effort to do it.

In 2012, the National Association of Insurance Commissioners announced the results of a study that found that only about four in 10 Americans had even attempted to compile a home inventory. That’s probably because it seems like an overwhelming task for homeowners who have more possessions than ever.

The Insurance Information Institute says there are three good reasons to have a home inventory: It helps you purchase the right amount and type of insurance, makes filing a claim simpler, and helps substantiate losses for tax purposes and when applying for financial assistance.

“I tell my clients to think of it this way,” noted Allstate’s Mark Doiron of Madison, who urges all his clients to do a thorough home inventory. “Close your eyes and think about everything that’s in the room around you. Chances are, you are going to miss something. Now, think about trying to do the same thing when your home has just been destroyed.”

Of course, not having a home inventory doesn’t mean you won’t be able to file a successful claim, but it can make the process go much faster, noted Jason Hargraves, managing editor at insuranceQuotes.com. “The inventory is meant to make the process easier for you and the insurance company,” Hargraves told me. “Having to recall your items from memory after a loss can be stressful and you could easily forget something. Giving your adjuster a complete visual inventory also can speed up the process of a claim and serve as documentation for any potential disputes.”

Hargraves advised consumers not to be intimidated by the size of the task at hand, because the best tool to help is probably within your reach right now: your smartphone, which can take and store video. “Just aim, start recording and walk through your house,” he explained. “No special video equipment is required. Several apps are also available to make the process of using your smartphone for this even easier.”

Both Doiron and Hargraves advised consumers to keep receipts for as many items as possible, to document their value. Doiron added that’s especially necessary for any items valued at more than $1,000, such as jewelry, collections or artwork. Update the inventory often, and once you’ve created the record, it’s important to keep it (and supporting documentation) off-site yet accessible, such as in a safe-deposit box. Digital files can be stored in a cloud-based service such as Dropbox.

For more tips, visit the Insurance Information Institute at https://www.iii.org/article/how-create-home-inventory.

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Refunds coming from mortgage company settlement

via Refunds coming from mortgage company settlement, clarionledger.com

PDF: PHH Settlement

Mississippi consumers who faced foreclosures on their mortgages serviced by New Jersey-based PHH Corp. can expect to receive payments in the coming months, thanks to a settlement reached between the company and 49 attorneys general. PHH is the nation’s ninth-largest residential mortgage servicer.

Mississippi Attorney General Jim Hood announced the $45 million settlement Wednesday after the company was accused of improperly servicing mortgage loans from 2009 through 2012.

In a news release, Hood and his counterparts (working through the “Multi-State Mortgage Committee,” or MMC) accused the company of failing to maintain accurate account statements, failing to timely and accurately apply payments made by borrowers, failing to properly process borrowers’ applications for loan modifications, and failing to maintain adequate documentation to determine whether PHH had standing to foreclose.

About 270 Mississippi PHH customers who faced foreclosures should soon be receiving a notice in the mail about how to claim their payments. PHH borrowers who lost their homes through foreclosure will qualify for a minimum of $840, while other PHH customers who maintained their homes despite foreclosure actions will receive a minimum payment of $285. In addition to the payments, PHH must implement a testing and reporting process to ensure it follows the law in the future.

“Our settlement holds PHH accountable for harms homeowners suffered from improper loan servicing and shows our continued dedication to this area,” Hood noted in the news release. “The agreement requires new servicing standards to help ensure that PHH doesn’t repeat conduct that led to improper mortgage servicing and provides financial relief to aggrieved homeowners.”

Attorneys general in all states except New Hampshire signed onto the settlement agreement, noted mortgage industry website Housingwire.com. In reporting on the settlement, Housingwire.com noted that, while PHH officials didn’t admit liability in its statements, it said it’s committed to moving on and correcting past issues.

“We have agreed to resolve concerns raised by the MMC arising from its servicing examination conducted in 2010 and believe that settling this matter is in the best interest of PHH and its constituents,” PHH officials said in a statement to Housingwire. “We have made and will continue to make the necessary enhancements in our operations to ensure we remain compliant and continue to serve our customers in a fair and appropriate manner.”

To read the entire settlement agreement on Housingwire’s website, visit http://bit.ly/2lWi6Vo.

Mortgage payments jeopardize retirement years

via Mortgage payments jeopardize retirement years, clarionledger.com

PDF:Mortgage retirement 1Mortgage retirement 2

Mortgages have been a part of American life for generations. Very few people — especially early in their careers — have the resources to plop down the full payment on a home, so the vast majority of us live with a monthly mortgage payment.

In past generations, the mortgage was often paid off well before the golden years, but increasingly, people are carrying their mortgage payment with them into retirement.

According to the U.S. Consumer Financial Protection Bureau, in the decade between 2001 and 2011, the percentage of Americans 65 and older who hold a mortgage increased from 22 to 30 percent. And the rate jumped to more than 21 percent for homeowners 75 and older, up from just 8.4 percent in 2001. That means a lot of baby boomers are going to be sinking money into mortgage payments deep into their retirement, while their parents at similar ages would have been living in homes they owned free and clear.

The causes are varied: The average home costs a lot more than it used to, while average wages haven’t kept up with rising costs. In addition, with the rise and fall of interest rates, many people cyclically refinance their mortgages and open home equity lines of credit to get much-needed cash. While a lower interest rate is a good thing for borrowers, refinancing tends to extend the loan period.

In October, the Federal National Mortgage Association (otherwise known as Fannie Mae), issued a report about the issue. “The leading edge of the large baby boom generation has reached retirement age with a greater likelihood of carrying housing debt, raising concerns about their retirement financial security,” Fannie Mae noted in its report. “The oldest boomers, who were aged 65-69 in 2015, were 10 percentage points less likely to own their homes outright than were pre-boomer homeowners of the same age in 2000.”

As a result, Fannie Mae warned, some retirees may find their financial security reduced, with less money available to cover living expenses. It could also increase vulnerability to foreclosure and limit the “accumulation of housing wealth.”

Of course, many people consider housing debt to be just a part of their financial portfolio and manage it as they would any investment. But the volatility of the markets in recent years has made that decision more difficult, especially for consumers who have enough money socked away to pay off the mortgage if they had to.

Financial expert Wes Moss, who hosts the nation’s longest-running live call-in, investment and personal finance radio show on Atlanta’s WSB radio, wrote about the issue recently on the Clark Howard website. As to the question of whether seniors should pay off their homes into retirement, he says the answer is “a qualified yes.” He gives a couple of pointers:

  • Pay extra. Paying more than the minimum payment (or making an extra payment each year), Moss advises, can have dramatic effects over the long term. “Most happy retirees who own their homes outright paid off their mortgage early little by little, making more than the minimum monthly payment over several years,” he said. “In my experience, probably 70 percent of retirees who are mortgage-free used this method to reach that goal.”
  • Don’t raid your retirement savings to pay off the mortgage. Although it might be tempting to do so, he notes, withdrawing extra money from your IRA or 401K will generate tax penalties and increase stress. While taking money from other savings is a better option, it could leave you in a lurch later if you need the cash. Moss advocates the “one-third rule.” If you can pay off your mortgage with no more than one-third of your non-retirement savings, you should consider doing so,” he said.

As always, though, it’s wise to consult with a qualified professional before making any investment decision. For some good advice on finding a certified financial planner, visit The Motley Fool’s website at https://www.fool.com/investing/general/2015/06/05/how-to-find-a-certified-financial-planner.aspx.

Renters struggling to pay monthly rent face eviction and homelessness

via Renters struggling to pay monthly rent face eviction and homelessness, clarionledger.com

PDF: Rental Insecurity

Many Americans who live in a rental property often struggle to get from one month to the next. While that fact is well-known to most people, it might surprise you to find just how many people are unable to pay their rent on a regular basis. According to a recent study released recently by Apartmentlist.com, about one in five rental households reported they were unable to pay their monthly rent at least once in the past three months.

The study hints at what appears to be an alarming trend, even in the face of an improving economy. Missing rent payments often leads to financial penalties and eviction, which in turn can lead to homelessness and a variety of other social problems. In the study, Apartment List surveyed 41,000 renters, asking whether they’d missed a payment in the past year, whether they’d been threatened with eviction and whether they’d had a previous eviction.

While there are few reliable statistics about evictions (the study cited a “serious lack of comprehensive nationwide data on evictions”), it’s a very real issue for millions across the nation. About 3.3 percent of renters responding to the survey reported they’d been evicted in the past, and about 2.4 percent reported they were evicted from their most recent residence. While those numbers may seem small, the study’s authors concluded that — if the same percentage were applied to the general population of U.S. renters — it would mean about 3.7 million people had been evicted at least once. “If we assume that some share respondents fail to report informal evictions, this estimate is most likely understated,” the organization noted in its report.

The study seems to point out that rental insecurity has an uneven impact on American communities. Renters without a college education, for example, are more than twice as likely to face eviction as those with a degree. African-American households fared the worst among all demographic groups, while renters with lower incomes and single people with children more frequently reported inability to pay their rent. And there were geographic disparities, as well, with people in the South and Midwest facing greater rental uncertainty (Memphis renters reporting the highest eviction rates in the nation.)

As for the causes, there are many. Renting households often live paycheck to paycheck and have little or no savings. There are also economic causes; economists point out that as household wages have grown slowly or even stagnated in many parts of the country, rental rates have risen (often dramatically). For example, in Washington, D.C., household incomes rose about a third from 1980 to 2014, but rents jumped 86 percent in the same period. And in some cities, such as Houston, actual wages dropped during the same 34-year period, while average rents continued to climb.

“Evictions disrupt families and communities, imposing further harm on what are often the most vulnerable members of our population,” noted Apartment List’s Chris Salviati in the report. “Even when they do not face eviction, members of households that struggle to pay rent live with the fear of housing insecurity, which often means sacrificing other basic needs, such as food and transportation.”

To better understand how the law applies to landlord-tenant issues, visit the Mississippi Center for Legal Services’ website at http://www.mslegalservices.org/issues/housing/landlord-and-tenant-issues.

Be careful refueling your A/C

AdobeStock_514814.jpegvia Moak: Be careful refueling your A/C, clarionledger.com

As the weather heats up here in the South, our air-conditioning units will be getting busier and busier. The invention of air-conditioning has without a doubt created fundamental changes in how we live. Since its introduction in 1902, air-conditioning has not only changed the way we build structures (and even entire communities); it has also changed the way we interact (or don’t) with our neighbors and how much time we spend outdoors.

The rapid spread of air-conditioning (for which I, like most Southerners, am eternally thankful) has also led to rising concerns about the impact this technology has on the environment. Some refrigerants used in air-conditioning units (known as HCFCs or Freon) are being limited or banned outright by the U.S. Environmental Protection Agency out of concern they’re damaging the ozone layer. (Which — in case you weren’t paying attention in your high-school science class — protects us from being fried by the sun’s ultraviolet rays.)

The EPA is in the middle of an aggressive phase-out of some HCFCs, which will force companies to stop making them by 2020. Since the phase-out targets the widely used R-22 or HCFC-22, it’s forcing the industry to find new ways to adapt. Although R-22 use is still legal, the phase-out means the cost is rising and will continue to rise due to decreased supplies. (It’s important to remember you can still use R-22, and if you have it in your unit, it’s perfectly fine.) You’ll only have to pay higher prices if your A/C unit needs to be “recharged” due to a leak.

As costs rise and R-22 stockpiles dwindle, however, people have tried a lot of ideas for replacements. Unfortunately, some of those ideas aren’t so smart; some alternatives to R-22 are being sold that could be dangerous because they contain highly flammable propane. Yes, the same propane that you use to light your campsite or cook your hamburgers is a primary component in a substance being sold as “R-22a.” The EPAissued a news release earlier this month warning about the products and how they can cause an improperly equipped air-conditioner to explode or catch fire.

“Using an unapproved, flammable refrigerant in a system that wasn’t designed to address flammability can lead to serious consequences, including explosion or injury in the worst cases,” said Janet McCabe, acting assistant administrator for EPA’s Office of Air and Radiation. “As the summer cooling season gets started, we want to make sure consumers and equipment owners know what is going into their system is safe.”

The EPA has already conducted several enforcement actions about R-22a and related products, including the arrest of a Metairie, Louisiana, man who earlier this year allegedly sold a product called “Super-Freeze 22A” but didn’t warn his customers it could catch fire. In two additional cases, companies in Kansas and Illinois faced huge fines and were forced to stop selling similar products.

“EPA encourages technicians and contractors to consult our website for more information and recommends homeowners confirm that air-conditioning service providers follow manufacturers’ recommendations,” the EPA said in the news release. “Homeowners should be aware that recharging their cooling systems with the wrong refrigerant can void manufacturers’ warranties.”

The EPA has a list of questions and answers about R-22A atwww.epa.gov/snap/questions-and-answers-about-r-22a-safety.

In the meantime, if you are concerned about R-22 or alternatives, talk to your HVAC (heating, ventilation, air-conditioning) technician to make sure you know what’s being put into your unit. Most experts recommend having a qualified HVAC company take a look at your system at least once a year anyway, especially since our Mississippi summer is going to give your system quite a workout.

Check out alarm system salesmen, Chaney says

via Moak: Check out alarm system salesmen, Chaney says, published at clarionledger.com on 7/31/2015.

Home security is big business these days. According to the research firm Ibisworld, the home security market is worth about $22 billion and is growing rapidly. But, as with most industries, there are also concerns. As awareness of home security systems has grown along with the number of companies eager to get in on the action, so have solicitations — some of questionable legitimacy. Since people who install or service monitoring systems can have access to your home, it’s important that you know the company and its representatives can be trusted.

Recent telemarketing calls to Mississippi residents have gotten the attention of Insurance Commissioner Mike Chaney, who’s also the fire marshal. He sent out a reminder this week: Anyone who sells, installs or monitors home security alarm systems in the state must be licensed by the state fire marshal’s office — in other words, him.

“We are getting numerous reports of robo-calls, a number of them from a Texas area code, informing citizens they have been selected to receive a free alarm system and the company will send someone out to install it,” Chaney said in a news release. “We are again reminding citizens to either ask for the company’s State Fire Marshal-issued license number, or, remember that if you agree to the promotion, the company or individual who comes out to install the system must have a license and photo ID issued by the State Fire Marshal’s Office. Ask them to show you these credentials.”

Chaney’s office is empowered to administer the Mississippi Electronic Protection Licensing Act, passed in 2006. The act requires that companies selling or installing security systems or services must adhere to several requirements, including submitting a bond, undergoing criminal background checks and receiving competency training.

So, if you’re solicited by someone promoting or selling alarm systems or monitoring services, here are some potential red flags:

  • Offers that promise a “free” system or claims your current system is old, out of date or in need of an upgrade or replacement. (If the salesperson has not examined your system, they would not have this information.)
  • Claims that your home has been chosen as a “model” home and is eligible for a free system and/or reduced monitoring fee. (These are known tactics that play upon consumers’ ego or desire to get an “exclusive” deal, but may not be legitimate.)
  • Guarantees you will receive a reduction in your homeowner’s insurance when a system is purchased. (Most insurance companies do offer such incentives, but there may be conditions. Only your insurance company can determine your rate or discounts; contact your agent to verify this.)
  • Salespersons who come to your home claiming to be with your current company. Call your company and verify.
  • Claims your company has gone out of business or that your account has been purchased from your company. Call your company and verify.
  • Claims of increased crime in your neighborhood. Call your local police and verify.

Chaney added that if an individual is unable to produce such an ID, that person may not be licensed or authorized to operate in the state and should be reported to the state fire marshal at (888) 648-0877 or (601) 359-1061. If the individual acts in a suspicious manner, contact local law enforcement authorities. If the individual is in a vehicle, write down and report the license tag number.

Home-equity credit deadlines approaching

Originally published in the Clarion-Ledger print edition on April 15, 2015.

During the days of easy credit a decade ago, many consumers took out home equity lines of credit (HELOCs) to have some needed cash to make home improvements, pay for college, or even buy luxury items or travel. It seemed like a good idea at the time; home values were at historical high rates, and credit terms were loose. When the loan came due, you could just refinance. Banks made it quick and easy to apply to get at this pile of money, just sitting unused in the value of your home.

But now, as many HELOCs taken out during the middle 2000s are reaching the 10-year mark, many consumers may find that a nasty surprise awaits; the end of the “draw period” also means that the loan ceases to be “interest-only”, and the loan payment may suddenly increase to double or more of what you’ve been paying. The HELOC – which once looked like a ready-and-willing ATM – has morphed into a fully-amortized, adjustable-rate mortgage.

That means that a lot of consumers will be facing the harsh realities of paying that suddenly-higher note. Refinancing may still be an option, but since home values have shifted considerably during the past few years, credit restrictions have tightened and incomes have struggled to match rising prices, consumers may find their options are more limited than before.

In simple terms, a HELOC is a line of credit based on your home’s equity; they’re considered second mortgages. If you have equity in your home, a bank will loan you a percentage (with your home as collateral), with the stipulation that you pay the interest only during an initial period (often 10 years). And you can use the remaining value of the HELOC during the draw period to get needed cash; many homeowners use it as a “cushion” against financial emergencies.

According to some sources, as many as half of current HELOCs were taken out between 2004 and 2006, causing a lot of concern with the expiration of the 10-year draw periods that’s happening now. Some have likened all this to a “ticking time bomb”. Although that may be a little dramatic, regulators are concerned. Last year, the Federal Reserve issued a white paper with guidance for lenders in dealing with the impending changes.

“[Regulators] recognize that financial institutions and residential mortgage borrowers may face challenges as home equity lines of credit (HELOC) near their end-of-draw periods,” noted the agency. “As HELOCs transition from their draw periods to full repayment, many borrowers will have the financial capacity to pay as agreed. Some borrowers, however, may have difficulty meeting higher payments resulting from principal amortization or interest rate reset, or renewing existing loans due to changes in their financial circumstances or declines in property values.”

If you have a HELOC, it’s a good idea to dig out your paperwork and find out when your draw period ends. Bankrate.com suggests exploring these options with your lender:

  • Refinance the HELOC into a new one.
  • Refinance the HELOC with a straight home-equity loan.
  • Roll your remaining HELOC balance into a refinance of your primary loan. (Remember, interest rates are still near historic lows.)

And if your payment has mushroomed and you find you can’t handle it, don’t lose your home; ask for help from a credit counseling service.

Attorney General, Contractor Board warn bad contractors

via Attorney General, Contractor Board warn bad contractors | Consumer Watch, clarionledger.com, 4/22/2013

Mississippi Attorney General Jim Hood and the Mississippi State Board of Contractors today issued a warning to would-be unscrupulous contractors: shoddy work, ripping off consumers and bad practices will be met with zero tolerance.

“Mississippi has been hit hard by storms in 2013, everything from tornadoes to hail storms, causing an increase in out-of-state contractors moving to the state looking for work,” Hood said in a joint news release. “Many of these contractors are unlicensed or fraudulent.”

You may recall that, after the hailstorms a few weeks ago, agencies issued similar advice. But with the new hard line, officials hope to present a united front as we are still dealing with spring storms and hurricane season is around the corner.

“We caution storm victims not to make a bad situation worse by hiring the first contractor who comes along,” said Stephanie Sills Lee, Executive Director for the MSBOC. “Take your time and protect yourself against con artists who will take your money and run or from incompetent contractors who will perform shoddy work.”

A conviction for Home Repair Fraud could result in up to ten years behind bars, notes the joint release, adding, “The MSAGO and the MSBOC both intend to prosecute, to the fullest extent of the law, anyone caught committing home repair fraud.”

“There are a lot of honest contractors out there, but a disaster really brings out the crooks trying to take advantage of those already in a vulnerable position,” said Hood. “That’s why we are joining forces with the Board of Contractors to send the message that we are united in our fight against crooked contractors.”

Some tips recommended by both agencies to protect yourself from crooked contractors:

Hire only licensed and bonded contractors. Ask to see the license and verify the bond.
Use Mississippi contractors if possible.
Verify the contractor’s license by checking online at http://www.msboc.us
Be wary of supposed contractors who come to your home soliciting business. Most reputable contractors will be busy and won’t need to solicit business.
Always get more than one estimate. Three bids are recommended.
Request references and talk with those references.
Put all your terms in writing. A copy of a “model contract” can be found at http://www.agjimhood.com
As a backup, videotape the discussion with the contractor concerning the terms of the transaction/contract.

“Following recent storms, we have had our disaster response teams out pushing information and following up on complaints,” Lee said. “We hope by joining forces with the Attorney General’s Office that we can keep some storm-damaged residents from being victimized by an unscrupulous contractor.”

Consumers can check a contractor’s qualifications or file a complaint with the MSBOC by calling 1-800-880-6161 or by visiting http://www.msboc.us. Consumers can file a complaint with the MSAGO by calling 1-800-281-4418 or by visitingwww.agjimhood.com. A copy of the Attorney General’s “Consumer Tips for Storm Victims” can also be downloaded at www.agjimhood.com. More resources and tips can be found on both agency’s websites.