Beware of Rebate Bounce-Back

November 26, 2008

This holiday shopping season is already shaping up to be one of the worst on record for both consumers and retailers. We’ve already warned you to beware of possible worthless gift cards issued by failing retailers. Now, our attention turns to a mainstay of many consumer electronic stores’ Black Friday lure: the “MIR” or Mail-In-Rebate.

Some people live by rebates, others won’t touch them with a ten foot pole and nearly half of all eligible rebates go unclaimed. But when instructions are followed to the letter and materials are sent in on time, consumers can save big on popular gadgets. And therein lies the problem this holiday season. Buyers are more strapped and more enticed than ever to save money wherever they can.

Rebates are often sent in without the proper materials, or just forgotten in the shuffle and many times left unfulfilled even though the consumer thought they were ‘saving’ on their purchase. This Black Friday’s savings could be even more problematic if the company fulfilling your rebate check goes belly up like recently failed CPG in Tampa. If you recently tried to claim a rebate from them, here’s a list of CPG’s possible affected retailer rebates.

Retailers usually don’t fulfill the rebates themselves but pay a third party company to process them. Convenient for the retailer, but when the processor goes out of business any checks they send out might bounce.

While there’s no guarantee a rebate fulfillment center will stay in business long enough for you to get your money, there are a few steps you can take to ensure it won’t get rejected or stuck in processing.

  1. Carry the store’s ad with you to the shelf to verify the model and sku number of the product.
  2. Double check that you are purchasing all the items required to receive the rebate. Some rebates require you to purchase more than one product together on the same receipt.
  3. When checking out be sure any necessary receipts are given to you by the cashier. Some retailers like BestBuy will print receipts and all duplicates for you right at the register.
  4. As soon as possible fill out all rebate forms and gather all items detailed in the offer. Be advised that some offers require the ‘original UPC code’ from the box – many times this will render your product ineligible for return at the place of purchase. Defective returns may then need to be handled directly through the mfr. So where possible, you may want to test out the product prior to removing the UPC code from the box, then you’ll be able to return to the store and get a replacement product quicker and easier.
  5. Before mailing your rebate materials make copies of all forms, reciepts, and UPC codes. This will help you in the event of a dispute later.
  6. Check one last time that you’ve followed all instructions and enclosed all of the forms, UPC codes, serial numbers, etc.
  7. Mail your rebate early enough so that it is postmarked by the date of the offer. Where possible you can even check the status of your rebate online.
  8. Be sure to watch your mail carefully. Many rebate checks arrive looking eerily similar to junk mail offers and end up shredded or trashed with other mail because they don’t look important.

New Mortgage Meltdown Solution: A $40 Pair of Handcuffs

November 26, 2008

The Consumer Warning Network’s Chris Hoyer says a $40 pair of handcuffs will go a long way in holding accountable the corporate titans who caused the mortgage meltdown.  Pure and simple: JAIL TIME!

WFLA TV in Tampa talked to the US Attorney about pending local indictments, which are good, but Hoyer– a former federal prosecutor– says the arrests need to go all the way to the top to have real impact.  Watch the video above.

Stopping Foreclosures – The Broken Promise

November 26, 2008

foreclosure signFederal and state officials, eager to stabilize the housing market, have leaned hard on mortgage companies to honor their pledges to help more homeowners avoid foreclosure.  Unfortunately, a new survey released Tuesday by the non-profit California Reinvestment Coalition shows the efforts have produced only modest results.

Read more

Skippy Skimping on Peanut Butter

November 25, 2008

skippySee the rows of Skimpy Peanut Butter sitting on the grocery shelf? Same jar, same size, right?

Look again. The bottom of the jar has a dimple in it, subtly reducing the amount of product by 10%. The price, of course, remains the same.

It’s not just peanut butter that’s secretly downsizing. Cereal boxes, ice cream tubs, candy bars, paper towels and chocolate bars are among the many products quietly reducing their sizes and thereby effectively raising their prices, with no warning to the consumer.

See the full story here in the L.A. times.

How To Stop Unwanted Catalogs

November 24, 2008

In 2005 more than 19 billion catalogs were mailed in the United States.  By 2008 on average every person in the United States will receive more than 41 pounds of catalogs.  This equals 4 million tons of junk mail each and every year.

The problem is how to stop the unwanted calalogs.  Even moving won’t stop the catalogs from finding you.  There is now a FREE and simple way to manage your junk mail. It is a web site called

Sign up and every time you receive an unwanted catalog go online and have it removed.  It is that simple!  In a few months your mail box will only contain bills.

Bankrupt Retailers = Bankrupt Gift Cards

November 24, 2008

Love ’em or hate ’em, retail gift cards have grown more and more popular in recent years. A bit impersonal? Maybe, but they’re convenient, always the right color, and arguably more useful than that medium, out of style reindeer sweater your Aunt Edna gives you each year.

According to the National Retail Federation, around 55% of consumers say they would like to receive a gift card, and nearly two thirds of consumers plan to buy them this season. But what happens to all of those cards when the retailer goes out of business? Read more

Fannie & Freddie Suspend Foreclosures for the Holidays

November 21, 2008

Fannie Mae and Freddie Mac are temporarily suspending foreclosures and evictions during the holiday season.  The companies say it’s part of an effort to include more people in a recently announced program to re-write mortgage loans for the most distressed borrowers.  The video above is a report from WFLA TVwhich outlines the effort.  Tampa attorney Jill Bowman expressed some skepticism about the long-term benefit. 

The Ultimate Nigerian Scam – $400,000 Over 2 Years

November 20, 2008

It would seem everyone has heard of the Nigerian Scam by now, but as P.T. Barnum would say, “There’s a sucker born every minute!”

Never has this phrase rung more true than in the seemingly unbelievable story of a 2-year con of an Oregon woman at the hands of a patient but persistent Nigerian Scammer. Lured by the promise of a $20 million payoff from an estate of a long lost grandfather, Janella Spears began by sending $100 in untraceable funds to Nigeria.

From there the scammer kept stringing her along promising the next payment “would be the last one.” Each time Spears would send more and more money in hopes that her payoff was coming – until those transfers captured the attention of Oregon Department of Justice investigators. Over a three-week period they noticed wire transfers of $144,000 to Nigeria performed by one person – Janella Spears.

Read More

Foreclosure Battle: Who Owns Your Loan?

November 19, 2008

Here’s what can go wrong when a mortgage lender sells your loan and doesn’t tell you. One hand is moving to foreclose and kick you out, while the other is telling you they want to negotiate a loan modification. The results aren’t pretty. This is the story of a Tampa woman faced with foreclosure.  She was negotiating with her lender to work-out a deal to stay in her home. Only one problem: the lender didn’t actually own her loan. Read more

Homeowner Bailout: Do You Qualify?

November 19, 2008

After shifting gears and deciding that buying toxic assets wasn’t such a good idea after all, the federal government announced two new bailout plans that finally focus on homeowners. Are you a homeowner who could find some financial relief from these new plans? Maybe, but there are a lot of unanswered questions.

The Federal Housing Finance Agency (FHFA), conservator of Fannie Mae and Freddie Mac, unveiled a new relief plan on November 11th that can help homeowners in trouble on their mortgages.  It offers a program to make their loans more affordable and keep them out of foreclosure. Three days later the FDIC announced its own similar bailout program.

Who Qualifies?

The FHFA plan applies to mortgages held by Fannie and Freddie, and to certain other mortgages held by a list of banks who are part of the “Hope Now” housing consortium. A “streamlined loan modification program” designed to put “seriously delinquent” homeowners into more affordable loans will be put into place by December 15.

These highest risk borrowers will qualify if:

1. they are three or more payments behind on their mortgages;

2. they currently occupy their homes;

3. they have not filed for bankruptcy;

4. their unpaid principals are more than 90% of the current value of their homes

5. they certify that their current situation is a result of  hardship or change in financial circumstances.

If homeowners meet these criteria, they can work with their mortgage service providers to reduce their monthly payments so that they do not exceed 38% of their gross household income. These reductions can come about through a combination of reduced mortgage interest rates, extended loan periods, or deferred payments on some of their principal.

The FDIC announced a similar program of loan modifications for loans delinquent 60 or more days. Loans under this program can be modified to reach a 31% monthly income level. The loan-to-value calculations are, however, a bit more complicated under the FDIC plans.

Incentives for Loan Servicers

Both programs contain benefits for mortgage service providers who participate in the loan modification program. The FHFA will pay them $800 for every successfully modified loan, and the FDIC will pay $1,000. This is to encourage as many servicers as possible to participate in the program and not force homeowners into foreclosure.  Providing a fee for modifications is an incentive for servicers, because, in the past, they usually got higher fees for doing a foreclosure.

Why two plans, and do you qualify? The two plans attempt to reach as many affected mortgages as possible. Fannie and Freddie own or guarantee almost 60% of all single family mortgages, but they only represent 20% of the serious delinquencies. The participating members of Hope Now hold many mortgages internally and can likewise engage in loan modification programs.

Many mortgages, however, were bundled and sold as mortgage backed securities to investors.  That creates an extra hurdle for homeowners seeking loan modifications for those underlying mortgages, because the homeowner can’t negotiate directly with the entity that owns the loan. These “Private label securities” make up less than 20% of the mortgages, but 60% of the serious delinquencies.

The FDIC program is designed to lure as many non-Freddie and and non-Fannie mortgages into participation as possible by offering an FDIC guarantee of 50% of any modified loans that re-default after modification. In other words, if a borrower and lender participate in the FDIC loan modification program, and the borrower later defaults on the newly modified loan, the FDIC (i.e., taxpayers) will guarantee 50% of the loss to the affected lender.

The FDIC estimates that these potential guarantees will cost $24.4 billion based on past experience, but will help avoid almost 1.5 million foreclosures. Since foreclosures drive down the housing market everywhere, it is hoped the program will help stabilize the market.

But holders of these mortgaged backed securities may tell the lenders: “Wait a minute! You can’t change my investment that way without my permission.” In fact, a group of investors has done exactly that in connection with a group of mortgages that were going to be modified under a settlement between Countrywide Financial and 15 state attorneys generals. Investors holding such securities may not just sit back and allow their investments to be “modified” without their say-so.

So if you are seriously delinquent on your mortgage, the first question is whether your mortgage even qualifies under these programs. If it is a loan Fannie or Freddie either guarantees or owns, the mortgage will qualify. If the mortgage is held by one of the participants in Hope Now and not securitized, the mortgage will qualify. If, however, your mortgage is non-Freddie or non-Fannie AND has been securitized, you may be out of luck.

How can you find out if your mortgage qualifies? You’ll have to demand that your mortgage service provider reveal to you whether your loan comes under either the FHFA or FDIC program. If it does and you otherwise qualify, there may be relief for you under the new programs. As far as initiating the necessary procedures, these will have to be worked out by the agencies between now and December 15.

For homeowners whose mortgages do not qualify, the only real help can come from Congress. It will take legislation to force securitized mortgages into these programs. If you are in this category, write or email Congress and demand action. You didn’t ask that your mortgage be sliced up and sold as a security, so why should you suffer as a result?

Also, foreclosure moratoriums, like the temporary one announced by Fannie and Freddie last week for the holidays. have become necessary. Most servicers, while working on loan modifications, proceed with foreclosures anyway, and the foreclosure might nullify your modification attempts. We have heard horror stories of homeowners who were on the verge of a successful loan modification only to discover that their homes have been sold out from under them through foreclosure. One homeowner even found out her personal belongings had been trashed by Freddie Mac, because the foreclosure had overtaken her loan modification efforts which were on the verge of success!

When more details on the two new programs become available, Consumer Warning Network will post details to inform affected homeowners.

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