The latest effort to fix the foreclosure mess has major flaws, according to a recent article in the New York Times, http://www.nytimes.com/2011/12/25/business/foreclosure-relief-dont-hold-your-breath-fair-game.html?_r=1. This time, the focus is on the foreclosure processing abuses by major loan servicers, including the "robo-signing" of court papers.
The problems include an inherent conflict of interest, as highlighted in a recent Senate subcommittee hearing. The problem is that the consultants hired to do the reviews of past practice are being paid by the banks they are reviewing. Those that have done work for these banks in the past or hope to do work for them in the future are not barred from doing these reviews. The Comptroller of the Currency claims they have carefully vetted the consultants chosen, but as the article points out, it took very little time for a researcher to find serious flaws, including a reviewer who has previously done credit reviews possibly of some of the very same loans from which abuses flowed.
This is yet another example of how Washington has not really come to grips with the inherent conflicts of interest and laissez-faire attitude that contributed to our getting in this mess. Until all players in the financial system have clearly defined limits and standards, enforced by independent parties, the system is going to remain broken.
Proponents of reduced regulation forget their history: we had laissez-faire capitalism in the 19th and early decades of the 20th century. The results were bank failures and periodic financial collapses. This is not a history we should like to repeat.
If you have been the victim of a foreclosure scam or abuses by a creditor or mortgage lender, we can provide assistance. See our website at http://www.nv-njlaw.com
Tuesday, December 27, 2011
Thursday, December 15, 2011
Some thoughts for the holidays, even in the midst of financial chaos
The end of year holidays can be especially difficult for people and families in distress. But they are also a time to reflect on what we have and what we value, in the context of what is hopefully a long life. I meet and try to help a lot of people whose financial lives or businesses are out of control or falling apart, and the most important job I have is to help them put things in perspective, so they can take control of their lives. Here are some thoughts from that experience:
1. Life is a long road, and the bumps in the road become less important once we get over them. Many people dwell on the past, how much better things were, how they never thought they would end up where they are now. They forget that in the long run, things work out. Sure, there may be costs and difficulties, but facing them and accepting them leads to calm and reasoned actions. A certain degree of faith that we can get through this often results or is strengthened.
2. Our first obligation is to our family, and to preserving our ability to support them. People worry about the loss of a good credit score, or what people will think, or losing a house they can no longer afford. But our first duty is not to our creditors, but to preserving our ability to support and maintain our families and those important to us. If this means that we have to shed financial obligations that threaten our ability to keep our jobs, or to put food on the table, or to pay for medical care, then so be it. In the long run, things are just things. The goal should be to get back to a situation where our basic living expenses can be paid with the income we have now.
But this may mean telling our children and family some unpleasant truths about our situation. Make no mistake, this is not something most of us want to do, but handled the right way and with the right perspective, it can strengthen our ties to those we love and who are our friends. What the rest think of us should be secondary. And children know that something is wrong. Leveling with them can reduce anxiety, and help them be "part of the team".
3. Enjoy and revel in the things that money cannot buy. Family, friends, shared experiences. I have known people for whom confronting and dealing with their financial situation has been liberating. They have come back to a point of valuing the important things. They have experienced the freedom of not having to worry about preserving things that may not be necessary, at the expense of what should be important.
4. Have faith that no matter what happens, "this too shall pass". Many years ago, someone told me it is not the number of times you fall down that counts, but the number of times you get up. All my clients eventually find a way to get on with their lives. Things get better once you confront the situation and develop a plan to move on. From spinning out of control, they have a grip on the "wheel", and they are steering their lives to a better future.
For more information about this subject, see our website at http://www.nv-njlaw.com/
1. Life is a long road, and the bumps in the road become less important once we get over them. Many people dwell on the past, how much better things were, how they never thought they would end up where they are now. They forget that in the long run, things work out. Sure, there may be costs and difficulties, but facing them and accepting them leads to calm and reasoned actions. A certain degree of faith that we can get through this often results or is strengthened.
2. Our first obligation is to our family, and to preserving our ability to support them. People worry about the loss of a good credit score, or what people will think, or losing a house they can no longer afford. But our first duty is not to our creditors, but to preserving our ability to support and maintain our families and those important to us. If this means that we have to shed financial obligations that threaten our ability to keep our jobs, or to put food on the table, or to pay for medical care, then so be it. In the long run, things are just things. The goal should be to get back to a situation where our basic living expenses can be paid with the income we have now.
But this may mean telling our children and family some unpleasant truths about our situation. Make no mistake, this is not something most of us want to do, but handled the right way and with the right perspective, it can strengthen our ties to those we love and who are our friends. What the rest think of us should be secondary. And children know that something is wrong. Leveling with them can reduce anxiety, and help them be "part of the team".
3. Enjoy and revel in the things that money cannot buy. Family, friends, shared experiences. I have known people for whom confronting and dealing with their financial situation has been liberating. They have come back to a point of valuing the important things. They have experienced the freedom of not having to worry about preserving things that may not be necessary, at the expense of what should be important.
4. Have faith that no matter what happens, "this too shall pass". Many years ago, someone told me it is not the number of times you fall down that counts, but the number of times you get up. All my clients eventually find a way to get on with their lives. Things get better once you confront the situation and develop a plan to move on. From spinning out of control, they have a grip on the "wheel", and they are steering their lives to a better future.
For more information about this subject, see our website at http://www.nv-njlaw.com/
What to tell the kids when financial problems loom large
I am not a psychologist. This article is not psychological advice from a trained or licensed family or mental health professional. However, we have met with many, many people over the years and from that experience can give you the benefit of our perspective. You may be looking at this article because you are in debt and are feeling some guilt about your current circumstances, and especially about how it impacts your family. Guilty feelings are not a bad thing. They mean you acknowledge some responsibility for your current circumstances, and a need to do something. So feeling guilty or scared is normal and healthy. It is what we do with that guilt or fear that is important. I will share some thoughts how to help your children deal with the stress you are going through, and to benefit from the experience. Of course, seeking help from a trained family therapist is always wise, when the situation warrants.
Dealing with financial distress is scary enough. For many of our clients, a major hurdle is what to tell their children. Along with confronting your financial troubles, you have confront your family and the fears you may have about them. Yet a healthy and effective approach to taking control of your life and moving on to the fresh start you need demands that you do so.
A good start is to recognize what you are fearful of and put it into perspective. Downsizing and cutting back mean making hard choices.
Children are GOING to be affected, if they haven’t been already. It's embarrassing to disclose what is happening to you. And it leads to hard questions about how and why. You may feel that telling the children forces you to admit failure, and disappoint what you think are your children’s expectations. You may be afraid that you or your children may lose status or respect among their peers and your neighbors.
While these are real concerns, we believe the right approach can help you minimize the effect they have on you and your family.
First, recognize that children are brilliant at discerning minute changes in their parents’ emotional landscape. They will sense if not know that you are struggling and that things are not right. Not sharing with them what is going on and what you are doing about it can only increase their anxiety. With the right approach, you can lessen the stress on them and yourselves as well.
Explanation can have positive benefits if done rightChildren learn from us both by seeing our mistakes and seeing how we deal with them to move on. Showing your children that you are not hiding from your situation, but taking control of it and making the hard decisions that need to be made is a very positive example. By sharing with your children what you are doing, you also allow them to become part of the solution. You show them that as a family you are working together. For example, you might explain that paying for their new ipod or toys means you will have to give up something more important, like a roof over your head. In the end, you are telling them "We're all in this together" and "We will get through this and move on".
The hard part may be explaining how this situation came about. Don’t be too hard on yourself. The point is not to cast blame. Instead, it is to deal with the past and move on. Maybe the causes were beyond your control and it was just the economy, or an unexpected event. You might want to show how past decisions to buy and spend contributed to this situation--"if I had it all to do over again, this is what I would have done". At the end, you and your children need to deal with past but not dwell on it, and move on: "this is what happened, this is where we are, and we will deal with the present the best way we can, so that we can protect you and the family."
As I have said before in this blog, we often tell our clients that protecting their families and their ability to continue supporting themselves and their children is the single most important mission. Credit scores, paying creditors, concern about what others may think of us are secondary.
The Value of Putting on Blinders. A useful image here is to think of yourself as "putting on blinders". Just as blinders help a horse avoid getting spooked or distracted by extraneous noise, people in financial distress need to put on blinders to the past and the too-distant uncertain future. The past is done: we recognize what happened, but we do not dwell on how much better things were then or what we might have done differently. The distant future is unknown. We can only predict a limited time into the future. Stay focused on the here and now, on what we have to deal with now and what we are reasonably certain will happen or we can control. Bad things could happen or good things could happen, but making decisions today on what might or might not happen is just another distraction sucking emotional energy and attention away from the job at hand.
Of course, before you sit down with the children, you need to take careful stock of your situation. Put together a budget, with your actual monthly income, and the basic and necessary living expenses. You can use one of our budget forms or come to see us for help with this. You also need to have a plan. And we often recommend that our clients write it out and keep it for future reference. The plan can be changed, but in the emotional forest, that piece of paper is a road map to where you are and where you need to go. It can help you keep on track.
In addressing your children, you should decide where to draw the line. You need to retain a zone of privacy--not all your financial affairs are their business. Decide what the children need to know. You are not inviting them to audit your personal finances. You also do not need to make them your emotional caretakers. At the same time, commit to keep them in the know to some degree. And make clear that you still control the finances and make decisions for yourself and the family. Decide in advance what expenses or activities are not going to be changed or touched, except as a last resort. Your children need to know what they will not have to give up, as much as what will be different.
All this is information your children need so they can adjust their expectations and know why things are happening, and how they fit in. But the other tough question is: what do your children do with this knowledge, in dealing with their peers? Here might be some talking points for them:
Dealing with financial distress is scary enough. For many of our clients, a major hurdle is what to tell their children. Along with confronting your financial troubles, you have confront your family and the fears you may have about them. Yet a healthy and effective approach to taking control of your life and moving on to the fresh start you need demands that you do so.
A good start is to recognize what you are fearful of and put it into perspective. Downsizing and cutting back mean making hard choices.
Children are GOING to be affected, if they haven’t been already. It's embarrassing to disclose what is happening to you. And it leads to hard questions about how and why. You may feel that telling the children forces you to admit failure, and disappoint what you think are your children’s expectations. You may be afraid that you or your children may lose status or respect among their peers and your neighbors.
While these are real concerns, we believe the right approach can help you minimize the effect they have on you and your family.
First, recognize that children are brilliant at discerning minute changes in their parents’ emotional landscape. They will sense if not know that you are struggling and that things are not right. Not sharing with them what is going on and what you are doing about it can only increase their anxiety. With the right approach, you can lessen the stress on them and yourselves as well.
Explanation can have positive benefits if done rightChildren learn from us both by seeing our mistakes and seeing how we deal with them to move on. Showing your children that you are not hiding from your situation, but taking control of it and making the hard decisions that need to be made is a very positive example. By sharing with your children what you are doing, you also allow them to become part of the solution. You show them that as a family you are working together. For example, you might explain that paying for their new ipod or toys means you will have to give up something more important, like a roof over your head. In the end, you are telling them "We're all in this together" and "We will get through this and move on".
The hard part may be explaining how this situation came about. Don’t be too hard on yourself. The point is not to cast blame. Instead, it is to deal with the past and move on. Maybe the causes were beyond your control and it was just the economy, or an unexpected event. You might want to show how past decisions to buy and spend contributed to this situation--"if I had it all to do over again, this is what I would have done". At the end, you and your children need to deal with past but not dwell on it, and move on: "this is what happened, this is where we are, and we will deal with the present the best way we can, so that we can protect you and the family."
As I have said before in this blog, we often tell our clients that protecting their families and their ability to continue supporting themselves and their children is the single most important mission. Credit scores, paying creditors, concern about what others may think of us are secondary.
The Value of Putting on Blinders. A useful image here is to think of yourself as "putting on blinders". Just as blinders help a horse avoid getting spooked or distracted by extraneous noise, people in financial distress need to put on blinders to the past and the too-distant uncertain future. The past is done: we recognize what happened, but we do not dwell on how much better things were then or what we might have done differently. The distant future is unknown. We can only predict a limited time into the future. Stay focused on the here and now, on what we have to deal with now and what we are reasonably certain will happen or we can control. Bad things could happen or good things could happen, but making decisions today on what might or might not happen is just another distraction sucking emotional energy and attention away from the job at hand.
Of course, before you sit down with the children, you need to take careful stock of your situation. Put together a budget, with your actual monthly income, and the basic and necessary living expenses. You can use one of our budget forms or come to see us for help with this. You also need to have a plan. And we often recommend that our clients write it out and keep it for future reference. The plan can be changed, but in the emotional forest, that piece of paper is a road map to where you are and where you need to go. It can help you keep on track.
In addressing your children, you should decide where to draw the line. You need to retain a zone of privacy--not all your financial affairs are their business. Decide what the children need to know. You are not inviting them to audit your personal finances. You also do not need to make them your emotional caretakers. At the same time, commit to keep them in the know to some degree. And make clear that you still control the finances and make decisions for yourself and the family. Decide in advance what expenses or activities are not going to be changed or touched, except as a last resort. Your children need to know what they will not have to give up, as much as what will be different.
All this is information your children need so they can adjust their expectations and know why things are happening, and how they fit in. But the other tough question is: what do your children do with this knowledge, in dealing with their peers? Here might be some talking points for them:
- It's not a reason for shame
- Coin is not everything--pride, hard work, and love of family are just as valuable
- "It's not where you end up that counts, its where you started from and how far you traveled"
- Lots of successful people failed at some point in their lives, and went on to success--"behind every great success is a great failure" (eg Walt Disney, Henry Ford)
- Teach them resilience
- Teach them the value of planning and savings.
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