Saturday, January 12, 2008

Lending crisis has many faces

From the Charlotte Observer:

But a wave of home-loan defaults, particularly in the high-interest sub-prime area, tightened lending standards across the country. Like a river in a drought, home-loan money began to dry up.

Rainer, who said she lost nearly 70 percent of her practice, now focuses more on criminal defense and personal injury law.

"It was drastic; it was like the ball dropped," said the 38-year-old, who had to change her spending habits. "I had to beat the bushes to develop those other areas of my practice."

It's true that real estate agents, mortgage lenders and builders are on the front line of the housing market and are most affected by a housing crunch. But a supporting cast also feasts when markets are fat and feels hunger pangs when sales thin -- as has happened in Charlotte the past six months.

They are home insurance agents, inspectors and real estate attorneys, like Rainer. They are home appraisers, like Jeff Taylor, who have witnessed it firsthand.

Taylor, 41, has worked in the field for 17 years. Appraisers' clients, usually lending institutions, need to make sure a property is worth the selling price or close enough to it. So they hire Taylor and others in his field to have a look and estimate values.

A typical appraisal costs $300-$400. It's the key to how much a potential buyer can borrow for a mortgage. Overly generous appraisals have been blamed, in part, for the current housing crisis around the country. This is the worst market Taylor has seen, he said.

Want to be Richer in 2008?

Sanjay writes:

Some wise people have made a smart new year's resolution for 2008: to manage money better. Are you one of them? We have a checklist of ideas to help you get started. So, whether you take a loan or are planning to invest, keep these thumb rules in mind.

Smart loan mantras

Borrow money to buy ONLY useful assets, such as a home, a car or to fund your education. It's a strict �no-no� for personal loans, credit card loans and if you plan to take a holiday on equated monthly installments (EMI).

Your EMI for all loans put together should not exceed more than 40 to 50 per cent of your take-home salary.

Before opting for a loan, shop around for the cheapest interest rate.

Getting insured?

Buy insurance when you really want to be insured, not when you want to invest or save tax. Your insurance policy should provide financial security to your family, and here's why you must opt for one:

For protection against medical emergencies. Opt for a mediclaim policy.

For protection of life or disability. Opt for a term or accident policy.

For protection of home loan. Opt for a term or mortgage policy.

To protect your home and valuables. Opt for a home insurance policy.

Insurance plans like endowment, money-back, whole-life or unit linked schemes are not mentioned in the above category, because these are complicated, not to mention rigid; hence they should be preferably avoided. Remember, we are looking for simple, cheap, yet effective insurance plans.

Improve your home with caution

Gracy writes:

Many people keep on saving money so that they can build a home of their dreams. If you are already a homeowner, you might well have plans to improve your home and raise your standard of living. Very often, people find that home improvement is not an easy task especially when their old home requires a lot to be done. A limited budget is often cited by the homeowners as a reason for holding their home improvement plans.

If you are interested in carrying out home improvements, some precautions should be taken. All plans regarding remodelling and expansion of your home have to meet the required sanction of the local councils. You should take care that all the necessary sanctions have been taken before executing any home improvement plan.

Any liability or expenses incurred before taking sanction may prove costly if, later on, the concerned authority refuses to approve your plan. It is always better to exercise precaution than regret later on.

Another precaution that a homeowner should take when improving home is regarding the home insurance clauses. As is obvious, do-it-yourself home improvement is very popular among the UK residents but this type of home improvement may violate some of the clauses of your home insurance policy. You are required to check with the insurance company that what types of DIY home improvements will not violate the insurance policy in respect of your home. If you do not take care regarding this aspect, the insurance company might refuse to compensate in case of any loss arising during the home improvement process. As far as funds required for home improvement is concerned, you can always pledge your home and take homeowner loans of upto £250,000. Of course, the loan amount will depend on many factors like loan-to-value ratio, lender’s policy and your credit rating.

Secured homeowner loans are secured against your home and this may lead to repossession if you fail to repay the loan instalments in time. To avoid taking such a risk, many people prefer taking unsecured homeowner loans. These loans do not require any security and are quickly available. The interest rate may be a little bit higher compared to the cases where you have to provide a security. Almost all types of loans are available on the Internet and the best part is that the online lenders process your loan application quite quickly. Before taking any loan offer, you can also consult an independent financial adviser so that the best possible decision can be made.

The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. She has done her masters in Business Administration and is currently assisting Loans-Bazaar as a finance specialist. For more information visit on Bad Credit Loans visit

Basics Of Home Insurance

From the Economic Times:

When it comes to your house, it holds not only economic but also tremendous emotional bonding. The possibility of damage to your house cannot be ruled out. Home insurance tries to preserve the safety of your valued house. It protects the house from unforeseen eventualities that can cause damage.

A home insurance policy covers the structure and contents of your home from natural to manmade calamities. It also comes with additional features like protection for the family, loss of cash in transit and baggage loss. Home insurance comes with two-fold protection, one for structure and another for content . Structure cover is a comprehensive cover that envelopes the construction of the house including its walls, roof and the flooring. Content cover protects all the contents and belongings within the house. It provides insurance for all the expensive jewellry and cash at home.

What are the calamities covered?

Fire is a major catastrophe that damages structure and its contents. A home insurance policy provides protection from fire and such disasters that can prove very expensive.The contents of the house should be insured for their market value.The building cost is equated to the cost of reconstruction today.

There are other perils against which this insurance protects your home. It includes explosion or implosion, aircraft damage caused by aircraft,damage /loss due to riot,damage due to impact by rail or road vehicle or animal, bursting/overflowing of water tanks, apparatus and pipes, leakage from automatic sprinkler installations, lightning and bush fire, loss caused by storm, landslide etc.

What are optionally covered?

The home insurance needs can be diverse and can be tailormade to suit various needs of home owners. On payment of extra premium you can extend the umbrella of cover to include additional benefits. You can include burglary , loss/damage of domestic appliance, personal accident and baggage loss, public or third party liability, plate glass, etc.

Home insurance remains high

From the Dallas Morning News:

AUSTIN – Texas homeowners still pay far more for insurance than those in any other state, even after the overhaul passed by the Legislature four years ago that was supposed to lower rates.

A new study from the National Association of Insurance Commissioners showed that the average annual premium in Texas for the most common homeowner policy was $1,372 a year, considerably more than the nationwide average of $764.

Louisiana was the second-highest at $1,144, and Florida was third at $1,083. The premiums in all other states were less than $1,000.

But the study also showed that other states are closing the gap. Many of their rates have seen double-digit increases in recent years, while Texas rates have stabilized. The study is based on premiums collected in 2005.

Texas has historically been among the most expensive states for home insurance, in large part because of its pattern of severe weather conditions such as hurricanes, hailstorms and tornadoes. A rash of mold claims in the early part of the decade caused even higher rates.

That led state lawmakers to pass a major insurance reform law in 2003, with promises to consumers that they would get some relief in the cost of home insurance.

Disaster Doesn't Wait. Prepare for 2008.

Jim Walker writes:

Now is the time to get your home and family ready to cope with the 'unthinkable.'

As you read this, it may be sunny and warm. A lot can change in a week. But under last weekend's dark and dripping skies, you probably watched the burnt-off hillside above your home with some trepidation. If those periods of hard rain had lasted for hours instead of minutes, your home might have been in trouble. Many other local homes were in the same situation - and continue to be. Given enough rain, in a short enough period of time, flooding and mudslides could reach disastrous proportions, right here in the good old SCV.

And there are other potential disasters.

Most recently there were October's wind-driven wildfires. That's how those hillsides got burned in the first place. A number of local homes were lost and hundreds more had close calls. Thousands of people were temporarily evacuated.

Many of you remember the 1994 earthquake vividly. That event qualified for a "federal disaster area" label and it was only a 6.7 quake. There were long-term power outages, and highways knocked out of action.

Floods, wildfires, earthquakes - and now the concern of terrorism - it's all enough to keep you awake at night. But you'll sleep better if you have a plan, and if you've made a few simple preparations. Remember, knowledge is power, even when you're up against Mother Nature.

The case for renter's insurance

From Marshall Loeb:

Don't take the chance of losing your belongings in a theft, flood or fire. Renter's insurance protects you from losing your personal property -- and from liability lawsuits. Here are three things to consider when shopping for renter's insurance:

A basic home insurance policy for renters, known as an HO-4, covers losses to your household inventory from 17 types of perils. Among those are fire, civil riot, aircraft and vehicles, vandalism, theft, falling objects, flooding from home utilities, and electrical surge damage. Natural disasters are not included, so if you live in an area prone to earthquakes or mudslides, consider adding a separate rider.

Know whether the insurance company will reimburse you in "actual cash value" (ACV) or "replacement cost coverage" should something happen to your home. As the name suggests, ACV coverage will pay you only what your property's value was at the time it was damaged. If you bought a laptop two years ago for $500, it's worth significantly less today, and you would get a fraction of what you paid for it. Replacement cost coverage will pay you what the same laptop actually costs now. The only drawback is that you have to pay out of pocket to replace the missing or damaged item, then send the receipt to your company for reimbursement. Note: Replacement cost coverage has higher premiums, but you get more in return if you ever need to file a claim.

Make sure you declare any items of particular value before you buy the policy, or you won't be able to recover the loss. Expensive jewelry, antiques and electronics may be covered up to a limit, but very expensive items, such as a diamond ring or an irreplaceable original painting, often require a separate policy.

Renter's insurance has the additional benefit of liability protection. If someone slips and falls in your apartment and decides to sue you, you would be covered for what the victim wins in court up to your policy's limit, along with legal expenses.

What will all this cost you? Expect to pay between $150 and $300 a year if you don't need extra coverage for jewelry or computers, says, an insurance comparison and shopping Web site.

Halifax insurance offers storm advice

From Money News:

As Scotland faces strong windstorms, Halifax insurance has recommended that homeowners take precautions to protect their properties.

Halifax senior claims manager Martyn Foulds said that the average claims made for storm damage stands at approximately £1,000.

"It is advisable for homeowners to take preventative steps to reduce the risk of damage to their homes and also ensure they have adequate home insurance cover in place," he remarked.

Some of the preventative measures recommended by Halifax insurance include cutting low-hanging branches outside a home, clearing nearby gutters and securing loose outdoor items.

It also advised that people should maintain a home emergency kit, including torches, spare bulbs, batteries, tinned food, warm clothing, blankets and a shovel.

'Simple checks' can avoid home insurance claims

From LSE:

Damage to homes and subsequent insurance claims can be avoided of householders are more safety conscious, an expert suggests.

Elaine Parks, head of technical services at Legal & General, said that a recent survey had shown people need to be more aware of the precautions they should take.

Its Safe as Houses survey revealed that half of respondents had never had their wiring looked at, while about a third had not checked their plumbing and a quarter did not know the state of their guttering.

Half also said they had never tested their burglar alarm and ten per cent did not know whether their smoke alarms were working properly.

Ms Parks said: "Installing a burglar alarm, good quality locks and security lighting or living in a neighbourhood watch area are all good preventative measures to help keep our homes secure."

Get the right home insurance rate

From the Hexham Courant:

HOUSE insurance: have your eyes glazed over and your mind switched off yet?

The sorry truth is that most of us do not pay due attention to the annual task of renewing our home cover.

In fact, a recent survey showed that 25 per cent of UK householders don’t bother to shop around at all, and nearly half only seek one other quote.

The reasons given for this boring loyalty to an existing insurer ranged from: “I don’t believe I can get anything cheaper,”and “I trust my provider” to the honest “I didn’t have time,” and “I can’t be bothered.”

Sorry people! Is the term “rate tart” foreign to you? You could be missing the chance to save money.

According to Steve Johnson of Sainsbury's Home Insurance: “Although it may seem tempting to just stick with your renewal quote or the first quote you get, it really is essential to shop around.

“Despite the fact that home insurance premiums are reportedly on the rise, products vary dramatically and there are some cracking deals out there if people take the time to evaluate what's on offer.

Home insurance fee would aid state in battling blazes in high-risk areas

From the Los Angeles Times:

As hillside and canyon development accelerates along the edges of urban centers, the cost of protecting homes from wildfires continues to grow -- along with the debate over who should pay.

Nearly 1 million houses statewide have been built on land so distant from urban centers that local fire departments are not responsible for them. The cost of protecting those homes falls to the state, where the bill for running the fire department is nearly $1 billion per year -- up 83% from a decade ago.

This week, Gov. Arnold Schwarzenegger proposed tacking a fee onto all property insurance policies sold in the state and using the proceeds to fight blazes in areas served by the California Department of Forestry and Fire Protection. The 1.25% levy would raise $125 million a year in badly needed funds.

Some fire officials hailed the move as a first step toward recognizing the immense danger and cost of living on the edge of the wild lands, noting that the state needs to spend hundreds of millions more on fire protection, according to reports completed after the devastating 2003 fires.

Profitable insurers overcharging customers, consumer groups say

From the Dallas Morning News:

AUSTIN – Consumers in Texas and across the nation are getting far less value for their auto and home insurance premiums these days while most insurers are seeing profits surge, according to a study released Thursday by leading consumer groups.

The report by the Consumer Federation of America estimated that the average family in the U.S. has been overcharged $870 for auto and home insurance over the last four years because companies have been charging excessive premiums and paying out proportionately less in claims.

"The insurance industry reaped record profits in 2004 and 2005 despite significant hurricane activity. Profits in 2006 rose to unprecedented heights and 2007 may set a fourth consecutive record," said the study's author, J. Robert Hunter, director of insurance for the CFA and a former Texas insurance commissioner.

"Unfortunately, a major reason why insurers have reported record-high profits and low losses in recent years is that they have been methodically overcharging customers, cutting back on coverage, underpaying claims and getting taxpayers to pick up some of the tab for risks the insurers should cover."

Direct Line Home Insurance offer

UK report:

A new Direct Line Home Insurance offer of one-third off policies may be of interest to consumers who are trying to save money in the new year, the firm has claimed.

Andrew Lowe, head of Direct Line Home Insurance, said that the savings made from taking up the offer could counteract "the big Christmas spend".

"By taking advantage of offers such as ours, homeowners can save a whopping third off home insurance and still have peace of mind that they are fully covered should they need to make a claim," he remarked.

Some of the cover and benefits provided by Direct Lind home insurance include garden cover for up to £1,000, up to £1,000,000 buildings cover and replacement goods brought to customers' doors.

In October 2007, Direct Line introduced residential insurance aimed at buy-to-let owners and investors who have up to five properties.

Insuring Your Home Insurance

From the Motley Fool:

Cut your existing costs
Three moves can cut your premiums by as much as two-thirds, according to The Insurance Maze: Raise your deductible to $1,000 from $250 (15% to 30% savings), purchase your auto insurance from the same company (15%), and keep a claim-free record (5% to 35%). That would save $245 to $560 on a $700-a-year policy.

If disaster does strike, make sure you have vital information within arm's reach before you head out the door. Preparation can prevent a personal crisis from turning into a financial disaster. Create a command central for your family's finances with this list of bare essentials.

Get It Done: Make a Grab-and-Go Box
Contacts: Note phone, address, and email for family, friends, schools, medical and financial advisors, utilities, and service providers (cleaning, gardening). Designate an out-of-town contact for everyone to call.

ID: Assemble passports, a current picture of each family member, and birth and marriage certificates.

Emergency resources: Include some cash and prepaid phone and charge cards.

Medical: Pull together health insurance policy information; claim forms; copies of insurance cards; a list of hospitals, doctors, pharmacies, and current prescriptions; and medical histories.

Financial: Jot down account numbers (credit, bank, brokerage, mortgage, savings), branch and main websites and phone numbers, and passwords (kept secure). Include the location, spare key, and content list for your safe-deposit box. Make sure a loved one or trusted advisor has been granted access.

Household: Document all payment obligations (mortgage, credit card, utilities, and auto, student, and any other loans), due dates, minimum required payments, and payment info. (Online banking and bill payment is a real help in these situations.)

Insurance: Include homeowner's, auto, life, and disability policies; blank claim forms and contact information; a list of local adjusters; and a detailed home inventory.

Home Insurance


If your home were wiped out, could you prove how much any lost, stolen, or destroyed belongings are worth? Just 42% of us have an inventory of our home's contents, according to the Insurance Research Council. Itemizing your assets gives you a running head start if disaster strikes. The Insurance Information Institute's free home inventory software at can help you catalog your possessions room by room and attach photographs and scanned receipts (don't forget the stuff in the garage, basement, and attic).

Fill in the gaps
Note whether you have "cash value" (based on depreciation) or "replacement cost" coverage and consider that most policies cap payouts at 50% of the home's total coverage. "Extended replacement cost" coverage (which pays out about 20% more than a standard policy) and riders for valuables provide a bigger safety net for your belongings.

Keep up appearances
Today's insurers are skittish. Just asking about filing a claim can put your insurability at risk. Avoid the chopping block by paying for claims of $1,000 or less out of pocket, upping your deductible, and buying your home and auto coverage from the same carrier. If insurability is an issue, ask if a few fixes (e.g., replacing a leaky roof or old boiler) will help.

Check your risk reputation
Your premiums and eligibility are based on the five-year claims history in your home and auto insurance files.

8 smart ways to insure your home insurance

Dayana writes:

Hurricane Katrina swept away all the old rules about homeowner's insurance. These days, filing a single small claim, switching insurers to save a few bucks, or assuming your coverage hasn't changed can expose you to huge financial hardships.

A study released this week by the Consumer Federation of America supports what many homeowners have been feeling over the past several years: We're paying a lot more to protect our homes and getting a lot less in return. It's more important than ever to check up on your coverage, so here are eight defensive moves to keep you adequately covered and cut costs.

Appraise your coverage
Surveys show that more than half of U.S. homes are underinsured by an average of 22%. Coverage based on generic formulas ($65 to $150 per square foot) won't cut it if you've renovated or failed to account for rising building costs. For $7.95, will calculate your home's replacement costs.

Conducting A Home Inventory Maximizes Home Insurance

Want to Maximize Your Home Insurance Dollars in 2008? Make 'Conduct a Home Inventory' One of Your New Year’s Resolutions.

One of the best ways to make the most of your homeowners insurance is to have an up-to-date home inventory of your personal possessions. With so many people receiving expensive holiday gifts or taking advantage of the end-of-season sales on everything from home electronics to linens, dishes and other household items, there has never been a better time to create or update your home inventory, according to the Insurance Information Institute (I.I.I.)

“Having an up-to-date home inventory is one of the best ways to make the most of your insurance dollars,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. “A home inventory lists all your personal possessions and their estimated value. This helps you to purchase the right amount of insurance and will make the claims process faster and easier if there is a fire, hurricane or other type of disaster. And, remember, there is virtually no part of the country that is immune from some sort of catastrophe.”

To encourage consumers to create a home inventory, the I.I.I. has developed the popular software program, Know Your Stuff. The software has been updated and version 3 is now available, making it easier than ever to enter, edit, print and store a home inventory. The new version can store multiple photographs of rooms and objects, and makes handling large inventory files fast, stable and secure.

The I.I.I.’s Know Your Stuff - Home Inventory Software makes the task of creating an inventory simple. It allows you to organize your possessions room by room and provides lists of possessions that are typically found in certain rooms as a prompt. It also has the capacity to store digital photographs so that you can document your possessions visually.

It is easy to update and store a digital home inventory—it takes no more effort than the click of a mouse to add a new possession. And when it comes to storing your digital home inventory, there are many options: saving it on an internal or external hard drive or; using an online storage solution; burning it onto a CD; or printing out a room-by-room document. Try to make multiple copies, and be sure to keep at least one copy of your inventory outside of your home, in a safety deposit box or other secure location.

Both Windows and Mac OS versions of Know Your Stuff, version 3 are available as a free download at: . The software and your personal home inventory files are all stored on your computer to safeguard your privacy; the I.I.I. does not have access to any of the information about your home or possessions that you input.