Time Running Out

The tax credit for first-time home buyers expires Nov. 30. Because deals can take up to 60 days to close, now is the time to buy.

Real estate agents almost always advise that now is the right time to buy a house.
For first-time buyers hoping to seal the deal before the government's $8,000 tax credit expires Nov. 30, that advice is timely - and right on the money.

From contract to closing, real estate transactions typically take 45 to 60 days. But you cannot claim the credit - 10 percent of the purchase price up to $8,000, with specific income caps - if you have not made settlement by November's end.

Despite tighter credit and lenders' demands for more and more documentation, "it still can be done in six weeks," said Re/Max Town & Country agent Lynn Ayers in West Chester.

But buying sooner is better than later, observers in the Philadelphia area market say, since housing prices appear to be stabilizing, even rising, as are 30-year fixed mortgage rates (now about 5.14 percent), both of which threaten to make houses less affordable.

"I've been looking seriously for about a month," said Tisha Miller, 30, a counselor for the Family Training Program in Philadelphia, who has been renting in Center City for nine years.

"I'm hoping to have everything completed by November," said Miller, who wants a two-bedroom house with outdoor space for about $300,000, assisted by money inherited from a grandfather.

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What Does a Mortgage Payment Consist Of?

More fun and exciting Q&A: “What does a mortgage payment consist of?”

Have you ever been curious what you’re paying each month to live in your shiny new (or possibly dingy old) home or condo?

A mortgage payment, assuming it’s not an interest-only loan, consists of a principal and interest portion, as well as mandatory taxes and insurance.
There’s a handy acronym to sum it all up, known as PITI; usually lenders want X number of months of PITI for cash reserves if you’re verifying assets when you apply for a loan.

The principal portion is essentially the amount of debt you are borrowing, which eventually transitions into your ownership in the home, or home equity.
The interest portion is the cost of borrowing the money for the loan, or the price the bank or mortgage lender charges for taking on the risk.

The tax portion of the mortgage payment is paid to the local government based on the assessed property value and tax rate for the area.

Finally, the insurance portion of the mortgage payment covers homeowners/hazard insurance, which protects the borrower from a number of dangers and provides liability coverage.

Note that if your loan-to-value exceeds 80 percent on a single loan, you’ll also have to pay private mortgage insurance.

FYI, an interest-only loan carries a mortgage payment that only pays off the monthly interest, taxes, and insurance, meaning you can only build equity in your home if the property value appreciates.

How the Mortgage is Paid Off...

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Why Aren’t Lenders Doing More Loan Modifications?

Daily, in the newspapers, radio, television and the internet, articles are written about the difficulty that borrowers face in getting loan modifications. These reports come not just from reporters, but from loan modification companies and also attorneys who are attempting to do the loan modifications.

At the same time, the Federal Government and the Obama Administration announce new programs to assist homeowners in getting loan modifications. These programs are going to solve the problems that homeowners have, and are going to save their homes. Yet, closer inspection of the program’s details raises eyebrows about if the new program will benefit homeowners. Then within a few months of implementing the program, reports come out that the programs are not working. Homeowners are not getting the needed help. Foreclosures are increasing.

Next, states like California decide to try and pass legislation to prevent homeowners from paying money upfront to loan modification companies and attorneys for assistance in dealing with the Lenders and Servicers. Then President Obama declares that homeowners should not pay for loan modifications and that their lenders and servicers are doing the modifications for free.

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World leaders rush to pay tribute to Kennedy

LONDON – World leaders praised U.S. Sen. Edward Kennedy as one of the towering figures in American politics, offering plaudits for his dedication to fighting for the causes in which he believed.

Kennedy died Wednesday after battling a brain tumor. He was 77.

In Britain and Ireland, he was remembered particularly for his involvement in the long process that led to Northern Ireland's 1998 Good Friday peace accord.

British Prime Minister Gordon Brown said that "even facing illness and death he never stopped fighting for the causes which were his life's work.

"He led the world in championing children's education and health care, and believed that every single child should have the chance to realize their potential to the full," Brown said.

Former British Prime Minister Tony Blair called Kennedy "a true public servant committed to the values of fairness, justice and opportunity."

Britain gave Kennedy an honorary knighthood earlier this year.

Lord Owen, who served as British foreign secretary in the 1970s, said Kennedy was "the most influential senator" in the U.S.

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Obama plans to keep Bernanke at Fed

AP source: Obama plans to keep Bernanke as chairman of Fed to continue economic recovery

OAK BLUFFS, Mass. (AP) -- President Barack Obama plans to reappoint Ben Bernanke to a second term as chairman of the Federal Reserve, a position from which he guided the economy away from its worst recession since the 1930s and, the White House hopes, toward an economic recovery critical to its legacy.

Widely credited with taking aggressive action to avert an economic catastrophe after the financial meltdown last year, Bernanke will be nominated for another term as the helm of the central bank on Tuesday. Obama plans to make the announcement on Martha's Vineyard, the Massachusetts island where he is vacationing for the week with his family.

Bernanke is expected to be at his side, said a senior administration official who discussed the nomination only on condition of anonymity because the news was not yet public.

By announcing he wants Bernanke for another term and not changing horses in midstream, Obama removes a sense of uncertainty on Wall Street.

Bernanke masterminded what is now seen as a successful strategy to lift the economy out of recession, unlock credit and stabilize financial markets, in part by using unconventional and unprecedented lending programs. But he's not without his detractors, and the top Democrat on the Senate banking committee warned of a thorough hearing before Bernanke would take his post for a second time.

Many on Wall Street and in academic circles believe that Bernanke would be the best choice to lead the country into a sustainable recovery and would be in the best position to figure out when and how to reel in the trillions of dollars pumped into the economy to battle the crisis.

"Wall Street can rest a little easier now," said Chris Rupkey, an economist at the Bank of Tokyo-Mitsubishi. "Having a new chairman come in at this late date would put the Fed-engineered solution to both the recovery and the exit strategy at risk."

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Remember me? Wall Street repackages debt for sale

Solution or just deja vu? Wall Street has new way to turn mortgage debt into AAA bonds

WASHINGTON (AP) -- Wall Street may have discovered a way out from under the bad debt and risky mortgages that have clogged the financial markets. The would-be solution probably sounds familiar: It's a lot like what got banks in trouble in the first place.

In recent months investment banks have been repackaging old mortgage securities and offering to sell them as new products, a plan that's nearly identical to the complicated investment packages at the heart of the market's collapse.

"There is a little bit of deja vu in this," said Arizona State University economics professor Herbert Kaufman.

But Kaufman said the strategy could help solve one of the lingering problems of the financial meltdown: What to do about hundreds of billions of dollars in mortgages that are still choking the system and making bankers reluctant to make new loans.

These are holdovers from the housing bubble, when home prices soared, banks bought risky mortgages, bundled them with solid mortgages and sold them all as top-rated bonds. With investors eager to buy these bonds, lenders came up with increasingly risky mortgages, sometimes for people who could not afford them. It didn't matter because, in the end, the bonds would all get AAA ratings.

When the housing market tanked, figuring out how much those bonds were worth became nearly impossible. The banks and insurance companies that owned them knew there were still some good mortgages, so they didn't don't want to sell everything at fire-sale prices. But buyers knew there were many worthless loans, too, so they didn't want to pay full price for the remnants of a real estate bubble.

In recent months, banks have been tiptoeing toward a possible solution, one in which the really good bonds get bundled with some not-quite-so-good bonds. Banks sweeten the deal for investors and, voila, the newly repackaged bonds receive AAA ratings, a stamp of approval that means they're the safest investment you can buy.

"You've now taken what was an A-rated security and made it eligible for AAA treatment," said Richard Reilly, an analyst with White & Case in New York.

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Federal Reserve Survey: No Return to Normal in Near Term

Despite some encouraging economic signs, a clear majority of bankers surveyed by the Federal Reserve Board do not expect underwriting standards for residential real estate, commercial mortgages or credit cards to normalize before 2011.

In the central bank's survey of 55 senior loan officers at domestic institutions, some said it could take even longer for standards to return to the levels that prevailed before the crisis hit. Four in 10 bankers told the Fed that underwriting standards for even investment-grade commercial mortgages would not normalize for "the foreseeable future." Another 20% said that such a recovery would not happen for at least two years.

Such pessimism was evident across loan categories. A little more than 41% of respondents could not predict when standards for prime borrowers seeking residential mortgages would return to normal, and 32% said the same for credit card borrowers. More than 12% of officers said it would take until 2011 for residential mortgage standards to normalize; 25% said the same about credit card loans.

Despite talk of a recovery already underway on Wall Street, Monday's survey results crystallized warnings from Fed Chairman Ben Bernanke that a return to normal levels of growth will take several years to achieve.
Fed policymakers "generally expect that, after declining in the first half of this year, output will increase slightly over the remainder of 2009," he told Congress last month. "The recovery is expected to be gradual in 2010, with some acceleration in activity in 2011."

For companies with below investment-grade ratings, the situation is more grim. More than half of the loan officers — 53.1% — said their benchmarks for approving commercial mortgages for these companies would remain unusually stringent in coming years. And 28.6% said this lending would return to normal by 2011.

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9 Secrets Health Insurers Don’t Want You to Know

By Suz Redfearn
From Health magazine

Health insurance companies like to keep secrets. And they like to save money. Example: You have surgery, and weeks later you get a bill for using an out-of-network anesthesiologist. Ridiculous, right? You didn’t choose who put you under, so you shouldn’t have to pay extra. But your insurer sent the bill anyway, hoping you wouldn’t notice.

Fighting back against this kind of trickery—and winning—is a lot easier than you think, says Kevin Flynn, the president of Healthcare Advocates, a Philadelphia-based firm that helps patients wrangle with their health plans. We checked with Flynn and other insurance-industry insiders, lawyers, doctors, and regulators to uncover nine little-known ways to get the health coverage you deserve—for less. How to Get Your Medical Insurer to Cover Alternative Medicine Treatments

Don’t pay if you don’t have a say
When you purposely see an out-of-network doctor, your plan usually makes it clear that it’ll cost you. But when you have surgery, the hospital chooses the anesthesiologist. If you get that annoying “out-of-network” bill, Flynn says, draft a strongly worded letter stating you had no say about the anesthesiologist—in-network or otherwise—and, therefore, won’t pay any additional fees.

“If you don’t have direct control, you are not liable,” Flynn says, adding that this tactic is likely to work every time, but few consumers know about it. How the Costs of Diabetes Add Up—and How to Save

You may be eligible for more coverage...

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FACT CHECK: White House ignores health concession

FACT CHECK: White House health care rhetoric ignores concession on government-run plan

WASHINGTON (AP) -- President Barack Obama has indicated a willingness to drop a government-run health care plan from any overhaul. The White House says that's not a shift. Actually, it is.

Fierce proponents of a government-run health plan for months, Obama and senior administration officials, bowing to pressure from Republicans and skeptical voters, suggested that such a public option is not do-or-die.

"All I'm saying is, though, that the public option, whether we have it or we don't have it, is not the entirety of health care reform," the president told a town hall-style audience in Grand Junction, Colo., on Saturday. "This is just one sliver of it, one aspect of it."

CLAIM: "I challenge you guys all to go back and see what we've said about this over the course of many, many, many, many months, and you'll find a boring consistency to our rhetoric," White House press secretary Robert Gibbs told reporters.

THE FACTS: During the 2008 presidential campaign, Obama said a new public plan should offer comprehensive insurance similar to that available to federal employees.

In the first half of the year, Obama said repeatedly in speeches, weekly radio and Internet addresses and town halls that he wants a health care overhaul that has a taxpayer-funded public health insurance option. He has said the plan would compete with private insurance to keep costs down.

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What Exactly Is the "Public Option"?

There are no shortage of opinions when it comes to the health care debate. But how many of those chattering voices from either side actually know what they're talking about? With news that the government-run option may be doomed, people are searching for more specifics on the proposal. What exactly is this public option that has so many people up in arms?

Over the past 24 hours, lookups on "public health care option" and "what is the public health care option" have both surged into the thousands. That's largely due to Health and Human Services Secretary Kathleen Sebelius, who on Sunday said the public option is "not essential."

Those remarks were later contradicted by former presidential candidate Howard Dean. In an appearance on "The Early Show," he talked forcefully about the public option, which the Obama administration has begun to back off from. "You can’t have reform without a public option," said Dean. "If you really want to fix the health-care system, you’ve got to give the public the choice of having such an option."

OK, OK, but what the heck is it? Here are some of the Buzz's most popular articles that explain the controversial choice: ...

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Banks Help Small Debt Become a Big One

In his briefcase, Imar Hutchins carries a certified check for $25,000. It is a crazy amount to walk around with, but for the last nine months, a series of banks have refused to take the money, even though Mr. Hutchins owes it toward a mortgage on a small apartment building in Harlem.

In fact, the $25,000 check is the fourth and largest payment that Mr. Hutchins has tried to make after he fell one month behind last year. Since then, the banks have rejected every penny he has sent. At bewildering speed, and without telling him, the original bank — Washington Mutual — invoked a clause in the lending note and moved to seize the building, at 763 St. Nicholas Avenue, near 148th Street.

So many foreclosures are hitting the courts, the stories of greed and folly by all parties could fill volumes. But the machinery of foreclosure also has a brainless side. Even generally responsible people can get trapped among the shards of the global financial crisis.

In 2005, lenders filed foreclosures on an average of 14 properties a day across the city. This year, it is 65 per day.

“Banks get bought by other banks, they change their philosophies,” Mr. Hutchins said. “The people fall through the cracks. No one is really looking out for the customer.”

While Mr. Hutchins’s case is just one foreclosure among thousands now moving through the courts, a judge saw it as an example of how things should not be done.

“The facts in this case, in their simplicity,” wrote Justice Emily Jane Goodman, “illustrated the state of property foreclosures in New York and the economic relationship between banks and their borrowers, as well as the surrounding ironies.”

Mr. Hutchins, 39, who, among other things, co-founded an elementary school in Atlanta while he was a student at Morehouse College, ran a vegetarian restaurant in Washington, and got a law degree from Yale, has lived in Harlem for the last five years. His grandfather Lyman T. Johnson sued the University of Kentucky to force it to admit black students in 1949. “My father was a Realtor,” Mr. Hutchins said. “I tried like hell to do anything but real estate.”

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Health Care Bill Fact of the Day: Creating Another Federal ‘Czar’

The “Affordable Health Choices Act of 2009,” the House health overhaul bill, creates the position of Health Choices Commissioner, or “Insurance Czar.”

The Insurance Czar would be appointed by the President to oversee the Health Choices Administration. This would be the 33rd federal ‘czar’ appointed by President Obama since his January 20, 2009 inauguration.

The appointee would be responsible for establishing and regulating geographically-based Health Insurance Exchanges, determining what benefits and coverages must be included in health insurance plans each year, and assessing fines on employers and individuals who do not provide or acquire health insurance.

Source: HR 3200 §141-2

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Foreclosures rise 7 percent in July from June

RealtyTrac: July foreclosures rose 7 percent from June; lenders slow to modify loans

WASHINGTON (AP) -- The number of U.S. households on the verge of losing their homes rose 7 percent from June to July, as the escalating foreclosure crisis continued to outpace government efforts to limit the damage.

Foreclosure filings were up 32 percent from the same month last year, RealtyTrac Inc. said Thursday. More than 360,000 households, or one in every 355 homes, received a foreclosure-related notice, such as a notice of default or trustee's sale. That's the highest monthly level since the foreclosure-listing firm began publishing the data more than four years ago.

Banks repossessed more than 87,000 homes in July, up from about 79,000 homes a month earlier.

Nevada had the nation's highest foreclosure rate for the 31st-straight month, followed by California, Arizona, Florida and Utah. Rounding out the top 10 were Idaho, Georgia, Illinois, Colorado and Oregon. Among cities, Las Vegas had the highest rate, followed by the California cities of Stockton and Modesto.

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Health Care Bill Fact of the Day: Billions in Pork Barrel Spending for ‘Community Transformation’ and ‘Beautification’

Under the Senate Health, Education, Labor, and Pensions Committee’s “Affordable Health Choices Act,” local governments can apply for “community transformation” grants to build jungle gyms, sidewalks, bicycle paths, and grocery stores, to install streetlights, and to establish new farmers’ markets.

The dollar amount of these grants, and of the total “community transformation” earmark program, is left to the discretion of the Obama administration.
Cities can also apply for “community makeover” grants, which can provide them with up to $10 per resident in taxpayer dollars for “beautifying streets.”

Sources: “Affordable Health Choices Act,” Title III, Subtitle CHR 3200, § 3151

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How To Avoid Foreclosure By Declaring Bankruptcty

Desperation seems to be the mother of invention in the Mortgage Modification department.

Over 3 million people are 60 days behind in their mortgage payments with little hope of finding a quick solution. This has caused many borrowers look for somewhat imaginative measures to save their home, one of these has been declaring bankruptcy to avoid a mortgage foreclosure. Does this work? Is it legal?

Chapter 13 bankruptcy does not get rid of your mortgage payments. However one in five people that went through pre-bankruptcy credit counseling claimed they were doing so to avoid losing their homes to foreclosure according to the Consumer Credit Counseling Services of Greater Atlanta which provides credit counseling throughout the United States. Is there some kind of genius in this madness? There seems to be.

Debt-collection stay.According to the American Bankruptcy Institute filing a bankruptcy petition automatically creates a stay against debt-collection efforts which effectively stops a mortgage foreclosure even though it may be only temporarily. Obviously if the borrower continues to withhold payments the mortgage will foreclose.

Bankruptcy can create debt relief.What bankruptcy can allow is to free resources from a household budget by reducing other sources of debt and allow a homeowner to pay for their mortgage. Can this work for you? That is something you can ask when you undergo pre-bankruptcy counseling.

There are two lessons we can get from this...

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EBay, GM set to start car-selling trial Tuesday

EBay, GM expected to start trial program to sell new cars through online marketplace

SAN FRANCISCO -- General Motors and eBay Inc. are expected to announce Monday that hundreds of the auto maker's California dealers will let consumers haggle over the prices of new cars and trucks through the online marketplace, as part of a previously disclosed trial.

About 225 of California's 250 GM dealers are set to take part in the program, which will begin on Tuesday. They will be selling Buick, Chevrolet, GMC and Pontiac vehicles on cobranded Web sites through eBay's online auto marketplace, eBay Motors, until Sept. 8. The cars will also be searchable through eBay Motors and eBay's main site.

The trial is part of Detroit-based GM's turnaround plan, making more official a practice some of its dealers had already participated in on their own. It expands an existing partnership covering GM certified used vehicles sold through eBay.

It also marks a shift for San Jose, Calif.-based eBay, since most of the vehicles sold on eBay Motors -- a site that sells various types of vehicles and auto parts -- have traditionally been used.

Starting Tuesday, eBay visitors will be able to visit Web pages like gm.ebay.com and chevy.ebay.com, where they can browse new 2008 and 2009 vehicles, ask dealers questions and figure out financing.

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Fewer layoffs expected as recession winds down

Fewer layoffs expected in July as recession winds down, but firms show little appetite to hire

WASHINGTON (AP) -- First, the good news. Workers probably got slapped with fewer pink slips in July as the worst recession since World War II winds down.

Now, the reality check. A paucity of job openings means nearly 15 million unemployed Americans are still looking for jobs, and their ranks are likely to keep growing into 2010.

Labor Department data due out Friday is expected to show job losses slowing in July to a pace of around 320,000, with unemployment rising to 9.6 percent, up from 9.5 percent the previous month. If the job-loss estimate is on target, it would be a heartening improvement from June's 467,000 job losses -- and the slowest pace for job losses since August 2008.

Slower job losses are anticipated because companies aren't cutting investment and spending as drastically as they had been during the depths of the recession which came in the final quarter of last year and carried over into the first quarter of this year. And, recent barometers have shown some improvements in manufacturing, housing and construction activity.

The government reported last week that the economy shrank at a pace of just 1 percent from April-to-June, the strongest signal yet that the recession may be ending.

Many analysts predict the economy could start growing again in the current July-to-September quarter. And, the Fed recently observed that the economy is finally showing signs of stabilizing in some regions of the country -- especially in parts of the Northeast and Midwest -- bolstering hopes of a broader-based recovery this year.

However, the anticipated slowdown in layoffs won't prevent the unemployment rate from rising for the 10th month in a row and to the highest level in 26 years.

The good news, bad news picture in the labor market suggests that employers are feeling more comfortable about slowing down firings but still aren't ready to ramp up hirings.

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Judge doesn't sign off on BofA, SEC settlement

Judge declines to OK BofA's $33M settlement with SEC over Merrill bonuses, sets Monday hearing

NEW YORK (AP) -- A judge has ordered a hearing on a $33 million proposed settlement between the Securities and Exchange Commission and Bank of America Corp. over executive bonuses.

Bank of America had agreed earlier this week to pay the penalty to settle government charges that it misled investors about Merrill Lynch's plans to pay bonuses to its executives.

But the settlement was subject to court approval, and Judge Jed S. Rakoff declined to grant it and set a hearing for Monday.

In a statement late Wednesday, Rakoff said the proposed settlement "would leave uncertain the truth of the very serious allegations made in the complaint."
In seeking approval to buy Merrill, Bank of America told investors that Merrill would not pay year-end bonuses without Bank of America's consent. But in its complaint filed with the U.S. District Court for the Southern District of New York, the SEC said Bank of America had already authorized New York-based Merrill to pay up to $5.8 billion in bonuses and didn't share that information with shareholders.

That rendered a statement Bank of America mailed to 283,000 shareholders of both companies about the Merrill deal "materially false and misleading," the SEC contends. Bank of America agreed to settle the charges without admitting or denying the allegations.

The judge also said the agreement "in no way specifies the basis for the $33 million figure or whether any of this money is derived directly or indirectly" from public funds advanced to Bank of America as part of its bail out.

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'Clunkers' rebates look likely for another month

By Ken Thomas and Laurie Kellman, Associated Press Writers
On Wednesday August 5, 2009, 6:45 am EDT

WASHINGTON (AP) -- The Senate has cleared the way for a vote extending the "cash-for-clunkers" program, which offers car buyers rebates of up to $4,500 for trading in their gas-guzzlers for new, higher-mileage models, setting aside Republican opposition to the plan.

Senate Majority Leader Harry Reid said Tuesday he had the votes to pass a $2 billion extension already approved by the House. The funding would triple the cost of $1 billion rebate program and give as many as a half-million more Americans the chance to grab the new car incentives through September.

Many Republicans oppose the plan but Senate Minority Leader Mitch McConnell, R-Ky., predicted his party would not block a vote.

"The matter will be completed," McConnell said.

Lawmakers hoped for a vote late Wednesday or Thursday.

Senate passage would send the legislation to the White House for President Barack Obama's signature and assure consumers there will be no interruption in the program that has led to packed car dealerships nationwide. Vice President Joe Biden called the program "an unqualified success" as Obama officials sought passage for the extension.

"I think it would be hard to tell ... the thousands of people who have just traded in gas guzzlers for more efficient cars that this is having no impact," Biden said.

Republicans still were seeking a chance to amend the House version, but Democrats were confident the bill wouldn't be changed. Senate changes to the program would require another vote by the House, which is in a monthlong summer recess. The White House says that without new funding, the program will run out of money by Friday, which is when the Senate begins its own August break.

To read the original article click here

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BofA agrees to $33M SEC fine over Merrill bonuses

WASHINGTON (AP) -- Bank of America Corp. has agreed to pay a $33 million penalty to settle government charges that it misled investors about Merrill Lynch's plans to pay bonuses to its executives, regulators said Monday.

In seeking approval to buy Merrill, Bank of America told investors that Merrill would not pay year-end bonuses without Bank of America's consent. But the Securities and Exchange Commission said Bank of America had authorized New York-based Merrill to pay up to $5.8 billion in bonuses.

That rendered a statement Bank of America mailed to 283,000 shareholders of both companies about the Merrill deal "materially false and misleading," the SEC said in a statement.

Bank of America agreed to pay $33 million to settle the charges without admitting or denying the allegations. The settlement is subject to court approval.

"Bank of America believes that the settlement ... represents a constructive conclusion to this issue," company spokesman Scott Silvestri said in an e-mailed statement.

New York Attorney General Andrew Cuomo, who referred the case to the SEC in April, said his investigation is continuing. The SEC said its probe also is ongoing.

Bank of America, along with Citigroup Inc. and insurance giant American International Group, is among the largest recipients of government aid. It has received $45 billion from the federal $700 billion bank rescue program.

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Should Your Credit Report Cost You a Job?

This sounds like a cycle of pure misery: First, you get laid off. Then, you're one of the 4.4 million Americans who in June saw their job searches stretch out six months or more. The bills keep rolling in--car payment, house payment, medical bills--and your credit card balance is ballooning. You interview for a job and you're one of the top candidates, but a late-stage credit check has the employer going with another hire. The bottom line: You need a job to improve your financial situation, but your finances are now hurting your ability to get a job.

A House bill introduced earlier this month aims to prevent such a situation. The Equal Employment for All Act would prohibit employers from using the details of a consumer credit report in making hiring decisions, with exceptions for financial firms and government agencies, as well as jobs requiring certain security clearances. The legislation follows efforts by some states to sharply limit employers' ability to consider a person's creditworthiness in hiring.

While credit checks historically were used to screen applicants for financial and government jobs, the practice has spread. More than 40 percent of employers run credit checks on job candidates, according to some research. Rep. Steve Cohen, who introduced the bill, points to a report that a third of workers making less than $45,000 a year have poor credit scores linked to bankruptcies, loan delinquencies, divorce, medical problems, or unemployment. The bill would give "some of our most vulnerable, 'credit challenged' citizens--students, recent college graduates, low-income families, senior citizens, and minorities--the opportunity to begin rebuilding their credit history by obtaining a job," Cohen says.

To read the original article click here

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