The VA Doesn’t Send You Mortgage Ads


By

We’re announcing an enforcement action against a lender that wrongfully used the logos of the Department of Veterans Affairs (VA) and the Federal Housing Administration (FHA). RMK Financial Corporation (also doing business as Majestic Home Loans) sent out ads to veterans and other VA-eligible borrowers that misled consumers to think that RMK’s products were endorsed by the VA, or even sent by the VA, and they misrepresented the terms and costs of the mortgages themselves. This is the fifth enforcement action we’ve completed in the past two months against companies using deceptive mortgage advertising.

Deceptive advertising to mislead consumers

RMK sent out mailings to over 100,000 consumers across the country. These ads used the name, seal, and logos of the VA, giving the impression that the VA had sent the ad or endorsed the product. Also, the ads misrepresented the price of the advertised mortgages, including whether the interest rate was fixed or variable. Sometimes, important disclosures about loan rates were hidden on the back of the ads or buried in fine print. Envelopes were plastered with warnings about “fines or imprisonment” under US law.

Two years ago, along with the Federal Trade Commission, we warned companies that were placing mortgage ads directed at consumers, some of which targeted those eligible for VA benefits. Since then, we’ve continued to investigate mortgage lenders, including RMK.

The VA won’t advertise to you

Mike Frueh, Director of the VA Home Loan Program, had this to say about mortgage offers that represent themselves as coming from the VA:

“VA will never email or mail out solicitations for our loan program. VA does not endorse or sponsor any particular lender; instead, we work to ensure all Veterans and Servicemembers can safely use the benefit they’ve earned, at the lender of their choice. If you have any questions about your home loan benefit, please visit the VA website, or call VA at (877) 827-3702.”

Here’s what you can do

While we may not reduce the volume of your junk mail as a result of today’s action, we hope that we’ve called attention to a significant problem. Here’s how you can avoid being taken in by similar offers:

  • Be a savvy consumer— look at everything an advertiser has to say about the product they’re selling. Today’s action involved a mortgage lender that placed flashy seals and logos front and center, but hid important disclosures in the fine print on the back of their ads.
  • Get information from trusted sources — even if an ad is plastered in official-looking seals and impressive endorsements, check with a trusted source to learn all you can about the product being advertised. Learn more about VA loans and refinances. Ask CFPB also has answers to some common questions.
  • Let us know about misleading ads— if you see an ad that looks deceptive or misleading, or just looks too good to be true, submit a complaint to us. We accept complaints about mortgages and other financial products marketed to veterans, such as consumer loans. Information you provide informs our work every day.

This article by Holly Petraeus was distributed by the Personal Finance Syndication Network.


From Robo-signing to e-Signing: The Future of Mortgaging

Several days ago, the New York Times published a rundown on startups who are looking to digitalize and streamline the mortgage underwriting process, with the aim of putting loans into the hands of information savvy Millennials. Starting small but growing fast, the startups profiled aim to take digitalize mortgaging, allowing loan seekers the experience of getting loans from anywhere, anytime, with ease. Only a few days later, the U.S. Justice Department and J.P. Morgan came to a $50 million settlement on the banks’ robo-signing practices, a concession that the Wall Street Journal says involves “payments to more than 25,000 homeowners, including some who received inaccurate payment-increase notices during their bankruptcy cases.” Robo-signing–the practice of approving loans without sufficient oversight to essentially mass produce loans in the buildup to the housing crash–is seen as one of the more dangerous and unsavory practices from the great mortgage run. The old and new conditions of the lending environment feel so distant from one another and so connected at the same time. Two stories that in their own way illustrate the balance the lending industry has tried to strike between ease, availability, and safety . . .  all the while negotiating cautious federal prohibitions against the type of practices that were instrumental in crippling the world economy less than a decade ago. A wealth of questions surround the industry, at once highly regulated to protect consumers and also largely insulated from the type of widespread competition that drives innovative products and offerings due to the high dollar amounts it handles.

The coming years will be interesting as traditional lenders and young upstarts tightrope walk their products into the market, trying to grasp the unique sensibilities and manage the distrust of younger homebuyers, while staying within the confines of ethical and legal lending. Tech and traditional lending aren’t diametrically opposed in theory, but the multi-trillion dollar goliath industry has been sluggish to keep up. Startups from Lenda to DocMagic are lining up as the market begins to shift from in-person underwriting to the digital space. And in the coming years, how loans are made will become all the more important in the competitive lending market, thanks to an ever-increasing demand. Two factors are coming together in such a way that, in all likelihood, there will be an immense push for consumers entering the housing market: demographics and the economy. Both pivot on the wants and needs to the youngest generation of homebuyers–Millennials, or those born between the early 80s and late 90s. The oft maligned, oft praised generation of phonegazers are coming to an age where purchasing a home is the next major life decision.

Millennials make up a substantial proportion of not only upcoming home buyers, but also the population at large–they are predicted to overtake the baby boomers, previously the largest generation, as the largest later this year. Up until recently, the recession and wage stagnation has prevented young graduates from getting the type of employment needed to grow a down payment and make a home purchase. But, as the job market starts to turn around, that may be changing. Will big traditional lenders make the changes to the status quo to court this immense emerging market, or will young upstart techies take the helm?

Beyond making loan underwriting more mobile and, for lack of a better word, swipeable, mortgage lenders need to overcome the enormous hurdle of distrust. Particularly for younger buyers who viscerally remember watching the generation before them, duped by confusing or unjust loan terms, foreclosed on at an alarming rate, banks are often seen as something of great skepticism. Last year, a Gallup poll found that only 26 percent of Americans have “a great deal” or “quite a lot” of confidence in banks, up from a record low of 21 percent in 2012. 28 percent say they have “very little” confidence. This is a problem both for traditional lenders and for real estate, as well as a marvelous opportunity for a new generation of lenders who can extract themselves from the “bank” archetype. By feeling less like a bank and more like a cool tech start up, can this prejudice against bankers be undermined? From my perspective–as someone of that age group–there is a strong likelihood. Whether mortgage loan startups take a slice or define market dominance like some of their Silicon Valley brethren is a question of how they clearly articulate how eSigning isn’t just robo-signing with an iPad.


NICHOLAS BROWN.
Based in Los Angeles, Nicholas Brown writes and researches for JustRentToOwn.com. His interests include macroeconomics, sustainable living, personal finance, and investment trends. He has also guest blogged for several websites, including Realty Times among others.

This article by Nicholas Brown first appeared on Just Rent to Own and was distributed by the Personal Finance Syndication Network.


At FTC’s Request, Court Shuts Down Credit Repair Scam That Impersonates FTC

Scammers Make Impossible Promises, Target Spanish-Speaking Consumers

At the request of the Federal Trade Commission, a federal court has halted the operations of a company that calls itself “FTC Credit Solutions.” The company allegedly used false affiliation with the Commission to market bogus credit repair services to Spanish-speaking consumers.

In a complaint filed with the court, the FTC alleges that defendants deceived consumers by claiming to be affiliated with or licensed by the Federal Trade Commission, falsely promising that they could remove negative information from consumers’ credit reports, and guaranteeing consumers a credit score of 700 or above within six months or less.

“Peddling lies under the name of the Federal Trade Commission to target consumers who are in difficult financial situations is appalling,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “This scam used the promise of a fresh start to hurt consumers when they most needed help, so we are pleased the court has taken a first step to ending it for good.”

The FTC’s complaint quotes a radio advertisement hosted by defendant Guillermo Leyes, in which he falsely stated that FTC Credit Solutions had a license from the FTC. Defendant Leyes misrepresented that the purported license allowed FTC Credit Solutions to guarantee any consumer a credit score of 700 or higher within 120 days or less.

According to the FTC’s filings, in undercover calls placed to the company by FTC investigators posing as consumers seeking debt repair services, defendant Maria Bernal, an employee of the company, said that the company “works under the Federal Trade Commission, which is a law that was signed by the President in 2010.” She also falsely promised that the company could “delete” and “get [the investigator] a pardon” for $19,000 in debt.

The FTC further alleges that the company unlawfully charged consumers fees in advance of providing the promised credit repair services.  The company also sent the major credit bureaus letters with false information on behalf of numerous consumers.

The FTC alleges that the company, along with employees Leyes, Bernal, Jimena Perez and Fermin Campos, violated the FTC Act and the Credit Repair Organizations Act (CROA). Specifically, defendants violated the FTC Act by misrepresenting that they were affiliated with the FTC, by falsely promising to remove negative information from consumers’ credit reports, and by making false promises about improving consumers’ credit scores. In addition, the FTC alleges that by charging consumers upfront for credit repair services and misrepresenting their services, the defendants violated the CROA.

Under the terms of the temporary restraining order granted by the court, the company has temporarily ceased operations and the defendants’ assets are frozen.

The County of Los Angeles Department of Consumer and Business Affairs provided significant assistance in this case.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Central District of California.

This article by the Federal Trade Commission was distributed by the Personal Finance Syndication Network.


Feds: Millions Targeted by ‘Phantom’ Debt Collection Scheme

A Georgia firm called millions of consumers attempting to collect on “phantom” debts, and tricked consumers by citing personal information purchased from payday loan lead generators, federal investigators allege.

A lawsuit against Universal Debt and Payment solutions and a host of related companies was revealed Wednesday, alleging the firm’s tactics included purchasing personal information from data brokers that operators could use to convince victims to pay debt they didn’t owe. Agents would use names like “LRS Litigation Group,” “Worldwide Requisitions,” and “Arbitration Resolution,” and tell consumers they risked jail time if they didn’t pay immediately. The claims were bolstered by operators’ citing personal information, including bank account numbers, the CFPB alleges, that had originally been obtained by payday loan lead generation websites and sold to data brokers.

“Our lawsuit asserts that consumers were harassed, threatened, and deceived as part of a reprehensible scheme to collect debt that was not even owed,” said CFPB Director Richard Cordray. “We are taking action against the many parties that allegedly contributed to this phantom debt collection operation. The ringleaders of the scheme, the telemarketing company that broadcast millions of robo-calls, and the companies that processed the payments should all be held accountable for taking advantage of vulnerable consumers.”

In one example cited in the lawsuit, a consumer complained that he received a threatening call while he was asleep.

“The caller stated that he had a ‘restraining order against (the consumer) to appear in court if I didn’t settle with them.’ The caller said the consumer had 24 hours to pay $500 on a $1,600 debt to Bank of America, or the collector would ‘contact (the consumer’s) employer to levy (his) wage, and they were also contacting the local police to serve papers,’” the lawsuit alleges. “According to the complaint, because he was scared, the consumer provided his bank card information. After making the payment, the consumer’s wife informed him that they had never done business with Bank of America.”

A phone call to the number listed for Universal Debt was answered by a man who said he was sick and was unable to answer questions about the lawsuit. Asked if he had a lawyer, he said he couldn’t afford one.

The CFPB lawsuit also names several service providers, including Global Payments, which processed the debt collector’s credit card payments.

“Payment processors provided substantial assistance … enabling the Debt Collectors to accept payment by consumers’ bank cards when the Payment Processors knew, or should have known, that the Debt Collectors were engaged in unlawful conduct,” the CFPB alleges.

The firm did not immediately respond to requests for interview.

The CFPB also named Global Connect, LLC in the lawsuit for enabling the debt collectors to initiate millions of calls.

“(It) provided this service when it knew, or should have known, that the messages it broadcast for the Debt Collectors were unfair or deceptive, and materially contributed to the Debt Collectors’ scheme,” the lawsuit says.

Global Connect did not immediately respond to a request for comment.

The alleged scheme plays on a common problem — consumers who don’t know if a debt collection call is legitimate. If you’re worried about whether you have any debts haunting you, you can check your free annual credit reports for collection accounts. And if you want to see how a collection account can hurt your credit, you can check two of your credit scores for free on Credit.com.

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This article originally appeared on Credit.com.

This article by Bob Sullivan was distributed by the Personal Finance Syndication Network.


How Much Can Gardening Really Help You Save on Produce?

About this time of year, a lot of us think that maybe we could grow some of the food we eat. If not to save money, then to know where our food came from and what chemicals it was exposed to. Meryl Streep was famously quoted as saying, “It’s bizarre that the produce manager is more important to my children’s health than the pediatrician.” And not only can the food be healthful, it can be more flavorful as well.

And yet planting a garden can seem intimidating. “Most of us want that home-grown, healthy goodness that veggie and herb gardens provide, but sometimes it’s hard to figure out just where to start,” says Joan Casanova, spokeswoman for Bonnie Plants, a plants wholesaler.

“Even a small garden can fill your table with fresh, nutritious food, and help save money, too. In addition to the satisfaction you’ll get from growing your own food, gardening delivers a host of other health benefits, from low-impact exercise to boosting vitamin D levels with the hours you’ll spend in the sunshine,” Casanova says.

So maybe it can make us healthier. Can it make us wealthier? Well … perhaps, but in some cases it might depend on how you measure wealth.

What You’ll Pay to Get Started

First, a gardener needs to know what the startup costs are. Is it a container garden on the patio? A raised bed you made yourself? Or one you had delivered and installed? Or have you decided you are going to plunge into this and turn the backyard into a mini farm? Costs will vary.

And savings will depend on how much you now spend on vegetables. Do you buy in-season? Do you pay more for organic? You get the point. Also, it may be hard to compare because you may eat more vegetables (and waste less) if you are, say, picking only exactly what you need for a salad. Then again, at the peak of your harvest, you may have many more tomatoes or zucchini than you can possibly use. Is it “waste” if you give it away, meeting some of your neighbors and making new friends in the process? (It almost certainly is if it goes unpicked and rots.)

Costs will also depend on how you buy your plants. Growing them from seed is theoretically the cheapest, but it’s also more difficult than starting with a young plant, and it will add four to six weeks to the time before the plant yields vegetables.

What should you plant to save the most money? Well, if your favorite fruits or vegetables grow well in your climate, that can be a smart place to start. But be aware that in addition to putting a plant in the ground, you’ll be watering, fertilizing and picking (or missing the harvest because you were on vacation). And if you are doing it solely to save money, you might be happier buying from a co-op or farmers market, two other ways to get farm-fresh, locally sourced vegetables.

To Save Big, Think Small

The clearest cost savings may come from growing foods that, per pound, are some of the most expensive produce around — herbs. (And if you are also growing vegetables, know that herbs repel many insects and garden pests. Some easy ones to try: basil, parsley, rosemary, cilantro and mint.  And look for varieties you’ve never tried. Grapefruit mint, anyone?) Those are relatively easy to grow, and they also benefit the big stuff, like tomatoes. (Plus — they’re very easily preserved, and you won’t need canning supplies.)

But first, let Casanova take us step-by-step on how to plant a garden if you’re a novice.

  1. Decide what you want to plant. Among some of the easy-to-grow traditional favorites are eggplant, bell peppers, tomatoes and summer squash.
  2. Choose your garden spot. It will need at least six hours of direct sunlight every day. Plants that don’t get enough sun won’t bear as much fruit as they would otherwise, and they will be more vulnerable to disease and insects.
  3. Check the soil. It needs to drain well, and you will probably want to add compost and peat moss.
  4. Feed your food. Those vegetables take nutrients out of the soil, and they’ll have to be replenished. Check to be sure that the plant food you use is organically based.
  5. Water well. Most vegetables are not drought-tolerant, and regular watering is essential.
  6. Make pests unwelcome. Whether you rely on natural predators or pick pests off plants by hand, make sure you watch out for them. If you see something you can’t identify, capture it and take it to a plant nursery for advice.

(Of course, if your delicious produce tempts the neighborhood rabbits and deer, container gardens may be your answer.)

Gardening can be a fun hobby, and the rewards are easy to see. It also provides light exercise and sunshine, both of which are good for you. And it can have an impact on your grocery budget. What you pay for food is one of the most flexible parts of a family budget, too. You can increase the impact of your savings without increasing the work by organizing a neighborhood co-op, swapping the food you have in abundance for what you don’t.

Remember though, that results can vary, and that pests or weather can have a huge effect on whether you realize the savings you’re hoping for. If you’re looking to pay off debt, reduce your overall expenses or put away some savings, a vegetable garden may well be part of your plan, but it’s unlikely to be the one ticket that turns a difficult financial situation around. Still, it can be a fun and healthy way to cut back on spending while actually increasing the quality of the food you and your family eat.

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This article originally appeared on Credit.com.

This article by Gerri Detweiler was distributed by the Personal Finance Syndication Network.


10 Most Affordable Communities for Renters

Housing expenses often take up the largest share of people’s monthly budgets, so if you can’t find affordable housing, it can make everything more difficult. People who live in densely populated areas know this all too well and understand that high rent prices are just a part of living where they want to be (I’m looking at you, New York and San Francisco).

If you want to spend as little of your paycheck on rent as possible without living in a rural area, you have plenty of options. RealtyTrac, a company that analyzes the U.S. housing market, looked at rental and income data in the 100 most populated counties in the U.S. to come up with a list of the most affordable counties for renters. RealtyTrac used fair market rental rates, as determined by the U.S. Department of Housing and Urban Development, for three-bedroom properties and compared that to median income data from the Bureau of Labor Statistics. The counties include urban and suburban areas of some of the most populated cities in the country.

Tazewell County, Illinois
Metropolitan Statistical Area: Peoria
2015 percent of median income needed to rent: 17%
Unemployment rate: 6.5%

Warren County, Ohio
Metro area: Cincinnati
Percent of median income needed to rent: 17%
Unemployment rate: 4.5%

Columbia County, Georgia
Metro area: Augusta
Percent of median income needed to rent: 17%
Unemployment rate: 5.3%

Ascension Parish, Louisiana
Metro area: Baton Rouge
Percent of median income needed to rent: 17%
Unemployment rate: 5.2%

Forsyth County, Georgia
Metro area: Atlanta
Percent of median income needed to rent: 17%
Unemployment rate: 4.7%

Howard County, Maryland
Metro area: Baltimore
Percent of median income needed to rent: 17%
Unemployment rate: 4%

Fort Bend County, Texas
Metro area: Houston
Percent of median income needed to rent: 16%
Unemployment rate: 3.9%

Hamilton County, Indiana
Metro area: Indianapolis
Percent of median income needed to rent: 15%
Unemployment rate: 4.1%

Williamson County, Tennessee
Metro area: Nashville
Percent of median income needed to rent: 15%
Unemployment rate: 4.3%

Delaware County, Ohio
Metro area: Columbus
Percent of median income needed to rent: 14%
Unemployment rate: 3.6%

So if you’re looking for a new place to live with lower rent, those are some of your best options. Keep in mind some of them have an unemployment rate higher than the national 5.5% (as of February 2015, the most recent data available on unemployment at a county level). If you’re going to pick up and move, make sure you have decent job prospects.

No matter where you live, before you look for a home or apartment, give your credit a look. (You can get two of your credit scores for free every 30 days on Credit.com.) It can be tougher and more expensive for renters with low credit scores to secure housing, so come search time, you’ll want to make sure you’re presenting landlords with the best financial picture you can muster. Improving your credit scores takes time, but even small, short-term improvements will help increase your score. In some of these areas, you may even want to consider buying (this calculator can show you how much house you can afford) — according to the RealtyTrac analysis, it’s more affordable to buy in Tazewell, Warren and Columbia counties than it is to rent, despite the low rent costs.

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This article originally appeared on Credit.com.

This article by Christine DiGangi was distributed by the Personal Finance Syndication Network.


7 Surprisingly Simple Ways to Save Money

Life is expensive. If you prefer to spend on the fun parts like dinners out, special occasions and vacations, here are some useful hacks to save on the less-fun parts. The less-obvious savings methods outlined below can help you stretch your paycheck a little further on the everyday expenses.

1. Shop Smartly

The way you spend makes a huge difference on how much you spend. It’s a good idea to make a list before you head to the store so you know you are buying only what you need. You also might want to research what is in season and buy accordingly. If you want some food but it’s expensive because it’s out of season, consider getting the frozen or canned version. The opposite is true of clothing — you can buy out of season to capitalize on sales.

2. Power Strips

If you already remember to turn off lights each time you leave the room and keep the thermostat automated to an appropriate temperature, you may think your electricity bill is as low as it can get. In reality, many gadgets and appliances use power if they are plugged in even when turned off, a phenomenon called phantom power. To reduce this problem, you can plug all of your electronics into power strips and turn those off when devices aren’t in use.

3. Insulate

Keeping your home well insulated can reduce energy costs significantly. Use plastic or caulking to plug drafty doors or windows and keep closets closed so you aren’t wasting money heating or cooling them. Many power companies offer free or inexpensive energy audits so you can see where you are losing money.

4. Make Your Own & Do It Yourself

If there is work that needs to be done around the house, try hitting hardware stores that offer free DIY workshops, study up and try it yourself. You can also try making cleaning supplies with household items like vinegar, baking soda and lemon juice. Save big jobs for the professionals, but don’t be afraid to cut back by taking charge. And now that it’s spring, you may be thinking of growing some of your own food. That, too, is possible, even if you have limited space.

5. Get Paid to Recycle

While cashing in on your state’s plastic or can deposit can help with your grocery bill, it is time-consuming. You might want to try programs like Recyclebank or TraX that work with your waste hauler to give rewards for staying green. They offer benefits like coupons for popular restaurants, supermarket savings and free magazines or entertainment. There are also websites that allow you to recycle old electronics for cash on the Internet.

6. Clean & Maintain Appliances

It can be a good idea to mark on your calendar routine checkups for everything from HVAC filters to dryer screens to dishwasher filters. These machines use huge amounts of energy, but will run more efficiently if the filters are clean. Sometimes it’s just about remembering to add them to your routine.

7. Renegotiate

If all else fails, remember that almost everything is negotiable. As long as you have good relationship with credit cards, cable providers and insurance company, you can contact the customer service or retention department to ask for a discount, explaining that you may rant to e-evaluate your decision to use their services. This can work even if you are locked into a contract, as long as you are really willing to walk away. Often these are services that eat up a large chunk of your monthly budget, so saving money here can pay off for months to come. Especially if you use the extra savings to pay down credit card debt, which can increase your credit scores (you can check your credit scores for free on Credit.com) and lower your lifetime cost of debt.

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This article originally appeared on Credit.com.

This article by AJ Smith was distributed by the Personal Finance Syndication Network.


4 Lessons Baseball Can Teach You About Money

The boys of summer are back and as baseball season begins again, there are some things we can learn. Beyond the rules of America’s favorite pastime, we can also learn some personal finance rules. Here are four ways baseball can help you get your finances in order.

1. 3 Strikes & You’re Out

This phrase is often used as a threat but this can also be seen as multiple opportunities to get it right. In baseball you get nine innings, three outs per inning and three strikes per at bat. Sure, you will fail much of the time but there are many opportunities to try and get it right. By taking this approach to your finances you can avoid getting frustrated. Say you are trying to focus on putting more money into saving for retirement. You may strike out sometimes, splurging too much and not making your saving goal for the month, but you can step back up to the plate! Next month, try again.

2. Hitting a Home Run

The crowd goes wild and the cameras flash whenever the ball flies out of the ballpark. A home run is exciting. This is the same kind of mentality for making a lump sum addition to a financial goal. Many of us just received tax refunds and using that to pay off a debt can help us pay it off more quickly. In addition to tax refunds, bonuses, birthday gifts or unexpected money can be put to good use too. It’s one swing that yields big results.

3. Playing Small Ball

But it doesn’t always have to be about the big hit. You will sometimes hear about “small ball” when it comes to baseball. As opposed to swinging for the fences, this type of play is about small steps to lead to the goal of getting runs. It’s about trying to hit a single, steal a base or make a sacrifice bunt. The point is that these small actions add up. The same is true with your finances. If you make the effort to regularly pay off debt like student loans or contribute to a 401(k) eventually you’ll get there. Credit building is the same way — making an action plan and small changes can make a big impact on your credit over time. You can track your progress by getting your credit scores for free every month on Credit.com.

4. Call to the Bullpen

During a baseball game, a team usually utilizes multiple pitchers. When they are looking to replace the current player on the mound, they make a call to the bullpen, the area where other pitchers warm up. This can be a good strategy for your finances as well. If your current strategy for paying off debt or saving money isn’t working, you may want to change strategies. This could be literally calling someone else in, like a spouse or financial adviser, or it can mean trying a different strategy. You may decide that collecting credit card travel rewards isn’t working for you and instead move to a cash-back program. The important thing is to know you can change the direction of the game, and your financial situation, with one call to the bullpen.

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This article originally appeared on Credit.com.

This article by AJ Smith was distributed by the Personal Finance Syndication Network.


Last-Minute Tax Filers: Beware of This Obamacare Scam

For all stripe of rip-off artist, tax season might as well be called open season. Scams are legion, and navigating a solution after the fact can be somewhere between maddening and negotiating an Iran deal that everyone likes. Last month the IRS issued a warning that received scant attention from the media, but nonetheless could impact millions of taxpayers this year — particularly targeting low-income, elderly and Spanish-speaking taxpayers.

The scam takes advantage of the Individual Shared Responsibility Provision of the Affordable Care Act. It’s a penalty, but one with many exemptions. Because it is somewhat complicated, the new provision has become the object of many fraudsters’ affections, especially during tax season.

This is the first year that taxpayers must confront this new liability. In the simplest of terms, if you don’t have health coverage, you pay a penalty to the government.

The provision is intended to induce people to get coverage, since individual shared responsibility is all about increasing the number of Americans enrolled in health insurance plans in order to enlarge the pool to spread risks and reduce costs. Regardless of what you think of that theory, that’s the informing principle.

So what is the penalty? While at first blush it doesn’t sound like a huge amount of money, it’s not nothing either — especially to a family who is forced to live paycheck to paycheck. It can be 1% of a family’s annual income (minus the tax return filing threshold for your filing status), with a maximum penalty being the national average cost of a bronze plan, or it can be calculated as $95 per adult and $47.50 per child under the age of eighteen, capping out at $285 for a family. The amount per adult will increase each year. In 2016, it will be $695 per adult and $347.50 per child, capping at $2,085 per family.

For an unscrupulous tax preparer the Shared Responsibility penalties can add up to quite a caper. How so? Because the scam involves A) taking advantage of the inherent complexity of the exemptions and B) pocketing the penalties. Sometimes the scammer claims he or she can reduce the cost of the penalty because they have created a pool for leverage, or they simply claim that paying them directly instead of the government is “how it’s done.”

The only thing you need to know is: That’s not how it’s done. The easiest way to avoid this scam is to remember one rule: Only pay the IRS. Period.

There is some good news. While you are required to report whether or not you have health care coverage on your tax return, the majority of filers will not have an issue here. It has been estimated that only four million of the estimated 30 million uninsured will have to pay the Shared Responsibility Provision in 2016. But here is where fraudsters see their honey pot, using complexity to fleece honest taxpaying citizens while exposing them to penalties when the IRS circles back to get money that was stolen from them.

Are you off the hook for paying the penalty? Here’s the list of exemptions to see if they might apply to you (consult your tax preparer as this column is not meant to serve as a substitute for professional tax advice):

  • There were no “affordable” options for you, because available annual premiums were in excess of 8% your household income.
  • You had a gap in coverage less than three consecutive months.
  • Your household income was below the return-filing threshold ($10,150 for an individual on a 2014 tax return).
  • You are not a U.S. citizen, a U.S. national, nor an alien lawfully present in the United States.
  • You belong to a health care sharing ministry.
  • You belong to a federally-recognized Native American tribe.
  • You are in a jail, prison or another qualifying institution — such as a psychiatric hospital, etc.
  • You belong to a qualifying religion existing prior to December 31, 1950, recognized by the Social Security Administration (SSA).
  • You qualify for a hardship exemption.

Hopefully it’s not news that you need to choose a tax preparer wisely. There are many fly-by-night operations that are literally gone in the blink of an eye the minute April 16th rolls around.

That said, most tax preparers work hard to get you the best possible refund (or the lowest possible amount due) while remaining scrupulous and sticking to the letter of the law—and that is no easy task given the complexity of the Internal Revenue Code of 1986. If you are unsure about a tax preparer, you should ask for references or, even better, consult the IRS’s searchable database of tax preparers that are recognized by the agency.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

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This article originally appeared on Credit.com.

This article by Adam Levin was distributed by the Personal Finance Syndication Network.


The Best Cash-Back Credit Card in America

When it comes to credit card rewards, cold, hard cash is always popular. And if you are looking for a good cash-back credit card, you have plenty of choices. So the question is – how do you choose the best one?

With a cash-back card, you receive a percentage of cash back with each purchase you make with the card. And you may get a higher percentage of rewards by making purchases in specific spending categories at specific times of the year. The rate of rewards varies from card to card, as do limitations on the amount of rewards you can earn per month and per year. So check the rewards details and rewards limits on each card you are considering and find out the following:

  • How easy is it to redeem rewards?
  • Can your cash reward be redeemed for a gift card from your favorite retailer?
  • Can you get your cash reward sent as a paper check, a deposit to a bank account or simply as a credit to your account?
  • Is the price of a cash-back card with a lucrative rate of rewards a hefty annual fee? Some cash-back credit cards come with annual fees and some don’t.
  • Does the card offer other perks, like travel insurance and purchase protection?

Also consider the card’s annual percentage rate for new purchases. Carrying a balance and being hit with finance charges month after month can wipe out any rewards that you may earn. So it’s wise to only charge to a cash-back credit card what you can pay in full each month. However, some cash-back cards do come with an attractive 0% introductory rate for a year or more. So if you needed a few months to pay off a large purchase you could earn cash-back rewards and pay no interest charges for several months. Ideally, you then have a plan to pay off that purchase in full before the teaser rate expires.

You also will need excellent credit to qualify for a cash-back credit card with a 0% introductory rate.

With all this in mind, we reviewed the top cash-back credit cards as part of our Best Credit Cards in America series for the overall value they could offer, both in terms of awards and benefits. After much consideration, we’ve picked the top three. Here’s our winner for the Best Cash-Back Credit Card in America.

Winner of Best Cash-Back Credit Card in America: Citi Double Cash

We chose the Citi Double Cash credit card as our winner because of the rewards and features it offers. Cardholders get a total of 2% cash back with no annual fee — earning 1% cash back when they make a purchase, and another 1% when their purchase is paid for. In addition, new applicants receive 15 months of interest-free financing on new purchases as well as balance transfers, with a 3% balance transfer fee. Finally, this card comes with all of the same features and benefits found on Citi cards including several purchase protection and travel insurance policies.

Fees to consider: There is no annual fee for this card, but there is a 3% foreign transaction fee imposed on all charges processed outside of the Untied States.

Applying for a Cash-Back Credit Card

Before you apply for any credit card, carefully do your research and make sure the card’s offerings meet your specific needs. It’s also important to know whether you’ll meet the card issuer’s general credit requirements, which means it’s helpful to know what your credit score is ahead of time. You can see two of your credit scores for free through Credit.com. Finally, in order to fully benefit from cash-back rewards, it’s ideal not to carry a balance on these cards, and instead plan your spending so that you’re able to pay the balance in full every month.

Want to see more? Here are our other picks for the best cash-back credit cards in America.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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This article originally appeared on Credit.com.

This article by Jason Steele was distributed by the Personal Finance Syndication Network.