Sunday, November 14, 2010

Will Rates Go Lower?

Historic, low home loan rates have been about the only thing stable in the economy these days. This low level mark breeds complacency, especially with the buzz in the air that rates may go even lower. But the question hangs in the air like humidity on a southern summer day - will rates go lower? And if there is a chance, should you wait and see or move forward now?

More Quantitative Easing
The buzz that began earlier this fall stemmed from talk coming out of the Federal Reserve that they were considering another round of Quantitative Easing in an effort to stimulate the sluggish economy.

What is Quantitative Easing? Here is what Wikipedia says:

The termquantitative easing(QE) describes a form ofmonetary policy used by central banks to increase the supply of money in an economy when the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero.

"Quantitative" refers to the fact that a specific quantity of money is being created; "easing" refers to reducing the pressure on banks.

During the first round of quantitative easing, implemented during the credit crisis, the Federal Reserve bought Mortgage Backed Securities (MBS) which helped drive home loan rates lower. Lower rates resulted from these purchases because of supply and demand. When there is more demand, prices move higher and yields (interest rates), which move inversely to prices, move lower.

The Federal Reserve announced their new bond-buying program at their monetary-policy meeting on November 3 and they will be purchasing $600 billion in Treasuries through June 2011. This second round has been dubbed by the media as QE2.

Here's the Difference
With the new program, the Federal Reserve will only be purchasing Treasuries. Both Treasuries and MBS are bonds and compete for the same investment dollar. There is a natural spread between Treasuries and MBS. If the yield of Treasuries goes down because the Federal Reserve is buying $4 billion to $5 billion in Treasuries per day, it would likely help MBS move down in yield (interest rates) and up in price as well to remain competitive. This natural spread is the reason many anticipate mortgage rates improving.

Another camp speculates that MBS may get disappointed by QE2, like a jealous suitor, and sell off. A sell off would mean price deterioration, resulting in higher yields (interest rates). An old-time trader's saying goes something like this, "Buy on the rumor and sell on the news." Since all this QE2 talk began, the bond market has (for the most part) had a small party. Could this be the "buy on the rumor" behavior? If so, then that would take us down the path of thinking that "sell on the news" will follow.

But How Low Can They Go?

Assuming the market responds favorably and MBS improve, it is probably unlikely that rates will move significantly lower than they are today. For lenders to be able to offer a mortgage rate around 3.625% to 3.75%, it would require significant trading by Wall Street investors in the 3.0% coupon. This coupon has seen very little activity.

In addition, lenders have been slammed with refinance volume and are running at, or over, capacity. Also, processes have slowed due to new government guidelines and lenders increased attention to compliance. With processes moving slower, lenders are requiring longer lock periods which impact interest rate pricing. They may look to further manage capacity by regulating their volume through the interest rate offered.

"Wait and See" is full of risk. If MBS improve, and if lenders pass on the price improvements to the borrower, it is highly likely the benefit in interest rate will be incremental. That's a lot of "if's" to hold onto for a hope of small gains.

The downside risk is far greater than the upside potential for rates to improve. If QE2 is not well received, the bond market would sell off and mortgage rates would suffer. History shows us this can happen much more quickly than any improvement.

With these incredibly low interest rates, there may not have ever been, nor ever be again, a better time in our history to purchase or refinance your home. The waiting game could be risky and the opportunity may disappear.

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Tuesday, October 26, 2010

Sites like Twitter

I have been investigating inside the web to find other sites like Twitter but which links are "do-follow" (it gives more relevance to the linked pages on search engines like Google).

I found two: and Both work in the same way than Twitter and Facebook: create a profile, for free, and start posting public messages which can contain links, files, and so on.

My main concern was to obtain good backlinks for my blogs. With and I have been able to do that.

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Tuesday, October 05, 2010

Market Condition in Park Cities

The market in the Park Cities seems to have finally stabilized. The homes that are selling are the ones in prime locations, pristine condition and priced right. There are still so many sellers that can not wrap their heads around the fact that they have to take a lower price for their home. If a seller bought in 2006 or 2007, he probably paid top dollar and will take a loss if he has to sell. It's an awesome time for buyers to find fabulous deals for the first time in the Park Cities compared with prices in the past. Young couples trying to get into the school district should definitely stretch in this market to get into the school district. The million dollar and under market seems to be selling at a brisk pace (if priced properly). Pricing is still key! Older homes are having a difficult time selling because there are so many newer constructions that are distressed or going for short sales. There have been several "high end" sales in the last few montsh....$11,000,000! The $3-5,000,000 range is definitely slow unless the price was reduced from $5 million down to $3....or $3 million down to $2.5 It's definitely an interesting market! Keep in mind, if it's priced competitively or under market, it will sell. It has to "stand out" in this market or it will sit.

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Friday, October 01, 2010

Bank of America delays foreclosures in 23 states

WASHINGTON (AP) -- Bank of America is delaying foreclosures in 23 states as it examines whether it rushed the foreclosure process for thousands of homeowners without reading the documents.

The move adds the nation's largest bank to a growing list of mortgage companies whose employees signed documents in foreclosure cases without verifying the information in them.

Bank of America isn't able to estimate how many homeowners' cases will be affected, Dan Frahm, a spokesman for the Charlotte, N.C.-based bank, said Friday. He said the bank plans to resubmit corrected documents within several weeks.

Two other companies, Ally Financial Inc.'s GMAC Mortgage unit and JPMorgan Chase, have halted tens of thousands of foreclosure cases after similar problems became public.

The document problems could cause thousands of homeowners to contest foreclosures that are in the works or have been completed. If the problems turn up at other lenders, a foreclosure crisis that's already likely to drag on for several more years could persist even longer. Analysts caution that most homeowners facing foreclosure are still likely to lose their homes.

State attorneys general, who enforce foreclosure laws, are stepping up pressure on the industry.

On Friday, Connecticut Attorney General Richard Blumenthal asked a state court to freeze all home foreclosures for 60 days. Doing so "should stop a foreclosure steamroller based on defective documents," he said.

And California Attorney General Jerry Brown called on JPMorgan to suspend foreclosures unless it could show it complied with a state consumer protection law. The law requires lenders to contact borrowers at risk of foreclosure to determine whether they qualify for mortgage assistance.

In Florida, the state attorney general is investigating four law firms, two with ties to GMAC, for allegedly providing fraudulent documents in foreclosure cases .The Ohio attorney general this week asked judges to review GMAC foreclosure cases.

Mark Paustenbach, a Treasury Department spokesman, said the Treasury has asked federal regulators "to look into these troubling developments."

A document obtained Friday by the Associated Press showed a Bank of America official acknowledging in a legal proceeding that she signed up to 8,000 foreclosure documents a month and typically didn't read them.

The official, Renee Hertzler, said in a February deposition that she signed 7,000 to 8,000 foreclosure documents a month.

"I typically don't read them because of the volume that we sign," Hertzler said.

She also acknowledged identifying herself as a representative of a different bank, Bank of New York Mellon, that she didn't work for. Bank of New York Mellon served as a trustee for the investors holding the homeowner's loan.

Hertzler could not be reached for comment.

A lawyer for the homeowner in the case, James O'Connor of Fitchburg, Mass., said such problems are rampant throughout the industry.

"We have had thousands, maybe hundreds of thousands of foreclosures around the country by entities that did not have the right to foreclose," O'Connor said.

The disclosure comes two days after JPMorgan said it would temporarily stop foreclosing on more than 50,000 homes so it could review documents that might contain errors. Last week, GMAC halted certain evictions and sales of foreclosed homes in 23 states to review those cases after finding procedural errors in some foreclosure affidavits.

Consumer advocates say the problems are widespread across the lending industry.

"The general level of sloppiness is pervasive around the industry," said Diane Thompson, counsel at the National Consumer Law Center.

Vickee Adams, a spokeswoman for Wells Fargo & Co., said Wells' "policies, procedures and practices satisfy us that the affidavits we sign are accurate."

Mark Rodgers, a spokesman for Citigroup Inc., said the bank "reviews document handling processes in our foreclosure group on an ongoing basis, and we have strong training to ensure that appropriate employees are fully aware of the proper procedures."

Mortgage finance companies Fannie Mae and Freddie Mac said Friday they're directing companies they work with that collect loan payments to follow proper procedures.

In some states, lenders can foreclose quickly on delinquent mortgage borrowers. By contrast, the 23 states in which Bank of America is delaying foreclosures use a lengthy court process. They require documents to verify information on the mortgage, including who owns it.

Those states are:

Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.

AP Business Writer Christopher S. Rugaber contributed to this report.

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Tuesday, July 27, 2010

Who is Robert J Russell

Do you need a Speaker for your next event ?

Call Robert J Russell - check out his Speaking website:

Watch the video - Who is Robert J Russell >

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Thursday, July 22, 2010

Remember the '70's ? They are coming back!

What instantly comes to your mind when we talk about the 1970s? Needless to say, only two things instantly strike our minds, hip hop music and the retro fashion.

It was the era when fashion industry was growing in Europe. From the mid 1960s, American impact on Indian silver screen was visible. The Indian culture was blending with the Western. First thing this blend brought was the change in fashion.

In the 1970s bobby print shirts, short jackets, bell bottom pants, big goggles, skirt-blouse and thin sarees had become the first choice of Bollywood's glamour icons. Bollywood divas like Mumtaz, Sharmila Tagore and Asha Parekh sizzled in thin sarees, while B'wood's first super star Rajesh Khanna, action man Dharmendra and the angry young man Amitabh Bachchan made the bobby print shirts and bell bottom pants favorite among people. Eventually, these things went out of fashion, but with the launch of 'Om Shanti Om' in 2007, the retro theme made a comeback. The fever gripped the nation when Karina dazzled in a retro style saree in song 'zoobie doobie...' from superhit movie '3 idiots'. The theme was again used in movie 'Once upon a time in Mumbai'. In one of his recent movies, Akshay Kumar has worn a leather jacket and a scarf around his neck. So, what's retro about it? Remember, Rishi Kapoor wearing a leather jacket a scarf in his first movie 'Bobby'. Even Vinod Khanna used to wear it the same way.

It's not only the silver screen that's gone 40 years back. The ad-filmmakers are also using it widely. The Dairymilk chocolate ad 'Aaj pahali taarikh hai...' was instant hit. A recent ad of Vivel soap features characters dressed like Jitendra and Leena Chandavarkar in famous song 'Dhal gaya din, ho gayi sham…' from 1970 movie 'Humjoli'. The two hippy-type looking guys in the commercial of Cadbury's Five Star chocolate are also dressed up the old fashioned way. Oh! will it be right to call it 'old fashion'.

The retro mania doesn't end here; the theme is also used in many TV serials during scenes especially having old songs. Needless to say, it's also popular in theme-based parties. Well, so much projection of the style on the screen was bound to make an impact on people. Broad checks, short jackets, bell bottoms, lacy hairbands, big goggles and many other accessories of the 70s have hit the market and are doing a great business.

Well, the blend of old and new is also seen. The bell bottoms are now low-waist jeans and bobby print is used on modern styled dresses too. The tops have reduced a bit in length and slight changes have taken place in designs of sarees.

When I asked a young girl wearing a short top and a bell bottom jeans, why she was dressed like that, she instantly replied, "It's the 'latest' fashion." Hmmm, seems she has never seen Zeenat Amaan or Parveen Babi.

Well, the fact of the matter is 'retro' is no more retro, which means 'old'. And with more and more films and commercials using the theme the fever is surely increase in future. Who knows, one day the picture on a city road may become identical to the one taken 40 years back. Picture abhi baki hai dost!

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Friday, July 16, 2010

Thinking of a greeting card - think about this

A need that people essentially struggle to fill in their lives is the longing to be appreciated. Showing appreciation for others can have a profound and lasting impact on your relationship with them although it may seem like an easy and simple thing to achieve. A good way to accomplish this is to send a greeting card. There's nothing like the feeling of finding an unexpected card in the mailbox. We open that piece of mail first all the time.

Whenever you need to wish your friend or acquaintances happy and belated birthday, or wish your near and dear ones merry Christmas, or send your beloved one happy valentines day wishes or just say hello or give a "get well soon" message to your bosom friend , you just go to a greetings card outlet or visit an online greetings card website and send the desired card. Are you wondering what greeting card is all about and how did it begin? This article is for you if you have the desire to know.

Greeting cards are several of the nicest things we will ever get in our lifetime. When was the last time someone made you cry with a simple card that had a short, heartwarming message? You could perhaps still feel the emotion that overwhelmed you when you first read it if it wasn't too long ago. Greetings cards may be the cheapest that we can buy someone, but they sure are the richest in meaning. Whether it's for a best friend or grandma whom you haven't seen since you were a grader, a card is always appreciated, especially when it arrives with a personal and some hugs and kisses.

Especially those you make yourself, possibly nothing can be nicer than cards except others cards. Homemade cards work even apparently most impersonal of reasons for giving such as for business purposes and never fail to cheer up anyone's day. A nice, personalized note surely can't be beat, so if you want to make all the best and warmest impressions on your receiver, create your own card and say it in your own words which is probably the best way to say it, anyway, whatever it is.

These days, you don't even have to worry about creating the actual card as there will be many tools you can use. You can download a lot of different software that are dedicated to creating personalized greeting cards on the Internet. Although, not everyone will be eager on doing things themselves. So if you think you only have a message but not the means to actually put it in a nice-looking card, there are websites as well that will do it for you for a very cheap price. After all, what's important is your message. Creating a design on the card by drawing it yourself may be great with kids, it just won't work when your receiver is your boss' wife or maybe your boss himself.

Make use of those software that could come much in handy, especially the holiday season if you want to be able to deliver your most honest and personal yet decent message to someone. Or then again, if computers are not your thing, simply find a website that will give you the cards you want with your own message and a great professional look to boot.

Those cards can even open a lot of opportunities for you whether you make your own cards using software or buy them from a website. These days when people when people put a premium on the convenience offered by the world online, a home based greeting card business sure sounds like a great way earn more income.

Explore the possibilities as you plan to put up your own greeting card business by searching the Internet for websites that can help you do just that. If you want proof that this venture works, you can check out review sites where you'll find people with their own greeting card businesses already taking flight. Find out what they have to say about the websites that opened opportunities for them and made them a success.

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Tuesday, June 29, 2010

Are you on Facebook - Check out our page

A big thank you to everyone who's become a fan on Facebook. If you haven't yet, we invite you to join the group .

The tips we give out aren't paid for or sponsored in any way. We're extremely grateful to have our loyal readers, because as we've mentioned in the past, our mission is to help people all over the world.

However, when you think of Robert J Russell, we hope that you will visit our website first!

Visit us online at or by phone at 972-679-9029. Thanks!

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Friday, May 07, 2010

Create your own home stimulus package

The Federal Government's Homebuyer Tax Credit may have expired on April 30, but just because Uncle Sam has turned off the financial spigot aimed at housing doesn't mean home buyers still can't get "something extra" during their purchase. The keys for buyers today are how they negotiate and structure the terms of their offer.

While some terms can involve things like leaving the drapes and light fixtures, others involve money upfront and money over time. Depending on the amount of the purchase price and the loan, the amount homebuyers can save can be significantly more than the tax credit that just expired.

This month, YOU Magazine turns to national mortgage expert and consultant, Jim McMahan. McMahan is Director of Training and Education at LoanToolbox, the leading education provider to thousands of mortgage professionals across the country.

The Fed Checks Out
Both March and April of this year saw the ending of two important stimulus programs that were designed to benefit the housing market. In March, the Federal Reserve ended its program for purchasing Mortgage Backed Securities, which helped keep home loan rates low. April brought the end to the tax credit for home buyers. The tax credit was up to $8,000 for qualifying first time buyers and up to $6,500 for qualifying repeat purchasers.

Just because these programs have ended doesn't mean that home buyers can't seek credits from the seller to accomplish something similar. Successful investors will tell you that money is made when you buy something right with favorable terms, not just when it is sold.

What's More Important? Low Rates or Tax Credit
In a recent survey by Prudential Real Estate and Relocation Services, an overwhelming majority of those polled found that when factoring in either low interest rates or the tax credit, low rates were far more important in a decision to purchase a home now.

There's a good reason for this statistic. For example, if you purchase a home for $300,000 and finance $270,000, and your interest rate for a 30-year fixed rate loan was 5.25% versus 4.75%, you would pay nearly $30,000 more over the term of the loan. This is a significant amount of money!

Since the Fed's Mortgage Backed Securities purchase program ended on March 31, there has been much volatility and price swings in the markets. Rates overall are off their lows and are often quoted above 5.00% today with no points.

Looked at from another perspective, if prospective home buyers are waiting for home prices to decline a bit more before purchasing a home, but interest rates push higher towards 6.00% in the meantime, waiting could well cost those home buyers more money in the long run.

In fact, let's say a home buyer delays a transaction but receives a $10,000 reduction off that $300,000 home. If, in the meantime, rates were to rise .75% to 6.00% and the buyer financed 90% of the purchase price, the amount of total payments over a 30-year term would be over $35,000 more than paying the $300,000 purchase price and the 5.25% interest rate.

An Idea to Save Money Up Front and Over Time
When negotiating the sales price for a home, in many respects what the buyer is negotiating for is not only what the sales price of a home will be but also what the monthly payment will be. After all, unless someone is paying cash for the property, the terms consisting of the purchase price, the down payment, and interest rate on the mortgage will all factor in to what the monthly costs of the home will be for the buyer.

Many buyers focus on the sales price when negotiating and this is understandable. A home is typically the largest transaction home buyers have been involved with and the price paid factors in immensely on what it will cost them each month.

However, in negotiating the terms of the contract, a buyer can also negotiate to have the seller contribute money from the proceeds to allocate towards the buyer's closing costs. This money can be used towards either the reduction of cash required to close and/or a reduction in the interest rate on the mortgage.

Double Bonus by Seller Paying to Lower Rate
It's easy to see the benefits for buyers to have a lower interest rate on their mortgage. Even when compared to paying and financing less for a home, the accumulated costs when compared to financing a larger amount with a lower interest rate offer a buyer lower total costs over the time a mortgage is in effect.

However, one aspect of this situation not often considered is that the IRS treats points paid up front to lower a mortgage interest rate as pre-paid interest, regardless of who pays the fees. This means that when buyers negotiate to have the seller pay the costs to lower their interest rate, they receive the benefit of deducting them on their income taxes in the year the home is purchased.

If the costs to reduce the interest rate are 2.00% to obtain a lower interest rate, the $5,400 in this scenario, 2.00% of $270,000, would be deductible as pre-paid interest, netting additional money back to the buyer at tax time.

Time to Look at Your Options
Many guidelines have changed in the past few years, so the first thing home buyers should do is to seek a pre-approval from their mortgage professional in advance of writing an offer to purchase a home. In addition to determining exactly what home buyers can qualify for, pre-approval gives home buyers a stronger negotiating position since they will be perceived by the seller as a cash buyer.

In addition, home buyers who would like to investigate seller paid points as an option may find that they can purchase a little more expensive home.

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Tuesday, March 23, 2010

Health Insurance Reform

A weekly compilation from Aetna of health care-related developments in Washington, D.C. and state legislatures across the country

Week of March 22, 2010

Late in the night Sunday, the House of Representatives helped President Obama deliver what no other President has been able to do -- a significant reform of the nation's health care system. The process is complicated by the fact that the House first had to pass the Senate's version of health care reform, and then pass a package of fixes that the Senate will have to take up separately through a "reconciliation" procedure requiring only a simple majority vote. To help figure out what health care reform will look like if the reconciliation bill is adopted, a number of news organizations are offering their own summaries or guides to the changes, including: The New York Times, USA Today, and the Chicago Tribune. Also, you can read online what theCongressional Budget Officehad to say about the bill it estimates will cost $940 billion over the next decade.


On Sunday, the House approved the previously passed Senate version (219 to 212) of health care reform, which sends this measure to the President for signature on Tuesday.The House also approved (220 to 211) the House-initiated "fix" to this Senate bill (called the Reconciliation bill) to revise items in the Senate bill that are repugnant to the House. This Reconciliation measure has to be approved by the Senate (scheduled for this week) to legally change the Senate bill. While Republicans in the Senate have more procedural tools at their disposal to derail the Reconciliation bill, the very nature of a reconciliation bill is that it only takes 51 votes, rather than the "normal" 60 filibuster-proof votes in the Senate on such major items as health care. Therefore, it seems likely that the Senate will indeed approve the changes, though perhaps not this week. If there are any changes on the Senate floor to the Reconciliation bill, even one word, it would have to go back to the House for yet another vote.

Since the beginning of the year, Congress has extended for one month at a time two health-related items: 1) suspension of imposition of a 21 percent cut in doctor reimbursements under Medicare; and 2) continuation of worker eligibility for a 65 percent subsidy to pay for COBRA coverage. The end of March deadline will be extended yet again through April, once the Senate agrees with the extenders bill passed by the House last week. Both chambers have passed a lengthier extension of these two items (the "doc fix" would go through September and the COBRA item would go to the end of 2010) as part of a separate larger bill, but with no compromise in sight Congress may have to extend these two items yet again at the end of April.


COLORADO: The bill requiring maternity and contraceptive coverage in individual policies and eliminating pregnancy as a pre-existing conclusion took a turn for the worse last week.Originating in the House, the measure had been amended to only require that a coverage option be provided. The Senate, which was expected to accept the bill as amended, passed a version requiring that coverage for reproductive services be included in the majority of the individual plans marketed by a carrier. At the request of the governor, the bill has now been referred to a conference committee.

CONNECTICUT: The Insurance and Real Estate Committee reported out a number of bills of interest last week, including: An Act Concerning Rate Approvals For Individual Health Insurance Policies-- the committee substituted language 1) removing the ability of AG and Health Care Advocate (HCA) to bill the plans for consultants, 2) removing the ability of the HCA and AG to appeal to the court, 3) narrowing the filing time frame for the approval to 120 days, and 4) starting to define terms and processes. The Committee's Republicans all voted no on the bill, indicating that they were concerned that the Committee hadn't gotten it right yet. An Act Concerning Appeals of Health insurance Benefits Denials -- the bill currently requires that upon the request of a member that a health plan provide all specific documents and information that were NOT provided by the enrollee or their provider that were considered in the denial. An Act Concerning Standards in Health Care Provider Contracts-- although a "standards in contracting" bill was enacted into law last session, providers continue to push for even greater limitations on contracting, including prohibitions on down-coding of claims. Other bills reported out include bleeding disorder coverage bill, a bill that would require hospitals to charge uninsured patients no more than 110 percent of Medicare, and a bill that would raise the medical malpractice threshold requirements for various providers.

GEORGIA: The legislation imposing limitations on the use of rental networks was deferred after Aetna helped educate legislators about the need for further amendments to the bill.Most importantly, the bill still does not contain an exemption for the requirements of ERISA plans and non-ERISA self-funded plans. Aetna continues to work with the legislators on this issue and anticipates the bill may be heard next week. No further action has been taken on the House bill imposing a 1.6 percent tax on the premiums of health plans. Indications from the Governor's office are that it may decide not to pursue this bill. However, we are watching the issue closely.

INDIANA: The legislature adjourned March 13 with no resolution to the major issues in Indiana.Specifically, the Republicans were unable to move a bill to delay imposition of new taxes to support the unemployment compensation fund or authorize a ballot initiative to permanently cap property taxes, and the Democrats were unable to move their agenda on education funding, creating jobs and providing greater assistance to the unemployed. With the exception of a bill dealing with emergency medical treatment of employees covered by workers' compensation, no insurance bills survived. Bills defeated included a push by the Indiana State Medical Association (ISMA) to allow providers to pick and choose the plans offered by an insurer that they would participate in and an initiative that would have required health insurers to provide extensive data to Indiana DOI regarding premiums and loss ratios. In addition mandatory recognition of assignment of benefits for out-of-network providers and the Indiana Dental Association's initiative to prohibit dental plans from imposing or negotiating fee schedules on non-covered services were defeated. Of note is that ethics legislation did pass both houses, and it is expected that the Governor will sign the bill impacting lobbying registration and reporting; it also limits who may serve as a lobbyist.

MISSOURI: With eight weeks to go in the legislative session, the House overwhelmingly approved the "Freedom of Health Care Act," which would send voters a constitutional amendment to prevent them being compelled to participate in any federal health care plan. The "yes" votes included all House Republicans and more than a third of Democrats. The Senate gave final approval to a bill requiring health plans to cover the diagnosis and treatment of autism spectrum disorders. On the budget front, Governor Nixon cut another $126 million in state spending, which means he has now vetoed or withheld almost $850 million from the budget the General Assembly approved last May. Because falling revenues show no immediate signs of improving, further cuts appear certain before the fiscal year ends on June 30. Analysts are projecting a $500 million shortfall in the budget blueprint the Governor proposed in January, prompting serious talk about restructuring state government and broad promises of bone-nicking budget cuts. One large target is the Medicaid program, and a preliminary draft of the appropriations bill is holding $100 million for physician services contingent upon a $300 million windfall that might come Missouri's way if the U.S. Congress extends the federal budget stimulus package.

NEW JERSEY: The governor recently gave his fiscal year 2011 budget address to a joint session of the legislature, outlining his plan for addressing a $10.7 billion state deficit.The proposed budget calls for drastic cuts across all sectors of government including: schools districts, FamilyCare (the state health program for the uninsured), the earned income tax credit, and the elimination property tax rebates. In contrast to past years, there were no new proposed tax increases. However, some cost shifting is anticipated in the form of increased assessments on individuals and businesses. Of note is a $2 million expenditure increase at the Department of Banking & Insurance, which will be borne by insurers in the state. In his effort to stimulate the state economy, the governor proposed discontinuing a 4 percent corporate business tax surcharge as well as allowing the surtax on high income earners to sunset. Further analysis will be done in the coming months, as the legislature begins its deliberation of the budget, to determine what, if any, impact the budget could have on Aetna. The budget must be signed by into law by June 30. The Senate unanimously confirmed Tom Considine as the next commissioner of the Department of Banking & Insurance. During his testimony before the senate judiciary committee, Considine advised that Horizon Blue Cross Blue Shield of New Jersey application to convert to a for-profit entity has been put on indefinite hold at the request of Horizon. In addition to Considine, the senate confirmed Dr. Poonam Alaigh as commissioner for the Department of Health and Senior Services.

NEW YORK: According to data recently released by the Department of Insurance to bolster the Governor's demand for prior approval of insurance rates, New York HMOs had premium increases of 17 percent on average this year, with some increases as high as 51 percent. The data showed that premium changes varied widely between companies and between counties. The state continues to claim that reinstating prior approval will save $70 million. A coalition of insurers, business groups and providers strongly opposed the prior approval proposal as a measure that would impose price controls on insurance. In both press statements and full-page ads, the coalition underscored that reinstating prior approval ignores the real reason for rising health insurance premiums-increases in the underlying cost of health care services-and does nothing to address those costs. Real reform is needed that addresses the underlying costs of care, reduces the hidden taxes and ensures that health plans can continue to provide coverage to New Yorkers. The prior approval opposition group includes the Health Plan Association, the Employer Alliance, the hospital associations HANYS & GNYHA, the Business Council of New York State, the National Federation of Independent Business and several upstate business alliances.

OKLAHOMA: Two bills seeking to streamline state employee health insurance benefits, in an effort to improve choice and lower costs, passed the House last week. The bills are based on recommendations made in a report by Milliman Inc. to the Oklahoma State Employee Health Insurance Review Working Group, which met during the interim last year. The report was requested to examine the functions of the Employees Benefit Council (EBC) and the Oklahoma State Education and Employees Group Insurance Board (OSEEGIB) and to determine if a duplication of efforts existed between the two agencies. The report concluded that the functions of the two groups should be integrated to form a new organization focused not only on the payment of health and other insurance claims but also on the wellness of the covered individuals; one oversight board should be created that would include members from backgrounds that include medical and employee benefits, as well as those from legal and fiscal backgrounds; the new organization should include a stronger wellness component; the state employee benefit allowance is artificially inflated and should be recalculated; and more choice is needed in rural areas of the state. The bills now move to the Senate for consideration.

WASHINGTON: Legislation authored by Democrat Eileen Cody to allow health insurance consumers the opportunity to purchase health insurance across state lines failed to gain traction in the legislature, despite support from the small business community and an endorsement from the chair of the health committee.Although some regional insurance carriers had expressed concerns, the main opposition came from chiropractors and mental health providers who believed that provider protection laws would be uncut by the legislation.


Transforming Health Care in America
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Friday, March 05, 2010

Save the Smartest Way Possible

The annual "America Saves Week," an event organized by more than a hundred organizations to encourage consumers to sock money away, wrapped up at the end of February. It's not having a huge effect, at least according to the latest numbers -- the January personal savings rate fell to 3.3 percent from 4.2 percent in December, the lowest rate in 15 months, the Commerce Department reported this week.

If savings behavior isn't changing, consumer attitudes may be. A recent Gallup poll found 62 percent of Americans say they enjoy saving more than spending, while 35 percent reported the reverse. Back in 2006, respondents were split about 50-50 on the question. Moreover, 57 percent say they are spending less money in recent months than they used to, up from 50 percent last July. Among the newly frugal, 38 percent say this spending pattern is the "new normal," while 19 percent say the budget cuts are temporary

The poll didn't examine how people are saving, but the latte-by-latte route is being challenged by some. "If you look at the things you spend the most money on, that's where you can save the most money," says Elisabeth Leamy, author of the new book "Save Big" and a "Good Morning America" consumer correspondent.

Leamy offers a hundred ways to save thousands of dollars on five top costs -- homes, cars, credit, food and health care. She argues that it's easier to squeeze money out of the big stuff than to pinch pennies. "I would rather focus ferociously on getting rid of junk closing costs when I buy a house or do the research every few years when I need to buy a car, than scrimping and struggling to save every day," she says.

The book offers step-by-step instructions to minimize closing costs on a house, negotiate the price of uncovered medical procedures and save on auto insurance, among other tips. Some suggestions are straightforward. You can save $9 a month by keeping your tires properly inflated, or save tens of thousands by buying a used car and paying cash rather than financing. (Been there, done that, it works; the only exception was the Kia we bought during the Cash for Clunkers program.)

Wiser Use

For consumers whose finances aren't particularly complicated, Leamy is a big advocate of pre-paying your mortgage. For example, suppose you take out a $200,000 mortgage for 30 years at 6.5 percent interest. The monthly payment is $1,264.14. Let's say you can afford to round up your monthly payment to $1,300, paying an extra $35.86 a month. You'll save $23,900 over the life of the loan.

But for me, this is the trickiest part of personal finance. There are multiple goals crying out for that extra $35.86 -- a fund for emergencies, college, retirement and those little expenses that make life worthwhile right now (like a vacation to Florida, especially if you lived on the East Coast this winter).

If you carry credit card debt, the best use of that $35.86 is paying down those cards as quickly as possible, because the high interest rate is dismantling your road to riches brick by brick. Three simple steps: 1) Take five minutes to call each card company and see if they'll lower your interest rate. 2) Make all your minimum payments on time and in full and shovel the extra $35.86 toward the highest interest-rate card. 3) When it's paid off, shift that minimum payment plus the extra $35.86 to the next card, and keep rolling until you are free of credit card debt. (Watch out for debt pay-down scams that charge you for that same advice.)

Next, I would allocate that $35.86 toward an emergency fund equal to three month's living expenses in a savings account. Personally, I keep my emergency fund in my checking account, because I get 3.5 percent interest on deposits up to $30,000 if I use my debit card 10 times a month. I know I can only spend the amount above my emergency fund "base." This works remarkably well if you're disciplined. (Rule of thumb: If you've had more than one overdraft charge this year, don't try this, because you don't have enough control of your finances to make it work.) First get a budget.

Now, let's assume you're free of revolving debt and have managed to save three month's living expenses. The next place I'd put the $35.86 is in a retirement account. If it grows at 5 percent for 40 years, you're looking at $32,864 (assuming a 2 percent rate of inflation). Click here for a method to compare the value of an extra mortgage payment to a 401(k) contribution.

Can We Have It All?

Frankly, I think you could make a good argument for splitting the $35.86 between a retirement fund and a vacation fund, because the days are long, life is short and all you take with you are memories.

Unless, of course, you have kids; then maybe you put one-third of the $35.86 to retirement, one-third to vacations and one-third to college. For instance, I used to make an extra mortgage payment but eventually allocated the money to my kids' 529 college savings plans. Why? Inflation on college tuition is running 7 percent. My returns over the last three years averaged 3 percent. The only way to reach our goal is to save more (and practice jump shots, on the outside chance the kids could ride a sports scholarship through college like their dad.)

Old-fashioned American optimism (and clever advertising) suggests we can have it all. Doing the math often demonstrates otherwise. At a certain point it comes down to making choices about the big things we want in life and setting goals to reach them, and then, as Leamy puts it, "buckle down and do the work."

It would be wonderful if America Saves Week inspires someone to skip a $3 latte and save the cash -- but even better if it gets people to think about what they really value, and use their money accordingly.

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Tuesday, February 23, 2010

Google's New Aardvark - Move aside Facebook

Afterlaunching Buzz last week, Google have continued on the social track by now acquiring social search service Aardvark.

The deal, rumoured to be worth around $50 million, could see Google use the social search engine as an answer to, well, Yahoo! Answers. Through IM, Twitter and e-mail, Aardvark lets you ask full-text questions and then takes your social connections and attempts to identify the best person within your network (or extended network - friends and family) who might be able to assist in giving that answer.

Here is how Wired explains the concept behind Aardvark:

Users who sign up give (Aard)Vark access to one of their social networks - Facebook, LinkedIn or the e-mails in their contact list. Users then say what things they are confident answering questions about (e.g. chess, cooking, country music). Vark then routes future questions - such as what's the best country band out of the south from the 1970s or where's a good sushi restaurant near Santa Monica - to the right person. A series of algorithms keeps tuning the targeting by watching if a user's answers are quick and useful, deciding whether their friends are also experts, and checking if a user is online or has been asked to answer too many questions recently.

The news was confirmed by Aardvark CEO (and ex-Googler) Max Ventilla who emailed TechCrunch with the following: "We can confirm that Google has signed a deal to acquire us but have no further comment."

So I'm afraid that's all the news we have so far folks, but if we hear anything more, we will be sure to let you know.

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