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Courses offer knowledge on money management
Friday, Nov. 20, 2009
 Click here to enlarge this photo Staff photos by EMILY BARNES
Darlene Jones-Dorsey, right, of St. Mary's County talks to Amelia Macaspac, a Waldorf-based banker with Bank of America, at the "Get Money Smart: Managing Your Money in Difficult Times" seminar at the College of Southern Maryland in La Plata on Saturday.
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As it turns out, there is occasionally such a thing as a free lunch. And those who attended "Get Money Smart" seminars Saturday got to enjoy one, as well as attend up to four free presentations on subjects including "Free Money" and "Investing 101." The courses, intended to help Southern Maryland residents increase their financial literacy, were sponsored by the College of Southern Maryland and held at its La Plata campus.
The distressed housing market can be a great way to snap up a bargain but let the buyer beware, panelists warned during a discussion of foreclosures and short sales.
If they recalled only one thing, listeners should remember that "a short sale is a long sale," said Skip Mudd, a consultant with C&F Mortgage Corp. in Waldorf.
A short sale — where a potential buyer offers to purchase a home for less money than remains to be repaid on the mortgage — is time-consuming and difficult to arrange because there can be many players in the process and some of them might lack an incentive to cooperate.
"There is no motivation for the bank. Banks and investors are the most unmotivated people in the world because they would prefer that [the current homeowner] stay and keep making payments. … There is no reason for them to want to help," said Kathi Payne, a real estate agent with Coldwell Banker Jay Lilly Real Estate in Waldorf.
Not all delays are the result of foot-dragging because "the banks are overwhelmed," said Tim Murphy of CNF Mortgage in Waldorf. Because of the barriers, most attempted short sales do not go through.
"Put yourself in the position of the bank. You're owed $100,000. Someone comes in and says, ‘We'll give you $75,000.' That's a $25,000 hit and there's no urgency from the bank's point of view to take that loss," Mudd said, adding that submitting inspection reports or photographs of damage could encourage a lender to make a deal.
Robin Jackson heard about Get Money Smart through her credit union and came to learn how to get her personal finances under control, the Accokeek resident said. During a session on building good credit, she said she was afraid of what could happen if borrowing is too easy.
"I'm 26. I don't have a credit card. I'm scared to get a credit card. I know I'm an impulsive spender," she said. Instructors suggested that she apply for a credit card secured by a certificate of deposit so that she could not spend herself into a hole.
Another member of the audience complained that exhortations to fiscal responsibility were at odds with the reality that consumers have to navigate.
"This country is based on debt. You can't move up in life without paying loans; you don't have a track record. … It's a catch-22," said Glenda Harrison of Waldorf.
Presenters Steve Kensinger of Old Line Bank and Judy Brown of Educational Systems Federal Credit Union said people should take advantage of the free annual credit report from the three major credit bureaus guaranteed them by law.
"Consumers need to be policemen of their own credit file and make sure that information is accurate," Kensinger said.
Also dangerous are "credit repair clinics" that demand money to raise a bad credit score. There is nothing a clinic can do that a person cannot do for himself, and some clinics have ruined clients' credit, warned Jason Groom of NRL Federal Credit Union. During the same presentation on "How to Use Wealth-Building Tools," Karrie Wood of Community Bank of Tri-County told consumers to be wary of "phishing" scams where criminals pretend to be from a financial institution in order to trick someone into revealing personal information, because that is not how real banks operate.
Also to be shunned are cash advances on tax refunds or paychecks as well as carrying balances on credit cards.
All workers should invest in 401K retirement plans if their employers offer them, especially if the employer matches contributions, he added.
Deborah Holt of Spangler Insurance Agency did her best to give advice on choosing health insurance but warned that the entire system could change soon if reform efforts succeed. Above all, she warned the currently insured to think carefully before changing coverage, because if they regret it they might not be able to go back to what they had before.
"We don't know what's going to happen. If you give up your individual plan, you can't go back to it because of medical underwriting. You can be turned down or there can be things they aren't going to cover," Holt said.
