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YOUR BOTTOM LINE

Mortgage Meltdown: How to Dig Ourselves Out; How to Get the Best Possible Health Care at the Best Price; Top Ways You're Getting Ripped Off and What to Do About It; Best Schools and Financial Aid

Aired August 1, 2009 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


GERRI WILLIS, CNN HOST: Hello. I'm Gerri Willis and this is YOUR BOTTOM LINE, the show that saves you money.

The future of your health care debated on Capitol Hill, how you can insure you're getting the best possible care at the best price. Avoid getting taken for a ride. The top ways you're getting ripped off and what you can do about it. And the cost of college, where to find the best financial aid and which schools are the best value. YOUR BOTTOM LINE starts right now.

We begin with what could be the some glimmers of hope, yes hope, in the housing market. According to the S&P/Case-Shiller Home Price Index, the index of homes has increased. Prices have gone up for the first time in three years.

New home sales rose 11 percent, the highest increase in almost nine years and existing home sales are up 3.6 percent. Positive signs suggesting the worst may, just may, be behind us. But folks across the country continue to complain that the Obama administration's Making Home Affordable load modification plan, well, it's not gaining enough traction.

Now, Treasury Department talked to mortgage firms saying hey, it's time to pick up the pace.

Here to discuss the mortgage meltdown and how we can dig our way out is John Taylor. He's the president and CEO of the National Community Reinvestment Coalition.

Welcome, John. Good to see you.

JOHN TAYLOR, NATL. COMMUNITY REINVESTMENT COALITION: Hey Gerri, nice to see you.

WILLIS: All right, I wanted to show you and our viewers some numbers here and it really describes what's going on. You see the pace of foreclosures starts higher and higher and then the pace of loan mods not keeping track at all of foreclosures. What's going on here? Why isn't the president's plan getting more traction?

TAYLOR: Well, for one, you know, it's really dependent -- it's a voluntary system dependent upon these services who manage these loans for banks and investors to voluntarily come in and participate in the program. And that's been slow to come. It was slow to come under the Bush administration, it's slow to come under this administration... WILLIS: Right. Why don't they want to help? I mean, what's the hold up?

TAYLOR: Well, I think for one, I think that a lot of these investors and services are waiting for what you were just talking about, the market to turn around so they don't have to take as big a hit. So they're sitting tight, a lot of them.

A lot of them don't have the capacity, they didn't staff up. And then for another group of services and investors it's, they want to offer something less than what the president is offering. The president's proposal, Making Home Affordable, actually will keep people in their homes long-term. A lot of these services want to offer something less than that may result in another foreclosure or another modification, but don't have to give as much.

WILLIS: You know, last week, we asked you to write in and share your experiences with Making Home Affordable, and we got lots and lots of responses. And what's really interesting here is now, these responses are really going to the next problem in the market and that's unemployment and that's forcing people into foreclosure, as well.

I want to turn now to two viewers, we promised we'd bring you on air, and we are. One is Marty Stahl, he is in Phoenix, and Alphonso Hall, he joins us now from Omaha, Nebraska.

I want to start here Marty, and Alphonso I'll get back to you in a second. Marty, you tried to get in on the president's Making Home Affordable program the day after he announced it. Tell us about your story about trying to get a loan mod and why you were seeking one.

MARTY STAHL, HOMEOWNER: Well, I'm seeking a loan mod because, as you mentioned, many of us are unemployed. I was laid off in February of 2008 and was starting to run out of savings and the president's announcement sounded great.

So, what I did is I -- the next morning, I called up Wells Fargo and they told me that I had to wait until April to file and then the beginning of April, they told me to still wait. I finally got to file on April 15. I think that they accepted the filing or whatever they call it on April 22, and then I waited more and called every week to find out what was going on.

WILLIS: But you're not really getting traction here, right?

STAHL: No.

WILLIS: But he's still frustrated. He's not getting through and he's lost his job. So now he's in the worst of all worlds. Is there anybody to turn to at this point?

TAYLOR: I mean, lenders, again, I would, you know, if you weren't satisfied with the people who are trying to help you, the fact that they contacted was nice, but you really need to contact an agency -- and I'll give you a number, Marty, in a second -- but, or legal aid that have the kind of leverage, because Wells Fargo, I know for a fact, is willing to work with some consumers, they weren't willing to work with you and I don't under -- know the particular facts related to you, but there are levers that will get all these major banks to work with consumers.

WILLIS: All right, we're going to hook you, Marty, you and John up together and you can have a conversation on how to go forward. But again, it's often getting somebody just focused on your case who actually knows how to work the system.

All right, I want to turn to Alphonso for a second, because Alphonso was successful in getting a modification and he didn't even use a service, he did it on his own. Alphonso, he's joining us by beeper (ph), now.

Alphonso, now tell us, how did you do it? How'd you make it happen?

ALPHONSO HALL, HOMEOWNER: First of all, what I did was I made the phone call, that was the first initial step. I was a little bit hesitant because I was a little behind from a car accident and called and U.S. Bank had started the process.

First they filled out the form and found out what my income was, if I was still eligible. Sent it in, went through the process and after the first of the year still hadn't heard anything, called every two weeks, wanting to get the status on it. Nobody could give me any pertinent information.

As of the first of the year, I was -- there was a reduction enforced at our company, I was laid off and that really, double fold, put me behind, called them in February, set me up on some type of three month plan, to make sure I could still make the payments. Made them for three month, January called, and said I made my three payments for November, December and January, where do we go from here? They said, continue to make the payments and you'll get a letter in the mail.

WILLIS: And you did.

HALL: That's when they made a decision. I got a letter from the vice president of U.S. Bank and he said that my loan modification was approved.

WILLIS: This is a really great success story. You did it on your own, but it took you awhile, it took you, what, I believe, a year, to get this?

HALL: Yes, ma'am.

WILLIS: John Taylor, Marty Stahl, Alphonso Hall, thank you so much for coming, talking to us about this program, your experiences with us, and helping us out, appreciate it.

A new health care plan is brewing. What it could mean for you and your family and when it's time to fire your doctor. (COMMERCIAL BREAK)

WILLIS: Health care is a hot topic these days with President Obama pushing for a massive overhaul of the system. Now, many of you have e-mailed us here at the show to express your concerns and ask questions about what these plans would mean to your bottom line. Here to break it down for us is Dr. Bernadine Healy, she's the health editor of the "U.S. News and World Report" and the former director of the National Institutes of Health.

Welcome, doctor, great to see you, today.

DR BERNADINE HEALY, U.S. NEWS AND WORLD REPORT: Nice to see you, Gerri.

WILLIS: All right, so, I want to start with the dollars and cents of the plans. You know, we've heard a lot of estimates about what they might cost, a trillion dollars over 10 years. I want to know is if these plans go into effect, what will it cost me as a user of the plans? Will my costs go up or will they down?

HEALY: Well, Gerri, you're asking the question that every single American is asking when a tax bill is passed or cap or trade, and they say you'll have to pay an extra percent or two percent, they understand what that means. But here, it's very, very hard to give any individual that answer.

You know, we have the CBO looking for the government to see how much the government is going to have to pay. But we don't have the code for what individuals will have to pay.

We do know, for example, that young people are going to have to pay more.

WILLIS: OK, so young people will have to pay more. Will the elderly pay more? Will older people pay more?

HEALY: The elderly will pay more, because the -- almost a third or more than a third of the money to pay for health reform is coming out of Medicare. Now, that means indirectly, the elderly are making a huge donation to health reform, to cover everyone else. There are also more subtle things in terms of restrictions on elderly care that we really won't see play out until health reform is fully in place.

WILLIS: Well, I really want to talk to you about that, because there are big questions and people are really concerned if their treatment is going to be dialed back in any way. Will there be limits to what kinds of procedures or treatments or drugs you can take because of this plan?

HEALY: Here again, Gerri, what we have are structures in place that will make determinations of that. For example, a health benefits committee or a health choices administration. They will ultimately determine what people have to have in their insurance or what they'll have to pay out of their pocket. So, we don't know if our care is going to be dialed back and we won't know. WILLIS: Well, it's certainly a massive program that we're talking about here, and there are lots of questions. Not a ton of answers. We really appreciate your coming on and telling us about some of these issues that are emerging right now. We hope you watch it --- continue to watch it for us. Dr. Healy, thanks for your time, today.

HEALY: Thank you, Gerri.

WILLIS: Everyone wants the best insurance and care when they step in their doctor's office, but sometimes, you know, that's not always the case. So, how do you know when it's time to fire your doctor? That's right. You can fire your doctor. Dr. Orly Avitzur is a neurologist and medical advisor for "Consumer Reports."

Doctor, yours is an amazing story. You fired not one doctor, but two and in the space station a year, so you really know how to do this. I think that people have doctor problems, they have long wait times, they get frustrated. But when does that really rise to the level of, I've got to get this doctor out of here.

DR ORLY AVITZUR, CONSUMER REPORTS: Right, I think it Is unfortunate, but it's important for every patient to know they have a choice and so, if things are not going well in the office, if your doctor has a poor bedside manner or his staff is rude or you don't get telephone calls answered, or you're kept waiting a very long period of time, it's just time for you to kind of take a look at the situation and decide if you really want to stay, if it's worth staying at that practice.

WILLIS: But wouldn't it make more sense before you just, you know, fire your doctor, to maybe go to the office manager or someone and say, you know, look, I'm having problems, there's a -- the doctor has a rude bedside manner, I'm waiting for an hour. Would that maybe prompt some change?

AVITZUR: Absolutely. You should always speak to the office staff first and even try to make them your friends because you need them for all sorts of things, from scheduling appointments to dealing with insurance problems. So, have a good relationship with the office staff so that you can talk about things like this when they get a little bit sticky. And also feel free to talk to the doctor if things are so intolerable that you're actually considering leaving.

WILLIS: How long is too long to wait in an office? Seriously, because, you know, I hear all kinds of horror stories about people waiting an hour, two hours. How long should you be willing to wait?

AVITZUR: That is such an individual question. I do think it's important for doctors to be respectful of your time, but sometimes doctors get caught up in the emergency room or they get behind because of surgery and there are other unforeseen circumstances including emergencies that happen that just can't be helped and I think it's an individual question. If you love your doctor and it's just something that happens now and then because of those circumstances, then I certainly wouldn't recommend leaving. WILLIS: So, you got to give me the nuts and bolts here. What do I need to do if I have decided I'm going to firing my doctor. What do I need to know? What paperwork do I take with me, are there any fees or charges?

AVITZUR: You need to know that it's your medical right, it's your legal right to have your records and so it's probably best, and the laws in states vary, but to request those records in writing. Sometimes, there is a copying charge, there often is not. But it's definitely something that is within your legal rights and should be transferred to your next doctor, because that doctor will need it in order to have the full information to help you take care of your health.

WILLIS: Dr. Orly Avitzur, thanks for your time today, we appreciate it.

AVITZUR: Thank you very much.

WILLIS: And a new survey out from Demo (ph) says the public policy think tank reveals 52 percent of respondents citing medical expenses as contributing to their credit card debt. Other findings include 37 percent are relying on credit cards to cover basic living expenses, like rent, utilities and groceries.

And Hispanics have the highest average credit card levels, while African-Americans have the lowest.

Look, using your credit card as a plastic safety net never works well, because the price of doing that is so high. Interests and penalty fees can easily escalate your monthly bill. A better strategy for getting money, if you're in a real bind, is break certificates of deposit or turning to your family for a loan.

Now, if that's not possible, consider contacting your creditors directly and asking for help. They may well extend the period you have to pay them back or forgive fees. In this climate, any payment is better than no payment, from their point of view.

It's time to start thinking about back to school. We have the list of the best college values in the country, next.

(COMMERCIAL BREAK)

WILLIS: Higher education certainly doesn't come cheap and if you're a parent or a student or you know a parent or a student, we're going to show you how to find a perfect college for your budget. Joining us now is Robert Franek, he is the author of the "Princeton Review's Best 371 Colleges."

OK, Robert, you do this the right way, you actually interview students to find out what they think and they're the ones who are living this thing, so they are a great source. Let's walk through some colleges now. Which school makes their students happiest with financial aid, and it's all about financial aid this year. ROBERT FRANEK, PRINCETON REVIEW: And you're so right. And we go to whom -- and we consider those college experts, current college students, and ask about their experiences academically and otherwise and certainly around financial aid, especially this year, that there's such a spotlight...

WILLIS: Everybody is having such a hard time with financial aid. There are virtually no private loans. What is the best school for financial aid?

FRANEK: Right now, if, rated by our students, it's Swarthmore College in Swarthmore, Pennsylvania. And Swarthmore is an excellent school when we start to think about the sticker price, it's $44,800 but they're giving out amazing amounts of aid and the students are actually graduating with no loan debt. So, they're meeting that aid 100 percent.

WILLIS: Wow. OK, where are students least happiest about their financial aid?

FRANEK: This year it is NYU, and they have been a unusual suspect on our list. And with a price tag of around $48,000, $49,000 a year, students are graduating with some pretty big loan debt from NYU, on average, about 35.5 after they finish their four-year degree.

WILLIS: Wow, that's a lot of debt. It's expensive to live in New York, so maybe that's part of the story, too.

FRANEK: Of course.

WILLIS: Let's talk about best value. Right? Public and private. Let's sStart with the private school. What is the best value out there? And I assume you're looking at what you're getting for the money?

FRANEK: Yeah. And that's true. And we tried to look at what you're getting for the money but also the experiences that a student was earning in the classroom. We wanted to make sure that they were challenged, that their professors were good teachers, that they encouraged class discussion.

We looked at sticker price, as well, and then those financial aid factors. Were they meeting your need 100 percent? What percentage, overall, was the student needing that. And then average indebtedness that students were graduating with. This year's No. 1 private school is again, Swarthmore College.

WILLIS: Boy, they are winning every category.

FRANEK: They really are. They really are. And again, well deservedly. When we started to think about that student experience in the classroom, they are unapologetic about saying how clearly wonderful their teachers are and that classroom experience is good, but then also the financial aid value that they're getting, as well.

WILLIS: Let's go to public school, now. FRANEK: Yes, University of Virginia, No. 1 on the list.

WILLIS: Great school.

FRANEK: Excellent school. Excellent school. And especially students in state, it's about $16,300 tuition.

WILLIS: So much cheaper, but you have to live there to get that price.

FRANEK: That's true. For an out of state student, it's 35.5. the average aid package that a student is getting is around that $30,000 mark. So again, they're able to do the near possible, which is to meet a students need 100 percent.

WILLIS: Now, I think one of the most important things about a college, right now, for so many students, is what are the career services like? And that translates into, are you going to help me get a job when I graduate? So many of these kids coming out of school, right now, they cannot find a job. Who has the best career service program?

FRANEK: No. 1 on our list this year is University of Florida, and again, rated by students. University of Florida is an exceptional school academically, it's a big school, but the center there is a staff with 17 full-time professors all devoted to career services, inside the classroom and outside the classroom. So, experiential learning opportunities, internships (INAUDIBLE), while you're in school and then those first-time jobs when you're out of school.

WILLIS: OK, parents want to know -- well, I want to tell you, students want to know -- what is the best party school?

FRANEK: No. 1 on our party school list, again voted by students, is -- actually no, Penn State has been a usual suspect on this list, but this is the first time it's in the No. 1 spot.

WILLIS: OK, so it's slowly climbing the rankings?

FRANEK: It has slowly climbed the ladder.

WILLIS: I don't know if that's a positive or not. Robert, thank you so much for your time, today.

FRANEK: Pleasure to be here, thank you.

WILLIS: Really appreciate it.

FRANEK: Thank you.

WILLIS: All right, listen up. Don't get ripped off. I have to repeat that. Don't get ripped off. Grab a pen and paper, we're going to show you how to avoid getting duped.

(COMMERCIAL BREAK) WILLIS: Money aside these days, so what can do you when you know you're being taken for a ride? Maureen Farrell of "Forbes" joins us now with some of the ways you're getting ripped off and how you can easily avoid being duped.

OK, you're got some great information, here. I'm going to wind you up. ATM fees. ATM fees are high, but you say you might not realize what you're really paying?

MAUREEN FARRELL, FORBES: So, everyone's, sadly, used to ATM fees, these days. If I'm a Citibank customer, I go Bank of America. I know I'm getting charged $3 for an ATM fee. What you don't know is that Citibank is actually charging you, too. Citibank may be charging you $1.50.

WILLIS: So, your own bank charges you for using somebody elses' ATM. That seems so unfair.

FARRELL: Exactly. Consumers are getting hit twice.

WILLIS: So, the easy avoid it is that you don't use out of network ATMs, but you've go another idea, as well.

FARRELL: You can also go to another bank, walk up to the counter, write yourself a check, make it out to "cash" and walk away with that and you won't get charged a fee.

WILLIS: All right, I like that idea. Let's talk about warrantees for a second, because there's lot of rip-offs in warrantees. What's the best way to go and really what's the down side?

FARRELL: So, you want a warranty, you want the protection, but a lot of people -- most people typically buy it directly from a retailer, the warranty and then you're really getting hit. We saw a $350 Toshiba laptop and the warranty there costs $280.

WILLIS: What?

FARRELL: That's 80 percent of the purchase price.

WILLIS: That's crazy. So, I mean, you're almost paying what you paid for the laptop.

FARRELL: Exactly.

WILLIS: That makes me nuts. OK, you know, obviously you can probably shop around for a warranty. Where do I go?

FARRELL: You can go to a third party warranty provider and you'll get a much better deal, typically, at a much cheaper price. For that same Toshiba laptop, we found a third party provider, it's called SquareTree.com, and they charge $100 for a three-year warranty.

WILLIS: I like that better. OK, let's talk about theater snacks. FARRELL: So, theater snacks, you know, movie customers are captive audiences, so they pay through the nose for soda, popcorn candy. We saw here, at a Lowes in Manhattan, you would pay for a 5.3 ounce of peanut M&Ms, you pay $4.25. But, you don't have to do that, clearly you can plan ahead, stop by your...

WILLIS: Or you can pay 75 cents, you know, at the drugstore.

FARRELL: At the pharmacy on your way, take it get in. save all the money, there.

WILLIS: All right, eye exams. You know, I have to get a new driver license and I'm being told I have to have an eye exam to do it. Where should I do it?

FARRELL: So, most states, you do have to get an eye exam, in most states, but -- and Lenscrafter, most eye exams providers are happy to charge you. So, you can pay $65 up to $165, but you don't have to do that. You can go directly to the Department of Motor Vehicles and get it for free.

WILLIS: Love that. OK, I want to change the tone, here a little bit. Because this has been pretty much light stuff. But there is something very serious in this that really affects a lot of people and usually at their most vulnerable -- buying a casket. So people get charged $20,000 four times over cost, even more for caskets. You really have to be careful with something like this.

FARRELL: You do. I mean, most people, clearly, people don't plan ahead for these things, you don't want to think about it. So, funeral homes offer you a one-stop shop. For caskets, you're paying, like you said, three to four times the price of what you should be paying.

WILLIS: All right.

FARRELL: So, you have another option. The option here is you can actually buy directly from a manufacturer.

WILLIS: That's obviously, just the solution. I appreciate your help, today. Thanks so much for bringing us this information.

FARRELL: All right, thanks for having me here, today.

WILLIS: As always, thank you for spending part of your Saturday with us. YOUR BOTTOM LINE will be back next week right here on CNN. You can also catch us on HLN every Saturday and Sunday and 3:30 p.m. Eastern Time and you can hear much more about the impact of this week's news on your money on YOUR MONEY with Christine Romans and Ali Velshi, Saturday at 1:00 p.m. Eastern and Sundays at 3:00, right here on CNN.

Don't go anywhere. Your top stories are next in the CNN NEWS ROOM. Have a great weekend.

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