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YOUR BOTTOM LINE

Mortgage Modification Fairs, Loan Modification, Gadget Gifts, Budget Holiday Entertaining, Charitable Giving

Aired December 19, 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 NEWS ANCHOR: Hello, I'm Gerri Willis and this is YOUR BOTTOM LINE, the show that saves you money. Hello. I'm Gerri Willis, and this is YOUR BOTTOM LINE, the show that saves you money. Imagine getting your home mortgage payment cut in half in just a few hours. We'll show you how it can happen.

And what's that you're saying? You still have gifts to buy? From managing your kids expectations of Santa to techie solutions, hey we've got you covered. Plus, of course, some cheap tricks we've got a few last-minute solutions for your food and wine. The show that saves you money starts right now.

Hundreds of thousands of homeowners are facing foreclosure. But the Treasury Department says only four percent of those homeowners are getting their mortgages modified with the government's program. This week I visited a place where a lot of loan modifications are happening and happening fast.

(BEGIN VIDEOTAPE)

(voice-over): Ray Dawkins has tried for three years to get his adjustable rate mortgage modified. When he first got the loan it was affordable, but the original low interest rate reset to 10 percent and he can't make the payments.

(on camera): What's that like to pay?

RAY DAWKINS, HOMEOWNER: I can't even imagine. That's -- that's just horrible. It's horrible. Horrible, horrible.

WILLIS: How much of your income does it take out?

DAWKINS: I'd say about 95 percent.

WILLIS: Ninty-five percent of your income to pay your mortgage.

DAWKINS: Yes.

WILLIS (voice-over): Ray's mortgage servicer gave him a forbearance and he hasn't had to make the entire payment for months while he works out his problem. Ray has come to a mortgage modification fair run by NACA, the Neighborhood Assistance Corporation of America.

(on camera): What do you hope will happen with your mortgage?

DAWINS: I hoping the lender would, you know, help me out, reduce my principle to an affordable payment that I can afford, be more comfortable making. That's what I'm hoping to accomplish.

WILLIS (voice-over): He's come to the right place. Sylvia Alayon says 80 percent of people who come to these fairs leave with a mortgage modification. And the fairs draw tens of thousands of people.

(on camera): How can these people get a new mortgage in a day when they can't seem to get any traction whatsoever on their own?

SYLVIA ALAYON, CONSUMER MORTGAGE AUDIT CTR: The key is that all of the groups here are committed to this cause, and the goal in mind is for every homeowner that walks into the -- to this building that they walk out with a loan modification.

UNIDENTIFIED FEMALE: What's your last name.

DAWDINS: Dawkins.

UNIDENTIFIED FEMALE: Spell that for me.

DAWKINS: D-A-W...

WILLIS (voice-over): Counselors meet with each person to decide how much of a mortgage payment they can afford. If the person's situation is especially difficult, Ayalon's group, the Consumers Mortgage Audit Center, performs an audit combing through every line of paperwork. Bank reps from the major lenders look over each file and decide how to modify the loan.

After meeting with his mortgage servicer, Ray gets some good news about his monthly payment. Moments later, he announces it to thousands of people still waiting for their turn.

DAWKINS: I walked in here paying $4,700, and I'm walking out now paying $2,400. I am thrilled. I am so happy.

WILLIS: A three-year struggle over, Ray leaves after only a few hours knowing he can keep his home.

(END VIDEOTAPE)

Amazing, right? Well, they say 40 to 50,000 people have come to each stop in its Save the Dream tour of mortgage modification fairs, but not everybody can make it to one of these fairs. We want to offer advice for folks who are trying to get their own loan modification. Michelle Jones is the senior vice president of counseling at the Consumer Credit Counseling Service of Atlanta.

Michelle, welcome.

MICHELLE JONES, CONSUMER CREDIT COUNSELING SERV: Thanks, Gerri.

WILLIS: All right, so answer the big question here, why is it that somebody at one of these fairs can get a modification and Ray got it in a couple of hours, and if you try to do it on your own you just get no traction whatsoever? JONES: Yeah, there's no question, Gerri, that a lot of people are still really struggling through this process that they try to get their loan modified. If you have the benefit of going to one of these fairs, that's a great thing to do. We've participated in a number of Hope Now events where servicers were on-site, counselors were on-site and they can work together to get through the process.

But, the fact is not everyone is in close proximity to one of these fairs and there are other avenues available that people can use to get their loan modified.

WILLIS: All right, well, let's talk about some of that. You say the first step is to call your mortgage servicer directly.

JONES: That's right. That is the first step to take. And you need to take that step over and over and over throughout the process. It's very important to stay in close contact with your lender.

The other thing, I think you need to do is to get the help of a certified housing counselor. You can get that assistance over the phone, and organizations are available nationwide to help you.

The third thing that you want to do, Gerri, is you want to be sure that you have all of your documentation together. If you can send your, what they call workout package, if you can send that in one bundle so that they have everything that they need at one time, you're going to be more successful then you can send in your materials piecemeal over a period of time.

WILLIS: Michelle, what's in that?

JONES: So, you're going to want to include everything from a W-2 form to your pay stubs to a hardship letter explain your difficulty. There are a number of specific documents that must be included in workout package and if you go to the MakingHomeAffordable.gov Web site there's a great link on there that shows all the documentation that you need.

WILLIS: All right, I've got to ask you this question because a lot of loans we saw modified were modified at two percent, which I don't care what kind of credit score you have, you are not getting a two percent loan. How is that possible? And is this something that people should expect out of the modification process?

JONES: You know, I don't know that I can say that that would be the norm for everybody who goes into modification process. I think it's going to depend on what type of mortgage you have. You have a lot more options available to you if you have a loan that's backed by Fannie Mae or Freddie Mac or an FHA-secured loan. So, those are definitely going to be the options where you have more possibilities available to you.

WILLIS: And of course, you know, one of the big questions for people out there, when do I reach out for help. Is it when I'm one month behind, two months, three months? When is it absolutely too late to get any help? JONES: You know, it's never too late to get help. We have talked to people the day before their house is to be sold at auction. So, it's never too late to reach out for help. But that being said, the earlier in the process the better, you have more options available to you the earlier you are in the delinquency.

WILLIS: Michelle, thank you for that. Great information. We appreciate your time.

JONES: All right, thank you, Gerri.

WILLIS: Up next, we'll help you put Santa on a budget. How to manage your kids' gifts expectations. Plus, some cheap tricks when it comes to buying food and wine, before you buy.

(COMMERCIAL BREAK)

WILLIS: If you're like most people when it comes to getting that bill for Christmas in the mail, you might be hoping it pays for itself. According to a CNN Opinion Research Poll, 49 percent of people will spend less on holiday gifts compared to last year.

And when it comes to the kids, saying Santa needs to cut back might be hard for them to understand. Here with tip on how to talk with your kids about their wish list without becoming a Grinch is Janet Bodnar, she's the editor of "Kiplinger's Personal Finance."

Janet, great to see you, again.

JANET BODNAR, KIPLINGER'S PERSONAL FINANCE: You, too, Gerri.

WILLIS: All right, well let's talk about this. I mean, the great idea you have here is you really need to affiliate yourself with Santa, here. You and Santa on the same page, right?

BODNAR: Exactly. Right. Working hand in glove, so to speak, or hand in mitten. And you know, kids will really accept that. They'll accept whatever rule or customs you set in your house as far as Santa is concerned. And if you think, for example, that a present is too expensive or not suitable for the kids or it's just not going to show up under the tree, telling them that and letting them know that you're working with Santa is something that they will accept.

WILLIS: Janet, you know, one of my friends said, hey, this year we're only giving the kids three gifts. We told them that and they're going along with us. Is that something you can actually do yourself?

BODNAR: Yes. And you know, first of all, Gerri, I always tell parents this, never be afraid of your kids. You really do have power. They really will listen to what you say and whatever customs you set, as I mentioned before, they'll go along with. I have a friend who does something similar to your friend. Their custom in their household is that Santa will bring the kids one present for -- one major present and then mom and dad bring additional presents. And that's the rule in their household. So, as long as you believe in it and you convey that to your kids, you can make it stick. The kids will rise to the occasion. They really will.

WILLIS: OK, well you know, let's face it, though, if you say give me a wish list, you're going to get 20 things.

BODNAR: Right.

WILLIS: How do you deal with that?

BODNAR: Yes. Take it as positive. They're going to put 20 things on the wish list. Have them make choices. That's a skill you want to teach kids anyway, no matter what your economic condition is, you personally in the economy in general. So say to them, all right, you've got 20 things on this list. If you had to choose the top five or the top three, what would they be?

If the kids are older you can give them a budget and you would say, all right, if you had $300 to work with, what would be, how would you divide up this list among those things. And it gives the kids a reason to think about how much things are really costing. So they're learning a lesson and you're probably going to get away with spending less time and less money on the Christmas ...

(CROSSTALK)

WILLIS: Less time, less money, that's what we're looking for, Janet. OK, so let's talk about being creative. More ideas for being creative. What else can I do if I'm trying to pare back this Christmas budget?

BODNAR: Not giving gifts that actually have money attached, you know, giving gifts of service. If you're talking about siblings, one sibling versus another, you know, have the kids give, say, I'll take your chores for a month. I'll walk the dog for a month. Or I'll take out the recycling or I'll bring the recycling bins back, that sort of thing.

You know, I said this last year and it's interesting got some interesting pushback. If you're the parent, give the kids a date with yourself. You know, so time spent with mom or dad, maybe taking in a cheap movie, matinee, or take in a dinner. And some parents would say, oh, my kids would never want to spend time with me. Why would they want to do that? Well sure they would. People say that to me, Gerri, really. But they do crave your attention. Certainly, if you have a good relationship with your kids, they'll want to do this. If you don't, then maybe it's time to work on this. So, just spending time with the kids and not necessarily a lot of money. I think that really works.

WILLIS: Janet, great ideas as always. We love having you on this show. Thank you so much.

BODNAR: Well, it's my pleasure, as always, Gerri. And happy holidays.

WILLIS: You, too. If you've got a techie in your life that's got everything or someone who simply needs a bit of technology upgrade, fear not, our next guest is here with some unique last-minute gadget gift ideas. Mario Armstrong is a technology contributor to NPR and the founder of TechTechBoom.com, which I just love to say.

Mario, welcome, great to see you again.

Hey Gerri, thanks for having me back on again.

WILLIS: All right, we've got to talk ant the Kindle, e-book readers. Which one is your favorite in this group? I have to tell you, we are a Kindle family, so you know where I'm coming from.

MARIO ARMSTRONG, TECHTECHBOOM.COM: Really? Oh, so it's going to be hard to really try to convince you. Well, so, there's a real battle going on. And I'm holding the Sony e-book reader, right here. But you're right. Amazon Kindles, Barnes and Noble also came out this year with one, the Nook. So they're in this game.

And so now we have three companies, three totally different devices. It really comes down to your personal preference and taste. If you already shop tremendously at Amazon, then the Kindle probably makes the most sense for you.

One limitation to the Kindle is that it doesn't have a, open format, which means books like the Sony e-book reader can get more inventory of different books that maybe you can't find in the Amazon store. So, there are some tradeoffs. But you should do your homework. We have a full list on the Web site of how to do that. I lean personally towards the e-reader, the Sony E-book a little bit.

WILLIS: Oh man, we are going to have it out after the show, Mr. Mario. OK, all right, now I want to talk to you about netbooks because I'm buying a PC for my mother, I'm buying a computer for my mother this year and I hear a lot about netbooks. Do you like them?

ARMSTRONG: OK, good for you. I really like the category. I don't think they're for everybody. I'm holding up an HP version of one.

WILLIS: It's tiny.

ARMSTRONG: Yeah, very tiny. Very light weight, which is one of the things that people really love about them. But they have some limitations to them. No. 1, the keyboard size is about 88 to 92 percent of a standard keyboard. So, smaller keys. You really want to feel it out and test it to make sure you're OK. No. 2, when you scroll Web pages on netbooks, it takes a long time, in some cases you're scrolling and scrolling and scrolling because the screen is smaller.

But for you, Gerri, I got the special one. This one. It comes -- it comes in its own little digital clutch bag. It's the Viviene Tam edition. You can strut your stuff in this netbook in total style made by HP. It has your name all over it.

WILLIS: Mario, it matches my dress.

ARMSTRONG: This is you.

WILLIS: OK.

ARMSTRONG: This is you.

WILLIS: All right. I have to get you to the wearable HD video camera.

ARMSTRONG: Oh, my gosh.

WILLIS: This is exciting.

ARMSTRONG: Insane. This is hot. This is the first time ever, wearable, Gerri, wearable. Think about it.

WILLIS: I don't know about that. Does it work?

ARMSTRONG: Think about it -- it works phenomenally well. It shoots in ten ADP. I've actually shot a few videos in this. It picks up the audio. It's totally hands free. I can wear this on my ski goggles or I can put it on my handlebars of my motorcycle or my bike.

So, for outdoor enthusiasts or sports enthusiasts, this is a great gift idea. It's a little expensive, about $249, depends on how expensive you think expensive is, obviously. But, the first time wearable HD. And you know, it's really light weight and it's ruggedized. I really like this device. I'll ready to go skiing now.

WILLIS: Mario, thank you. Thanks for skiing. Thanks for bringing us all the gifts. And I really like that tiny little red netbook. OK.

ARMSTRONG: Yes.

WILLIS: It's time to prep for that big holiday gathering. We've got some budget-friendly tips for your shopping list. That is next.

(COMMERCIAL BREAK)

WILLIS: Well, buying for a holiday party or family gathering, it can get really pricey. Joining me now with some tips for shopping smart this holiday season is Dana Cowin, she is editor in chief of "Food & Wine."

Welcome and let me tell you, thank you for bringing all of this food. You know, when I go shopping, when my husband goes shopping for a party, we always overbuy. And sometimes my husband will buy double. That's a big mistake, you say.

DANA COWIN, FOOD & WINE: I say stick to your list. This is really important. There's two reasons for that. One, impulse purchases. I go in. I have a list. I know my plan. I know my party. And then I end up with Cameron paste, (INAUDIBLE), spices t hat I think just might help my dip. But they don't. The other thing is buying extra. I'm always so concerned there won't be enough food. I think maybe we need something else. You got to sick to your list. Don't buy doubles. It's going to be OK. If the recipe says it's going to feed 10 and you're having 10 people, so with that.

WILLIS: OK, so, trust your recipe.

COWIN: Yes.

WILLIS: One of the interesting things you say is skip the cheese tray. And I do not serve a lot of appetizers because it's expensive and a lot of work.

COWIN: Yes.

WILLIS: You agree.

COWIN: I agree. I think that you always think the cheese tray is simple. It is simple, but what it isn't is cheap. So if you want to do a cheese tray, you're looking at 60 bucks. We are looking at about $10 per cheese. And you can't really get away with too much less and you don't want to feel skimpy, don't want three cheeses on a board.

WILLIS: And we have to tell you, we're looking at about 70 bucks ,here.

COWIN: Absolutely.

WILLIS: A lot of money just for the appetizer.

You say you can also save money with the salad by changing the mix of what you buy. How do I do that?

COWIN: OK, you've got to be open minded only in the produce aisle. So, that's where you can go off your list. Salads, as long as you have, like, a gentle salad mixed with like a spicy salad, if that's your idea, have to be open minded about which ones you buy. For example, the romaine lettuce has varied $2.50 per head in the last two weeks.

WILLIS: That's a lot.

COWIN: So, you an save money there, or look at your tomatoes. Now, it's almost like the bear syndrome. There are expensive tomatoes which are usually on the vine.

WILLIS: These.

COWIN: These. There are mediumly expensive tomatoes. Those are usually the cherries in a box, over here. And for whatever reason the romas tend to be the most affordable wherever you go.

WILLIS: And that's this. OK. I want to talk about prepared foods because that's always a big debate. Do I buy them or not? You say sometimes it's cheaper to go ahead and buy it premade. Explain.

COWIN: OK, this is painful as the editor of "Food & Wine" magazine to tell you to buy prepared foods. I will say, buy your guacamole. And I stand by it. Buy your salsa. Because they are close to the same price. The guacamole you're probably saving some money. Guacamole purchased might be, let's say $6, $7.

WILLIS: It's expensive.

COWIN: It's expensive. Guacamole made, $9, $10, but think of all the work you saved yourself. Work is money in my life.

WILLIS: All right, so we have cupcakes. We have brownies. Which are cheaper?

COWIN: OK, it's much cheaper to make your own baked goods. I don't know why, but $2.75 for a cupcake or a brownie at a great bake shop. At home, it'll be about 50 cents apiece. That's such a big difference.

WILLIS: That's a big difference. I want to talk about entrees because that's where you end up spending a lot of money. What's a good way to save on the entree? What do you serve?

COWIN: OK. So, I happen to love pork. And so I can have pork in any form. I usually -- I love ribs. They tend to be more expensive, though, than a big hunky cut, like a pork butt. Pork bults actually...

WILLIS: Pork butt.

COWIN: Pork butt. Pork butt is actually the shoulder and it's something that you braise long and slow and once it's braised long and slow you can do almost anything with it. It's a great dish for family and friends because it serves a lot of people at $2 a pound.

WILLIS: I love that. OK, great money-saving tips. Thank you for that, Dana. Great to have you here.

COWIN: Great to be here.

WILLIS: 'Tis the season for giving. Next, we'll tell you how you can do it without breaking the bank.

(COMMERCIAL BREAK)

WILLIS: The holidays are a time for giving, but it might be tougher for some folks to give charitable donations this year. So, what do you do if you want to give every dime you can? Joining me now is Max Schorr, co-founder and community director of "Good" magazine.

Max, great to see you.

MAX SCHORR, GOOD MAGAZINE: Good to be here, Gerri.

WILLIS: Of course, this year is more important than ever that you give to organizations that can actually make a difference, have the wherewithal that can continue to work all year long. How do you find those organizations that are really doing well?

SCHORR: That's a great question. Organizations are populating that are doing great work, and you can research in your local community and you can look online with sites like Charity Navigator and Network for Good. But I think the biggest thing is finding an organization that you're passionate about.

WILLIS: Finding something you're passionate about and really want to give to and really connect to at the end of the day, makes a lot of sense. You know, we're talking, though, about what if I really can't give money this year? What do I do if I want to contribute, but I really don't have the cash?

SCHORR: Yeah. I think we're seeing the idea of giving blend into all areas of society. So, basically, you can volunteer. You can bring it to your workforce. You can bring it to your home. But, I think specific things for the holidays are, you know, volunteering in your neighborhood, clothing drive, food drive, that sort of thing.

WILLIS: So, getting involved on a grassroots level and taking the lead. Can you tell us a little bit about some of the Web sites that can help people focus in on what they want to do and make the change they're really looking for?

SCHORR: Yeah, I think there are some great new sites that help you connect directly to where you're giving. One is Kickstarter, and that's actually a projects that aren't just charitable, but you give and help a project happen and then you get something in return. Kiva is another wonderful one because you loan money and the money comes back to you and Donors Choose is another where you give directly school supplies to classrooms.

WILLIS: So, Kickstarter, is that for early money in an operation? It sounds like it's start-up dough.

SCHORR: It's kind of start-up dough for small projects. It's a wonderful site.

WILLIS: So, you get to put your name on it almost. I mean, you're one of the original donors. That would be fun.

All right, a lot of people don't have time to volunteer, which is what we were talking about before. Are there other ways to participate?

SCHORR: Absolutely. I think it's getting more aware and more active at a local community. And I think it's just lifestyle decisions and being a good neighbor and being a good person. And I think the impact of that is huge.

WILLIS: So what you're advocating really is becoming sort of an activist where you live.

SCHORR: Yeah. And I think what's happening is the impulse to do good is blending with all areas of society. So, it's not a separate charitable activity, but it's part of life and it's part of the decisions we make every day.

WILLIS: All right. Well, that's great advice. And of course thank you so much, Max, for helping us out today. We really appreciate it.

SCHORR: Thank you so much.

WILLIS: If you are giving cash and not your time to a charity this year, be sure to check out the organization before you give. Many are struggling and you want to be sure your money will be used effectively. Ask directly how the recession has impacted their operations. Are they laying off staff? Have they been forced to tap emergency funds? If you find fund-raisers unwilling to talk about their charity's financial position, that's a big red flag.

Another one -- a charity that's more concerned about survival than its cause. A good charity will focus on a business plan for tough times. And be sure to ask for a receipt documenting your gift, so you can get the tax break come April 15. Hey, it's not that far away.

As always, we 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 at 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, Saturdays 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 NEWSROOM. Have a great weekend.