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YOUR BOTTOM LINE
Mortgage Denials, School Shopping Budget, Insurance Open Enrollment, Free Phone Apps, Health Care Related Bankruptcies in the U.S.
Aired August 14, 2010 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
STEPHANIE ELAM, CNN HOST: No doubt about it, getting a mortgage is tough these days. We'll tell you about some new red flags that could keep from you that home loan you need.
We're three months away from open enrollment, but we have what you need to know right now about the new cost of your health care.
And parents, rejoice. We're talking back-to-school savings. Get your kids ready for the classroom without breaking the bank. The show that saves you money starts right now.
Applying for a mortgage is no fun, in fact it is a lot of pressure. You have to worry about your credit score, your entire financial background and some stuff may just be out of your control. There are little-known reasons why you might be denied, so here to shed some light on them is personal finance author and good friend of the show, Carmen Wong-Ulrich.
I thank you so much for being here.
CARMEN WONG-ULRICH, PERSONAL FINANCE AUTHOR: Thanks for having me.
ELAM: All right, so let's talk a little bit about something that I think would be pretty controversial. Could someone actually be denied because they're expecting a baby?
WONG-ULRICH: Yes, you can and here's why. If you earn income, especially if you're the primary breadwinner for the home, more and more common these days, if a woman, if you're pregnant, if you're expecting a child and you go on maternity leave. Now, when you go to buy the home, you know it takes a couple months to actually go through the financial process, so you may not be on maternity leave then, you may get approved but now lenders are required, just before you close, to check again and make sure you have that income. So, if you go on, for example, disability, they check with your employer. Now, your employer is not supposed to say she's pregnant, she's having a child, that's against the law, but what they can do is see that you're on disability or that on maternity leave when they look at your paperwork. If they see that, they get nervous and they will shut you down.
ELAM: All right, let's talk about independent contractors, because that's another situation where if you are working for yourself, this could be a difficult process of getting a mortgage.
WONG-ULRICH: Absolutely. Been there, done that. Here's the thing, more and more of us have, of course, are becoming freelance, becoming independent contractors, we're not getting hired full time with benefits so you have -- your income is not the same month to month to month. You may not even have contracts that show that you're under employment for a year's time or such, so they get, the banks get very, very skittish about having income that's not going to be very regular.
What you can do is you can try to get the folks that you work with to have letters that say this person's going to write for us for this year, if you don't have a contract, just anything that assures them you're going to have this income going for a while.
ELAM: And then, if you have, let's say, a job, no one's going on maternity leave, everything is fine there, but the housing market has affected your neighborhood, what could that mean for you, then?
WONG-ULRICH: Well, here's another thing, you know the housing market has dropped quite far, some markets are continuing to drop. So, if you're looking at putting 10 percent down or 20 percent down and a lender gets skittish because it's drop even some more, they may want another five percent deposit in order to ensure your mortgage. So, you've got to look at where you're buying, look at not just your income, but where exactly, how is the housing market behaving where you are. If it is continuing to go home, they may come back at you three months later when you close and say we need more money.
ELAM: And five percent, depending on how much the property is a lot of money. That's not a little bit of cash that you're talking about, there.
WONG-ULRICH: That is a lot of cash. Absolutely.
ELAM: And what about refinancing? What roadblocks will people encounter for that?
WONG-ULRICH: All of the above. Everything I just said. All of the above, because don't forget, refinance buying your home all over again. What helps you is if you have a lot of equity in the home. If you have substantial equity in the home, especially over 30 percent, then the odds are even if you are going on maternity leave or if you're on workman's compensation, you'd still be able to get through the re-fi, but they're still be very, very strict about proving that you have stable income.
ELAM: All right, so get the information to back it up and then see that will help you out. But you maybe you have to be a little more patient.
WONG-ULRICH: A little more flexible, a little more patient.
ELAM: All right, Carmen, thanks as always for the information.
WONG-ULRICH: Thank you, Stephanie. ELAM: Good stuff there.
All right, now to an even darker side of mortgages: Foreclosures. Queens has been called "ground zero" of the New York foreclosure crisis and the community of Jamaica there is saddled with the nation's highest concentration of mortgage fraud, four times worse than the national average. But understanding the problem is really half the battle, as we discovered when we visited a free foreclosure rescue fair.
UNIDENTIFIED FEMALE: We want you when you leave here to know what you need to know to save your home.
HOWARD BENNETT, QUEENS HOMEOWNER: Good afternoon, sir. They already said, bring this, and if you give me this, you will get the modification. And up to now, I show him all the paperwork and still don't get the modification.
LEROY COMRIE, NEW YORK CITY COUNCIL: I hope you have all your documentation so that they can do everything they can to assist you and even if you've been frustrated before in the past, please be patient because the bank's job again is to make it frustrating.
BENNETT: I have sleepless nights over it. Wake up in the night, I can't go back to sleep.
COMRIE: We have translators here for people who need translation in every major language in the city and we also have other counselors that are here that can help people with going through the process.
NOEMI AVILES, HOUSING COUNSELOR: He has been trying to work with the bank on and off, but I think it's been a lot of miscommunication because he doesn't know the language too well and he speaks to different people, so sometimes you don't know what direction to go.
UNIDENTIFIED FEMALE: The counselor can translate for you.
SHAMA MUBDI, HOUSING COUNSELOR: We decided modification for him which was declined, so we are in the process of resubmitting. A lot of people, they are not really able to talk to the lender. When they call them, a lot of time they really don't understand exactly what is going on. They are unable to express themselves, unable to explain their needs.
LISA HASEGAWA, NATIONAL CAPACITY: Because of the language barriers, a lot of people in immigrant communities haven't had access to the same kind of information about what some of workouts, what some of the modifications are available to them and so they -- the only people who are offering assistance are the people who are the scammers and the scammers are really great at being able to provide information in language.
UNIDENTIFIED MALE: It is unfortunate and it happens a lot, but just don't do it again. How much did you give them? BENNETT: Three thousand dollars.
UNIDENTIFIED MALE: Three thousand?
SEEMA AGNANI, CHHAYA CDC: Of all the people who were helping to perpetuate the bad loans are now perpetuating the bad rescue scams. They're targeting individual owners and families that are vulnerable, they might be seniors, they might be immigrants, they might be women who aren't necessarily aware of all the legalities of a mortgage.
UNIDENTIFIED MALE: These are foreclosure rescue scam artists and they don't deliver the services, they collect the fees and run off with the money. Now, what they generally will tell you is don't call the bank, we've got your file.
BENNETT: That's what they did.
UNIDENTIFIED MALE: OK, so that's because you won't call the bank to understand that they stole the money. OK? So, just don't do that anymore and you're OK.
BENNETT: I owned this house 13, 14 years now and I have done so much to it. You know? And for me to lose it, that would be a terrible thing. That would be a terrible thing to me.
ELAM: Seven-hundred and sixty households were served by that rescue fair. And if you want to find a HUD-approved housing counselor in your area, logon to MakingHomeAffordable.gov or you can call 1-888- 995-HOPE.
All right, maybe you've heard the term "grandfathered in," but done know exactly what it means for the cost of your health care in the future. We're going to explain it to you in 90 seconds.
ELAM: All right, it's time now for a glimpse into your health care future. Benefits open enrollment, that's not going to take place at your job until the fall, but we've got some things to think about right now when it comes to your health and bottom line in 2011.
Andrew Rubin is the vice president of NYU's Langone Medical Center. He's also the host of "Health Care Connect" on Sirius XM Doctor Radio and we always love having him here.
Andy, thanks for being here.
ANDREW RUBIN, NYU LANGONE MEDICAL CTR: Good to be here.
ELAM: All right, can you explain to us why it is important to understand the idea of grandfathering in when it comes to health care?
RUBIN: OK, so remember President Obama when his one health care reform passed, he was talking a lot about people if you like your insurance you can keep it? Well, that's what this is all about. Large group plans are exempt from many of the new provisions that we're hearing about in the news that are kicking in over the next few months. So, basically if your plan is from your employer and you work for a large employer, it is highly likely many benefits that we're reading about now won't apply to you yet.
ELAM: And that's something you really need to know. And let's take a look at some of the things. Like, let's say, you are grandfathered in, how is this going to affect say your preventive care?
RUBIN: OK, so for preventive care, remember screenings for example, they actually -- we're no longer going to have co-pays or co- insurance for mammogram or colonoscopies. If you're in a grandfathered plan and your employers' plan is still charges you a co- pay or co-insurance, they still get to do that.
ELAM: OK, so these are things -- I don't know if everyone realizes this is really what's going to happen, that's why we need to talk about this.
RUBIN: It's complicated stuff.
ELAM: It is. And now, some people when it comes to choosing the doctor that they want, it's not going to be unrestricted if you're grandfathered in.
RUBIN: That's correct. So, under health care reform, If you go to an obstetrician as your primary care provider or a pediatrician as your primary care provider, you no longer need a referral if you're in a an HMO plan. If your plan is grandfathered in, you still have to go to see your primary care physician to get that referral to go see your obstetrician or pediatrician.
ELAM: That's an extra step you don't want to take, especially in New York City.
RUBIN: That's why they got rid of it.
ELAM: Right, exactly. All right, and then talk about emergency care, because there's some changes there, as well.
RUBIN: Well, this is a big one. A lot of people go to an emergency room and they think the emergency room is in network because the hospital is in network. But then they come home and find out that the doctor who saw them in the emergency room is out of network and they have this huge out-of-network bills. Under health care reform, there's some pretty complicated rules, but essentially the intent is to try and not penalize the patient for going to an in-network emergency room and getting an out-of-network doctor bill. Under health care reform that gets fixed. If you're in a grandfathered plan the old rules still apply and the doctor can continue to balance bill you at that high penalty.
ELAM: If you have an emergency the best you can do is go to the right place, right. And so not to know which doctor -- RUBIN: That's a tricky one. And honestly, we get a lot of complaints on the radio show people who went to the emergency room thinking they did the right thing, then end up with big bills.
ELAM: Right. And there are a lot of parents who probably care about this one. You may have your child off to college getting their grad degree and they're not 26 yet. Do you keep them on their insurance? But there could be changes there, too.
RUBIN: Well, this is a big one. Everybody likes keeping their dependent children on their insurance plan until they're age 26. But under a grandfathered plan, if your child has an option to get health care insurance from their own employer you can't bring them on to your own policy.
ELAM: No way.
RUBIN: So, no matter what. So, even if your child can't afford the insurance being offered through their own employer, they still can't go on the policy.
ELAM: So, even if they can't afford it. That's important to note. Andrew Rubin, thanks for being here.
RUBIN: Good to be here.
ELAM: And can you believe? It is back-to-school shopping time, but, don't whip out your cash just yet. Up next, what you need to know before you start loading up your shopping cart.
ELAM: Over the next few weeks on the show that saves you money, we're going to help you do just that when it comes to sending your kids back to school. The average family is expected to spend more than 600 bucks -- $600! -- on back-to-school goodies this year and here now to help us save some of that money is Janet Bodnar, she's the editor of "Kiplinger's Personal Finance" and she joins us from Washington, today.
So good to have you here, Janet.
JANET BODNAR, KIPLINGER'S PERSONAL FINANCE: Well, it's my pleasure.
ELAM: All right, so let's talk about this. Before you go ahead and you hit the mall, what do you need to do?
BODNAR: Your first trip is to go to the kid's closet and find out what you got from last year that still works. Because -- you're doing that for your own closet, too, everyone is a little bit thrifty, now. So, you're mining your closet, you're seeing what's there that you can still use. And for the kids it's a good lesson between needs and wants. You know, they may want a whole new wardrobe, but they may not need a whole new wardrobe. And having them make those decisions is helpful to them and also helpful to you as far as that budget is concerned.
ELAM: Yeah, and you can make some space so you can put new stuff in there. You got to get the old stuff out.
BODNAR: Exactly. So, for every new thing that goes in, an old thing has to get out.
ELAM: Right. All right, so you talk a bit about lists and you also talk a bit about budget. You say both things are really important.
BODNAR: Well, yeah. I think especially with kids. Again, if you're spending 600 bucks divided over all the kids in your family, where's that going to go? How much is going to go to jeans, how much is going to go to tops? How much is going to go to school supplies and that sort of thing? And if you share this with your kids, especially as they get older, middle school, high school age, they can make some, again, some decisions on what they want to spend their money on, and especially if they have a clothing allowance.
Maybe you'll spend 200 bucks of that on your high school kid. So, you say to the high school kid, this is what you have to spend, you have to make some decisions on how you want to spend it. boy, that will wake them up, because as long as your money is on the line, they'll spend as much as you're willing to part with, but when they have to make the decisions it's a whole different thing, but a great learning experience for them.
ELAM: Yeah, mom, please? Dad, come on, please?
BODNAR: Oh, yeah.
ELAM: I may have been guilty of that. My child's too young to do that to me just yet, but I think I may have done that once or twice.
BODNAR: You'll get yours.
ELAM: I'll get mine, now. So, what about the timing of those sales? You don't want to miss the sales when you go out to do the shopping. So, how do you time it just right?
BODNAR: Well, first of all, looks like what retailers do is in August, that's when they tend to put school supplies on sale. Come Labor Day, then you may fine more sales on school clothing and that sort of thing. Plus there are about 16 states -- you can fine them on our Web site, Kiplinger.com, that actually have sales tax holidays on back-to-school equipment, anything from school supplies to computers to clothes, that sort of thing. So, if your state's one of them, you can really benefit from that and that's on our Web Site, Kiplinger.com.
ELAM: And what about, if you're talking about Web Sites, what about if you do your shopping on Web sites? What about that? What are some of the good steps, there? BODNAR: Well, you know, another thing you can do -- aside from looking -- shopping at the right times and looking for the sales tax holidays, you can ask for e-mail alerts or Twitter alerts, that sort of thing, that will give you alerts from when stores have their own sales, so retailers can notify you if you get on their list that you can take advantage of that.
Plus, there are a lot of sites online that will give you coupons. RetailMeNot is one we at Kiplinger recommend a lot. And there are others that will give you coupons for certain back-to-school products. So, again, if you sign up for those you can get the coupons and get the product code, and that sort of thing, and do your shopping online. Maybe fewer temptations than when you stand actually in the middle of the store and you want to buy everything in sight or your kids want to buy everything in sight. If you can control it a little bit better plus get some money off with coupons.
ELAM: Yeah, that's not a bad idea. Maybe buy in bulk a little bit, too. Janet Bodnar, thanks for breaking it down for us, as always.
BODNAR: Oh yeah. My pleasure, as always.
ELAM: All right. All right, so that free app you just downloaded to your iPhone, Blackberry or droid Well, it might actually and threat to you. We'll explain what we're talking about, next.
ELAM: "There is an app for that." How many times have you heard that one? Case is, it's really true, whether you have an iPhone, a Blackberry or a droid, there are hundreds of thousands of apps to choose from. But, you need to watch out for downloadable programs and applications that thieves may use to steal your info. So, we've got help for you today. Sasha Segan is a lead mobile analyst for PCMag.com." He's here with us.
Sasha, there seems to me Apple has the most apps out there, but there are still a lot for all the phones, right?
SASHA SEGAN, PCMAG.COM: Oh, absolutely. I mean, the iPhone has the most apps, they're going on a quarter million right now, but Android is coming up fast, you know they're approaching the 100,000 mark. And then you have, you know, a lot fewer apps for Blackberry, Windows Mobile, Palm, but they each still have thousands of apps. So, you're likely to find at least a couple dozen that you like.
ELAM: At least one, two, or 20.
ELAM: So, let's talk a little bit about this, because when you look at this, who is really vetting these apps out there?
SEGAN: Well, it depends on the phone you have. On the iPhone platform, for instance, Apple vets the apps really strictly. And you see the news stories that come out saying, oh, Apple rejected my app and Apple shouldn't have rejected my app and that goes to the really strict scrutiny Apple puts over apps.
So, you can pretty much assume that anything in the Apple app store isn't malicious. Google does less vetting with Android apps, so you have to be a little more wary with Android apps, but if they hear something as malware, which means it's a bad program, they'll take it out. And Blackberry also does pretty good vetting. What you have to really look out for is if you go out those stores. If you're that kind of hacker, jailbreak person.
ELAM: Yeah, explain jailbreak, because we hear this all the time, but explain exactly what that means.
SEGAN: Yeah, jailbreaking is using your phone to go outside the accepted channels of what you can do with it and that means being able to download iPhone apps from outside the Apple app store, downloading third-party software that Google never heard of on to your Android phone. And there you're just in the Wild West.
ELAM: You're just being crazy.
SEGAN: Hyper aware.
ELAM: Yeah, be aware of what you're doing? All right, so then, the other thing is if you are going to download an app, what are some red flags something may not right?
SEGAN: Well, the big question is what information is this app collecting and who is it sending it to? For instance, if you have a droid, every time you download an app, it gives you a whole bunch of warnings of things it might do and you can go down the warnings and you can say, this app is collecting my location. OK is this the kind of app that should be collecting my location? What do you think it's going to use the location for? This app might make phone calls. Is it OK? Is this an app I expect to make phone calls? So you can go down that list and you can see, OK, these are all things I expect my app to do. It's OK.
Now two absolute red flags, no app should ever ask for your social security number and no app should ever ask for your credit card number. The credit card number is stored by the store. The individual apps shouldn't be dealing with that.
ELAM: OK. That's good to know. So then with all this information, what are your tips for the best way to about getting apps on your phone?
SEGAN: Well, the best way to go about betting your apps on your phone, obviously, is to go to PCMag.com and look at our great stories like, "100 Best Free Apps for Your Phone," but if you go to the official app stores, I do suggest sticking with the official app stores, because that's where the most scrutiny and the most vetting has gone on, and you can be pretty much assured that those apps are safe. ELAM: That's pretty good. I think a lot of people like to know that, if they're using the stores, things should be pretty good. Sasha, thanks so much for joining us.
SEGAN: Thanks for having me.
ELAM: All right, next, our good friend and senior medical correspondent, Elizabeth Cohen, is here to explain that while your doctor may hold all the answers, you hold all the power.
ELAM: We're all looking for ways to cut back these days, especially when it comes to medical costs. According to recent estimates, medical problems contributed to more than 60 percent, 60 percent, of all bankruptcies in the U.S. Now, a new book "The Empowered Patient," by CNN's very own senior medical correspondent, Elizabeth Cohen, is helping you get some of those crazy costs under control. And Elizabeth is joining us now. She is in Atlanta at the CNN Center.
Elizabeth thanks so much for being here.
ELIZABETH COHEN, CNN SR MEDICAL CORRESPONDENT: Oh, thanks, Stephanie.
ELAM: Let's talk a little bit about this, because your book highlights prescription drugs as a particular challenge. We hear so much about that. Are prices really, really that high?
COHEN: Oh, they really are that high. And we rely on prescription drugs -- 1 percent of seniors, 61 percent of the rest of us rely on prescription drugs. And when a drug costs $100 a month or $200 a month or sometimes even more, that's a huge burden. And people think, oh, well, I have prescription drug insurance, if you're lucky enough to have it. That usually doesn't take care of everything. You still have a huge deductible and co-pay in many situations and you can still have a really tough time even with insurance.
ELAM: OK, so if that's the case, Elizabeth, what can people do to help bring down some of these costs?
COHEN: Well, the good news is that there really are things you can do besides going to Canada, which I know has gotten a lot of attention over the years.
ELAM: So true.
COHEN: But you don't have to hop on a bus. There are simpler ways of addressing the problem. So, first of all, there's one I sort of call the yeah, duh, kind of thing because everyone should know this by now, which is you need to ask if there's a generic for the brand name that you've been described that. That just sort of goes without saying.
But you should also ask your pharmacist for help, because there may be an entirely different drug that you can take that will work just as well. When your doctor prescribes a drug, he or she is not thinking about the price, they probably don't even know the price because it's different for everybody, depending upon your insurance. So, say to the pharmacist, wow, this is expensive. Is there a different drug that could help me? And also consider a prescription assistance plan if you're having trouble paying for your drugs. You can just Google "prescription assistance planning," you'll see that there are plenty of groups out there that really want to help with you high prescription drug prices.
ELAM: All right. And you also talk about medical marketing and that people are going to fall victim to this. What exactly do you mean by that?
COHEN: Well, what I mean by that is that pharmaceutical companies are smart and they spend lots of money marketing to doctors. In fact, one study says that they spend $30,000 a year per doctor, meaning per every -- for every doctor in the United States, $30,000, marketing to them. Now, they're not marketing cheap drugs, they're marketing their most expensive products. So, that means when you see your doctor, there's a very good chance that they just had lunch with a pharmaceutical rep or just had one in their office. And so that drug may be top of mind for them. And so if you're sitting in the waiting room and you see lots of well-dressed, nice, attractive young people with roller suitcases behind them, you can pretty much bet that those people are pharmaceutical reps.
Nothing wrong with them, but I think you ought to know as an empowered patient, that those people are influencing your doctor or trying to influence your doctor to prescribe the most expensive drugs they have. And studies show that doctors often will do what pharmaceutical reps try to get them to do. So, if you see those folks in the waiting room, keep that in mind. When your doctor prescribes something, you can say, hmm, is there something cheaper that would work just as well for me?
ELAM: And they're in practically every doctor's office. I've definitely seen them.
COHEN: Oh, me too.
ELAM: Elizabeth Cohen, thanks so much. Great information, and congrats on the book.
COHEN: Thank you, Stephanie.
ELAM: All right, that wraps everything up for us today. But don't forget to tune into "YOUR $$$$$", today at 1:00 p.m. Eastern. Time now, however, for a check of your top stories, this morning. CNN SATURDAY continues, right now.