The Better Business Bureau has released a warning that cautions consumers to be careful when considering automobile loan modification offers. Some currently being advertised, it seems, are nothing but money-draining scams.

According to the BBB, complaints have poured in from coast to coast against a Florida-based company called Auto Relief Group (ARG). This company has apparently been charging consumers upfront fees and promising to lower their monthly car payments by modifying the terms of their auto loans—but not following through.

If this sounds familiar, it’s because mortgage modification scammers have used similar tactics to bilk homeowners in danger of mortgage foreclosure. And, with unemployment rates near 10 percent nationally, more households than ever are reportedly in need of loan modifications—one industry insider reported that 1.9 million cars were repossessed last year.

So what should you do if you’re in need of a modification on your car loan? The BBB suggests following these steps:

• Contact your lender: The lender is not the enemy—in fact, it’s in your lender’s best interest that you continue making payments on your loan. Letting your lender know you’re experiencing financial hardship and asking for a modified payment plan that allows you to make lower monthly payments is probably the easiest and most direct way to go about changing your loan terms.
• Do a background check: If you’re uncomfortable negotiating with a lender or don’t think you have the proper skills, it’s okay to pay someone to help you—but make sure you check out the company’s chops before enlisting its services. Checking online with your state’s BBB chapter will allow you to see its Reliability Report, any complaints against it and whether there are any lawsuits pending against it.
• Know the warning signs: Asking for substantial advance fees before performing any service is considered a red flag that something is not right. If a company you’re considering requires such an arrangement, take your business elsewhere—some states even have laws preventing upfront fees.
• Ask for a written agreement: Before sending out your first payment, ask for a written contract including the terms of your agreement and all payments you’re expected to make. This shouldn’t be at all problematic for legitimate companies.
• If things go wrong, file a complaint: If you realize you have been scammed by a company promising an auto loan modification, take action. File a complaint with your state’s BBB chapter and consider filing another complaint with the Federal Trade Commission—both groups allow you to do so online.

There’s been a fair amount of discussion lately about the ups and down of credit card balance transfers and whether they’re effective debt-elimination tools, particularly in light of some of the changes taking place thanks to the Credit CARD Act. Here’s a look at the basics of understanding balance transfers and determining whether one might work for you.

What Is a Balance Transfer?

Actually, it’s pretty much what it sounds like: when you transfer the balance you owe on one credit card to another card. In other words, you apply for a new card, use that card to “pay off” the debt on the old card and then make payments to the issuer of the new card.

Why Would Someone Do That?

Credit card issuers have attracted transferees by offering them low introductory rates and (in some cases) minimal fees to transfer a balance. If you’re trying to pay down your debt, transferring a card’s balance to a card with a lower interest rate might make financial sense.

Could a Balance Transfer Work for Me?

This is where the issue gets tricky. There’s no set-in-stone answer; the truth of the matter is that you have to do some number crunching in order to determine whether or not a balance transfer could save you money and help you eliminate debt. If you’re pondering this question, start with these steps:

• Determine your current credit card’s interest rate and exactly how much money you owe on that card.
• Figure out any fees associated with a balance transfer. According to this article from bargaineering.com, the fee is usually a percentage of the amount you want to transfer.
• Find out the promotional interest rate on the new card (which will often hold for about a year) and the regular interest rate that you’ll be charged once the promotional period ends.

These numbers are key to answering the question of whether or not to transfer your debt. And the next factor is essential, too: Will you be able to pay off your debt within the promotional period?

• Yes, I can pay off my debt before the promotional rate runs out. In most cases, it seems, it makes financial sense to transfer a balance if you’ll be free of the debt within the promotional period. But don’t just guess on this—determine exactly how much money you plan to put toward the debt each month, add in the transfer fee, and see if that adds up to what you owe (on cards with a zero percent introductory rate).
• No, I can’t pay off my debt before the promo rate expires. This situation is a little stickier and requires slightly more complicated math. First, determine how much per month you’ll pay toward this debt. Then, figure out the yearly interest rate (APR) that equals the promotional interest rate (i.e. if the promo rate is effective over 12 months, that is the APR; if the promo period is different, divide by the number of months it’s effective and multiply that number by 12). Remember to factor in the transfer fee. If that rate is higher than the rate you’re currently paying on your card, forget the balance transfer—it won’t save you money. If the post-promotional interest rate is lower than your current one, the transfer makes sense. If it’s higher, see the bargaineering.com article for detailed calculation instructions.

Additional Resources

Understanding Credit

The Burden of Credit Card Debt

This article is not advice. If you are having trouble with credit card debt, considering talking to a financial advisor or bankruptcy attorney in your area.

New home sales dropped to the lowest levels on record in July, according to figures on housing sales released by the Commerce Department.

The housing market continues to struggle following the end of the homebuyer tax credit that expired April 30.

According to CNNMoney, new home sales dropped 12.4 percent. The seasonally adjusted annual rate was 276,000 in July, down from 315,000 in June.

Year-over-year sales fell 32.4 percent.

The number of new home sales is the lowest ever recorded by the Commerce Department the Commerce Department, which began tracking housing sales in 1963.

Lower than expected

Economists surveyed by briefing.com had predicted that new home sales would rise to an annual rate of 334,000 in July.

This optimism came on the heels of the rise in March and April numbers, as an $8,000 tax credit encouraged first-time homebuyers to enter into the market.

But sales dropped again in May, after the tax credit expired, and improved only a little in June.

“The [latest] report shows the housing industry is still nursing a bad hangover,” Mitchell Hochberg of Madden Real Estate Ventures, in New York, told CNNMoney. “With shadow inventory, rising foreclosures, little job growth and more stringent access to credit, weak sales will persist and the industry’s headache will linger.”

Some believe that a recovery in the housing market will be a key indicator of a recovery of the economy as a whole.

Existing home sales also down

Another report on the real estate industry showed that sales of existing homes dropped as well, by a rate of 27.2 percent. This number was a steeper drop than experts expected, to a seasonally adjusted rate of 3.83 million units.

Single family homes, which make up most of these transactions, dropped to their lowest number of sales since the middle of 1995.

New home prices drop

The report from the Commerce Department also shows that the median price of new homes sold in July 2010 is down almost 6 percent from June, and 4.8 percent lower than July 2009. That median price was $204,000.

Estimates put the number of new homes for sale at the end of July at 210,000. At the current sales pace, it would take a little over 9 months to sell through that inventory.

Sales fell the most in the western part of the country, followed by the Northeast, then the South and the Midwest.

In the early days of the foreclosure crisis, the hardest-hit states were ones where building booms had been the biggest—California, Nevada and Florida topped most foreclosure lists. But now, according to some recent information, it seems that the worst foreclosure woes are no longer restricted to these area of the country.

In fact, the latest figures on the housing market from real estate data company RealtyTrac show that foreclosures are picking up speed in areas of the country that had previously resisted the trend. Here’s a look at some of the latest numbers and what they might mean:

• Foreclosures are reportedly up in the Midwest and Northwest. Specifically, foreclosure rates increased in Illinois, Utah, Idaho and Colorado in the second quarter and these states are now among the top 10 for foreclosures in the nation.
• In 19 states, the number of homes seized by lenders at least doubled, according to sources.
• In seven states, it seems that the number of homes seized by lenders more than tripled.
• In California, new defaults are reportedly down 43 percent; in Florida, they’ve dropped by 37 percent; and in Nevada, they’re down by 27 percent. These figures may sound encouraging, but they likely indicate only that the market is bottoming out.
• In July, sources note that 325,229 American homes were informed that default, auction or bank repossession actions would begin on their houses (this represents a four percent increase from June but a 10 percent dip from this time last year).

Moving Toward a Solution

The New York Times recently ran a piece that discussed some aspects of the Obama administration’s Consumer Financial Protection Bureau, an organization designed to better regulate consumer products and services. The article makes many points relevant to the foreclosure crisis’s latest numbers:

• We all messed up: While it’s easy to blame fat cats on Wall Street for the current financial woes plaguing our country, a more honest assessment finds that most people involved in buying and selling houses during the boom acted a little bit irresponsibly.
• We need better choices: One of the aims of the new CFPB, then, is to regulate and oversee various financial products and services and their providers to help make sure we have fewer chances of messing up so badly in the future.
• We can expect improvement: The article notes that, ideally, the CFPB would work not to restrict banks’ ability to make money, but to encourage them (and other financial institutions) to compete in ways that benefit consumers, rather than compete to trick consumers into getting expensive, dangerous products.

A fascinating article from the New York Times discusses a forthcoming service from MasterCard that could provide a new kind of discipline for those of us who have difficulty sticking with our monthly budgets, despite our best intentions.

The service is called inControl, and, if your bank adopts it, will apparently work like this:

• You choose limits: When planning your budget, you can set spending limits on various types of purchases. Once you hit that limit, your card will be rejected if you try to swipe it (and don’t worry: the limits can be retailer-specific, so you can restrict your spending at clothing stores while leaving your grocery budget untouched).
• You set up alerts: Even those who are careful with their personal information can be victimized by fraud, and the inControl system will allow users to reject all charges made from countries with suffixes like –stan and –ia, which are often associated with scams. Similarly, you can set up alerts for purchases made over a set amount or outside a given geographical region.
• You stick to your budget: If you aren’t interested in genre-specific budget limits, you have the option of shutting off your purchasing power after a certain amount of spending in any category each month, which can help you stick to your “other” limits for disposable income.
• You keep track of your kids’ spending: Another interesting feature allows users to give their children cards that permit only a certain amount of spending each month. And, if you like, you can have certain types of spending rejected entirely.
• You keep track of your employees’ spending: Even if you don’t have a small business, you may have hired a babysitter once or twice. The card would allow you to set up an account for a sitter to spend certain amounts of money at limited vendors while she was watching your kids.
• You make changes: If you decide you don’t like receiving alerts every time an unusual purchase is made or you’re nearing you limits, you can change the terms of your inControl services as you go.

The potential benefits for consumers are obvious: the system could help people stick to their budgets and limit their credit card spending, which could then limit debt and promote all-around financial stability.

But, according to the Times, banks may be slow to accept the system—after all, banks make money when we spend more than we should. The arguments for and against a system like inControl abound, so if you’re interested, contact your bank to see if you might have an opportunity to test it out.

The Federal Trade Commission recently reported about its testimony before the Senate’s committee on Commerce, Science and Transportation. The matter at hand was protecting Americans in financial distress from fraudsters posing as those with debt relief products and services.

The Issue

Unfortunately, there are a variety of ways someone who’s already struggling with debt can lose even more financial ground: debt relief scammers often con people looking for help out of money they can’t afford. Some such organizations:

• Falsely claim non-profit status: This can lull customers into a false sense of security and push them to hand over money to someone less than trustworthy.
• Demand upfront payment: Many scammers, it seems, require consumers to pay hefty fees before any service has been provided. Once they have the money, the scammers do little or nothing to ease a customer’s debt load.
• Collect disproportionate payments: Rather than charging small fees to help consumers get money to their creditors, some services reportedly take generous helpings for themselves and put only tiny amounts toward debts.
• Give consumers bad advice: Some scammers have apparently instructed consumers to avoid contacting their creditors, their lawyers or a credit counselor—all of whom would likely provide better guidance than the scammer.

What the FTC Is Doing

To combat such practices and protect consumers from giving their money to hucksters, the FTC has taken several steps, including:

• Passing new rules for how debt relief services can be marketed over the phone to consumers
• Bringing 23 lawsuits in the past seven years against companies that falsely claim to be non-profit organizations, debt settlement services or debt negotiators
• Working with state attorneys general to enforce and enhance legislation to protect consumers
• Trying and settling cases on behalf of more than half a million consumers who have been victimized

How It Affects You

So what does all this FTC action mean for you? If you’re struggling with debt, it could mean a lot. First of all, new FTC regulations about how debt relief services can be marketed mean that you’ll likely have more information when trying to make a decision about your finances.

Taking steps to get out of debt is rarely easy, and if you’re weighing your debt elimination options (which include credit counseling, debt negotiation, debt settlement and personal bankruptcy), it’s important for you to have complete and accurate information about what you’re getting yourself into.

Employers will need more college-educated employees

A recent study out of Georgetown University predicts that, when the economy returns to stability and hiring picks up again, employers will need more college-educated employees than are available. The deficit of adequately educated employees could average 300,000 a year in the coming decade.

To meet the increasing need for higher education, a number of for-profit colleges have entered the education marketplace. Twenty-five percent of for-profit schools offer bachelor’s degrees, which is a far cry from the vocational schools and beauty schools of the past.

Enrollment at these schools have also continued to grow. In 2000, 673,000 students attended for-profit colleges. Now that number is 2.6 million.

As Kiplinger is reporting, with the rise in enrollment, there have come increased complaints about student debt loads, and the ability of students to repay them.

Regulators cracking down

In response to the growth in the for-profit college industry, the Department of Education is becoming more stringent with its regulations.

The department wants to require colleges to let prospective students know what their graduation rates are and what their job-placement statistics show. There is, in the mind of the Department of Education, an acceptable ratio of student debt service to income, which it considers to be gainful employment.

They also want to limit some of the more high-intensity ways that for-profit colleges market their schools. Proposed rules would increase the rules against compensation currently allowed for recruiters, who are paid based on the number of students that they are able to recruit. Such limits would help to curb some high-pressure sales tactics that for-profit colleges enlist via recruiters.

Increased oversight

Education Secretary Arne Duncan recently announced that the department will step up its oversight of federal student financial-aid programs to try and curb these sales tactics. The news came after a government investigation uncovered deceptive marketing practices at 15 for-profit colleges.

The increased oversight would mean expanding the Education Department’s enforcement staff, continuing undercover investigations and increasing program reviews.

“We have a responsibility to ensure that students can make informed choices about investing in post-secondary education, and that taxpayers’ investments in the federal student aid programs are helping students,” said Duncan.