(00:00:00) Did God you made many many poor people? I realize of course that it's no shame to be poor, but it's no great honor either. So what would have been so terrible if I had a small fortune? If I Were a Rich Man you heard you did you do all day long I did it beautifully if I were a wealthy man I wouldn't have to work hard if I were a pity pity Rich, yeah, I just did a diverted Idle Man Ida build big tall house with the rooms by the does it right in the middle of the Town a fine tin roof with a real wooden floors below that couldn't be one log staircase just going up and won't even longer coming down and one more leading nowhere just for show Ida Philemon I With chicks and take his and geese and ducks for the table see and hear squawking Justin noisily as they can and each lap (00:01:39) if we were rich man or rich women what we would be able to do. Well the fact is most of us are not rich and during these times of continuing inflation. What was once a comfortable income now simply makes ends meet well for the next 50 minutes or so, we're going to be talking about what we can do to make what we have go a bit further to help in that discussion are three Studio guests. They are Jan hus Nick who is a personal banker with Northwestern National Bank in st. Paul Robert pollin der who is a vice president with Twin Cities Federal Savings and Loan and Bernard J. Duffy who is president of the Minnesota Consumer Credit Counseling Bureau, which is located in Minneapolis. We want to thank you for being This afternoon and also mentioned to listeners that in about 15 or 20 minutes or so. We'll open up the telephone lines and let them call in with their own questions. I have one of my own to begin with and that's for you. Mr. Poe Lander. I'd like to ask you who can buy a house today and in the Upper Midwest in Minnesota. Is it something that's Out Of Reach for most people at this time? Well, the price of homes today has pretty much place the average person in a very difficult position to buy a home even if they can get financing the monthly payments are so high that they are having difficulty making that purchase money is available, especially under FHA and GI. The interest rate today is 11 and a half percent, but then there's that old thing called points that have to be paid in addition to the interest rate on an FHA on an FHA or VA loan and There's one point paid by the buyer, which is the usual origination fee and beyond that the points are paid by the seller. So what should people do who may have no more than about four five six thousand dollars in the bank may be less than that. They're just starting out. Should they pretty well forget about spending the their weekends looking for a home? No, you can look in the paper and inquire with a real estate agent or the owners if they will accept an FHA or GI loan and if they do they would be willing to pay the points which gives them an all cash transaction incidentally. So it's still a good deal for them points today very anywheres from I believe as low as three and a half percent up to 10% So it may take a little shopping to get the right points, but your agent should be able to advise you on that where to go at the time right now at Twin Cities Federal There is no money for conventional loans. No, we are we are still in the market. Our maximum loan is 75,000 and we do require a 25 percent down payment on conventional loans. So it does place a lot of people in the position where they can get financing usually at it's a second home purchaser who would have that required down payment they they would need the equity out of the sale of their home to come up with 25,000 which is quite a considerable sum. Yes, it is but we don't have unlimited funds and we do have to slow it down. And that's the only way we can do it. We find I'd like to talk to you more about buying homes and them in the region in just a bit. But I'd like to ask you Jan hus Nikka to talk a little bit about some of the alternatives to buying a home for young people who have a few thousand dollars who if they decide that they don't want to buy a home now or they can't buy a home right now. We've heard in the past that buying a house is a good investment. What are some other things that you explain to people who may come to you that are sensible things to do with their money if they don't have a whole lot of money and they are not really interested in. Investing in the stock market or something like that. We highly recommend our savings certificates right now. We have a very excellent rate at 9.60 and that's on it for years saving certificate and it has a yield of about why I've forgotten the yield on that but we have other terms with these start out at 90 Day certificates, which pays five and a half percent. We have one year the pays six are two and a half years certificates piece six and a half percent and the highest rate right now. Of course, we have the money market certificates that that's a ten thousand dollar minimum and that's for the short term and right now that's pain 11.7 67 and there are some penalties involved as most banks for early withdrawal. What kind of penalties okay, it's a six-month penalty on certificates that are over a year and 90 days on the 90-day certificate the one-year certificate when you say six months. I'm not sure I understand what you mean by that. Does that mean that I get penalized six months for the amount of time? I've had it in. Can you explain that a little bit you would forfeit six months of the interest that you've earned on that certificate? Okay. Okay. So tell me if what if a person doesn't talk about a savings certificates. They just come in and open a standard savings account. What's the interest rate on something High interest rate on that is daily interest in that's five and a quarter percent under so you can do considerably better for yourself. If you check into some of these certificates. That's correct. Get a much higher rate. Okay. Mr. Duffy, you're involved in credit in Minneapolis and in Minnesota and it's it's something that people who are thinking about buying a home have to be concerned about people who are thinking about making any kind of a purchase. That's that's on credit or long-term payments. What are some of the things that that people who have never made a big purchase like buying a home ought to know about there. Credit record before they go to a bank to apply for a mortgage. Well, the first thing they need to do is establish themselves in the file of the credit bureaus in their respective communities young people come in today and say well, how do we start establishing a credit record? And it's usually opening a checking or a savings account of a nominal amount also opening a charge account at a department store and a limited amount of soon as they establish themselves credit limits are set by every store every credit Grandeur and after they've established that then they can get into buying an automobile or or whatever recently when we visited the seniors in a st. Paul school system. I think one of the interesting things well the young man today was primarily interested in buying a car but most people didn't realize that he could shop for credit as well as the automobile and thing we told the students in the area say Paul high schools was when you buy a car whatever you buy Find out where to best place to go to finances automobile because you can any and today the law says you have to spell it out exactly as to what it's going to cost talk a little bit about young people getting into the credit getting credit for themselves as money becomes more scarce. People are going to have to work a little bit harder to get that same amount of money. How does a high school junior senior establish a credit record four humors? Well, the first thing you has to do of course is have an income that indicates that he can pay his obligations. Is he a part-time student then he has part-time income and of course income is one of the facets that you have to look into when you extend credit of any type alone or whatever. It may be and then a limit is put on on that particular individual but once he starts out establishing himself, I even use this an example. He might have 50 dollars in his pocket to buy whatever fifty dollars will buy today which isn't very much I guess but if you could open it Charge account at some store then going to pay the $50 later. Then he started a credit record in this way young people have to start off today. Of course in an automobile where their security a reasonable down payment as possible there Jen. Is that true at the bank today? Yes, we do require a down payment 20% down on an automobile. Is that for for anybody or just for young people starting out? Yes, that's the general for in order to get inaudible just having a little microphone Readjustment here today. I would like to go back to talking about home buying again. And mr. Poe Lander. I wonder if you could talk a little bit more about the relationship between credit and getting a mortgage. Mr. Duffy talks to people every day who have for one reason or another perhaps got themselves into a difficult situation with regard to credit. How closely do you and this Twin Cities Federal look at a person's credit rating and what are some of the things you look for in a very important to a mortgage lender we do. (00:10:35) Of the (00:10:36) homeland security and that's part of it. But we do require that we have verification of employment to prove that his income is real and it is to the amount also and we verify the source of his down payment so that we know that they didn't borrow that they're going to have that obligation in addition to the loan payments and his employment is credit and his credit report is looked at very closely to it see that they do have good loan payment habits and when you look at that and when you what do you look for you look to see that they've what paid on time that they do pay on time and that they aren't Or using their credit. This is something that is an indication of somebody was going to have trouble when they oh just everybody in town and they kind of borrow from Peter to pay Paul and now they want a loan on a home and they indicate that they do stretch their credit too far for their income. One of the things that a number of banks at least here in the Twin Cities have and they're certainly in other parts of the state to our instant cash cards, people can go and withdraw 25 or 50 dollars and that also provides at least with some banking services as sort of a ready Reserve so that if you overdrawn your checking account why that automatically kicks in $100 or whatever to cover for it. What does that look like on your credit record when you're going to borrow for a car for a home Jenna's Nick? Well as far as their outstanding obligations on the credit line, is that what you're referring to? Yeah, I'm wondering how whether that whether the fact that I might have, you know. On written too many tracks and and have had or withdrawn too many times from my little card and and had the bank had to kick in some money to cover for that how many times that has to happen? If at all before you start looking raise your eyebrows a little bit at a record like that because in one sense, it seems like that encourages people use plenty of credit and then but I'm wondering how penalized a person is for. You're not penalized at all for using the credit at all. But we like to see them pay it down every once in a while instead of being up and hug on their line all the time continually and never getting the ready reserve line paid off that does have some bearing on it. Yes. So so if I continually overdraw my checking account and have to have the bank kicking $100 to fill it up and then I pay that back if I do that over a period of time while that's going to cause some problems no problems as long as you have the ability to repay a back all the time. Okay? Okay. Well the time is about 23 and a half minutes past 12:00 noon, and we're talking about credit and Mortgages and the availability of money today and if you have a question for any or all of our guests here in the studio in Saint Paul, you can call us and ask a question. You can call us at 2 2 1 1 5 5 0 if you live in the Twin Cities, I'll give that number. Again. It's 2211550 in the Twin Cities. If you live outside the Twin Cities, but in the state of Minnesota, you can call us toll-free at 1-800-669-9133 Watts number and I'll give it again. It's 1-800-662-2386. Phone lines are very rapidly lighting up. And so let's see if we can't go to the first caller right now. If you'll put your headphones on why we can all hear them. Good morning. We're listening for your question. (00:14:07) Yes. Good morning. I have a question about points on mortgages. Okay, go ahead. So something one when we're all going to school. We didn't seem to learn very much about what was involved in purchasing a home which is now quite a good investment but point system is it's always seemed to me in buying properties a little like the cost of doing business with the bank is points or I equate them do sort of an extortion type things and all the noise some of my friends and I suppose the banks don't like it either because they do have to get a certain yield but how did points began anyways, and it's really kind of upsetting (00:14:52) thing. Mr. Polar Lander. Do you want to do you want to answer that one? Well points of course are charged to the seller or buyer to offset the earnings on an FHA or a GI alone. There are no points on a conventional loan. And of course your conventional loan rates are running about 13% now your FHA and VA loans are running at 11 and a half percent. So to make up that loss of earnings as compared with what the market is points are paid to the lender and these points are paid once at the time of the closing of the (00:15:32) transaction. It still is a little bit old to understand the thinking behind having to pay extra for what would seem to be quite a good yield for any lender. I know the depositors that you have in most banks that received their five and a quarter on their passbook savings. They probably wouldn't complain about some of the yields of if their banking institution was. I was getting what I would consider would be a pretty good yield unless you're you're saying that you have to package the loans to be sold on the open market. You don't keep as many of them in your your own house. (00:16:10) Well, many of the lenders don't keep any of their mortgages in fact, and they sell it on the secondary market and unless they do get these points. They can't sell them but your Banks and your savings and loans, of course, we're all concerned with the average cost of savings as opposed to the average yield on the mortgages. And this is where the trouble comes in all lenders went along with the market and with the government what they would allow for a number of years and the interest rate on their average loan is so low that actually you're really making up for some of it with the new loans that you have to place and the cost of savings to the savings and loans for example Is going up much faster in these days than the average yield in the mortgage. And this is where the problem is. And this has been going on for some time. Let's go to another listener. We have a number on the line. Let go ahead with your question, please (00:17:14) the question that I have is related to the the discrepancy between the interest rate that the average saver has on a short-term savings account usually five and a half five and three-quarter inch five and a quarter percent. It would vary and the very significant interest rate that we pay when we borrow money is the banking industry is the loaning industry through this discrepancy discouraging the the average person from investing in or putting monies into savings account. (00:17:50) Jenna's no. No, I don't think they are discouraging them. They are offering much higher rates on your savings certificates, but you must remember that your money is Up for a longer a longer length of time on that (00:18:02) - I guess my question is that the average person today? Probably doesn't have the ability to lock their money up into that. 56 year pattern. (00:18:11) Okay. Well, we have the smaller certificates at $300 minimum that you can tie up for four years for a smaller. (00:18:19) Por favor. No that's still a significant amount of time. I'm talking about the day-to-day straight if I go in and borrow money at a bank for a 90-day period I pay anywhere from 12 to 17 percent on that money. That's the short term. Yes, but if I put money into a savings account for 90 days, I realized only five and a quarter or five and a half and I guess that's where I'm having some. (00:18:39) Yeah, that's correct. That's the way it is right. Now. (00:18:42) You don't have an answer from well, I can't answer that one. All right, thank you. (00:18:46) Thank you. Let's go to another listener who has a question good good afternoon. We're listening for your question. (00:18:51) Now with the lady had mentioned 9 something percent interest paid on I thought she said four-year minute are four years (00:18:59) four years. Yes, and that's a minimum of $300 (00:19:02) and this is insured by the FDIC. Yes. It is. It's insured up to 40,000 that's plenty. Thanks very much. You're welcome. (00:19:15) Okay, the time is 29 minutes past 12:00 noon. And you're listening to a discussion of mortgages and Investments on a small scale and our guest in the studio include person very knowledgeable about credit and a person from a bank and person from Savings and Loan and if you have a question for our guest, you can call us at 2 2 1 1 5 5 0 in the Twin Cities outside the Twin Cities but in Minnesota, you can call us on our wats line. It's 1-800-662-2386. Go to another listener now good afternoon. You're on the air (00:19:48) people than talking about returns of 11% for long-term certificates are any number of that's when houses who which are often Market money market mutual funds that are paying 13 and a half percent right now with this small as $1000 minimum investment no load and things like that. What are the real risks associated with that kind of investment as compared to one certificate investment, which There's more money and offers you less liquidity. Well the risk on that is that your money at the bank is (00:20:25) insured but on your money market they are not insured. (00:20:29) Yep, the money market a prospectus outlines the fact that they invest almost exclusively in very high quality paper or in federal funds or federal certificates themselves. Is it really a significant risk? I don't think it's too significant except that (00:20:49) it's not insured and that's are selling point at the bank that we do ensure our money up to 40,000. There's a there's increasing concern. I understand on the parts of these some banks and perhaps Savings and Loans to that that some corporations Sears and Roebuck 41 has asked for permission to to go directly to their customers to get money to borrow money from their customers for expansion and avoid the high interest payments that they would have to pay to Banks to 15 and some odd percent interest payments. Is there any discussion sent you have any sense for the feeling for that here in the Twin Cities in terms of what the concern? Bankers are people in savings and loan with in terms of Corporations like Sears for instance going directly to their customers and borrowing money rather than going to Banks or Savings and Loan well corporate bonds, of course old now and this would be a form of that and anything that cuts into our savings of course gives us less money to make mortgage loans with our biggest competition right now, of course is the government and when you're in competition with somebody you're paying their bills and they regulate you in every way and then they're in competition with you. Can you explain what a problem? Can you explain a little bit about that competition for people who might not understand? Well, of course the government's and in all their bonds bills notes. Pay whatever they have to pay to get the amount of money that they need most of it is by auction and then we follow along. So the banks have a great problem people just take money from the bank was Draught from the bank and the bank sells them the bonds are notes. And so it's not much fun. So you're not talking now about the treasury bonds that 50 or $100 savings. No, that's that isn't too much of a problem. It's the big ones. Okay, $10,000 certificates and so forth. Okay. Let's go to another listener who's waiting to ask a question. Good afternoon. (00:23:01) I'd like to direct my question to mr. Duffy. I'm a part-time teacher. And I understand that you need a minimum income at least of $10,000 now that correct. I think American Express (00:23:19) card usually require a minimum salary income of 10,000 to 12,000. I don't think that the bank cards visa and Master charge if you have a good job and your credit record is good. You should have any trouble getting a charge card which you need to do use today and way we buy things I would suggest that you try for a Visa card or Master charge card because I think if your record is good at the credit bureau, you shouldn't have any problems. (00:23:51) Do not base their judgment on income. (00:23:54) Not entirely. No Jenna's Nick. I see you shaking your head in agreement down if you're a customer at a bank and they're familiar with you and and you've been there awhile. They can pre approve an application for a Master charge or a Visa for you and that's a good Yes, it is. Once you've established yourself at your bank. Okay, very good. Let's go to another listener who's waiting - question. Good afternoon. (00:24:17) Hi, I just got turned on my radio here. Okay, I got lucky two months ago. I decided to buy and was able to get on an 8% I was I understand it's from floated municipal bonds or something and I got an eight percent mortgage. (00:24:36) Are you it's probably the Minneapolis programs that it (00:24:40) must be that I don't really understand why or how that happened. And you know, it just seems like if it can happen occasionally why can't it either why can it not necessary? I can happen more but can it be fellas, you know available to more people. (00:24:55) Well, this is a subsidized program and by the government and of course anytime you subsidize it it's adding to the cost of taxes or whatever by the average person. So it's a matter of the government government being in the business and they sell these bonds tax-exempt so they can sell the last ones that were sold for the city of st. Paul were sold at 8.8. So here's somebody with a big piece of money who's getting 8.8 tax-free bonds. Now this party no longer pays income tax on those earnings. So I suppose if Put all their money in that sort of thing who's going to pay the taxes that the government needs to run the government. So this is what the problem is and there's a few people got a break on it. I think it would be a good program if they turn it down just a little bit. They've almost set it up. So anybody can get this money and people that don't need a subsidy are getting it. I would like to see the families with children taken care of on this. These are the people who can't get the down payment. They have difficulty renting a place. There's no single-family properties for rent practically and I don't think an apartment building is a good place to raise children. So this is the one type of person who really needs the help and these programs have been taken care of that as far as I'm concerned. There's a lot of people getting these loans who don't really need them and don't really need to be subsidized by Other taxpayers are these these loans available through the Twin Cities Federal are these These are programs that come and go the federal government is working on a legislation which will practically eliminate this they realize that there's such a tax loss to the government that they can't afford it and they also realize that it's really unfair competition for the private sector and what are they called again? Tax-free or a tax exempt bonds? I see how would you how would you apply that to a home mortgage while this money is used to place home mortgages? And st. Paul's just breaking out with a new program now and it was in the paper. They've got 48 million and residential Rehabilitation bonds have been sold. And so part of that is to convert buildings and apartment buildings to Condominiums and it's a rehab program and 25 percent of the value of the home has to be put into rehab. So they're they're covering that problem of rehab with it, but it's good and it's bad 22 minutes before one o'clock and we've got callers waiting to ask questions. So let's go to another person on the line right now. Good afternoon. (00:27:56) Good afternoon. I was interested in your conversation several minutes ago about establishment of credit rating and I've often wondered if my payment on my college loans would be valid criteria toward establishing credit. (00:28:13) Mr. Duffy certainly would and we need that record. I was present the credit bureau see Paul for 32 years. So I've seen young people come up with their educational programs. Also, there's been quite a bit of conflict and not paying that off and if you establish yourself the student loan and pay it back as agreed. Certainly. This is a fine thing to have in your credit record. And by all means one thing you should always do is once you start establishing credit be sure you keep it good because establishing it isn't so difficult. But if you let yourself get into problems and it's going to stay there for a while and cause you problems. (00:28:52) Okay? Thank you very much (00:28:53) Jen. How's Nick? You were shaking your head? Yes there too and to policy at your bank that students are people who have been students recently who but who paid off their bills or paying them off? Yes to date you look favorably on that we do we certainly do. Okay. Let's go to another listener who's waiting to ask a question. Good afternoon. (00:29:11) What about tax making interest income on savings accounts savings? Certificates at various Bank Mutual Savings Credit Unions and Industrial Banks and terribly tax-exempt entity that could lower the mortgage interest rate by lowering the world on savings accounts. It just like municipal bonds. (00:29:40) I'm not sure that we have any policy makers here in the studio. But so I don't know that there's any does anybody well, I believe right now credit unions are tax-exempt. (00:29:49) I don't mean technically I mean tax exempt interest on savings accounts. Not tax exempt as far as the (00:29:58) institution. Oh, I see. I don't know of any institutions that have tagged exempt savings accounts. I can't imagine who they might be at this time (00:30:08) here. I realize of course, but what are you in favor of tax exempt interest on savings accounts? (00:30:17) I am definitely in favor of tax exempt interest on savings account. The federal legislation is got a number of builds up to provide 200 dollars per person or $400 per couple of tax-exempt savings and this would give a lot more money to the savings and loans and Banks who can make the necessary mortgage loans that the public is demanding now, but money is not coming into the savings and loans and Banks as it should and as a result, there isn't money for mortgages there. There's other reasons. To everybody was a little over optimistic for a period of time there and most lenders are overcommitted and that's why they had to cut back now, but this will right itself shortly. Yeah, but I don't see the rates coming down (00:31:08) and it seems to me that that all the time the home owner got a tax break far as adjustability of home mortgage interest or a person who borrows money on such frivolous things as snow bills and Recreation vehicles and yet the depositor has to pay income taxes on the savings account plus he has a very severe inflationary bite, but the homeowner could Kevin's house increase in value. So as I don't think that it's right for the homeowner always to get a tax break and yet his home get the value of his house goes (00:31:53) up. Sure. Thanks very much for calling in and let's Go to another listener right now. Good afternoon. (00:31:59) Hello, my question involves going to a bank for a loan now to see that. I'm a obviously the bank would want me to be a good credit risk before borrowing me some money or even thinking about it. What do they look for as far as how capable I am and paying the money back to they look at yearly income or how steady my income is. The reason I'm asking this is because I'm a self-employed artist and I don't make price of monthly paycheck, like most people I do make a fairly steady fairly good girlie and (00:32:35) it seems to be a good question to in terms of a young couple who are thinking of having a child saying they both have income right now, but in six months a year from now, they're going to have a child and the woman perhaps or the man wants to take off for six months to a year to take care of that, baby. When we look at the ability to pay of a mortgage applicant, we consider everything if you have the type of job where one month you might make a considerable amount the next month, you don't make anything we average it and if the evidence is there that you have made that much money over a long period of time that's certainly acceptable and we can prove that out through your income tax returns. For example, you have copies of that you can submit it to us and we definitely consider that absolutely Jan hus nakute Northwest National. Yes, we would consider that we would also get the copy of the tax statements. Look at your credit record how you've been handling your checking (00:33:41) account. Okay. The other thing is that I don't happen to have a credit record. I don't have any charge accounts any place and I haven't build up credit anywhere because I posted my business in cash and you know, I live very simply so the fact I don't have a credit rating. Is that a mark against me? (00:33:58) No, but it's a problem. If we have people come to the office frequently and said, hey, I've always paid my bills. I don't have any bills rather. I pay cash for everything. Why can't I have credit? Well, it's no problem provided that you don't have anything adverse and flour because if you ever had any problems, we know about that at the credit bureau if you borrowed money and didn't pay it. We know about that. There's any judgments on record public record items, but for record is clear and you say I make X number of dollars per year. I think I should be a good credit risk the fact that you're not there would help but by there's nothing adverse in the (00:34:36) file. Okay. Thank you very much. (00:34:38) Thank you for calling. Let's go to another listener now. Good afternoon. (00:34:43) Cathy Cox about establishing credit and having good credit what I would like, how can one find out just what their credit is even though you think that it is pretty good. How do you go about finding out just where you stand (00:34:56) credit-wise? I'm sure glad you asked that federal law says that who've been denied credit any place in the state of Minnesota United States of America, you have the prerogative and privilege of going to the credit bureau wherever the record is kept and they will pull the file in the Twin Cities were we're on computer will give them a copy of the credit report and say is this the way it should be because of your denied credit you have the option to say this is not right. There's a dispute there and have we all had the fact that there's been certain items that causes problems. So you then can make a hundred word statement to that effect. If on the other hand that you think you're going to Twin City Federal sternos are not Twin Cities by God. You didn't correct him on that Bob then. You think she's going to buy a home? He might want to be sure rich in the first place that his record is good. So he comes to the office and he says I would like to see my file and Minneapolis that'll cost him five dollars and principal rather $5 and the amp has four dollars and he can look at the record get a copy of his report see whether it's good or not. So when he goes in to borrow some money, he knows his record is good. And if you want to supplement it with information, he can have that privilege to it. So there's file is up-to-date And Timely and everything is checked out for him before he ever goes to borrow some money or by build a home or buy a home. Okay, very good. Let's go to another listener who's waiting to ask a question. Good (00:36:21) afternoon. Yes. I wanted to enquire regarding the actual security of the entire monetary system and view of what lecture I heard not too long ago out in Pittsburgh area from some people that had studied it rather thoroughly through work that's been done in the insurance department of the state of Nia apparently we've got a house of cards on our entire monetary system and even the Federal Deposit Insurance Corporation is very miserably underfunded. It couldn't withstand anywheres near the crush of without 1,000 percent inflation. If banks started failing at the rate that they could say in the 1930s and also for example, I understand that one of the main reasons for the governmental and estriol pussyfooting with regard to closing nuclear plants and coal plants vis-à-vis. The recent articles on on acid rain is because there are so many insurance companies and Banks and industries and so forth that have loans is involved. In those those plants that if they were suddenly required to write them off it would collapse the entire Financial system. (00:37:43) And also your excuse me, sir. I we've got some other listeners who are waiting to (00:37:46) ask questions. I just what I'm saying is you're talking as if people can put their money in and saving and the rely on getting it back. I don't think that's true anymore. (00:37:56) You have any questions or comments? I (00:37:58) think in the same thing, let's let's listen. Let's (00:38:00) listen for some comments from our guests. The insurance companies have backed all Savings and Loans and also the bank's up to $40,000 on your (00:38:08) savings. Thousand dollars would have to come from the federal government inflationary bond issue, and that would make if that's done. In other words. If all Insurance in the country were called. I understand that we'd have a 1,000 or 10,000 percent inflation and and it in other words. The the FDIC is a paper (00:38:36) tiger. Any comments about that? Mr. Philander? Well sure. It is a complex situation. You could think up a lot of things that could possibly happen if everything went bad at once, but if I don't look for that and if I did I think I'd get out of the country. We have about 10 minutes left in our program this afternoon, and we have one phone line to phone lines open. And if you'd like to call us and ask a question of one of our guests are all of them you can call to to 11550 in the Twin Cities area. That's two two one one five five zero if you live outside the Twin Cities, but in the state of Minnesota, you can call us toll-free at 1-800-669-9133. Go to another listener who's waiting to ask a question. (00:39:29) Yes. Thank you. We're buying a new property. But before we can do that. When he says no, I am concerned where we can find buyers out there who can actually afford to buy the house because of the condition situation of the mortgage money and interest rates and I was only if you can speculate as to what the market would be. Like, let's say starting in February. (00:39:53) I look for the money to gradually get more available shortly after the first of the year. The problem is with most lenders that they are over committed at this time and they're just trying to get their house in order a little bit because when we do make commitments we make them 234568 months away and we anticipate that money is going to come in as it has been but in the last few months it has not so what we do have to do is cut down on our commitments a little bit till we catch up with ourselves. And normally it takes two or three months these Cycles seem to run about every five years. This happened in 1974. It happened in 1969 or money got very difficult, but it was just a matter of a few months till everybody did get rid of some of their over commitments to improve under so I expected to improve somewhat at least right after the first of the year. We're going into an election year pretty quick too. And that seems to help the situation for some reason. Is that the way you see it to Jan hus Nick. Yes, I do. Okay. Let's go to another question or good afternoon. You're on the air (00:41:12) as can you explain the long-term consequences of a bankruptcy and how do you get that off of your credit record? And (00:41:20) Well just recently had a lot of cobre the record of bankruptcy its credit bureaus which is all Beyond file was reduced from 14 years to 10 years. In other words when you file bankruptcy now, it's going to be on your credit record for 10 years. And that's right. It's a federal law. Is there something that you can do it's on the record no matter what you might do to remedy your financial situation. You might go out and establish another business if you come across that be rather difficult wouldn't it? Well, the bankruptcy is there and it'll always be there. We don't eliminate that type of thing from the file, but we do try to help people buy that part of our job in counseling where we handle finances for 600 families in the Twin Cities today who have run into financial problems for various and Sundry reasons and in turn they are trying to rehabilitate themselves and they show that they can pay off in a whatever time I'll take two or three years and rather than file bankruptcy, they go this route, but then they can re-establish themselves and and by having a good record developing today and tomorrow this will offset the bankruptcy. You may have had to file for certain reasons. Mr. Duffy. What are some things very briefly that you can tell a person who I had to file for bankruptcy what are some of the things that they can do to make themselves appear as best as possible in terms of getting loans again, that's her thing. Well, as I said the difficult thing is once a person runs into problems, then he has a difficult time getting things straightened around again, and I think the average credit Grandeur the bank's the SNL's represented here today. The Retailer's they want that business and they're going to help a person as much as they can if he's run into bankruptcy for certain reasons. He's had a layoff he's had problems if illnesses in a family and all that sort of thing, but you couldn't quite handle so he can re-establish his record and people are going to help him do it. So you'll sit down with someone and tell them the things that they that's what we do in our Counseling Service six minutes before one o'clock. We have time for a few more questions. Let's go to another person (00:43:31) now, I have a $10,000 treasury bill if I were to place it in the bank at five and a quarter interest. I'd like to know how much of my money with the bank lend out. That (00:43:40) $10,000 Jenna's Nick. Well, there's certain reserves that they have to hold and I can't tell you exactly what that amount is. But they do have to hold a certain amount in reserve. Do you have any idea of percentage would it be 50% of it too? Oh no. Oh no. No, no out of five about five percent minimum. Okay. All right. Let's go to another listener who's on the line. Good afternoon. Hello. Yes, we're listening for your question. (00:44:12) Yes. I'd like to ask a question to either one of your participants. I am a real estate person. I'm working with client in the 20s and one child and the mother is legally blind. Is there any well furthermore they are both University graduates the husband and the wife and the husband is a manager of a fast food restaurant. And the mother is a consular for one of the agencies in the city and I would like to know if there is any subsidy as far as borrowing money for (00:44:58) them. Mr. Polar Lander. I don't know of any subsidized mortgage program at this time. I believe there are four veterans who have had their physical disability caused by service. But other than that, I don't believe for a person who is legally blind. They do get some income tax credits and so forth. But other than that, I don't know of anything that would give them an advantage. (00:45:31) Do you know of any proposal in the state legislature for including in the budget for such a (00:45:40) program? I don't know of any know. I don't (00:45:45) there are rumors that there will be then one more question for a person borrowing money today. Let's say on FHA approved long. Would they be what difficulty would it be for them to refinance that loan in the future in case the interest rates drop? (00:46:07) There's no prepayment penalty on FHA VA or on our conventional loan programs these days (00:46:14) that I understand but what be the problem for a (00:46:17) person well there would have the costs involved in refinance. And that runs from one but one and three quarters percent of the amount of the loan these days. Okay, we have less than three minutes left in our program in time for one more. Very quick question. Good afternoon. We're listening for your (00:46:35) question. Okay. I've got a problem and a non-owner occupied duplex, which I own it needs some rather substantial repairs and I'm wondering what borrow money there is for that I checked into title and FHA and I found one place that would loan me the money and then they ran out any suggestions. (00:46:54) Well, that is a problem today. Maybe you have some other security that you can give or get some sort of a bank loan, but I know Title 1 loans are difficult at this time. In fact all loans (00:47:08) are so there's not much other help (00:47:12) not at this time just have a little patience. I think it's going to use up shortly. (00:47:16) Okay, and one other very quick question, by the way, one of the panelists said that they dislike the tax free housing bonds because it allows federal tax. Was that the same one who also advocated exemption exemptions on and taxes for savings. (00:47:34) That's right. (00:47:35) Is there an inconsistency there (00:47:37) isn't I don't think so. I don't think so. Now you're talking about a little person with to 3,000 in savings has compared with the big investor who is getting a complete break on a hundred thousand. For example, there's a difference. Okay, that is all the time. We have this afternoon. I want to thank all of our guests Jan hus Nick from the Northwestern National Bank of st. Paul Robert Pugh Lander from Twin City Federal Savings and Loan and Bernard J. Duffy who has been very helpful in helping us get guests for the program and he of course is with the Minnesota Consumer Credit Counseling Bureau, which is in Minneapolis. And st. Paul he says, okay.