Q: Are FHA Reform Guidelines finalized by Government so consumers can obtain new higher loan limits that FHA is offering?

Submitted by Carol from Fremont, CA

A: I believe the limits have been announced for parts of California but have yet to be published for other markets. My understanding, and don't hold me to this, is that the final details are still being worked out. I did speak with the chief economist of Freddie Mac last week, and while I was waiting to chat with him, he told another journalist that even with these higher loan limits his loan-packaging company would think long and hard about each of these high value loans. The problem remains that if FHA reworks a loan in a market where home prices are still falling, then that loan is still bigger than the value of a home. And that's why Fannie Mae and Freddie Mac are nervous about bundling these loans into mortgage bonds to sell to investors. The private-sector players who market these mortgage bonds have already said they won't pool them with other loans but will keep them in a separate type of bond, and unless confidence returns to housing sector its not clear there is much appetitite for these mortgage bonds whose underlying collateral is high-priced home loans taken in by the FHA.

Answered 04/01/08 12:12:38 by Kevin Hall and Tony Pugh

Q: MY SON HAS BACK DUE CHILD SUPPORT WILL THEY TAKE THE REFUND FROM THE PRESENDENT FOR THESE BACK DUE PAYMENTS.THANK YOU

Submitted by BETTY from CANTON OHIO

A: Boy, that's a tough one. If there is a court order to seize any of his assets I'd presume so but you may want to check the IRS hotline for that one.

Answered 04/01/08 12:07:09 by Kevin Hall and Tony Pugh

Q: I filed my taxes for the year of 2007 but I did not recive my "Economic Stimulus Payment Notice" as for other people I know they have recived theirs, does this mean im not going to recive my qualifying payment????

Submitted by Mary from Baltimore,MD

A: I just received my notice in the mail yesterday, so I wouldn't give up hope. If you filed your return you should be getting it fairly soon. I responded to questions earlier in the week with some timetables for when people get their checks. You may want to scroll down to find them. If you don't receive a notice, you may want to check with the IRS hotline, on their website, and make sure they have your correct address but I presume that your address on your tax return should ensure you stimulus payment arrives.

Answered 03/27/08 18:17:43 by Kevin Hall and Tony Pugh

Q: my last two digits in my social security number is 42 when would i recieve my stimulus payment.

Submitted by kenyardette noland from eutaw,alabama

A: If you file electronically and expect a check returned via electronic deposit, you stimulus payment should go out the week of May 9. If you are filing a paper return and expect a paper check, it should ship out the week of June 13. For an IRS calculator to gauge your rebate, go here: http://www.irs.gov/app/espc/ Like everything in life, however, don't catch your chickens until they've hatched. Don't spend the money before you get it to ensure your calculations are right.

Answered 03/25/08 12:16:57 by Kevin Hall and Tony Pugh

Q: How do they decide who gets the stimulus packages first and how long will it take the final people to receive the rebate.

Submitted by mary from joliet, il

A: The IRS will send the first stimulus payments out on May 2 and will send out most of the 130 million stimulus checks by mid summer. Those who get their taxes in early will obviously be at the head of the line, and those who file electronically and want to get their checks deposited electronically will also get their rebate checks more quickly. The IRS believes it will send out 34 million checks within the first three weeks. The speed with which you get your check depends on how your file, electronically versus paper, and the last two digits of your social security number. For electronic filers whose last two digits range from 00 to 20, the checks go out the week of May 2. The last electronic checks go out the week of May 16 for social security numbers ending in 76 to 99. The first paper checks go out the week of May 9 for social security numbers ending 00 to 09 and the last checks go out on July 11 for social security numbers ending in 88 to 99.

Answered 03/25/08 12:14:20 by Kevin Hall and Tony Pugh

Q: I have $400K of my cash locked up with UBS in the failed Auction-Rate Preferred Securities mess. Do you have any advice regarding this problem? Could I potentially loose the money?

Submitted by Brad Barker from Dallas, Texas

A: For unfamiliar readers, auction-rate securities are a long-term paper—either municipal bonds, preferred stock, student loans or collateralized debt obligations. They have interest rates that reset every seven to 49 days via an auction process. But today, given the rampant fears on Wall Street, there is little interest in this auction process, and investors are beginning to sue issuers like UBS. I'm not qualified to give advice on what to do in your situation, nor are we allowed to as a newspaper, but in general terms I'd be scanning the financial news sites for indications of class-action suits and the like. My understanding is that this, like the market for mortgage-backed securities, is freezing up and it is one of the areas of the credit crunch that the Federal Reserve is trying to address by taking all sorts of collateral, presumably these instruments too. The idea is that since there is no market for it, the Fed will accept it -- giving it some form of pricing -- and the hope is that by putting a floor under the pricing the market, over time, will start to come back as people get less nervous. But everyone is nervous. Underscores what a tough job the Fed has on its plate, even if the toxic mortgage bonds are somehow taken back by the U.S. government to allay concerns, you still have all these other areas like auction-rate securities where investors are afraid to get back in the water (Jaws theme music fades out.....)

Answered 03/25/08 11:50:40 by Kevin Hall and Tony Pugh

Q: Warren Buffet recently said that the only way the we can strengthen the dollar is by balancing our enormous trade deficit. Since Free Trade has been our mantra for 15 years now, and tariffs are unlikely to be imposed, should the government look at subsidizing domestic manufacturing? Is that a feasible way to balance the trade deficit, if not how can we strengthen the dollar?

Submitted by Greg from Raliegh, NC

A: Guess one question is what do you mean by subsidizing domestic manufacturing, price supports? Look what happened when Bush tried to protect the steel industry... gave us a couple of years of safety from imports but we are not disconnected from the rest of the world, and as demand soared globally, not many exporters were willing to sell to us once we needed their products amid our economic rebound. Manufacturing is such a thorny issue, one reason we've lost many of these jobs is companies could automate more easily overseas than here. I am not advocating this, but you can make an argument that taking the hit on jobs here to keep a more automated operation in the United States would create more distribution and warehousing jobs etc. I think most companies would probably argue that reducing their operational costs would be the best way to "subsidize" manufacturing. Healthcare and energy are two big ones. It will be interesting to see in the general election what the candidates propose, the GOP debate in Michigan underscored how difficult the question is. Do you try to save what's left or revamp in a way that ensures other kinds of jobs are created and on net the job levels stay constant. Retraining helps, but if you are in rural North Carolina, where will you put those new skills to work? Not locally I suspect. There needs to be serious rethinking about these retraining programs ... and it might mean encouraging folks to move to other parts of the country, not something are always keen on doing, especially if you have roots in a community. Tough, tough question.

Answered 03/25/08 11:35:57 by Kevin Hall and Tony Pugh

Q: I have seen no actual evidence that markets would seize in any fatal way, or that systemic collapse would be severe enough to justify bailing out Bear Stearns. Are we just supposed to blindly trust that this public expense was necessary? My questions are; #1) Isn't this just fear-mongering to justify corporate welfare? and #2) Can the secondary markets in derivatives continue to function if transparency is required or can this game only be played in the dark?

Submitted by joe from new york, ny

A: Your questions are good ones and have no easy answer. Derivatives don't get a lot of attention, but they sure have the potential to be the other shoe that drops. And you are correct to note that this mess we are in comes from games played in the dark. When Robert Rubin, former Treasury secretary and co-chairman of Citigroup, acknowledges he was unaware that some of the toxic mortgage bonds his bank sold to investors were carried off balance sheets through a little-known buyback clause, that tells you how in the dark so much of this "financial engineering" was. There will surely be much debate in months ahead as to whether and how to regulate going forward, and it seems the argument that counterparties serve to regulate good behavior is a harder sell given what we know now. That said, I'm less willing to pounce on the Fed for the Bear Stearns move. I understand the moral hazard issues and the idea that it is corporate welfare, but if you see the world like Ben Bernanke does -- he being one of the world's leading experts on the Great Depression -- he believes the Fed needs to take bold actions when there is the potential for a confidence crisis that spirals out of control. If it were up to him, I'd bet he'd be pushing -- and perhaps privately is -- to get these toxic mortgage backed securities off the balance sheets of investment banks and repackaged into a modern version of Brady Bonds, which took Latin American debt in the 1980s and repackaged it into a bond that restored confidence in that troubled regin. Maybe he overreacted, we'll never know, but I personally would rather see an overreaction than a systemic collapse. Time will tell if the Fed is just paddling against a river that leads to a giant waterfall.

Answered 03/25/08 11:29:03 by Kevin Hall and Tony Pugh

Q: My wife and I adoped our grandson in 2007 and we claimed the adoption expence tax credit which made our tax liability 0. I am also recieving Social Security disability benefits. My question is: What will our stimulus payment be

Submitted by W B .S from Phoenix Az

A: As I warned a previous readers, don't take our word for gospel, but it sounds like your adoption expense credit wipes out your stimulus payment but providing you receive more than $3000 a year in disability payments I believe you would be entitled to the $300 payment. Hard to say whether the adopted child, whom I presume is claimed on your taxes, qualifies for the children portion. This is a tough one. Maybe your local AARP office can direct you to a local tax professional answering questions on the stimulus plan.

Answered 03/25/08 11:21:44 by Kevin Hall and Tony Pugh

Q: I carry my mother who is a senior and happens to be handicaped on my federal income tax. She lives with my husband and I and I am her caregiver. My question is; does she qualify for the senior $300.00 rebate in May? I have asked the question several times and keep getting different answers, that all make since. So what is the correct answer to that question, because if she's intitled to the rebate, then it's only fare for her to recieve it.

Submitted by Not Sure from Fort Worth, Tx

A: Don't take my answer as gospel but I think the answer dpeends on what sort of Social Security income your mother receives. She has to receive payments over a certain threshold, and it is very low, if my memory is correct like $3000 a year in Social Security or disability payments. Your local AARP office should know the answer, and the IRS website runs through a bunch of scenarios too. Presuming she collects Social Security and did so for most of 2007, she should get that check BUT you will have to file a tax form for it. The IRS website explains this, even provides a sample 1040 form filled out to reflect the Social Security payments.

Answered 03/25/08 11:19:04 by Kevin Hall and Tony Pugh

Q: Do you believe that: we are witnessing no more and no less than the shameless management of USA's DEFAULT on her SOVEREIGN DEBT. The more USA devaluates her currency by printing money and reducing local interest rates, the lesser is her US dollars denominated foreign debt. While the rest of the mortals pay dearly for devaluating their currency, in USA the effect is precisely the opposite, the lower the currency the lower is her debt. This is the very reason why the North Americans are so infuriated by the fact that China pegged the Yuan to their currency. The biggest US creditor in the world is so impertinent that not only refuses to bail out a bankrupt North America by graciously condoning her debt by revaluating her currency, but she also dares to increase her defence spending (it is function of the GDP) making her much more intractable using standard USA methods dealing with dangerous economic competitors. As a corollary, loosely considering Karl Weierstrass’ Limit definition, we can assert that the value of the US dollar with respect to floating currencies would tend to cero when time tends to infinity. The only problem is that that infinity is precisely NOW !

Submitted by Norberto from

A: Not sure I share the same doom scenario, in fact the dollar's skid has been pretty orderly and in the view of most mainstream economists necessary. Free floating currencies reflect the value that traders assign to a particularly money given the "balance sheet" of the nation. There have been times when the dollar has been seen as far too strong, and now some say it is far too week. As for defaulting on debt, our debt is in dollars, as distinct from many Latin American nations whose debt was in dollars and as their currencies sank against the dollar their dollar-denominated debt grew. We owe the Chinese and Japanese in dollars, so I'd argue the reverse, their policy of pegging their currency directly or indirectly to the dollar now means their exports and their investment in treasuries earn them less. I do share your concern that we seem to be increasingly reliant on foreign investment to spend into deficits, but as Fed Chairman Bernanke said on the question, better to have willing lenders than unwilling ones. My fear is the day when lenders decide we are risky bet and demand more, then our real problems start. And given the crunch of unfunded liabilities piling up, that day may not be too far away.

Answered 03/25/08 11:16:28 by Kevin Hall and Tony Pugh

Q: the money we get back on the stimulus act will we have to pay this money back on 2008 taxes?

Submitted by leah from opelika al

A: No, this is not a carry over to be taxed in the coming tax year. It is "free" money without tax implication. Of course it is not free, it is paid for with debt, which means future generations will pay the bill for this year's stimulus package.

Answered 03/25/08 11:05:10 by Kevin Hall and Tony Pugh

Q: Is oil really getting more expensive, or is most of the "run-up" in the price of oil over the past two years due to devaluation of the dollar? Can you perhaps contrast the rise of the price of oil to the price for other imported commodities, or contrast the change in price of oil in $$ to the change in the price of oil in Euros? How do we know if oil is absolutely more costly, or just relatively more costly due to the ever-weaker dollar?

Submitted by JR from Peterborough, NH

A: Both. Inflation in the oil sector is rampant as there are so many projects under way around the world. that has bid up the price of oil workers, jack rigs, engineers, even smoke stacks for refineries are years back ordered. This all adds to the cost of exploration and production. But the real run up in prices has to do with the weak dollar and since oil is traded in dollars, producers are demanding more dollars to keep their earning power intact when dollars are converted back to local currency or to euros. Oil historian Daniel Yergin came to our offices yesterday, we'll have an audio show on the Internet soon and another story on oil, but he refers to oil as the new gold, a place where investors take refuge from both inflation and the weaker dollar. Same can be said for commodities more generally. It is now an "asset class" and it's not just those evil speculators trying to make a buck on everyone else's back. It's your 401K plan, your IRA fund manager etc. There is a lot of money gushing around, moving between the stock market and commodities, you can even make a case that today's housing correction is partly responsible for the runup in oil prices since investors have fled the once safer mortgage bonds for the perceived safer ground of commodities. However, the selloff this week in commodities underscores there is no sure bet. Anyone who invested in gold last August is a genius, last week the opposite. It were that easy to pour money into a safe bet, we'd all be rich.

Answered 03/25/08 11:04:15 by Kevin Hall and Tony Pugh

Q: The Gold Anti-Trust Action Committee Inc. (GATA) is a non-profit organization who is demanding via the Freedom of Information Act that the US come "clean" about its gold reserves. Specifically GATA wants to know how much gold is left in the Federal Reserve vs. how much has been compromised by market intervention. GATA is predicting that a world financial diaster is unfolding and what must be done to mitigate this diaster. Is this a legitimate query by GATA or a scare tactic? If legitimate, just how serious are their allegations? Pleae explain.

Submitted by SLB from Islamorada, FL

A: Can't be of much help on GATA, the world has been off the gold standard for quite some time so there's question over how much it would matter what the gold reserves are. It is interesting, however, that gold was under $700 an ounce in August and now is settling in April contracts for over $1000 an ounce. It suggests there are a lot of people who still believe gold is viable and remains an important hedge against inflation. Sorry I can't be of more help, if the markets were not so volatile I could investigate it further but I suspect the strategic petroleum reserve has a greater bearing on our economy today than the actual level of gold reserves

Answered 03/17/08 18:46:10 by Kevin Hall and Tony Pugh

Q: I'm wondering if you can comment on how this credit crunch that can take down a Bear Stearns and worry so many banks, might affect federally registered Credit Unions.

Submitted by Robin Baker from Rome,NY

A: Credit unions are federally regulated ans subject to the same investor protections as most banks. The banks in trouble are investment banks, and they're in trouble because they made bad bets on complex financial instruments that in the simplest terms are described as mortgage bonds. These instruments are made up of bundled-together home loans, whose underlying value is the actual home and in many parts of the country -- especially places where the run-up in home prices was extreme -- there is a deep correction taking place. All that to say that most credit unions are not big holders of mortgage-backed securities, collateralized debt obligations or structured investment vehicles so there's a lesser chance of big problems. However, all financial institutions are tightening their lending standards in the aftermath of five years or so in which standards got lax. Now there is an overcorrection, and that further slows both lending and the economy. It will take time for this all to shake out. Expect a bumpy year ahead. There will be lots of ups and downs.

Answered 03/17/08 18:42:20 by Kevin Hall and Tony Pugh

Q: I do not remember did Former President Clinton pass a minimum wage bill in his eight years? Since they are so much for helping poor. We do need fresh YOUNG change. I say no more Clinton.I have not voted yet, but i assure you it will not be Hillary, she do not understanding what she signing.

Submitted by Anonymous from Houston, Texas

A: President Clinton bumped the minimum wage to $5.15 per hour in 1997. It was the last increase before Congress raised it again last year.

Answered 03/17/08 11:56:31 by Kevin Hall and Tony Pugh

Q: My son in Gainsville is a full time student,and he is my dependent.Is he eligible to get the $300.00 rebate?

Submitted by Alfredo from Miami,Fl

A: My read is no since he is beyond the age limits and is claimed by someone else as a dependent. But again, best to consult with IRS to make sure. Here is the link to the IRS special section on the stimulus package http://www.irs.gov/irs/article/0,,id=177937,00.html

Answered 03/10/08 12:03:10 by Kevin Hall and Tony Pugh

Q: I pay for my son's expenses,dorm monthly rent,car,food,etc.Can I deduct those expenses when filing my income tax?,he is my dependent and does not work, because he is a full time law student

Submitted by Alfredo from Miami,Fl

A: You'll have to consult a tax adviser on that one, we don't give tax advice. Here is a link to cut and paste that will take you to an IRS fact sheet on exemptions and deductions, some of your questions should fall into this document. http://www.irs.gov/publications/p501/index.html

Answered 03/10/08 12:00:14 by Kevin Hall and Tony Pugh

Q: This is a two-part question: 1) Concerning the stimulus payments, if a child is 17 and can be claimed as a dependent on their parent's return, but they had earned income (less than $200 and only paid around $3 federal tax), will they qualify to receive a check for the stimulus payments? If I understand correctly, parents will receive $300 for each child who is under age 16 at the end of the tax year. As the parent will not be receiving the money for this child, will the child receive the money himself if he files an income tax return? 2) In reference to the Social Security recipients who don't owe taxes but have to file a return for the stimulus payment, do they also have to file a State income tax return? I wouldn't think so as all of the figures will be "0", but I am awaiting your reply. Thanks for your help!

Submitted by Martha B from Galax, VA

A: My read of the IRS website suggests that a parent with no income but who claims two children as dependents would get $600 back. This is not to be taken as gospel, if is more than a theoretical question and you really want to know about your own situation, there is a hotline for the IRS. They would be able to answer the state income tax question too. I presume you are correct, but better to get that too from the IRS. Cut and paste this link to get to the IRS special section on the stimulus package. It has a lot of scenarios to run through... http://www.irs.gov/irs/article/0,,id=177937,00.html

Answered 03/10/08 11:57:04 by Kevin Hall and Tony Pugh

Q: Would you recommend a $100,000 variable annuity for a 70 year-old male using IRA funds (no penalty for value withdrawal after 7 years/principal guaranteed) wife 50 years old, at this time when economy seems in trouble? Company will be Metropolitan Life. Pls. advise - Thanks so much!

Submitted by DAB from Miami, Florida

A: Sorry to have to say that we aren't allowed nor qualified to give financial advice. I know annuities are popular, and there are reasons for and against them. As we've suggested to other readers, if you can afford it, a few hours with a financial planner is well worth the investment to forge a plan for both the short and medium term and think through inheritance strategies etc. Best of luck.

Answered 02/19/08 17:17:00 by Kevin Hall and Tony Pugh