On Friday the Senate passed new legislation that would make more Federal Housing Administration Loans available to troubled borrowers facing foreclosure, lowering the down payment required and allowing larger loans. The House passed similar legislation in September, and now House and Senate members will have to "resolve a number of differences between the two pieces of legislation," says the Wall Street Journal.

Bloomberg observes: "The agency's loan terms, which are more stringent than those of many lenders, may have caused some borrowers to turn to subprime mortgages. Housing officials estimate that the legislation will help about 200,000 homeowners who have fallen behind on their mortgage payments." The housing industry, including home builders and real estate agents, pushed for the legislation because they will benefit from the expansion of F.H.A. loans, says Bloomberg.
"This legislation is the perfect example of the kind of help Americans are looking for," Senator Charles E. Schumer, a New York Democrat who was a sponsor of the bill, said on the Senate floor. "It is definitely and desperately needed."

If you have consumer debt, you're probably looking for a strategy to pay it off. Some people use a home equity loan as a way to get a lower rate, others use 0% balance transfers, still others just call their credit card company and ask them to lower their rates.

What should you do? Here are few differing view points and strategies from personal finance bloggers who've been there.

The only option to avoid this jump is to cancel the automatic payment (and lose the interest rate reduction). Of course, this doesn't help if they are going to report you as not paid-in-full or as delinquent to the Credit Bureaus. It seems very shady that they would suddenly up your payment, charge late fees from 2 years ago, and not provide any notification. From what my wife understood from her conversation with the CSR, this is something they've done with loans across the board, including some which may have been listed as paid-in-full.

I've attached screen shots of our October and November statements for comparison. (Looking at the November statement, it appears that they've actually already applied the late payment and reduced the amount applied to principal, so we're paying interest on principal that should have been paid with the October payment as well.)

-Sean

While we respect CitiBank's right to correct their banking errors, it seems kinda rude to do it without giving people a heads up. Like Sean says, for those out there who sometimes keep their bank account barely above zero, such as poor students, this correct could come as a most unwelcome surprise if it results in an unexpected overdraft and overdraft fees.

If you have a student loan with CitiBank, either current or paid off, might want to check and see if they plucked an extra Ulysses S. Grant from your account for November.

The National Consumer Law Center and the Project on Student Debt have launched a joint website that offerers information for student borrowers who are behind on their loans, or those who just want to learn more about their options.

In only a few clicks we learned something that we didn't know: Some states will suspend your professional or vocational license if you default on your student debt. Some professions that may be affected: Attorneys, health care professionals, teachers, insurance professionals, state officers, and commercial fishermen.

This looks like a great resource.

H&R Block Inc., our nation's largest tax preparer, is now missing CEO Mark "Anybody Wanna Buy A Subprime Lender?" Ernst, after losing $1 billion in the subprime meltdown.

From Bloomberg:

Richard Breeden, the hedge fund manager and former head of the U.S. Securities and Exchange Commission, was named chairman, H&R Block said in a statement today. Alan M. Bennett, who retired this year as Aetna Inc.'s chief financial officer, becomes the interim CEO of Kansas City, Missouri-based H&R Block.

Breeden, who waged a proxy fight to win a board seat in September, had urged Ernst to ``stop the bleeding'' at Option One Mortgage Corp. amid five quarters of losses. Ernst, 49, put Option One up for sale a year ago amid pressure from shareholders, and said in March it might fetch as much as $1.3 billion. H&R Block said in August its agreement to sell the unit to hedge fund Cerberus Capital Management LP was falling apart.

``Unfortunately, Ernst's departure isn't going to remove the uncertainty over the sale of Option One,'' said analyst Scott Schneeberger at CIBC World Markets Inc. ``They're so mired now in subprime and the troubles there are getting so out of hand that his resignation isn't as momentous.'' Should have stuck to preparing taxes and screwing people with those bogus fee-riddled refund anticipation loans, we guess.

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