Archive for September, 2010

JPMorgan faces lawyers’ queries on foreclosures practices

Monday, September 27th, 2010 | Finance News

NEW YORK (Reuters) – Lawyers in Florida, one of the states hardest hit by the housing crisis, are questioning JPMorgan Chase and Co's foreclosure practices after discovering an executive authorized such a proceeding without knowing whether the bank had a valid claim.

The second-largest U.S. bank is one of the largest mortgage lenders and the latest to face allegations of shoddy foreclosure practices.

In May, the Florida law firm Ice Legal P.A. deposed a JPMorgan executive who signed an affidavit supporting the New York-based bank's claims against its client and discovered that the executive did not personally check the details of the case.

According to a transcript, the executive Beth Ann Cottrell said she had been part of an eight-person team that signs 18,000 documents a month. Cottrell said she did not personally review the documents in the case before signing the affidavit, according to the transcript.

A JPMorgan spokesman declined to comment.

Next month a Florida court will hear arguments in the case, according to Dustin Zacks, a lawyer at the Ice Legal firm.

Investigators are also questioning Ally Financial Inc, once known as GMAC, after that company last week said some employees submitted affidavits that contained information they did not personally verify, casting doubt on whether they were treating troubled homeowners properly.

Earlier on Monday, Connecticut Attorney General Richard Blumenthal joined regulators in California and Illinois in opening inquiries into GMAC's lending practices.

GMAC said it addressed errors in processing the foreclosures months ago and that it is confident the mistakes did not wrongly turn people out of their homes.

(Reporting by Elinor Comlay; Editing by Bernard Orr)

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The 401(k) Match’s Big Role in Retirement Security

Monday, September 27th, 2010 | Finance News

A generous company 401(k) contribution can help propel you to a secure retirement. Employees without a 401(k) match will need to do even more saving on their own to produce an adequate retirement income.

"You probably need to save 11 to 15 percent of your income over your working life to adequately replace your income in retirement," says Luke Vandermillen, vice president of retirement and investor services at Principal Financial Group. "You need to accumulate enough money to provide about 85 percent of your salary when you retire."

[See How to Tell if You Have a Good 401(k) Plan.]

Simply saving enough in a retirement account to get the 401(k) match isn't likely to reach that threshold unless your employer provides an unusually generous match. The most common employer 401(k) contribution is 50 cents for each dollar a worker saves up to 6 percent of pay. The maximum possible match using this formula is 3 percent of pay. An employee who contributes just enough to get the match will be saving 9 percent of pay each year, which is still short of Vandermillen's recommended annual savings percentage. "Unless you are doing something above and beyond that you probably won't adequately replace your income," says Vandermillen. "You will probably need to save more."

Of course, if your company has a more generous 401(k) match you may be able to get away with saving less on your own. IBM's retirement plan, for example, matches employee contributions dollar for dollar up to 6 percent of pay. An employee who contributes 6 percent of pay to the plan annually will end up saving 12 percent of pay each year. "IBM moved in 2008 from a defined benefit pension plan to the 401(k) Plus plan," says Monica DelBello, director of compensation and benefits at IBM. "This was part of the company's strategy to encourage employees to have shared responsibility in saving for their future while better controlling IBM's retirement plan expenses." Some 92 percent of IBM employees participate in the 401(k) plan.

[Bookmark the U.S. News Retirement site for more planning ideas and advice.]

Company 401(k) contributions can motivate people to save money for the future. "We definitely see higher participation rates in plans when they offer a matching contribution," says Vandermillen. A 401(k) match that requires workers to save 6 percent or more of pay to get the full match may result in people saving more than they otherwise would. "When plans stretch that matching contribution out it gives an incentive for people to contribute more in terms of their own dollars," says Vandermillen.

The exact matching formula also comes into play for employees unable to save enough to get the full match. A frontloaded 401(k) match is especially beneficial to workers who can only afford to save a small percentage of pay. Home Depot, for example, matches $1.50 for every dollar contributed to the 401(k) plan up to 1 percent of pay and then 50 cents per dollar contributed on the next 2 to 5 percent of pay once employees have been with the company a year. Approximately 70 percent of eligible Home Depot employees take advantage of the match.

[See 5 Ways to Size Up Your 401(k) Match.]

401(k) matches vary considerably from company to company and can be increased, reduced, or eliminated at any time. Waiting periods before you can join the plan, vesting schedules that may prohibit you from keeping the match if you don't stay with the company for several years, and, of course, investment options and performance all play a role in how prepared you will be for retirement.

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Summary Box: Can Russia be China’s gas supplier?

Monday, September 27th, 2010 | Finance News

BIG SUPPLY: Russia has massive stores of natural gas and its economy needs a cash infusion from sales to get it through the economic downturn that has crimped oil sales.

BIG DEMAND: Coal companies are already scrambling to meet seemingly endless demand for power in China, where industry is booming and a growing middle class is using more electricity at home.

EAST MEETS FURTHER EAST: China and Russia signed agreements to boost energy cooperation. Moscow said it can supply its energy hungry neighbor with all the natural gas it needs. Russian Deputy Prime Minister Igor Sechin told reporters in Beijing that Russia is in talks with China to open the spigot starting in 2015.

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