Bringing back consumer confidence, optimism

In October of this year, America experienced an all-time low in the Consumer Confidence Index, a measure of optimism on the state of the economy. Not surprising with the constant news surrounding the financial downturn and our weakening economy. Delinquencies are up, home prices are down and lending standards are tightening. Who could blame anyone for being paranoid about the future of their mortgage and their money in general?

So what can you do to make sure your mortgage and your money are safe? Number one – don’t panic. Now is the time for calm and reasonable thinking. For instance, if you are at all concerned about being able to make your mortgage payment, the first thing to do is call your lender. Many companies are implementing initiatives designed to proactively help potential at-risk borrowers remain current on their payments and ultimately in their homes. Extended foreclosure moratoriums and streamlined loan modification programs are just a couple of ways lenders are working to help borrowers. If you are in an adjustable rate loan with growing payments, you may want to consider a fixed rate alternative to secure a consistent payment for the long term. According to Freddie Mac, in the third quarter of 2008, 94 percent of prime borrowers who originally had a one-year, adjustable-rate mortgage chose a new fixed-rate mortgage when refinancing. Henry Paulson, Secretary of the Treasury, was quoted this week as saying, “The most important thing we can do to mitigate foreclosures and progress through the housing correction is to reduce the cost of mortgage finance, so more families can afford to buy a home, and so homeowners can refinance into more affordable mortgages.”

So what about banks? Is your money safe? The answer is simple – absolutely. No one has ever lost a penny of deposits insured by the FDIC. In one of the most important steps in recent history, the FDIC boosted the amount of deposit insurance for deposit accounts from $100,000 to $250,000 per depositor through Dec. 31, 2009. Additionally, banks that choose to participate in the FDIC’s Temporary Liquidity Guarantee Program have unlimited deposit insurance coverage for non-interest bearing transaction account. And as recently as the end of November, the FDIC announced the extension of this program to include unlimited insurance on some interest-bearing transactional accounts through Dec. 31, 2009.

The FDIC has created this program to strengthen confidence and encourage liquidity in the banking system by providing full coverage of deposit transaction account, regardless of the dollar amount. Ask your financial institution for details on this program. Note: Credit Unions do not have access to the Temporary Liquidity Guarantee Program and are not insured by the FDIC.

The result of daily media analysis of our economy has clearly shaken consumer confidence. The concerns we have are forcing us to curtail spending and consumption in many areas. Job losses, mortgage foreclosures, government bailouts and large investment losses can all be pretty scary. But those things have already happened. It is important to take a more logical approach to what you see, especially regarding the current economic condition. As our country weathers this recession, the most important thing we can do is act responsibly, reasonably and objectively.

This column is provided by American Marine Bank. Contact the Kingston branch of American Marine Bank at (360) 297-1711 or mortgage lending at (800) 648-3194.

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