Snipes 'victory' doesn't let tax filers off the hook

Is using the services of a credit counselor a good idea or will it hurt my credit in the long run?
— Lester J., Glendora, Calif.

Working with a counselor is a great idea — as long as you deal with an accredited counselor. Ask if they’re certified by the Department of Housing and Urban Development (HUD). Or go to the National Federation of Credit Counselors www.nfcc.org to find an accredited counselor near you.

Going to a counselor by itself won’t hurt your credit. If you have fallen behind and can’t catch up on your own, they may approach lenders (with your approval) to work out an alternate payment plan. In some cases, that could hurt your credit, but the counselor will work with the lender to minimize that impact. It’s a lot better than falling so far behind that you have take more drastic measures — like, say, filing for bankruptcy.

Make sure you get someone who is certified. There are a lot of crooks out there who claim the “erase your debt” or “refinance” it by rolling it up into a bigger loan and charging you more interest. These folks will lure you in with promises of a lower monthly payment. What they don’t tell you is that the way they get the monthly payment lower is by stretching out the term of the loan for decades, which means you pay much more interest over the life of the loan.

So give it a try. The sooner you get started, the sooner you’ll be out from under.

Money doesn't just disappear: where did it go (in the housing bust)? The developers and builders got paid by the banks, correct? Are the banks losses not the builders gains?
— Jay, Raleigh, N.C.

It’s true that the money behind the mortgages used to fuel housing boom came from lenders (and investors who bought into pools of mortgage loans that were shopped up as securities like shares of stock.) 

Not all of that went to the builder or owner of the house bought with that mortgage. Some of it went to the mortgage brokers — in the form of fees and commissions. Then Wall Street took a nice cut when the bundled the mortgages and sold them off.

And yes, it's true that some of it went to builders and homeowners who sold their houses during the height of the boom. When a buyer uses a $250,000 mortgage to buy a house that’s really only worth $225,000, the seller gets a $25,000 windfall because the market “overestimated” how much it was worth. Or, in some cases, the estimate was cooked up by an appraiser who inflated the amount to please a lender or mortgage broker. (Some of these bad actors have been convicted of fraud.)

The bulk of the money that “disappeared” is now showing up as losses by those lenders an investors; some $100 billion so far, and the story isn’t over yet. Much of that represents a paper profit that may never have existed.

As long as house prices keep falling, more builders or home owners will find their houses worth less that the loan they took out to build or buy it. Selling the house won’t help. If the loan principal is more than the market value, the builder or homeowner gets nothing and the banks gets what’s left. And if market value is less than loan value (which is getting more common as market prices fall) the bank loses too.

Money may not disappear, but market value does.

Don't miss this on MSNBC.com Pass it on: Sons of infertile men may be next The eight biggest Olympic marketing debacles Reality show judges range from wise to wacko Cosmic Log: Is this your jetpack? Forget your inhibitions: World's sexiest islands

MORE FROM ANSWER DESK

Answer Desk Section Front

Who gets extended jobless benefits Easing job losses point to wobbly recovery Long-term jobless face frayed safety net GDP growth overstates case Recession over? Readers don't believe it Breaking down the cost of health care Commercial real estate bust looms 'Official' job numbers don't tell the whole story Getting mortgage help No winners in trade wars Answer Desk Section Front   Add Answer Desk headlines to your news reader: