Bankruptcy Questions Answered

Is Texting ‘HAITI’ to 90999 a Scam?

Update: 1/20/2010. As aftershocks continue to do damage in Haiti, help is still desperately needed. There's still some confusion on how to donate. Here's what you can do:

• Send a text with the word Haiti in the message. The recipient should be the five-digit number 90999. You should receive a confirmation response. Reply Yes. $10 will be added to your phone bill
• Log on to RedCross.org to make a donation online via credit or debit card (minimum $10) or find a Red Cross location near you.

Watch out for scams that ask you to send your credit card information over text message as well as web sites that prompt you to download software.

In the wake of the traumatic 7.0 earthquake that struck Haiti Tuesday evening, an outpouring of support has been heard across cyberspace. And thanks to developments in technology, donating to important and topical causes is easier than ever. But could a text of support really find you victimized by a scam?

Right now, there are two legitimate ways to donate to Haitian support and relief organizations:

• Text 'HAITI' to 90999: This service was set up by the U.S. State Department. Texting "HAITI" to the number will donate $10 to the International Red Cross, and will appear as a charge on your wireless bill.
• Text 'YELE' to 501501: This will donate $5 to Yele Haiti, a non-profit organization founded by singer and Haiti native Wyclef Jean. A donation to Yele will also appear as a charge on your cell bill. You can also donate larger amounts at Yele's website.

So far, these are the only two legitimate text-to-donate services providing support to Haiti relief, according to consumer watchdog groups. But others may be popping up to take advantage of Americans' generosity.

The Better Business Bureau and the Federal Trade Commission have issued statements warning possible donors to watch out for scams, which tend to pop up after a catastrophe.

The five-to-six digit numbers known as short-codes make it difficult to tell who is on the receiving end of a text. A legitimate charity will not ask you to send your personal information or credit card number through text message.

The devastating earthquake that struck Haiti, the western hemisphere's most impoverished nation, Tuesday hit 10 miles southwest of Port-au-Prince, Haiti's capital and largest city. Haiti's prime minister has issued a statement that hundreds of thousands may have perished in the quake.

The Bankruptcy Blog reports often on consumer affairs and identity theft issues for all consumers, in addition to bankruptcy information.

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More Info for Subprime Borrowers From FTC and Fed

A joint statement from the Federal Trade Commission and the Federal Reserve Board released in late December announced new rules for lenders who offer some borrowers less favorable loan terms than others.

With active participation from the borrowers in question, this measure could provide an important safeguard against certain predatory lending practices.

Current Mortgage and Home Loan Requirements

As things now stand, lenders are not required to inform individual borrowers whether their loan terms are better or worse than those offered to others.

When the new rules take effect, though, borrowers will receive a notice if they are offered loans that are “materially less favorable” than a significant amount of loans offered to other customers.

Ideally, the new requirement will help people make better choices about their loans. Many people who originally got into subprime loans weren't fully aware how the loans worked or what their other options might be. What many thought were "regular deals" turned out to be trouble.

Partly because of this current gap in rules - that is, because of the system that leaves borrowers in the dark about where they stand in relation to others - lenders were able to develop the lending “innovations” that led to the subprime lending boom - and eventual bust.

New Rules to Help Home Mortgages

Set to take effect in one year (January 1, 2011), the new rules require the following:

• Compliance from mortgage lenders: All forms of consumer credit are included in the new regulations, which means that mortgage lenders, auto lenders, student loan issuers, credit card issuers, banks and financing firms will have to comply by notifying consumers when they’re offered unfavorable loan terms.
• Action from borrowers: The new rules require lenders who offer borrowers less-than-stellar terms on a loan to provide a free copy of a credit report or credit score. Once you get the report, it’s up to you to check that the negative action that the lender claims appears there is, in fact, there. And, if it does appear on your report, you must determine whether it’s correct.

In other words, these rules are good news, but they’re not a cure-all: you must still take the initiative to monitor and correct (if necessary) your credit report.

The new rules are apparently designed to ensure compliance with the Fair and Accurate Credit Transactions Act of 2003, an amendment to the Fair Credit Reporting Act.

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