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Open House

Landlord Foreclosures; Mortgage Crisis; Medical Billing Errors; Credit Card Balances; Holiday Travel

Aired December 01, 2007 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOSH LEVS, CNN CORRESPONDENT: You can click and they get the gift.
BETTY NGUYEN, CNN ANCHOR: Oh, that's perfect. Easy.

LEVS: And it's tax free because this is charity action and Amazon has partnered with them to make it a charity. And I also want to mention, quickly here on cnn.com, on our own site, we have CNN "Impact Your World." If you take a look at that, cnn.com/impact, we right there will hook you up with a series of organizations if you want to do some activism or if you want to make contributions. You can see the whole list, right there.

These are groups that work in the United States and also all over the world. Some do care, some do research. The U.N. program works with kids everywhere, as well. So, if you'd rather do that, it's good. But you know, today, when everyone's thinking about AIDS around the world, especially children who suffer with HIV or AIDS, it's great to have these resources.

NGUYEN: Absolutely, and we heard from the two guys earlier, they were facing so many difficulties. So, if you can just brighten their day a little bit, especially during the holidays it makes a difference.

LEVS: That's something.

NGUYEN: Thank you, josh.

LEVS: Thanks.

NGUYEN: Coming up, our coverage of World AIDS Day continues. My partner T.J. Holmes joins us live from downtown Atlanta where the AIDS memorial quilt is being stored. But first, OPEN HOUSE with Gerri Willis starts right now.

GERRI WILLIS, HOST: Hello, I'm Gerri Willis and this is OPEN HOUSE, the show that saves you money.

Coming up, getting ripped off at the hospital, how to protect yourself from billing errors and outrageous charges, and how to get out of debt and stay out of debt this holiday season. But first, from bad to worse in the mortgage meltdown, home prices experienced their biggest droop in more than 20 years in the last quarter. That's according to one industry group.

This, as foreclosures continue to take a toll on families across the country. But you don't have to be a homeowner to feel the pain.

(BEGIN VIDEOTAPE)

WILLIS (voice-over): Sixty-seven-year-old Alice mills signed a lease here in Philadelphia believing she could live in this house for at least a year. Then, eviction notices began arriving, but her landlord assured her everything would be fine. Two weeks ago, a sheriff's deputy showed up at her door and told her that she had to move out the very next day.

ALICE MILLS, VICTIM OF LANDLORD FORECLOSURE: Oh, I didn't know what to think. I didn't know where I was going to go, what to do.

WILLIS: Alice had paid her rent on time, but her landlord was behind on his mortgage and the bank foreclosed. Alice is one of a growing number of people who don't own homes, but are caught in the middle of the foreclosure crisis. Renters who thought they were protected by leases suddenly being told to move out.

JUDITH LIBEN, MASSACHUSETTS LAW REFORM INST: It's a significant problem all around the country in cities, in suburbs and, in fact, in some rural areas.

WILLIS: In most states, banks landlords have no legal responsibility to keep tenants or even to tell them about the foreclosure. That could change. A bill that recently passed the U.S. House would give renters living in foreclosed properties up to six months to find a place. But it's not law yet.

In a statement to CNN, the Mortgage Bankers Association says it really is unfortunate that a renter faces eviction if their landlord is foreclosed upon. However, forcing new requirements on lenders would be extremely burdensome as most lenders have neither the knowledge nor ability to be effective long-term landlords.

Advocates pushing for renter protection disagree.

LIBEN: These are folks that just had the bad luck to rent from an owner who couldn't pay his mortgage and defaulted and was foreclosed.

WILLIS: A new law would be too late for Alice. The bank gave her an extension, but she has less than two weeks left.

MILLS: I need help. I need a longer time to get a place, a decent place, a safe place. I really need longer.

(END VIDEOTAPE)

WILLIS: It's a sad story. This week, mayors from across the country gathered in Detroit, one of the nation's hot spots for foreclosures, to figure out how to fix this growing problem. Doug Palmer is the mayor of Trenton, New Jersey and he also serves as the president of the U.S. Conference of Mayors. He's joining us now from Cambridge, Massachusetts.

Mayor Palmer, great to see you, Gerri.

MAYOR DOUGLAS PALMER, TRENTON, NJ: Great to see you, too, Gerri.

WILLIS: Now, I know you had about 1,100 mayors represented at this event, this week. What are they telling you about the impact of the crisis on their towns, their cities?

PALMER: This is an economic tsunami which is happening all across America in cities, towns, suburbs. It's really taking out everyone. It doesn't matter if you are rich or even in the middle class. And we're very concerned for our city, for our citizens and the impact it will have on our budgets when you lose money.

WILLIS: Is this impacting Trenton?

PALMER: Yes, and we've only begun to see the beginning of the impact, like a lot of areas. What will happen, when you have people lose their homes, they'll be vacant. We have to maintain them because it's hard to get the lender to find the person that's going to be responsible to maintain properties. Property values go down. We lose tax raisables.

And, you know, Gerri, it was just heartbreaking about what happened to that woman in Philadelphia, a renter who her only crime was that she paid her rent on time and now she's going to be kicked to the curb. It's just -- it's just terrible.

WILLIS: No crime at all, there. No crime at all and she's suffering the economic blow. You know, mayor, I wanted to quote you to you. You say the foreclosure crisis has the potential to break the back of the economy. Is that what the mayors were complaining to you about this week? You said lost tax revenues, but at the end of the day are people going to actually lose jobs?

PALMER: Absolutely. You know, the report we did showed how it affects every aspect of our economy. Not only are people losing their jobs, but when you have a slowdown in the housing market and when you have Wall Street that uses the money from the sale of houses to invest, you see a slowdown in investment; you see a slowdown in home building, which affects the local economy and jobs.

And our report said that in the coming, next year, when we're looking at resetting the adjustable rate mortgages in May of '08, if nothing's done, we're facing the potential loss of people, about 524,000 jobs, and about $6.6 billion in local revenues. So, this affects every aspect of our local economy and our national economy.

WILLIS: Well, you know, we have seen 1.5 million Americans lose their home just this year. Whose fault is it? Who should come in and cure this problem? Whose responsibility is it to take ownership?

PALMER: I think everyone involved has to share some of the blame. You know the U.S. Conference of Mayors, four years ago, called for FHA reform. And quite frankly, that didn't happen. Had Congress, four years ago, passed real strong FHA reform, we may not be in this situation. WILLIS: What are the mayors doing to put this problem behind us, to end it?

PALMER: Well, we're doing a few things. First of all, we've pushed for and support Barney Franks' bill as it relates to predatory lending. But also, we're working with the Mortgage Bankers Association and non-profits to find out strategies on how we can help people before they lose their home. And at our summit that we had in Detroit, just this week, we talked with the mortgage bankers and non- profits on how this can be done. You know, surprisingly, 50 percent of people that are about to be foreclosed on never contact their lender.

WILLIS: And that's generally job No. 1 out there, you got to call your lender if you are in trouble trouble. We're unfortunate low out of time. Mayor Palmer, thank you so much for being with us.

PALMER: Well, thank you.

WILLIS: And we'll keep up with your efforts to solve this problem. We want to hear what you guys are doing. So, let us know.

PALMER: Thank you, Gerri.

WILLIS: Coming up on OPEN HOUSE, avoid getting ripped off at the hospital. Yes, you heard right. We'll show you how to protect yourself from billing errors and outrageous charges. How to get debt free and stay debt-free this holiday season and if you are thinking about traveling for the holidays, we'll show you how to do it on a budget. But first, your "Tip of the Day."

(BEGIN VIDEOTAPE)

WILLIS (voice-over): Holiday decorating is fun but it also has its dangers. Follow these safety tips to ensure the well-being of everyone in your family this season. If you are in the market for a live tree, check for freshness by looking for dark green needles and a sticky trunk. Once home, keep your tree well hydrated. If you opt for an artificial tree this year, look for one that bears a fire resistant label.

Check the cables of anything and everything that plugs into the wall. Look for cracked sockets, bare wires or loose connections. Throw out damaged decorations and make sure you don't overload your extension cords. For outdoor decorating, check and make sure the lights have been certified for outdoor use. That's your "Tip of the Day."

(COMMERCIAL BREAK)

WILLIS: Imagine being charged $1,000 -- $1,000 -- for a toothbrush. It happened to one hospital patient and it can happen to you if you don't check your medical bills. Norah Johnson is with Medical Billing Advocates of America. She's in Charlottesville, Virginia.

Good to see you, Norah.

NORAH JOHNSON, MEDICAL BILLING ADVOCATES OF AMERICA: Thank you for having me, Gerri.

WILLIS: I understand you say that eight of 10 medical bills have multiple, multiple errors in them. Now, who's to blame? Is it hospitals? Is it doctors?

JOHNSON: Well, it is hospitals and these errors are more frequent on hospital bills than they are on doctor bills. But partly the reason that the billing system is in such a shamble is because for every one bill, say for $50,000, a hospital will be accepting multiple different reimbursements for that same service rendered depending upon who the payer is.

WILLIS: It's obviously incredibly complicated. But let's take a look at some of these common mistakes that happen over and over and over again. You say folks get billed for routine supplies and services in the wrong way.

JOHNSON: Yes, and routine equipment, also. Those are extra charges that are tacked onto a hospital bill that, in fact, other payers and certainly the government, does not pay. The government says those charges are already folded into the room, the unit or the procedure charge. But with other payers, those charges are again billed out and in fact, they constitute a duplicate charge.

WILLIS: Wow, OK. Check-out time. Is that a big deal? Do you need to watch that?

JOHNSON: Well, generally speaking, a patient is not billion for the last day, the day of discharge. Unless, of course, the patient dies, then that day will be charged. But regardless of whether the patient is discharged so many times they're discharged at 7:00 or 8:00 in the morning by the doctor, and the time the hospital processes them out, it's 3:00 or 4:00 in the afternoon, that does not make a difference. They should not be charged for that room on the date of discharge.

WILLIS: Now you say that some folks get billed for medicines they never even took.

JOHNSON: Yes, that's true. And I tell people always to request a detailed, itemized statement listing all of the -- every line item charge for every item or medication or service that you incurred while you were in the hospital. That way you can look over the itemized bill and, for instance, if you happen to be allergic to penicillin and then you see several charges on that bill for penicillin, you know, you definitely want to have those charges removed.

WILLIS: Yeah, well now that would be concerning.

Now, what's a mucus recovery system that you might get charged for?

JOHNSON: That is a box of Kleenex and we've seen those charged for $112.

WILLIS: What? $112 for Kleenexes.

JOHNSON: No, for a mucus recovery system, yes.

WILLIS: That's crazy.

Norah, thanks for telling us about this. Really appreciate your help today.

JOHNSON: You're very welcome, Gerri, my pleasure.

WILLIS: Still ahead on OPEN HOUSE, how to tackle those credit card balances and get out of debt for good. We'll show you how.

Then hitting the road this holiday season, how to get your family and presents to your destination without hassle and for a whole lot less money. But first, you or mortgage numbers.

(COMMERCIAL BREAK)

(BEGIN GRAPHIC)

Two out of three middle class American families are on shaky financial ground.

(END GRAPHIC)

WILLIS: Home values declining, consumer debt in the billions, you may be worried about your spending this holiday season. And if you're already in debt or concerned about racking up more, you'll want to listen to our next guest. Brad Stroh is the founder and CEO of bills.com in San Francisco.

Brad, welcome.

BRAD STROH, BILLS.COM: Thanks, Gerri. Good to be with you.

WILLIS: You know, you say, like so many experts say, look, don't make the minimum payment on your credit card.

STROH: I think that's right. That's a trap that a lot of consumers get lured into. And it essentially means you're not taking control of your own consumer financial situation. Most typically...

WILLIS: You got to pay more, more, more, right?

STROH: What you really want to do is pay off the balances as quickly as possible. You know, a good data point is if you have $20,000 of credit card debt and you're just making the minimum monthly payments, that could take you 10 or 15 years to pay off. And if you instead had invested that money at a 10 percent rate of return, in 15 years you'd have $500,000. So, get out of those debt balances as quickly as possible.

WILLIS: OK, well you know, another interesting thing that people do, they get into the habit of rolling over credit card debt to credit cards that don't have any interest rate. Those zero percent offers, is that a good idea?

STROH: Yeah, so it's really enticing because, you know, the lower monthly payment makes it seem like a short-term gain. What we advise consumers, if you don't have the ability to pay the balances off in full, be very careful playing that pyramid scheme. What we really want you to do is get disciplined and figure out a way to, with your own cash flow, pay those balances off.

If you have a lot of financial stability then teaser rates and balance transfer -- advances, can benefit you in the short term, but be very careful not to compound a problem by adding on additional credit card debt.

WILLIS: Brad, what's your rule of thumb for spending in the holiday season?

STROH: So, the estimates are that the average American adult will spend about $900 on their loved ones around the holiday season. If you have the financial wherewithal, that's terrific and the holiday season is a great time to spend time and spend money on your loved ones. If you're in financial distress or on the precipice of financial distress, be very careful about compounding your problem around holidays. We'd advise people instead of spending money, try to figure out clever ways to show people you love them without going into debt or causing them to go into debt...

WILLIS: You know, it's not all about the price tag. You know? I mean, you can really give great gifts that you make yourself or some things that are just really creative. But, you brought up financial distress. When do you know your debt problem is out of control?

STROH: So, now more than ever, I think this holiday season more than ever before, it's important that people be very disciplined and pay close attention. If you are just making your minimum payments, as you mentioned earlier, if you're getting collection calls, if there's a lot of emotional distress around your credit card debt, you're probably right at the point where you need to seek help or get very disciplined about getting out of that debt problem as quickly as possible.

WILLIS: When do I search out a credit counselor?

STROH: So, there's a bunch of credit counseling or debt consolidation options. If you own your home and have equity in your home, you can always do a debt consolidation refinance loan. If you don't qualify for that because of credit or you don't have enough equity in your home or you're a renter, you can look non-profit credit counseling which lowers your monthly payment and your interest rates and is a way to cut your monthly payment and avoid having fallen off the precipice of a serious financial problem.

You could also seek out solutions like debt settlement negotiation, which is a much more aggressive strategy that impacts your credit, but will help you avoid bankruptcy. Or if you're really financially distressed and can't afford anything, you seek the advice of a bankruptcy counselor.

WILLIS: Brad, great advice. Thanks for being with us today.

STROH: Thanks, Gerri, good to be with you.

WILLIS: Now, to debt-proof your holiday, you'll have to do a little budgeting. Three in five people don't plan on even making a budget this year. But, don't make that mistake. Figure out how much you should spend. Financial planners recommend you don't spend more than 1.5 percent of your annual salary on gifts.

Now, to save time and money, go online. Sites like Shopping.com and Bizrate.com can help you compare prices on gifts. Plus, you won't be tempted by all those impulse purchases at the store. And if you don't carry a balance from month to month and have a good credit score, think about getting a reward card. It's a good way to pay yourself back a little. Check out Cardratings.com to compare terms.

Up next, you can save some serious cash this holiday season, but first, your "Local Lowdown."

(BEGIN VIDEOTAPE)

WILLIS (voice-over): Salt Lake City, Utah. Check out what you can do for little or no cost in this winter wonderland. Explore one of five national parks nearby. Hike, bike or cross-country ski the day away for less than $12. Visit the site of the 2002 Winter Olympic games. Head to the Olympic Center, the Delta Center or Olympic Cauldron Park, the former home of the Olympic flame. And be sure to stop by the Church of Jesus Christ of Latter Day Saints. There are no tours inside, but the grounds of this architectural wonder are always open to the public.

That's your "Local Lowdown."

(END VIDEOTAPE)

(COMMERCIAL BREAK)

WILLIS: Last year, more than nine million people boarded a plane during the Christmas/New Year's period, that according to AAA. Now, with flight delays more frequent and frustrating than ever, heading home to the holidays can be stressful. Here to give us tips to save you time and money at the airport is Erik Torkells, with "Budget Travel" magazine.

Now, you say it's more about saving time at this point, your time. You say fly nonstop.

ERIK TORKELLS, BUDGET TRAVEL MAGAZINE: Whenever you can in winter, fly nonstop. Basically, when I go to my parents at Christmas, in Palm Springs, I have the choice of flying between New York -- I can fly through Chicago, Dallas or Los Angeles. And I never fly through Chicago at the holidays. And that's because we have the potential combination of bad weather and overcrowded planes.

WILLIS: So you really have to think through this and you're better with the nonstop flight because you'll get there.

TORKELLS: Well, if they have to put you on a different flight, they have to have empty seats on that flight and at this time of the year, there are often not seats. Planes get booked up.

WILLIS: And you say it's all about loyalty clubs. Now, what do you mean? Do you mean credit cards? What are you talking about?

TORKELLS: No, not credit cards. Loyalty clubs, like frequent flyer clubs are a great example like that. Frequent flyer mileage programs, frequent guest programs, anything like that. This is ways companies trying to make you loyal to their brand. And what a lot of them -- a lot of them in the travel world do some really neat things. First of all, companies like Omni Hotels, what they do, if you're a member -- you don't have to have 100,000 points or anything -- but, as long as you're a member and staying at Omni Hotel, you get a free in- room nonalcoholic breakfast beverage delivered to your home every morning.

I mean, if you're going to buy a pot of coffee or room service, that will cost you $10, right there. But this is just part of the natural perkage of being a member.

WILLIS: Perkage, we all need perkage. OK, you say airport parking. This is a terrible time of year because you can't even get a space and when you get a space it's so expensive?

TORKELLS: It's the worst case scenario to arrive at the airport just in time for your flight, but to find out there are no spots at the airport. There are a lot of off-airport parking sites that, where you can reserve a spot in advance. And that's -- this time of year is an incredibly smart thing to do.

WILLIS: You can get them free at hotels sometimes.

TORKELLS: A lot of hotels, if they're near the airport, I mean, not right on the airport premises, but just near it, if you stay there the night before, they'll let you park for the duration of your trip, even if you are flying and going somewhere else.

WILLIS: And one of my favorite things, online check-in with the airport. I'm telling you. I love doing that it makes things so much faster.

TORKELLS: Frequent travelers know this by now, but the holidays are when a lot of people who haven't traveled a lot start traveling and they don't know that in the past year or two, this has changed everything, 24 hours before your flight you can go online, check in, print your boarding pass and when you get to the airport you don't have to check in. The long lines at airports these days are not at security as much as they are at check-in.

WILLIS: I love that. OK, big problem this time of year, you're going home for the holidays, you have a million gifts. How the holy heck do you transport them? TORKELLS: Well, this is not about saving money at all, I'm afraid, but I ship my gifts in advance for two reasons. The No. 1 reason is that way I can avoid checking bags. Checking bags is a terrible thing to do these days. If you can avoid it, you should avoid it.

And also, the system is overworked. It's tough. The No. 2 reason is you can't wrap your gifts and then bring them. The TSA reserves the right to look through anything. So, actually, you can wrap a gift and check it, I believe, but you can't carry it on. And...

WILLIS: So it's tricky.

TORKELLS: Yeah, it's just tricky.

WILLIS: You're saying bypass it.

TORKELLS: Ship them ahead.

WILLIS: Bypass it altogether. Well, thank you so much, Erik. Appreciate your time today.

TORKELLS: My pleasure.

WILLIS: If you have an idea on how to save money, send us an e- mail to openhouse@cnn.com. And if you want to check out this "Project Savings" again, check out our Web site, cnn.com/openhouse.

We thank you for spending part of your Saturday with us. OPEN HOUSE will be back next week right here on CNN. And you can catch us on HEADLINE NEWS every Saturday and Sunday at 3:30 p.m. Eastern Time.

Don't go anywhere. Your top stories are next in the CNN NEWSROOM. Have a great weekend.

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