“Credit Score Whack-a-Mole” for Stuart Mortgage Applicants

06.13.15 by

“Credit Score Whack-a-Mole” for Stuart Mortgage Applicants

 credit score

You may have wondered why there are credit repair companies out there since the credit reporting agencies have to allow any Stuart consumer to dispute incorrect line items on their own. The big Credit Reporting Agencies (“CRAs”) even have online systems for challenging erroneous information. The Agency must act speedily to investigate and correct any false information. Soooo, why pay someone else to just fill out their form?

The answer seems to be the same one that makes practitioners in the legal profession permanently in demand: it’s in the fine print. And in this case, it could be that some of that fine print is written in invisible ink.

As you can well imagine, speed is vital when a would-be Martin County mortgage applicant finds a credit score that’s lower than expected. The mortgage companies will decide whether you qualify (and how much interest to charge) based largely on that credit score. The actual details about how speedily the CRA must act are all contained in the fine print located in the FDIC’s Consumer Protection regulations, “Procedure in case of disputed accuracy” (6500, § 611). Once you notify the CRA, they have to investigate the validity of your claim and (without charging you a dime) determine within 30 days whether the item is accurate. More fine print describe further protections you have—

PARAGRAPH 2: The CRA has but 5 days to notify the company or person who provided the information about your challenge.

PARAGRAPH 6: The CRA has to provide you the results of their investigation in writing, and, if you’ve asked for it, describe the steps they took to arrive at their decision.

PARAGRAPH 7: If you didn’t know that you had the right to receive the above description, they must furnish it within 15 days after you later request it.

Those sound like pretty solid protections—vitally important since the CRA can’t just sweep your dispute under the rug, stall, or ignore you altogether. After all, they have to detail in writing how strenuously they worked to protect you! Right?

Except for one problem, which is in PARAGRAPH 8. If the CRA simply drops the disputed item from your current report within the first 3 days, that’s officially considered an expedited dispute resolution. Since the item has been dropped, that might seem to be a solid win. But PARAGRAPH 8 says that if the CRA does that, it no longer has to do anything demanded in Paragraphs 2,6, and 7! It’s as if those protections were written in invisible ink…so that next month, if the company or person just reports the same thing, voila! your credit report might once again go back to Square One. The CRA is supposed to notify you 5 days in advance; but let’s face it, the phrase ‘Catch-22’ comes to mind…or ‘Credit Score Whack-a-Mole’…

What can you do, short of hiring repair agency experts to fix your credit score? Most commentators are in agreement: just stay away from the online dispute forms. Send a registered letter with your dispute, because it usually takes the CRA longer than three days to act on it, so they can’t skip the protections.

And while you’re waiting, why not give me a call? We can start scouting for your new Stuart home!

Jensen Beach Homebuyers Should Check on Credit Report Inclusions

05.27.15 by

 Jensen Beach Homebuyers Should Check on Credit Report Inclusions

Finance

Here is a one-question True or False exam that every future local first-time home buyer should take:

True or False:

One sure way to build a strong credit report is to pay your bills on time.

(Answer: It depends)

Particularly for a first-time Jensen Beach home buyer, being able to present a strong credit report can make the difference between being able to afford a quality home that satisfies all your ‘must haves’—or one you just sort of settle for.

It’s about how much you can comfortably afford. The interest rate you will be offered is directly related to your bill-paying history, and a percentage point (or more) can make a big difference in your monthly budget. Because lending institutions charge more or less based upon the degree of risk they believe a loan carries, the stronger your credit report, the “more house” your monthly payment will cover.

Of course, since a string of unbroken records of punctual payments is what lenders look for, you might think that the answer to my one-question True or False exam would be an unqualified ‘True’—but not so fast. There’s a small catch is in the unbroken records that they look for. The word records.

Just paying your bills on time doesn’t build a strong credit report unless there are records of it—and for Martin County first-timers who have been paying rent for years, all those prompt payments could well be missing in action. The surprising reason lies in the nature of our whole credit reporting system.

It’s voluntary.

As the L.A. Times spotlighted last summer, landlords, phone and cable companies, “and many other creditors don’t report your payments” to the big three credit bureaus (Equifax, Experian and TransUnion). They aren’t required to do so. If you’re planning on becoming one of our Jensen Beach’s first-time home buyers, that might be a big deal—especially since rent payments usually make up the lion’s share of what you buy on credit. But you can do something about it!

Recognizing the difficulty some first timers were having in qualifying for home loans precisely because of such missing data, about five years ago, the credit bureaus teamed up with services like RentTrack that enable tenants to pay their rents online—and get credit for them. TransUnion and Experian also introduced services like “ResidentCredit” and “RentBureau” that encourage property managers to report rent payments for their tenants. That makes sense for landlords, too, because when rent payments are recorded, it enables them to better gauge the creditworthiness of their next batch of applicants.

Making sure your payments are being recorded will put today’s renters ahead of the game when they eventually decide they’re ready for the next step: home ownership. It simplifies the answer to that One-Question True or False credit report question greatly…to a simple “True”!

 Jensen Beach Homebuyers Should Check on Credit Report Inclusions

Stuart FL Mortgage Credit Easing Expectations Follow U.S. Thaw

05.12.15 by

Stuart FL Mortgage Credit Easing Expectations Follow U.S. Thaw

 mortgage credit

How easy or hard it is for Stuart home buyers to secure a mortgage with attractive terms is a key element in the local real estate picture. Our national mortgage credit provides the oil that keeps residential home sales moving smoothly; that, or it becomes a damper (or even something close to an emergency brake!).

The current Florida mortgage credit situation is largely a reflection of what’s going on in the greater financial world, where the corporate banking interests, world economic conditions, and political realities converge. It is in that greater arena where the counterproductive effects of tightening mortgage credit availability have been acknowledged for some time. At first, it seemed to be little more than talk, but recently, changes have been stirring. The resulting tinkering seems to be taking effect.

“U.S. consumers are finding it easier to get a mortgage,” was last Thursday’s finding by CNBC in their Reality Check. The commentary was headlined “A CREDIT THAW IS OFFERING MORE MORTGAGE OPTIONS.” In fact, it fairly bristled with refrigeration metaphors. Following “years of near frozen credit following the financial crisis” there was now “heat behind the credit thaw.” If you expected that the source of the heat was the springtime improvement in Stuart’s weather, you were mistaken. It was “simple clarification.”

Clarification Clarification.

The simple clarification lies in a chain of repercussions that requires some clarification of their own. It has to do with the usual suspects: Fannie and Freddie. Fannie Mae and Freddie Mac (the guarantors behind the majority of mortgage credit in Florida and throughout the country) had sued lenders left and right following the subprime mortgage market mess. It cost the banks and mortgage companies billions through lawsuits and loan buybacks. Lenders, who like many of us don’t like to lose billions, became understandably gun-shy. They demanded near-pristine credit from borrowers, because they didn’t want Fannie and Freddie (and sometimes their Uncle, Sam) to come after them again.

Bait-and-Goodbye

Rates may have been terrific, but for way too many Stuart would-be borrowers, those rates were attached to loans that weren’t being offered. It wasn’t exactly Bait-and-Switch; more like Bait-and-Goodbye. But new rules that clarify which loans are considered safe by the semi-governmental concerns have done away with a considerable degree of lender concern. Added to the nationwide increase in activity (the Mortgage Bankers Association registered a single month increase of 17% in new home applications in March), it seems likely that the defrosting described by CNBC should continue well past cherry blossom time.

Today’s Florida mortgage credit landscape is something that directly affects most buyer-applicants as well as Stuart home sellers, so that’s welcome news—and a good reason why now is a good time to give me a call!

First-Time Florida Home Buyers Can Get $2K Per Year

04.20.15 by

First-Time Florida Home Buyers Can Get $2K Per Year

 A little-known state program that pays first-time homebuyers up to $2,000 a year has more than tripled its number of participants in a year.

Administrators expect an even higher surge of homebuyers applying this year as the real estate market strengthens.

The state-run Florida Housing Finance Corp. runs the program, which gives first-time homebuyers money back each year based on how much interest they pay on their mortgage.

Once approved, low- and moderate-income homeowners can claim up to half of mortgage interest they paid as a tax credit on their federal income tax return, said Cecka Rose Green, communications director of Florida Housing Finance. The credit is capped at $2,000 each year, she said.

“It’s a $2,000 reduction, dollar for dollar,” Green said. “It keeps money coming back to homeowners.”

The tax credit is good for 30 years or the life of the mortgage as part of the Florida Housing Mortgage Credit Certificate Program, Green said.

Any mortgage interest not counted to receive the credit can still be deducted on federal income tax return, according to Florida Housing Finance.

The program started in 2005, but it didn’t take off during the housing boom, when many Floridians couldn’t afford to buy, she said. Then the housing crash occurred and that scared off many potential homebuyers, she said. The program was restarted two years ago, and 157 homeowners got into it in the first year, she said.

Participation more than tripled in 2014, with 523 homeowners participating, including 51 in Broward and 24 in Palm Beach County, Green said.

It should be even more this year, she said. “Home price have stabilized – it’s now looking to be a great time to buy,” Green said.

Average 30-year fixed-rate mortgages averaged 3.66 percent this week, down from an average of 4.34 percent a year ago, according to the survey of Freddie Mac, the secondary lender.

But two years into the restarted program, many first-time buyers still don’t know about it, said Adam R. Cohn, branch manager of Standard Mortgage Co. of Boca Raton.sold

The program has another advantage beyond the yearly money back, Cohn said. “The beauty of the program is that homebuyers can use that income to qualify for a loan,” he said. “That helps buyers qualify for a higher mortgage.”

To qualify in Broward, income must be less than $82,800 a year for one to two people in a household or $96,377 for three or more. Homes must cost less than $337,500, or $412,500 in a targeted area.

In Palm Beach County, income must be less than $78,720 a year to qualify for one to two people in a household or $91,840 for three or more. Homes must cost less than $337,500, or $412,500 in a targeted area.

The Florida Housing Finance has a list of approved lenders who can take applications for the program at http://www.floridahousing.org.

Copyright © 2015 the Sun Sentinel (Fort Lauderdale, Fla.), Donna Gehrke-White. Distributed by Tribune Content Agency, LLC.