Forget the rumor mill. Before you even think about putting your house on the market, you have to know what your house is really worth. I don't mean what you think it is worth. In fact, for you to arrive at an accurate assesment of your house's true value, you'll need to check your ego at the door. The best way to do this is to get the latest Home Assessment Report for your neighborhood.
With the fluctuating real estate market, home values are a lot like the stock market. You need to buy low and sell high. Contrary to urban myths about home values, here is what really affects the value of your home: the neighbors in your subdivision. You really need to keep up with what's going on around you if you are thinking about selling or buying a home. You want to buy in an increasing instead of a decreasing neighborhood. By this, I mean that you need to beware of who is selling what and for how much. You also need to keep track of what sold recently, because that is one of the factors that determines your home’s value, not some newbie real estate agent that knocks on your door and says. “ We just sold a house a half mile down the street for twice as much or less as what yours is really worth.”
If this happens, you need to find out if that house is in the same subdivision as yours. If it isn’t, you could be in for a surprise after the contract is signed and you find yourself on the wrong side of the negotiating table. That is not to say all real estate agents don't know what they’re talking about. Just make sure you know who you are working with and know what questions to ask.
Question One: What subdivision is it located in?
Question Two: What type of house was it and is it just like mine?
What I mean by this is you can’t compare a split foyer to a colonial with the same square footage as they are very different from one another.
Question Three: Were they exactly the same or are there differences?
What I mean by this is that there are a lot of factors to take into consideration. Say for example your house is 2100 square feet above grade (that means ground level and up for those who don't know) and your neighbor’s house a few blocks down is 2200 square feet above grade. You would think your neighbor’s house would be worth more, right? Wrong. There are a lot of things that go into deciding how much a house is worth, such as age, when the house was built, how many bath rooms does it have, how much land is it on, does it have an attached or detached garage, does it have a full basement, is it brick or does it have siding on the exterior, does it have central air and my personal favorite, has the garage been turned into an in-law suite, which is normally worth more than just a garage itself. Is the pool built-in or above ground? Believe it or not, most of the time above ground pools decrease the value of homes. And last, but not least, what kind of upgrades have been done, like new cabinets, new counter tops, bath rooms remodeled, tile fixtures, bathtubs, sinks and toilets been replaced, new bath rooms bene added, new windows or siding, has any more square footage been added to the house, like a guest room or sun room? When you add square feet to a house, that really brings the value up.
Of course, unless you are a certified appraiser, there is no way of knowing some of these things about your neighbors house unless you ask. However, there are ways of getting a general idea. Before you buy any house you should always contact a certified appraiser. It is worth the $100 to $200 to find out what the value has been over the last two to three years. There are also other ways to find out in general what's going on, like signing up here for your free home value report. It will give you a general idea of what's going on around you. If you have any questions you can contact me personally.
What you need to beware of are some of the urban myths that people think add value but really don't, such as adding new carpet, painting interior rooms, adding and repaving to the driveway. These are things that add little or no value at all. They make the property look nice but you spend more then you make on these items.
In a nutshell, these are the most important factors to look at when buying, selling or refinancing a home. These are also some of the things that lenders look at when deciding on how much money they will lend you. To learn even more, sign up for my free newsletter which keeps you on top of of the market, as well as providing you with other valuable tips.
Tuesday, May 22, 2007
Wednesday, April 4, 2007
Finally, Justice For Homeowners - FTC Charges Against Trans Union Upheld
By Derrick Carson
Administrative Law Judge Orders Credit Bureau Stop
Federal Trade Commission Administrative Law Judge James P. Timony has ordered Trans Union Corporation to stop distributing and selling target marketing lists based on consumer-credit data, except for certain authorized purposes. In his decision, Judge Timony said that federal law "protects consumers’ privacy by prohibiting consumer reporting agencies from communicating information ... to marketers for impermissible purposes. ... Trans Union invades consumers’ privacy when it sells consumers’ credit histories to third- party marketers without consumers’ knowledge or consent. ... "
Trans Union, based in Chicago, Illinois, is one of the three major credit bureaus in the United States. Trans Union gathers information on consumers and sells consumer reports containing data about the credit of millions of Americans. Buyers use this information to evaluate consumers’ credit. Performance Data, a division of Trans Union, is engaged in the target marketing business. Target marketing involves selling goods and services directly to consumers by mail or telephone. Trans Union’s target marketing uses information from its consumer reports to prepare a list of consumers who meet certain criteria. It sells this list for use in soliciting consumers.
The FTC enforces the Fair Credit Reporting Act (FCRA), which protects the privacy of credit information by prohibiting credit bureaus from furnishing to anyone the data they compile except under specific circumstances. For example, the law permits credit bureaus to release "consumer reports" for a client’s use in deciding whether to approve an application for credit or a job, and also in response to a court order. Under the FCRA, a permissible purpose for disclosure exists if a consumer authorizes the disclosure. The FTC also permits "prescreening" -- providing lists of consumers meeting certain credit criteria to credit grantors, as long as the credit granter gives each person on the resulting list a firm offer of credit.
FCRA amendments give consumers the right to opt-out of prescreening -- giving them the right to participate in the decision to use their information for firm offers of credit. Trans Union’s opt-out program does comply with the FCRA, Judge Timony said. Trans Union does not, however, require its clients to notify consumers of their right to opt -out of target marketing lists other than on prescreen.
In 1992, the FTC charged that Trans Union’s sale of target marketing lists violated the FCRA. Those charges were upheld by Administrative Law Judge Lewis F. Parker in a 1993 summary decision and by the Commission in 1994. Judge Parker’s finding that there was no real dispute as to the facts of the case was rejected by the U.S. Court of Appeals, which returned the case to the Commission. The Commission then remanded the case for trial before Judge Timony. The trial before Judge Timony began on February 17, 1998. The record closed on March 27, 1998.
During the 1998 trial, FTC lawyers offered a survey to assess consumer attitudes regarding the use of consumer credit information to compile marketing lists. Sixty-eight percent of the survey’s respondents found the use of credit report information for the compilation of marketing lists to be unacceptable. "The conclusion that the Fair Credit Reporting Act protects consumers’ privacy interests by prohibiting the unauthorized dissemination of their credit histories to third-party marketers is supported by the results of the consumer survey ... ," Judge Timony said in his decision.
One Trans Union argument rejected by the Commission and the administrative judges was that target-marketing lists do not fall within the definition of "consumer reports" that are protected by the FCRA. "Each of Trans Union’s target marketing products is a consumer report because it discloses information from Trans Union’s consumer reporting database that is also used by credit grantors for credit eligibility determinations," Judge Timony said.
The decision points to a 1993 Commission agreement with TRW Information Systems -- a second major credit bureau -- which allows TRW to extract certain consumer information such as: name, telephone number, mother’s maiden name, address, zip code, year of birth, age or social security number from its database for target marketing. TRW, unlike Trans Union, does not extract high credit amounts, auto loan expiration dates, and loan dates from its consumer reporting data base for use in target marketing lists.
Only Trans Union offers target marketing lists based on individual-level credit data, the decision states. These lists are unique in their source, in the extent of individual information they reveal, and in their use in target mail and telephone promotions. For example: Trans Union offers lists indicating the number of open automobile loans, loan type, the open and expiration dates for the lease or loan, and the high credit amount of the lease or loan. (Other target marketing firms offer automobile lists limited to ownership information and not the range of data that Trans Union supplies.)Trans Union sells lists that permit target marketing of persons who have an open bank card. (Other firms offer bank card lists, with the information at the household level, from self-reported survey responses or from suppliers of credit card information not from consumer credit reporting databases.) Trans Union offers a list of an open department store trade. (Other list providers offer department store card information from self-reported survey responses or from suppliers of credit card information.) Trans Union offers mortgage-related lists including: the presence of an open mortgage, presence of a second open mortgage, and the open and closed dates and high credit amounts of both mortgages. Trans Union’s customers can also obtain information about the type of mortgage loan (VA, FHA loans or secured home improvement loans). (List providers other than Trans Union offer mortgage lists. Their information is from self-reported sources such as surveys, and the public record -- including county registrar and tax assessor files.)Trans Union’s income estimator, calculates an individual consumer’s estimated income based on its credit data. (Competitive lists providers offer estimated income developed from public record and self-reported data, subjective information that has not been verified, and household income rather than individual level income.)Judge Timony also rejected arguments that Trans Union’s lists are protected by the First Amendment, citing both the government’s substantial interest in protecting consumers’ right to privacy and the fact that the FCRA advances this interest without being unduly restrictive.
Judge Timony noted that the FCRA and the Order he issued "directly advance the governmental interest in protecting consumers’ right not to have covered information communicated by consumer reporting agencies to target marketers without a permissible purpose." The judge also concluded that the opt-out procedure required by the FCRA does not cure the problem. "While the right to opt-out theoretically allows the consumers to request their names to be removed from target marketing lists, most consumers are unaware of this procedure.
Although Trans Union complies with the notice requirement for opt-out under the FCRA, there is no credible, direct evidence of the success rate of opt-out actually stopping direct mail or telemarketing calls," the decision states.
Judge Timony also pointed out that the statute does not outlaw the use of credit information for target marketing; it merely requires credit reporting agencies to include consumers in the decision to use their information.
Thus Judge Timony concluded that Trans Union assembles information on consumers to furnish consumer reports to subscribers and consumers. Trans Union is a consumer reporting agency. Trans Union’s target marketing lists are consumer reports. Trans Union furnishes consumer report information in target marketing lists to persons who do not have a permissible purposes under the FCRA. By this conduct, Trans Union violates the FCRA.
The judge’s order is subject to review by the full Commission on its own motion or at the request of either Trans Union or the FTC staff. If the order is not appealed within 30 days, it will become binding on Trans Union as the final Commission order.
Administrative Law Judge Orders Credit Bureau Stop
Using Credit Data to Create Target Marketing Lists
Federal Trade Commission Administrative Law Judge James P. Timony has ordered Trans Union Corporation to stop distributing and selling target marketing lists based on consumer-credit data, except for certain authorized purposes. In his decision, Judge Timony said that federal law "protects consumers’ privacy by prohibiting consumer reporting agencies from communicating information ... to marketers for impermissible purposes. ... Trans Union invades consumers’ privacy when it sells consumers’ credit histories to third- party marketers without consumers’ knowledge or consent. ... "
Trans Union, based in Chicago, Illinois, is one of the three major credit bureaus in the United States. Trans Union gathers information on consumers and sells consumer reports containing data about the credit of millions of Americans. Buyers use this information to evaluate consumers’ credit. Performance Data, a division of Trans Union, is engaged in the target marketing business. Target marketing involves selling goods and services directly to consumers by mail or telephone. Trans Union’s target marketing uses information from its consumer reports to prepare a list of consumers who meet certain criteria. It sells this list for use in soliciting consumers.
The FTC enforces the Fair Credit Reporting Act (FCRA), which protects the privacy of credit information by prohibiting credit bureaus from furnishing to anyone the data they compile except under specific circumstances. For example, the law permits credit bureaus to release "consumer reports" for a client’s use in deciding whether to approve an application for credit or a job, and also in response to a court order. Under the FCRA, a permissible purpose for disclosure exists if a consumer authorizes the disclosure. The FTC also permits "prescreening" -- providing lists of consumers meeting certain credit criteria to credit grantors, as long as the credit granter gives each person on the resulting list a firm offer of credit.
FCRA amendments give consumers the right to opt-out of prescreening -- giving them the right to participate in the decision to use their information for firm offers of credit. Trans Union’s opt-out program does comply with the FCRA, Judge Timony said. Trans Union does not, however, require its clients to notify consumers of their right to opt -out of target marketing lists other than on prescreen.
In 1992, the FTC charged that Trans Union’s sale of target marketing lists violated the FCRA. Those charges were upheld by Administrative Law Judge Lewis F. Parker in a 1993 summary decision and by the Commission in 1994. Judge Parker’s finding that there was no real dispute as to the facts of the case was rejected by the U.S. Court of Appeals, which returned the case to the Commission. The Commission then remanded the case for trial before Judge Timony. The trial before Judge Timony began on February 17, 1998. The record closed on March 27, 1998.
During the 1998 trial, FTC lawyers offered a survey to assess consumer attitudes regarding the use of consumer credit information to compile marketing lists. Sixty-eight percent of the survey’s respondents found the use of credit report information for the compilation of marketing lists to be unacceptable. "The conclusion that the Fair Credit Reporting Act protects consumers’ privacy interests by prohibiting the unauthorized dissemination of their credit histories to third-party marketers is supported by the results of the consumer survey ... ," Judge Timony said in his decision.
One Trans Union argument rejected by the Commission and the administrative judges was that target-marketing lists do not fall within the definition of "consumer reports" that are protected by the FCRA. "Each of Trans Union’s target marketing products is a consumer report because it discloses information from Trans Union’s consumer reporting database that is also used by credit grantors for credit eligibility determinations," Judge Timony said.
The decision points to a 1993 Commission agreement with TRW Information Systems -- a second major credit bureau -- which allows TRW to extract certain consumer information such as: name, telephone number, mother’s maiden name, address, zip code, year of birth, age or social security number from its database for target marketing. TRW, unlike Trans Union, does not extract high credit amounts, auto loan expiration dates, and loan dates from its consumer reporting data base for use in target marketing lists.
Only Trans Union offers target marketing lists based on individual-level credit data, the decision states. These lists are unique in their source, in the extent of individual information they reveal, and in their use in target mail and telephone promotions. For example: Trans Union offers lists indicating the number of open automobile loans, loan type, the open and expiration dates for the lease or loan, and the high credit amount of the lease or loan. (Other target marketing firms offer automobile lists limited to ownership information and not the range of data that Trans Union supplies.)Trans Union sells lists that permit target marketing of persons who have an open bank card. (Other firms offer bank card lists, with the information at the household level, from self-reported survey responses or from suppliers of credit card information not from consumer credit reporting databases.) Trans Union offers a list of an open department store trade. (Other list providers offer department store card information from self-reported survey responses or from suppliers of credit card information.) Trans Union offers mortgage-related lists including: the presence of an open mortgage, presence of a second open mortgage, and the open and closed dates and high credit amounts of both mortgages. Trans Union’s customers can also obtain information about the type of mortgage loan (VA, FHA loans or secured home improvement loans). (List providers other than Trans Union offer mortgage lists. Their information is from self-reported sources such as surveys, and the public record -- including county registrar and tax assessor files.)Trans Union’s income estimator, calculates an individual consumer’s estimated income based on its credit data. (Competitive lists providers offer estimated income developed from public record and self-reported data, subjective information that has not been verified, and household income rather than individual level income.)Judge Timony also rejected arguments that Trans Union’s lists are protected by the First Amendment, citing both the government’s substantial interest in protecting consumers’ right to privacy and the fact that the FCRA advances this interest without being unduly restrictive.
Judge Timony noted that the FCRA and the Order he issued "directly advance the governmental interest in protecting consumers’ right not to have covered information communicated by consumer reporting agencies to target marketers without a permissible purpose." The judge also concluded that the opt-out procedure required by the FCRA does not cure the problem. "While the right to opt-out theoretically allows the consumers to request their names to be removed from target marketing lists, most consumers are unaware of this procedure.
Although Trans Union complies with the notice requirement for opt-out under the FCRA, there is no credible, direct evidence of the success rate of opt-out actually stopping direct mail or telemarketing calls," the decision states.
Judge Timony also pointed out that the statute does not outlaw the use of credit information for target marketing; it merely requires credit reporting agencies to include consumers in the decision to use their information.
Thus Judge Timony concluded that Trans Union assembles information on consumers to furnish consumer reports to subscribers and consumers. Trans Union is a consumer reporting agency. Trans Union’s target marketing lists are consumer reports. Trans Union furnishes consumer report information in target marketing lists to persons who do not have a permissible purposes under the FCRA. By this conduct, Trans Union violates the FCRA.
The judge’s order is subject to review by the full Commission on its own motion or at the request of either Trans Union or the FTC staff. If the order is not appealed within 30 days, it will become binding on Trans Union as the final Commission order.
Monday, March 26, 2007
Why Credit is King
By Derrick Carson
When it comes to obtaining a mortgage, credit is everything. There are some loan programs out there that check only your credit score and job status. And now with what's going on in the lending world, with many sub prime lenders are shutting their doors, the guidelines for loans are getting even tighter. Where preciously a 620 score was considered sufficient to get a loan, now the baseline has risen to 640 and higher to get into a program with a low payment.
To hel you get a better handle on the hows and whys of credit scores, let’s take a look at the credit bureaus and credit scores in general. By and large, there is confusion and misconception when it comes to the credit bureaus Most consumers think that the credit bureaus are owned and operated by the government, which is 100% false. Trans Union, Equifax and Experion are all owned by the same parent company, and not by the government. These are multi billion dollar conglomerates charged with providing credit reporting services to businesses both large and small. Think about how many businesses pull your credit to see if you qualify for any kind of credit: credit cards, auto loans, bank loans, etc. Just about everything you do that requires credit is funneled through these three companies.
For example, it costs on average $8.00 just to pull a report from one of these entities so image how much it costs to pull from all three. (about $24.00 dollars on average) And as they advertise on tv, “what's your middle score?” You see, that's what they use to qualify you for virtually all credit. At one time not so long ago when it came to mortgages and other home loan products, all that mattered was your payment history on your existing home loan.
I don't see how this is a fair system, since we are taught as consumers to shop for the best deal. But the problem is that if you do this when shopping for a mortgage, the first thing they do is pull your credit score, which lowers your credit score each time this happens. And the credit system looks at this just as if you were refused. That's the reasoning behind lowering your score. According to the industry, the credit system ratings they use its not suppose to let inquiries count against you, but it does. It seems to me as if the deck has been stack against home buyers and homeowners. The bottom line is that this is how lenders profit from your misfortunes. And they justify it by saying, “I’m sorry, but your credit score is to low for that program. However, we can get you into another program.” You’ll soon find that this generally means higher payments and more of your hard earn money in their pocket.
With all that is happening with lenders shutting their doors and wall street investors losing billions of dollars in foreclosures and mortgage notes, you would think that some sort of relief would be just around the corner. But this is not the case. You see, instead of taking it out on the greedy lenders and loan officers who wrote the high-risk loans in the first place, the industry is instead taking it out on the consumer. We as consumers are forced to suffer higher payments & interest rates. So it’s more important than ever that you know how to play the credit score game and play it to win.
If you know how the game is played, you can do something about it. Let me start by giving you an example: I had a client that paid his bills on time and had over one hundred thousand dollars in credit card debt. His score was 580, which is horrible in the lending industry. I had him consolidate all his debts and educated him on how the credit system works. Within three short months his middle score was 720, which is most definitely in the money. now think about this. He paid on time every month, he never missed a payment, but his score was 580, which meant his loan options were extremely limited. On top of that, his payments were super high for the first three months. After all was said and done I had him refinance again at no cost to him except the appraisal and got his payment back down into prime rates, which is where he belonged in the first place.
Now since guide lines have been tightened, its tougher to get a loan using these same tactics. Remember the lending business works by the golden rule; He who has the gold makes the rules. Its their money and they don't have to lend it to you. However, if you heed my warnings, you can make the choice easier for both you and them. .Below are credit scores and how they rate your creditworthiness.
1) 680 and up is considered good credit (680 is the average homeowners credit score in the nation)
2) 660 to 679 is fair which means you are cut out of a lot of prime programs
3) 640 to 659 is ok but you wind up being cut out of even more programs unless you want high payments.
4) 620 to 639 is less than deal, but you can still get a decent deal as long as you can prove everything on paper and have not had some other credit-relatedproblems in the past that caused slow payments on bills. At this level your life is under the microscope.
5) 619 to 600 you can still get 100% financing, but they will clobber you on the payment. This is where you want to do some credit repair before you apply.
6) below 600 YOU NEED CREDIT REPAIR IF YOU DON’T WANT TO BE FORCED TO REFINANCE EVERY COUPLE OF YEARS.
NOTE: There are ways legal to repair your credit. This is called the fair credit act. Legally nobody is allowed to put derogatory remarks on your credit without the credit bureau giving you a 30 day window to dispute the facts. In reality they don't follow this policy, because lenders are in the game to make money, not spend money. The fines are so minimal that its just cheaper to pay them. Remember, this is a multi-billion dollar per year industry. And like any other business, the first order of business is to cut overhead and raise profits. Is it fair to consumers? Not even close, but what can you do about it?
What I can offer in way of defense is to educate you, so at least you’ll have better odds of coming out ahead of the eight ball when playing the mortgage game. Call me toll-free at (866) 323-7603 and I’ll not only provide you with effective tactics, I’ll also show you how to get a copy of your credit report free of charge.
When it comes to obtaining a mortgage, credit is everything. There are some loan programs out there that check only your credit score and job status. And now with what's going on in the lending world, with many sub prime lenders are shutting their doors, the guidelines for loans are getting even tighter. Where preciously a 620 score was considered sufficient to get a loan, now the baseline has risen to 640 and higher to get into a program with a low payment.
To hel you get a better handle on the hows and whys of credit scores, let’s take a look at the credit bureaus and credit scores in general. By and large, there is confusion and misconception when it comes to the credit bureaus Most consumers think that the credit bureaus are owned and operated by the government, which is 100% false. Trans Union, Equifax and Experion are all owned by the same parent company, and not by the government. These are multi billion dollar conglomerates charged with providing credit reporting services to businesses both large and small. Think about how many businesses pull your credit to see if you qualify for any kind of credit: credit cards, auto loans, bank loans, etc. Just about everything you do that requires credit is funneled through these three companies.
For example, it costs on average $8.00 just to pull a report from one of these entities so image how much it costs to pull from all three. (about $24.00 dollars on average) And as they advertise on tv, “what's your middle score?” You see, that's what they use to qualify you for virtually all credit. At one time not so long ago when it came to mortgages and other home loan products, all that mattered was your payment history on your existing home loan.
I don't see how this is a fair system, since we are taught as consumers to shop for the best deal. But the problem is that if you do this when shopping for a mortgage, the first thing they do is pull your credit score, which lowers your credit score each time this happens. And the credit system looks at this just as if you were refused. That's the reasoning behind lowering your score. According to the industry, the credit system ratings they use its not suppose to let inquiries count against you, but it does. It seems to me as if the deck has been stack against home buyers and homeowners. The bottom line is that this is how lenders profit from your misfortunes. And they justify it by saying, “I’m sorry, but your credit score is to low for that program. However, we can get you into another program.” You’ll soon find that this generally means higher payments and more of your hard earn money in their pocket.
With all that is happening with lenders shutting their doors and wall street investors losing billions of dollars in foreclosures and mortgage notes, you would think that some sort of relief would be just around the corner. But this is not the case. You see, instead of taking it out on the greedy lenders and loan officers who wrote the high-risk loans in the first place, the industry is instead taking it out on the consumer. We as consumers are forced to suffer higher payments & interest rates. So it’s more important than ever that you know how to play the credit score game and play it to win.
If you know how the game is played, you can do something about it. Let me start by giving you an example: I had a client that paid his bills on time and had over one hundred thousand dollars in credit card debt. His score was 580, which is horrible in the lending industry. I had him consolidate all his debts and educated him on how the credit system works. Within three short months his middle score was 720, which is most definitely in the money. now think about this. He paid on time every month, he never missed a payment, but his score was 580, which meant his loan options were extremely limited. On top of that, his payments were super high for the first three months. After all was said and done I had him refinance again at no cost to him except the appraisal and got his payment back down into prime rates, which is where he belonged in the first place.
Now since guide lines have been tightened, its tougher to get a loan using these same tactics. Remember the lending business works by the golden rule; He who has the gold makes the rules. Its their money and they don't have to lend it to you. However, if you heed my warnings, you can make the choice easier for both you and them. .Below are credit scores and how they rate your creditworthiness.
1) 680 and up is considered good credit (680 is the average homeowners credit score in the nation)
2) 660 to 679 is fair which means you are cut out of a lot of prime programs
3) 640 to 659 is ok but you wind up being cut out of even more programs unless you want high payments.
4) 620 to 639 is less than deal, but you can still get a decent deal as long as you can prove everything on paper and have not had some other credit-relatedproblems in the past that caused slow payments on bills. At this level your life is under the microscope.
5) 619 to 600 you can still get 100% financing, but they will clobber you on the payment. This is where you want to do some credit repair before you apply.
6) below 600 YOU NEED CREDIT REPAIR IF YOU DON’T WANT TO BE FORCED TO REFINANCE EVERY COUPLE OF YEARS.
NOTE: There are ways legal to repair your credit. This is called the fair credit act. Legally nobody is allowed to put derogatory remarks on your credit without the credit bureau giving you a 30 day window to dispute the facts. In reality they don't follow this policy, because lenders are in the game to make money, not spend money. The fines are so minimal that its just cheaper to pay them. Remember, this is a multi-billion dollar per year industry. And like any other business, the first order of business is to cut overhead and raise profits. Is it fair to consumers? Not even close, but what can you do about it?
What I can offer in way of defense is to educate you, so at least you’ll have better odds of coming out ahead of the eight ball when playing the mortgage game. Call me toll-free at (866) 323-7603 and I’ll not only provide you with effective tactics, I’ll also show you how to get a copy of your credit report free of charge.
Thursday, March 22, 2007
Why the Mortgage Game is Getting Pricier to Play
Gone are the days when subprime borrowers found willing lenders lining up to approve a mortgage. And with good reason. The recent spate of record defaults has many lenders toughening their standards.
A recent article in Bankrate.com stated that, "These stricter lending standards are the fallout from the meltdown in the subprime mortgage market."
Currently, that affects around 15 percent of mortgage borrowers nationwide. Those borrowers with credit scores of 620 or higher need not worry. At least not yet, as long as a borrower is willing to allow the lender to verify income level and assets.
The thing that most borrowers are not aware is that higher than normal default levels could eventually hurt even credit-worthy borrowers, as lenders are forced to make up their losses. In order to recover, lenders will inevitably pass these losses along to the consumer in the form of higher rates. Of course, the first to feel the bite will be those with bent credit.
"Rates on the most popular type of subprime loan, called a 2/28 mortgage, have gone up about 1.5 percentage points to 2 percent," says Jim Svinth, chief economist for Lending Tree.
These loans are are intended to be employed for only 2 to 3 years, after which a borrower is expected to refinance at a lower rate.
Bankrate.com points out that, "For more than a year, analysts have warned that the loose lending standards of the past few years would result in a spike in foreclosures. That's starting to happen among subprime borrowers."
The real culprit, of course are the mortgage brokers themselves, who are all too eager to scoop up high-risk mortgages, because of the profits. What with prepayment penalties, the industry's highest interest rates and investors lined up to back these mortgages, the subprime lending market has become a kind of Godzilla, looking to feed on those who can least afford to pay. Just like the Japanese sci-fi creature, taming the beast is not going to be an easy proposition.
Christopher Cruise, a trainer of mortgage brokers and loan officers, states that, "Brokers have multiple lenders to choose from, and if one lender makes a certain loan program unavailable, a broker can probably find another lender who still offers it."
A recent article in Bankrate.com stated that, "These stricter lending standards are the fallout from the meltdown in the subprime mortgage market."
Currently, that affects around 15 percent of mortgage borrowers nationwide. Those borrowers with credit scores of 620 or higher need not worry. At least not yet, as long as a borrower is willing to allow the lender to verify income level and assets.
The thing that most borrowers are not aware is that higher than normal default levels could eventually hurt even credit-worthy borrowers, as lenders are forced to make up their losses. In order to recover, lenders will inevitably pass these losses along to the consumer in the form of higher rates. Of course, the first to feel the bite will be those with bent credit.
"Rates on the most popular type of subprime loan, called a 2/28 mortgage, have gone up about 1.5 percentage points to 2 percent," says Jim Svinth, chief economist for Lending Tree.
These loans are are intended to be employed for only 2 to 3 years, after which a borrower is expected to refinance at a lower rate.
Bankrate.com points out that, "For more than a year, analysts have warned that the loose lending standards of the past few years would result in a spike in foreclosures. That's starting to happen among subprime borrowers."
The real culprit, of course are the mortgage brokers themselves, who are all too eager to scoop up high-risk mortgages, because of the profits. What with prepayment penalties, the industry's highest interest rates and investors lined up to back these mortgages, the subprime lending market has become a kind of Godzilla, looking to feed on those who can least afford to pay. Just like the Japanese sci-fi creature, taming the beast is not going to be an easy proposition.
Christopher Cruise, a trainer of mortgage brokers and loan officers, states that, "Brokers have multiple lenders to choose from, and if one lender makes a certain loan program unavailable, a broker can probably find another lender who still offers it."
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