Category Archives: Links

Your Home. They Don’t Want Your House, They Want Cash.

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Posted by on July 26, 2007 – 12:19 pm
Filed under Foreclosure Prevention, Home Loans, Links, Mortgages

With the record-setting number of home foreclosures occurring in the United States over the past few years it may come as a surprise to know that if you are having trouble making your monthly mortgage payments, you may be able to protect your home, but you must act immediately. The quicker you act the better your chances of preventing the loss of your home through foreclosure. The absolute first step, regardless of all else, is contacting your mortgage lender. Do not procrastinate thinking they will treat you like some inferior person, or yell at you for getting into trouble in the first place. Mortgage lenders are not in business to foreclose on property. It is their best interest to work with you and help you find a way to keep your home. They are people with feelings just like yourself, and want to avoid this situation just like you do.

Be warned that the longer you wait, the more difficult you make it for the lender to help you. If you are three months behind in your mortgage payments and the lender has not heard from you, the company will feel justified in pursuing foreclosure. It is vitally important to take action right away to save your home from foreclosure and protect your credit record.

Before You Contact The Lender

In this case it pays to swallow your pride and be prepared to discuss your problem openly and in detail. The more information the lender has the better able they will be to help you. If you really wish to make a good impression and get things off on the right foot think about some questions you may be asked and answers ready. The lender will see you are prepared and sincere.

Ways The Lender Can Help

Depending on your unique situation there are many different ways in which your lender might be able to help you.

Debt Counseling – If you have let your mortgage payment fall behind it stands to reason your other debts are in arrears too. Your lender can look at all your debt, see if it can be restructured, and help you make a spending plan and structure a repayment plan.

Payment Forbearance – If you have some equity in your home, it may be possible to rework your loan to lower the monthly payments for an extended period of time. The past-due amount could be added into the new loan.

Grace Period – By taking prompt action the lender will, in most cases, give you extra time to get your problem under control. However, if you fail to communicate with the lender, and you fall behind on your mortgage payments, they have no choice but to pursue foreclosure.

Sell The Home – If you don’t want to keep the home, or if the problem is so serious that it can not be resolved, it may be necessary for you to sell the home. Your goal is to sell the home and pay off both the mortgage balance and your delinquent debt, and thus avoid foreclosure. Be advised that a poor real estate market will limit this option.

Deed in Lieu of Foreclosure (Sign The Home Over To The Lender) – This is where you are unable to pay for the house and you voluntarily give the house back to the lender. Be warned that you still have to pay back any difference between what you owe and what the house resold for. Not every lender will always accept this arrangement.

Bankruptcy – This should only be used as a last resort because of the negative impact on your credit (up to ten years in some states). Keep in mind also that filing for bankruptcy is much more difficult these days due to new laws recently passed.

Questions The Lender May Ask

  1. What caused you to fall behind your payments in the first place?
    Bad things happen to good people. Be open about the situation that led to your problem, such as losing a job, a medical expense, increased homeowners insurance, higher property taxes, etc. Stick to the facts and don’t embellish.
  1. What is your current monthly income stream?
    Include monthly income, disability, retirement, or welfare benefits; and savings and investments.
  1. What other debt obligations and expenses do you have?
    List only essential expenses and other current financial obligations. Stick to the necessities and forget the things you’d like to have. Be realistic. Include expenses such as food, utilities, loan or credit payments, insurance, child support, any other payment you are required to make.

  1. What plans are you making to fix this problem?
    Brainstorm how you can manage your problem now, and also over the long haul. Tell your lender right away about your problem even if you feel the situation is hopeless. There may be ways to obtain financial assistance. If not, you may still be able to reduce your losses and prevent foreclosure. Foreclosure can ruin your credit record for years, so it behooves you explore every avenue and possibility.

Both parties, you and the lender, desire to see a successful outcome in stopping foreclosure. The lender wants their money and you want to salvage your credit. Working together you and your lender may be able to come up with a workable plan that benefits both parties, but remember that nothing happens until you take action.

Find The Hidden Costs On Your Closing Statement Or Risk Losing Thousands Of Dollars.

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Posted by on July 25, 2007 – 12:00 pm
Filed under Foreclosure Prevention, Home Loans, Links, Mortgages

Most people, either through ignorance or apathy, accept closing costs and fees for granted or just pay what they are told. They simply assume the title or mortgage company is looking out for their best interests so they shrug their shoulders and pay the costs associated with a mortgage closing. That way of thinking may be dangerous and costly when it comes to closing costs. Mortgage and title companies are in the business of making money and they have no qualms about padding the deal in their favor. 

To protect and educate yourself have your mortgage broker explain to you what each cost means, and why you are paying it. If you can, and I strongly recommend it, hire a real estate attorney to guide you through the whole process. They will protect you from making any costly mistakes. Surprises at the last minute are what you are trying to avoid. 

All too often consumers receive a call from the title company on the day of the closing. They are letting you know your closing costs are going to be a bit higher than originally expected. Their explanation is there was a mistake made in calculating some of the fees, and you need to bring more money to the closing. This is a common ploy used by title and mortgage companies to take advantage of your emotional state at the time. They know especially if you are refinancing to stop foreclosure that you are in a highly charged emotional state and simply want the whole thing to be over. They are calculating that by informing you at the “11th hour” of the increased costs you’ll simply bite the bullet and agree to the new cost. 

As hard as it may seem at the time it is in your best interest to delay the closing. The mortgage or loan company will likely try to coerce you into continuing; perhaps saying you are legally bound to close on a certain date. This is not true, especially if the terms of the contract have been altered without your consent. Inform them you are going to postpone while you further investigate the reason for the increased fees. If you have hired a real estate attorney inform them of the change immediately.  If you wish to avoid a situation like this, it’s a good idea to understand what the costs and fees are, how they are calculated, and why they have to be paid. Below are some common closing costs and fees with a rough estimate of average cost: Property Appraisal – Confirms the fair market value of the home. Typically costs up to $500Personal Credit Report– For obtaining your credit history and score. Typically costs from $20 -$30 Closing Fee – This is paid to an independent party, usually the title company or an attorney, to conduct the closing. Depending on your state of residence it may be required that a real estate attorney be present at the closing. Typically costs $400 – $500Title Search – This fee is paid to the title company for doing a thorough search of the property’s records. The title company researches the deed to your new home, ensuring that no one else has a claim to the property.  Title search costs vary per Title Company.Survey Fee – Verifies all property lines. Typically costs up to $400
 Flood Zone Determination – This is paid to a third party to determine if the property is located in a flood zone. If so the insurance is purchased separately by the buyer. This fee widely varies depending where you live. You may pay as little as $20, or up to several hundred depending.Courier Fee – This covers the cost of transporting documents to complete the loan transaction as quickly as possible. Typically costs between $20 – $40Lender’s Policy Title Insurance – Assures the lender that you own the home and the lender’s mortgage is a valid lien. Typically cost between $500 – $1000Owner’s Policy Title Insurance – Protecting you in the event someone challenges your ownership of the home. Typically cost between $500 – $1000 Homeowners’ Insurance – This covers possible damages to your home. Typically costs start around $400 and go up.Buyer’s Attorney Fee – Not always required. Different costs are associated with this fee from state to state. Typically costs $400 and up.Lender’s Attorney Fee – Not always required. Different costs are associated with this fee from state to state. Typically costs $150 and upEscrow Deposit for Property Taxes & Mortgage Insurance – Often you are asked to put down several months of property tax and mortgage insurance payments at closing. The amount varies according to the value of the home.Transfer Taxes – This is the tax paid when the title passes from seller to buyer. This fee varies widely depending on the state or municipality.Recording Fees – A fee charged by your local recording office, usually city or county, for the recording of public land records. This fee varies widely depending on the municipalityProcessing Fee – This goes to your lender. It reimburses the lender for the cost to process the information on your loan application. Typically costs up to $1,000 Underwriting Fee – A fee paid to lender to do research to determine whether or not to approve the loan. Typically costs up to $800.Loan Discount Points – These are prepaid interest. One point is one percent of your loan amount. This is a lump sum payment that lowers your monthly payment for the life of your loan. Amounts vary according to the number of points you pay.

Pre-Paid Interest – This is money you pay at closing in order to get the interest paid up through the first of the month. These costs vary depending on loan amount, interest rate and time of month you close on your loan.

It is your responsibility to verify that these fees are exactly what you agreed to pay. Questioning your closing costs will take some time and effort, but the opportunity to save several hundred if not thousands of dollars at closing time makes it worthwhile. The small fees individually seem insignificant, but when added together they can make a substantial difference. Every dollar you manage to save at the closing will be money well earned.

Closing Costs Can Eat Up Your Equity…Which Could Have Been Cash In Your Pocket

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Posted by on July 24, 2007 – 11:11 am
Filed under Foreclosure Prevention, Home Loans, Links, Mortgages

Closing costs are an inevitable part of buying or refinancing a home. Closing costs can represent a significant out of pocket expense. If you are involved in stopping foreclosure this becomes problematic as you are likely trying to conserve whatever cash resources you have.  

Closing costs are unavoidable for at least one of the parties involved, but there are ways to reduce this expense. Education of the home buying process is necessary and consumers should educate themselves on the closing process and all of the fees involved. They should also learn about potential scams that less scrupulous companies may employ so they can protect themselves. To avoid being victimized, along with obtaining the best deal on closing costs, borrowers should carefully consider the following advice.

Do your homework. Educate yourself on the multitude of options available that reduce closing costs. Learn which are beneficial and which ones just transfer the costs to the loan, which can end up costing more in the long run. With the amount of information available today there is no excuse for being unprepared. Visit your local library, bookstores, search the Internet and read free information from experts in the field. There are forums on the Internet where others like yourself who have been through this left their comments on the experience. This type of information is priceless, and best of all it isn’t slanted to selling you anything. The information is out there and consumers should read and digest everything they can. It is also a good idea to do some research on real estate scams and real world examples of mistakes that others have made.

A recent phenomenon gaining popularity is no closing cost loans. They seem like a great idea, but the problem with these types of offers is that in reality the closing costs are simply added to the mortgage and the borrower ends up paying more interest on the loan. In the end the closing costs could end up costing significantly more than if they were paid up front. If there is no money available to pay closing costs up front this option may be beneficial but if it can be avoided do so by all means.

If the real estate market in your area is favorable for it then consider negotiating with the seller to pay all or some of the closing cost themselves. If homes are selling quickly and at market price it may be more difficult to convince the seller to contribute to closing costs as there is a good chance that the house will sell otherwise.  If you find that local real estate promotes a buyers market then you have much more leverage, especially if the seller is having a difficult time selling the house. They may be more willing to negotiate an agreement to help with or pay for all of the closing costs. If you happen to be refinancing this option is unavailable.  

One of the largest components in closing costs is title insurance. Many consumers are unaware of what title insurance and do not know that they need it. That is until they see it as one of the costs on the closing documents. Because of this lack of knowledge most consumers have no idea of their right to shop around for title insurance. They simply allow their mortgage broker or real estate agent to take care of this, which can be a big mistake. By shopping around for title insurance consumers can cut $100’s or even $1000’s from their closing costs.  

There are other fees, such as courier fees, notary fees, documentation fee, overnight delivery fee, points, processing fee, and others which may be duplicates of other fees, or which are fees which the originator has marked up to add to it’s profit margin. These are the fees, sometimes called hidden fees, which you may overlook or not feel you have the right to question. You do have that right.  There are other options available that can cut closing costs whether you are refinancing or buying a home.

A little research can go a long way and if consumers take the time they should be able to find something that suits their needs. We all want to save money, conserve any home equity, and all it takes is a little time to gain some knowledge and make the appropriate decisions.

Rookie Loan Officers – All Their Good Intentions Still May Not Get You To Closing.

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Posted by on July 23, 2007 – 8:28 pm
Filed under Foreclosure Prevention, Home Loans, Links, Mortgages

It should come as no big surprise that the number of mortgage loan officers has grown proportionally with the real estate market. The problem being faced by the consumer is choosing a loan officer who has the right experience to evaluate their particular situation, and be able to give concise guidance, whether to move forward or explore another option.

It seems everybody from plumbers to chefs to home-makers is quitting their jobs to become loan officers. It’s fairly easy, too easy in fact, to get licensed as a loan officer. That along with the lure of making more money off one deal than they might make in a month is too tempting. Just like rookies in sports these individuals makes mistakes, often costly, until they learn the play book. Your task is to avoid being a practice tackling dummy. 

All too often consumers trying to refinance to stop home foreclosure find out far too late they have hired a rookie loan officer hell-bent on getting the loan underwritten. After all, that’s when they get paid, so it’s in their best interest to keep you on the hook all the way through to the bitter end.  Choosing the right loan officer can positively impact your wealth in the long run. Here are some tips for choosing the right one. 

Do your homework 

You are making a decision that will have far-reaching impact on your finances. Do not allow being under pressure to avoid foreclosure overshadow sound judgment. 

 Get a loan monitor 

These are people who have experienced what you will go through, and are willing to look at your paperwork, and show you theirs. They must be near enough to you so you can show them the paperwork and ask questions. I don’t suggest using a family member as they might try to protect you instead of being up front. A trusted friend who has been through the mortgage loan process would be my first choice. Probably the best reason to get a loan monitor is they are not under the same pressure you are and will be more objective and level-headed.   Proceed with caution Understand that the loan industry is basically a big machine, just like the pharmaceutical industry, the automotive industry or the medical industry. Many loan salespeople are the products of a “throw it all against the wall and see what sticks” training program. Few own their own homes, yet they make decisions for you. Seems ludicrous, but unfortunately it’s true. The industry makes billions of dollars, and it is insatiable, always wanting more. So comparison shopping is a must. 

Check them out 

Go to ConsumerAffairs.com’s section on mortgages or your state government web site, or your loan monitor, and check the background of these companies. Visit Google and do a search using the loan officer’s name. Do the loan company too, you will be amazed what you will find out. If you discover the loan officer isn’t what they portray to be then keep looking.  Have courageBe ready for the emotional highs and lows. It’s important not to give up. Don’t become frozen like a deer in the headlights. It is combination of information explosion and aimless direction that may kill your will. You can protect yourself, but you have to work at it — do your homework, get good help, pay attention and don’t lose your nerve.

Do Not Waste Money On A Home Appraisal Without Enough Equity To Justify It.

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Posted by on July 19, 2007 – 10:09 am
Filed under Foreclosure Prevention, Links

For many homeowners seeking help to stop foreclosure, refinancing their current mortgage is quickly becoming the option of choice, especially if they feel their home has enough equity in it to justify the decision. The only way this can be determined, however, is through a property appraisal. The problem with this is most home owners haven’t a clue as to their home’s real value as compared to the housing market where they live.

Don’t order a home appraisal prematurely unless you can stand the possibility of losing $300 – $500. First do some ground work to get an idea of your home’s approximate market value. Speak with a knowledgeable local realtor. Find one who has been selling homes in your area for a number of years and has a feel for the current housing market. Ask for a comparative market analysis. This will save you valuable time, not to mention money; both which you cannot afford to waste, especially if you are facing possible foreclosure.

Treat the refinancing as if you are selling the house (in essence you are, as you are buying it back). Make sure all the maintenance you can do is done; this includes clearing and trimming the yard to painting the house. Make a list of all home improvements – new windows, new floors, the finished basement, and any other item you feel has increased the value of the home. All this is necessary if you want the property to be valued as high as possible.

Keep in mind the lender is concerned with the property’s value as it relates to loan amount being requested. This is commonly referred to as LTV, or loan to value. The lower this number the more likely the lender will approve the mortgage loan. The lower percentage also allows the lender consider higher-risk borrowers, such as those with low credit scores, previous late payments in their mortgage history, high debt-to-income ratios, high loan amounts or cash-out requirements, insufficient reserves and/or no income documentation. The more you can do to improve the properties value the lower the LTV, and the higher your chances of being approved for the loan. 

Once you are satisfied the numbers will work in your favor it is time to order the appraisal. Lenders normally order this using one of their own appraisers, but rest assured you will pay for it regardless of the outcome.

A home appraisal is really an opinion of the property’s market value. The home appraisal is a detailed report that looks at such items as the condition of the home, the neighborhood, what similar homes are selling for, and how quickly similar homes sell. Part of the process is a sales comparison that looks at other properties in your neighborhood and what they are selling for and then figure how they compare to your home.

And finally, don’t be caught off guard. Know what you options are if the appraisal doesn’t come in with the numbers in your favor. Be prepared to challenge the lenders appraisal with your own information. There’s a chance you can get them to reconsider, especially if the appraiser overlooked anything. If you’ve done all your homework you lessen the likelihood of squandering your time and money, neither of which you can afford to lose if you are refinancing to stop foreclosure.

How Can Bad Credit Force You To Live In One Home And Pay Enough For Two?

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Posted by on July 18, 2007 – 10:17 am
Filed under Credit, Links

There have been countless books and articles written over the years about the importance of maintaining good credit. The reasons are myriad, but when you boil it all down the real issue is how much money your credit, good or bad, is going to cost you. We all want to earn, and keep, as much as possible to maintain our lifestyle. Our credit plays a vital role in our ability, or inability, to accomplish this.  So how does good credit stack up against bad credit in regards to the amount of money spent over the term of a loan? Let us use an example of two men, both looking to purchase the same style home in the same neighborhood for the exact same price, which for this example is $350,000. Buyer Number 1 is a mid-level executive who earns $120,000 per year for a company he has worked at since he graduated college. He has practiced frugality in all his spending habits; sticking to a monthly budget; diligently setting aside money in growth funds; and always paying his bills on time without fail. His credit is nearly flawless as indicated by his FICO score of 825. Potential lenders will almost immediately offer a loan at the current lowest interest rates as a reward for his good credit history. He has set aside $15,000 as a down payment towards the purchase of the house. Buyer Number 2 is also a mid-level executive earning $120,000 per year for a company he has been with for a little more than a year. He has a history of changing jobs, even occupations, every two years or so. He has lived his life up to this point with the mindset of “spend it while you got it”. Subsequently he has little in the way of savings or investments. Because of his careless spending habits he often runs out of money and is late on his bills more often than not. His current credit situation makes him a far greater risk than Buyer Number 1. Potential lenders are going to carefully scrutinize his finances thoroughly before deciding to go ahead with the loan. Through a sheer stroke of luck he has inherited a moderate amount of money and has decided to use $15,000 of this windfall towards the purchase of a home. His FICO score right now is around 625. 

Given the above parameters let’s compare the cost of the home purchase for each man using current interest rates. Buyer Number 1 because of his excellent credit qualified for a fixed-rate 30-year mortgage loan at 6.32%, while Buyer Number 2 with his bruised credit barely managed to qualify for a fixed-rate 30-year mortgage loan at 8.25%.  So how do these numbers compare against each other over the 30 years of the loan?  Buyer Number 1 has his monthly payment fixed at $2262.93, while Buyer Number 2 has his monthly payment fixed at $2701.24. Given the difference in monthly payments of 438.31 it is now a simple matter of multiplication. Over 30 years Buyer Number 2 will pay an additional $157,791.60 for the same house as Buyer Number 1.   Buyer Number 2, because of his bad credit, is literally paying in higher interest what amounts to the cost of another home over the 30 years of his mortgage. If you think this example is far-fetched then think again. It is a scenario that occurs in our country every day and there are instances where the disparity and dollar amounts between mortgages are much higher.  This simple example clearly illustrates that if you have good credit do everything you can to keep it that way, and if you have bad credit start now to fix it. There is a cure for this disease, but you have to decide if you want to swallow the medicine. Your financial life may depend on it.

Finding A Credit-Repair Company Is Easy. Finding The Right One Takes Effort

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Posted by on July 17, 2007 – 11:01 am
Filed under Credit, Foreclosure Prevention, Links

With the growing crisis in our country involving consumer credit, it should be no surprise that the number of credit-repair companies have grown proportionally as well.

Unfortunately this is not a good thing as the majority of these services offer little in the way of actual credit repair. Instead they prey on the emotions of people already in the throes of desperation, facing bankruptcy, and possibly unable to avoid or stop foreclosure on their homes. It has gotten so bad that a special federal law was named after it, The Credit Repair Organizations Act.

Most credit-repair companies employ one of two strategies. Most take the easy route by simply challenging every negative listing on your credit report by sending the credit reporting bureaus with what amounts to a form letter. Their thinking is if you flood the bureaus with many requests at the same time it will be difficult for them to meet the 30 day verification period, whereby the items not verified will come off your credit report.

The problem with this ploy is that the bureaus will eventually verify the information at which point it gets put back on your credit report. The bureaus may be slow but they are relentless. What about FACTA you might be asking? Doesn’t that state if the bureaus don’t verify within 30 days the information has to be removed. The law protects the creditors as well in FACTA, for it says that the dispute must be verifiable and legitimate. The key word here is legitimate. The “shotgun” approach won’t work in this arena.

Another trick being used by credit-repair companies is to set up a new identity for you. From the very beginning this method is fraught with peril, and the repercussions could have very serious consequences.  What is happening is you are being established with a false identity, which may lead to all manner of legal unpleasantness.

For many people under financial duress money is usually in short supply and the thought of having to part with any of it is overwhelming, yet most credit-repair companies insist that for them to be effective you have to send them a sizable amount up front, often hundreds or thousands of dollars, just to get the process started. Then they effectively bleed you dry by requesting additional fees for what they consider extra work not included in your lump sum payment. Most people, already fearful of their status, and grateful for the “help” being given by the credit-repair company simply keep throwing money away in the hopes the problem will eventually be resolved. The truly sad part is when the money dries up so does the “service”. As soon as the client tells the credit-repair companies they have no more funds to send in they are informed they are on their own. As you know most people don’t have to time or required knowledge to take up the issue and run with it.

That being said I am happy to report that all is not gloom and doom in the credit-repair industry as fortunately there are companies who have established themselves as above board and honest in their dealings with both the consumer and bureaus. Typical signs you are dealing with a reputable organization:

  • They are able to prove they have been in operation for a number of years, not simply combining the years of practice for each attorney on their staff.
  • They are registered with the Better Business Bureau.
  • They take the time to ask all the right questions of the client to establish the validity of their claims.
  • They typically write dispute letters tailored to each negative account in question.
  • Take a small retainer up front or no money at all, and then only charge you a nominal monthly fee, or for each negative piece of information verified and removed.
  • Discloses your legal rights should you decide to attempt credit repair yourself.
  • Does not claim Federal Trade Commission endorsement, the FTC does not endorse any business.

If a company can satisfy these requirements it is safe to assume they are legitimate, and are usually highly successful in their efforts to affect credit repair.

Cleaning up your credit report is not difficult. You can choose to do it yourself, or hire the right service to perform the credit-repair work. Take the extra time to hire the right company or your haste may end up costing you thousands of dollars and long-term financial damage.

Repairing Your Credit Is Easy By Arming Yourself With The Right Information

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Posted by on July 16, 2007 – 10:24 am
Filed under Credit, Links

The task of repairing your credit is far easier with the advent of technology and the implementation of the Fair and Accurate Transaction Act (FACTA). FACTA is an updated version of the Fair Credit Reporting Act (FCRA). Today all you need are reports from the three main credit reporting bureaus, along with your current FICO score available from myFICO.com.

Once you have the necessary documentation in hand you are poised to clean up the information that’s there – removing outdated or inaccurate data, adding positive information, and in some cases even increasing your FICO score.

Since you are taking on the task of credit repair yourself, don’t be surprised as you study your report just how many accounts you will find. Because your credit report includes negative information for the past seven years and positive information for much longer, you are likely to see accounts long forgotten and some you didn’t realize you still had. Some creditors never close accounts, even if left unused for years. Retailers are notorious for this. Your task is to sift through all this information, past and present, and identify errors.

In particular you need to look for the following:

  • Is your name and Social Security Number correct?
  • Are all your accounts listed?
  • Account showing the activity they should.
  • Accounts from a bank or store you are certain you’ve never done business with.
  • Single out accounts showing negative activity.
  • Are there multiple entries for the same account?
  • Do the reports have your correct address?

Now that you’ve gone over your credit report and collected all your data you are ready to get down to the nitty-gritty and prepare your disputes. Before you start this crusade it’s a good time to remind you to that attempting to remove accurate information-regardless if it’s good or bad is useless.

The process for disputing and correcting inaccurate information has been made as easy as possible by the bureaus themselves. Your responsibility is to review your credit report annually for accuracy, and if you find wrong or unfamiliar information to file a dispute.

You may initiate your dispute via phone, mail, or online. By phone is the quickest and easiest route but for it’s suggested you put everything in writing to create a paper trail. That way you can point to this if things go wrong or paperwork gets lost.

If you choose the mail option write a letter stating which items or items you’re disputing. A good suggestion about the dispute letter is to keep it friendly yet factual. The bureau employees on the other end get hundreds of ugly letters daily, so your letter might just get a little more action if couched in a pleasant tone. Include any facts that support and explain your case, and include copies of supporting documentation. Enclose a copy of your credit report with the items in question high-lighted. Provide your name, address, and what action your desire.

Send your correspondence by certified mail. Ask for a return receipt so you can document the fact your letter was received. Keep copies of everything.

Here’s what happens to your dispute information once received by the bureau. The bureaus contact the source that provided the data in question. That source now has 30 days to respond. If the source cannot verify the data within the 30 days, it must be removed from your report. If the source is able to verify the information it stays on your report.  In either case you’ll be notified in writing of any actions that occurred as a result of your dispute. You’ll also be sent an updated credit report if the dispute resulted in a change of information.

What do you do now once your persistence has paid off and the information has been removed? It’s time to work at adding positive information to your credit report. The best way is simply to make full payments on time for a year or more. Another way is to add information you feel should be included on your credit report. If you know there is an account you are paying that shows a good payment history, you can request the bureaus verify the account (for a fee of course), and add it to your report.

Lastly I need to mention the 100-word statement you are allowed to use for certain items on your credit report. This statement won’t lower or increase your score by using it, but it will allow you to answer any questions a lender may have when considering you for a loan. Use this statement to explain why there were a period of late payments, collections, or charge-off due to illness, job loss, or any other life situation beyond your control. Yu may dispute any information you feel is incorrect, but wasn’t removed by the credit bureaus.

Credit repair is easy, yet few people take advantage of the tools and resources available to them. Ask yourself just how important your credit is and if saving, or losing, thousands of dollars is enough to motivate you to take responsibility and take action to repair your credit.

Who Put The Bad Stuff In Your Credit Report? It May Not Be Who You Think.

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Posted by on July 14, 2007 – 7:53 am
Filed under Credit, Links

Believe it or not your credit is susceptible to any number of factors beyond your control. The point is nobody’s perfect, and neither is the average person’s credit report. Anybody recall the summer a few years ago when Florida was hammered by what seemed to be an endless succession of hurricanes? Do you suppose those natural disasters might have slowed down the mail service, and perhaps causing some payments to be late? You bet it did, and this simply an illustrates what I’m talking about. There any number of legitimate, and illegitimate, reasons for negative entries to show up in your credit report. Do you think lenders and creditors are perfect? Not for a minute. With billions of bits of information flying around it is only logical for honest mistakes to happen. This being said it proving extremely difficult to obtain the lofty status of “perfect” credit.

 

There are very few people who have what is considered “perfect” credit, or a FICO score of 850. In my previous career I saw this score only once. Lack of perfection is much more commonplace, and as long as your credit report shows more smooth sailing than rocky shoals you should be eligible for plenty of loans at competitive rates.

 

By now you are probably saying “Well that’s all well and good, but just how many bumps can my credit report tolerate before it moves into the danger zone? How long does the negative information remain? How do lenders interpret this?” Bad credit typically stays on your credit report for seven – ten years, depending on your state of residence. Lenders use a complex formula to determine your risk factor.

 

The long and short of it is if you have a lot of information on your credit report, with most of it being positive, the negative has less of an impact. For the younger generation this isn’t the best of news, as they tend to fewer open accounts and months of credit history.

 

So what do you do if you do discover negative information on your credit report that you are certain is in error? By law you are allowed by the Fair Credit Reporting Act to dispute any listings in question on your credit report. To learn what you are going to need for information and documentation either go online or use the automated telephone system. Both are tedious and time consuming, but persist you’ll learn exactly what you’ll need to submit a written request. Once the bureau receives your request they have to take action.

By law the credit reporting bureaus have only 30-days to verify and respond to your written request. If they fail to meet this time requirement they must remove the listing in question, and notify you of the outcome.

A word of advice – your written request should not be couched in threatening terms. I suggest instead taking the same approach you would for writing an acquaintance. Don’t you enjoy receiving a letter from someone who cares whether you are having a good day or not? These types of letters, if written properly, are highly effective. Place yourself in the credit reporting bureau employee’s shoes. He, or she, has just opened several letters that all started out the same. Some are irate, some are con jobs and some are downright stupid because the poor soul who wrote it has no writing skills. Now here comes your letter across her desk with a “Thank Youâ€? – isn’t that a nice, and clever way, to change their mental state and get them interested in what you have to say? Here you are thanking them for something they have not even done yet. Think they might read on further?

Your credit report is truly one of the most important documents you are responsible for. Banks, lenders, and the reporting bureaus are not going to take it on themselves to verify the accuracy and validity of the information unless you take an active role and force the issue. Do nothing and your inaction could unnecessarily cost you thousands of your hard-earned dollars. Take action and enjoy the benefits and advantages of good credit.

It’s Been Said The Devil’s In The Details. Learn To Understand The Details Of Your Credit Report Or You May Experience Financial Heck.

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Posted by on July 12, 2007 – 1:16 pm
Filed under Credit, Links

There have many suppositions offered regarding just what is contained in a credit report. Some know-it-alls have even gone so far as to broach the absurd idea that the intimate details of your life are contained within for all to see. Nothing could be further from the truth.

A credit report is as sterile as a hospital room, and benign in its reporting function. The information found there is purely specific; the amount of information however can cover volumes. Your credit report is fairly benign until one fails to pay a bill on time, at which time this credit reporting colossus notices, records it, and willingly offers this information to anyone who asks for the next seven to ten years!

In a nutshell here is what should be seen on your credit report:

 

â—Š Your name, addresses (current and former), Social Security number, and employment history.

â—Š Any tax liens, judgments, bankruptcies, and any other official information.

â—Š Accounts, if any, that have been sent to collection agencies.

â—Š Information about each credit account – Open or closed, who is owed, account type, single or jointly owned, amount owed, monthly payment, how well you have paid, and your credit limits.

â—Š All companies that have requested your credit report recently.

â—Š An optional message from you, up to 100 hundred words long, allowing you to explain any extenuating circumstances for any negative listing on your report.

â—Š Your credit score, which is an optional feature. One note of interest is your credit score may vary from one bureau to another.

 

Each reporting bureau has its own unique format, with information generally understandable by the average person.

As mentioned previously, nowhere in a credit report will you find lifestyle choices, religious affiliation, medical history, checking or savings accounts, or other personal information. Any information other than that listed above should raise grave concerns and prompt immediate action on your part to correct the situation.

Go online (www.equifax.com, www.experian.com, and www.transunion.com ), call, or email today and obtain a copy of your credit report. Educate yourself on its contents or run the risk of possible financial hardships.

Credit Reports Are A Snapshot Of Your Financial Wellness. Are You Well Or On Life-Support?

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Posted by on July 11, 2007 – 8:56 am
Filed under Credit, Foreclosure Prevention, Links

What is a credit report anyway? Some people lump it into the same category as their IQ results, driver’s license number, and cholesterol counts – in other words numbers to be aware of but not having any relevancy in our day-to-day life. They assume that when they decide to purchase a home that this is the only time their credit wellness is important. Nothing could be further from the truth.

 

In its simplest form, a credit report is your financial life history as a borrower. The credit-reporting bureaus, at no effort or expense to you, gather, manage, maintain, and share your information. There are many of these type reporting agencies, but there are three considered to be the top dogs:

 

  • Equifax
  • Experian
  • TransUnion

Businesses rely heavily on these reporting agencies to help them decide whether you are a good risk, and if they should lend you money and at what interest rate and terms. Different people use your credit report for different purposes. Your information is disseminated in many ways:

·         Lenders use your credit report as a tool your credit-worthiness, or likely you are to repay a loan. They base how much interest and fees to charge on your risk profile.

·         Insurance companies use credit reports to predict how likely you are to file a claim.

·         Potential employers are getting in the game and using your credit report to help decide if you will be a good employee.

·         Landlords use your credit report in determining your likelihood of making rent payments on time.

So powerful, and persuasive, is the information contained in your credit report that it may indirectly predict potential behaviors in other areas of your life. Late or missed credit card payments may indicate to a prospective landlord you are likely to be late with the rent as well. If you have had to file bankruptcy, or weren’t able to avoid or stop home foreclosure, then perhaps you are not in control in other ways as well.

Your credit report brings squarely into focus personal borrowing and spending habits, and even suggests your personal characteristics. Being aware of what your credit report contains is only the first, but critical, step in addressing and repairing any negative remarks contained within. Call, email, or write the three credit reporting bureaus today and obtain a copy of your personal report. The longer you procrastinate the more money it is going to cost you.

Take The Bull By The Horns. Get Your Credit Spending Under Control.

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Posted by on July 10, 2007 – 7:08 pm
Filed under Foreclosure Prevention, Links

By now you should be fully aware of the dangers and dilemmas involved with credit. Bad credit, along with its consequences, has reached epidemic levels in this country in a relatively short time. Now is the time to take charge and by following some very basic actions can turn a bad credit situation to one where you can use credit to your advantage.


By being pro-active you may find yourself:

  • Being able to borrow when it suits you and at sensible interest rates.
  • Taking advantage of lucrative offers such as “90-days-same-as-cash”; offers typically reserved for those with stellar credit.
  • Realizing some lifelong dreams such as long vacations, sending your kids to private school, or any other previously unattainable goal.

There are some very basic, yet effective steps that, if taken, will go a long way towards helping you achieve financial independence.

Set clear financial objectives. These will serve as a beacon to keep you on course. Without clear objectives’ you risk veering off course and onto that rocky path to bad credit. Your objectives, no matter how grand in vision, help keep your eye on the horizon and guide you to your destination.


Create a realistic, easy to follow monthly budget. Call it a spending plan if you wish. Do not look at it as a barrier or restriction. The purpose of the budget is to get you to your goal. If your goal happens to be a family vacation in

Orlando, Florida, putting aside money each pay period and limiting other spending are as important in getting you there as filling the gas tank and heading south.


Begin with a clear understanding of how much income you have to work with, and then make the necessary allocations for living expenses. For any debt you may have set aside an additional part of your income to retire that debt as quickly as possible.


If you happen to be self-employed, or work for an employer offering a retirement savings plan, make sure you make regular contributions. Set up an emergency fund for unforeseen occurrences such as job loss or illness. If you are truly dedicated to saving this one thing that will make a major difference come retirement time; First live on as minimal a budget as you can and put one-half of any future income increases aside. By doing this you will be amazed at how compound interest starts to work in your favor.


It isn’t terribly difficult to take charge of your finances. It is difficult however to change a habit, and unchecked credit spending is a very bad habit. Unless you take action and do something today you run the risk of bankruptcy, not being to stop home foreclosure, and long-term financial ruin. It’s a decision you have to make as your financial life depends on it.

Bad Credit … The Consequences Can Be Long-Term And Costly

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Posted by on July 9, 2007 – 5:10 pm
Filed under Foreclosure Prevention, Links

Most borrowers pay little attention to the “fine print” on a credit application. Most shrug their shoulders, promise themselves they’ll never get in trouble with their credit card, and sign away. Unbeknownst to them they are committed to a legal contract that is heavily weighed in the creditors favor. Yet again the “I want it now” mind-set has overcome better judgment. That legalese at the bottom of every credit application, that few seldom read, clearly outlines what will happen if you break your promise to pay on time.


What is the real cost of bad credit? There is the obvious increase in borrowing costs, not to mention the hassles of opening up new credit lines. The extra interest you pay is only scratching the surface of the problems created. What about the added stress to your family, missed opportunities that having good credit would have allowed you to capitalize on, and the fact that now you are “marked” as a bad credit risk with your financial history open for all potential lenders to see? 

Even if your problem is short-term your creditors do nothing to help you. They simply enforce the credit agreement and hit you with some fat fees. These fees do nothing for you, but help the creditor in a couple of ways:

  • They cause you to focus on their bill instead of another creditor’s bill.
  • The creditor makes more money off you because of the late fees you agreed to pay when you signed the agreement.

If you think the fees are bad on credit cards they are even worse on secured loans, such as mortgages. If you fall behind several months in your house payment you may be hit with huge fees that have to be paid in full to avoid or stop foreclosure.

When is it time to get serious about these fees? As soon as you realize you may be obligated to pay late fees, legal fees, deficiency fees, and default rates to name a few. As soon as those show up it is time to pick up the phone and call the creditor and ask to have the fees waived. Start by explaining how you plan to get current and let them know you need their help, not their fees.

Keep Your Promise And Credit Is A Powerful Tool. Break It And Credit Can Be Your Financial Downfall.

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Posted by on July 7, 2007 – 12:17 pm
Filed under Foreclosure Prevention, Links

Credit is literally based on belief. Credit derives its meaning from the Latin word credo which means “I believe”. The real issues at hand are: Do you do what you promise? Can you be trusted? Have you established a good reputation financially? Banks use these as the basis for forming an opinion about your credit-worthiness.

 

Credit itself is a simple enough concept to understand: You get something now with your promise to pay for it later. It is important to point out that credit does not increase one’s income. It is a tool to be used allowing you the convenience to spend money you have already saved. The previous is so important I want you to read it again and grasp its importance. Where people start getting in trouble is when there credit spending gets out of hand and their income, or savings, cannot cover it.

It is a simple fact that businesses make money when you use credit. This is no big revelation in itself as we know banks are in existence to make money on the interest portion of our monthly payments. This is their largest source of revenue by far so you can imagine they are eager to exploit as many was as possible to increase it, and of course at your expense. Creditors would like you to spend as much as you can-as fast as you can. They want to “help” you spend your future earnings today. This is their basic plan. This plan brings them unlimited joy – but it may not bring you the same delight if you cannot control your credit spending.

Creditors have made many types of credit available to consumers. This is no big surprise to anyone who walks to their mailbox every day. Despite the seemingly endless varieties there are still two basic credit types:

Secured credit: As the name implies the lender has some protection if you default on the loan. There is real property to back this type loan. Generally, the interest rates are lower and the length of time to pay it off is longer. This category includes mortgages and vehicle loans.

Unsecured credit: This type of credit is typified as being more expensive, with shorter pay back periods, and at a considerably higher risk to the lender. Because it has no backing of real property the lender has a higher degree of risk and is more vulnerable if you default. Credit cards fall into this category.

How do lenders determine the likelihood of you paying on time as promised? There are three things lenders need to know to gauge you as a risk:

  • Do you do what you promise?
  • What is you debt load? How much debt can you handle versus your income?
  • If your income drops or dries out what cash or property could be used to repay the debt?

Where do lenders derive this “intelligence” on you? The answer is your credit report and your credit score. Technology allows them to do this today with near lightning speed. For example your favorite department store is running a big clearance sale and you want to take advantage of it. Your checking account is a bit low at the moment but lo and behold they have a table conveniently set up right at the main store entrance offering a 90-days-same-as-cash special. All you have to do is sign a few papers and within minutes your credit has been checked and you are on your way with your purchases.

Today it is ridiculously easy to obtain credit. Creditors have mastered the art of advertising to our emotions and prey upon our compulsive need for instant gratification. We are creatures of habit, and this includes our spending. Unless you want to run the risk of financial ruin, finding yourself unable to prevent or stop home foreclosure, or worse yet having to file bankruptcy you have to take action to get your credit spending under control. Your financial life may depend on it.

Your Attorney’s Pushing Bankruptcy While Your Intuition Screams For Caution. How Do You Make The Right Choice?

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Posted by on July 5, 2007 – 3:29 pm
Filed under Foreclosure Prevention, Links

The first thing a person must understand is just what’s at stake. First consider what a bankruptcy will do to your credit for the next 7-10 years. If your home is at risk and you want to avoid or stop foreclosure then this creates another set of questions to be answered. Take an active role no matter what else you do. As hard as it may seem at the time educate yourself. Learn about your various debt options and be a part of the decision making process. An attorney may try to push you toward a bankruptcy filing while consumer agencies lean against it. Understandably an attorney specializing in bankruptcy stands to profit the most if he can get you to file. If most bankruptcy attorneys were doctors they would operate on every patient who came in with an upset stomach, while consumer agencies would treat the symptoms of the illness and never operate even if it meant having the patient on medication for the next ten years. Don’t let either talk you into a solution just because they say so.

 

I am not trying to advocate a “do-it-yourself” mentality. This is fine for painting the living room, but could be disastrous when it comes to handling a bankruptcy filing. If bankruptcy happens to be the only way out then by all means hire an attorney. If you hire an attorney and think you’re not being properly represented don’t be afraid to switch lawyers or hurt their feelings. Losing a client they never should have advised in the first place won’t change or interrupt their life. Losing your house or filing an unnecessary bankruptcy will surely change yours.

 

Below are a few simple guidelines to consider:

 

  • If you are not making mortgage payments or they won’t accept your checks save the money. Don’t spend it on other bills. You may need it to save the house. The ranks as one of the worst mistakes people make when finding out they cannot stop foreclosure.
  • Don’t make promises you won’t be able to keep. Tell creditors what you can really do, not what you think they want you to say.
  • Do not spend money on house repairs if you may be losing the house.
  • Explore all options but be ready for the worst.
  • If home foreclosure looms then ignore the collection agencies from the unsecured creditors. You have more important things to worry about. Don’t let them bully you into giving them anything. You may need every cent to avoid foreclosure and save your home. If they persist tell them you are exercising your rights in accordance with the Fair Credit Reporting Act and they have to communicate with you in writing.
  • Don’t file for bankruptcy unless it’s really the right thing to do. It’s not the only option as there are many alternatives to bankruptcy awaiting your exploration. If your attorney doesn’t explain the other options get a new attorney. If the bankruptcy option works the best for your situation don’t be afraid or ashamed to do it.
  • Make the time to deal with this problem. If your house matters to you, this is more important than almost anything else. If you hate the house anyway, don’t pour money in to save it, explore other residence options.
  • If you have been able to save some money don’t leave it at a bank you owe money to. They might be able to take it from you without notice.
  • If you really want to keep the house be prepared to work for it. This may mean getting a second job, or doing away with unessential expenses like cable television or high speed internet.

Perhaps the most important, don’t lose hope and don’t give up.