Steps to a Credit Make Over

Seven Steps To A Credit Score Makeover by Broderick Perkins You can mitigate the effect of tighter mortgage underwriting standards by improving your credit report profile and, as a result, your credit score. Just don't expect that your knee-jerk reaction to tighter money will generate overnight success. Chances are, you didn't get all those credit report blemishes during a single credit buying binge. And, if you are like many consumers, you don't even know what you are up against. BankRate.com recently found that 32 percent of Americans surveyed never check their credit reports and have no idea what shape it's in. It's time to find out and do something about it. Local lenders say the incidence of credit report knowledge is even higher when borrowers sit down to apply for home loans. "Less than 10 percent have seen their report and among those who have, most of the reports are old, many are only from one bureau and so they don't have a complete picture," said Joel Spolin, president of Absolute Mortgage in Palo Alto, CA. Your credit report is a sort of fiscal fitness report on your credit habits and the information it contains factors heavily into your credit score, a statistical analysis or numerical value placed on your credit behavior. Your credit score is commonly used to nay or yea your requests for credit and determine how much you'll pay for credit approved. Here are seven starter steps to take toward improving your creditworthiness. Get your credit report and look for errors. These days getting a credit report should be the no-brainer first step toward improving your chances of landing credit at the best price possible. Simply go online to AnnualCreditReport.com, the ONLY federally-sanctioned and cost-free service, and obtain a free credit report from Equifax, Experian and TransUnion. Given the year is more than half over, get your report from at least two companies, perhaps three. Next year set up your own credit monitoring service by getting a report from a different company every four months. Again, through AnnualCreditReport.com, each report is free. Questions? Call (877) 322-8228 for details about your free credit report rights. "We advise the client to get one report, pulled by a lender or broker and then use this report to share with other brokers so their credit is not getting constantly pulled," said Paul Garcia A trusted lender or broker can pull your report for you and show you the ropes. Limiting the number of credit report pulls is also key. However, someone pulling your credit report can charge you a fee and the pull will show up on your credit report, though with little consequence. Get your feet wet the first time around. Pull your own free credit report. Examine it for errors. That's the spirit of the law, to give you control and knowledge. Bring in a realty pro later, if necessary. "It's good to get the report so the borrower knows what they are dealing with and to determine if any corrective actions need to be taken," said Garcia. Check credit limits and attempt to keep balances evenly distributed across credit lines, advises attorney Edward Jamison, with the Los Angeles, CA Jamison Law Group he founded to specialize in consumer credit and identity theft. Make sure your maximum credit limit is reported for each account. "When no limit is reported, credit scoring software presumes the account is 'maxed out'." Jamison says credit scoring software scores more favorably when the balance is 50 percent or below, but too many open accounts with zero balances could lower the score with the assumption you could suddenly run up a lot of credit. Keep some credit cards open. Close others. Open credit cards with limited balances and good payment records raises scores, especially long-time credit cards. However, the accounts should be limited in number and well-managed. "Closing credit card accounts can hurt your score unless the accounts were opened less than two years ago, and you have more six credit cards," says Jamison. It's about striking a balance. "Credit scoring software assumes that people who have had credit for a longer time are at less risk of defaulting on payments," Jamison said. Where possible, get rid of late payments listed on the credit report. Jamison says if your late payments are dated and you've been a good credit customers for some time creditors may, in good faith, adjust your statement. "If you are a customer in good standing, the creditor may work with you," he said. The effort isn't easy. A demanding, frustrated and rude approach will make it more difficult. The lender isn't required to remove dings for 7 to 10 years in some cases. Pay off collection accounts and past due amounts. Payoffs and paying past due accounts start the clock running on how long the ding will remain on your report. In some cases the collection agency or creditor may remove the ding, says Jamison. Again, it's not easy. "The consumer should contact the collector and request a letter explicitly stating their agreement to delete the account upon receipt or clearance of the payment," he said. Likewise, whenever possible, seek to have charge-offs and liens that are less than two years old removed. "Charge-offs and liens that are older than 24 months do not affect your credit score nearly as much as ones under 24 months," says Jamison. "But if they're newer than 24 months, they can seriously damage your credit," revealing you as a more recent credit slacker. Keep in mind, all efforts to improve your credit, other than correcting errors, are typically based on you being a mature credit consumer -- pay your bills on time, don't overload yourself with debt and get in touch with lenders at the first sign of trouble for workouts than can help save your credit or reduce the damage to your report and your credit score.

Florida pre-foreclosures spike for first half of '07
Tampa Bay Business Journal - Tuesday, July 10, 2007

Florida took the No. 2 spot among the states with the highest preforeclosure filings from January through June, foreclosures.com reported Monday.
Florida posted 90,145 pre-foreclosure filings -- homeowners who have defaulted on their mortgages but have not yet lost their homes -- or 1.42 percent per capita. That compared with 39,037 filings, or .62 percent per capita, for the same period in 2006.

Nationwide, three out of every 1,000 homeowners lost their homes to foreclosure in the first half of the year, which represents a 41 percent increase compared to the same period last year. There also were more than 507,000 preforeclosure filings in the United States, or nearly seven of every 1,000 households, for the first six months of the year.
Foreclosures.com is the California-based publisher of foreclosure and property information.

Feds Investigating Home Builder Mortgage Programs for Consumer Abuses by Kenneth R. Harney
Most American home builders don't need new problems at the moment, but they just got one: Federal regulators confirmed last week that they are aggressively investigating allegations that builders around the country are pressuring or requiring purchasers to use their mortgage financing affiliates illegally.
Under the federal Real Estate Settlement Procedures Act (RESPA), builders and realty brokers are prohibited from requiring customers to use their own affiliates or subsidiaries for mortgage, title or other settlement-related services. They can recommend affiliates -- provided they also disclose the relationship -- but they cannot force consumers to use them.
Enforcement officials at HUD, which has regulatory oversight of RESPA, have begun looking into widespread allegations that some builders:
Increase the prices of homes when purchasers decline to use their affiliated mortgage companies.
Present $10,000 to $30,000 "incentives" -- upgrades to kitchens, "free" finished basements or "free" settlement costs -- as true discounts, when in fact the incentives are built into the cost of the house.
Require the use of an affiliated lender in order to qualify for incentives when they know their affiliates' mortgage programs carry intentionally inflated fees or interest rates to cover the incentives in whole or part.
Refuse to go to settlement when buyers change their minds and decline to use the builder's affiliated or wholly-owned mortgage company. In one case, a builder declared an $11,845 good faith deposit forfeited when the customer switched to an independent, nonaffiliated lender.
HUD officials spoke on background and declined to identify specific builders since some cases are still being put together or legal settlements may be pending. But the officials confirmed that in a number of instances, the department intervened directly on buyers' behalf and obtained substantial cash refunds.
In one case, a buyer complained to HUD's "RESPA police" -- its enforcement staff on settlement-related issues -- when a builder offered an "incentive package" of $13.450 for a customized "morning room," but only if the buyer got his mortgage from the builder's affiliated lender.
The builder insisted that the in-house mortgage affiliate's rates and fees were "very competitive" with others lenders in the area. But the loan deal carried a $5,400 origination fee -- far beyond fees charged by competing lenders and brokers. HUD investigators contacted the builder, warned of possible RESPA violations on required use, and got the deal changed. The buyer got his mortgage without the $5,400 fee, plus got the $13,450 morning room add-on.
HUD investigators say they also obtained $32,400 in refunds from a condo developer to 200 condo unit purchasers. The developer acknowledged that it charged each of the purchasers $162 for a property survey that never was required by the mortgage lender and constituted an "unearned fee" under RESPA.
Officials said active investigations are now underway into other alleged builder misconduct. For example, one builder allegedly is requiring home buyers to use only a specified title company. In addition to violating RESPA's required-use rule, investigators believe "the builder established a sham title company for the purpose of receiving kickbacks and unearned fees from the title insurance company." Officials say the same builder apparently has created a sham mortgage company for the same purpose.
How can consumers deal with strong-arm pressure from builders on choice of mortgage lenders? HUD recommends that buyers check out prevailing local market interest rates and fees, compare them to the builder-controlled lender's offer, and then tote up the true costs. Prudent buyers should also thoroughly study prices for comparable new houses in the market in order to spot fake "discounts" -- where the costs of incentive packages have merely been tacked on to the sale price of the house.
Published: November 13, 2006
Use of this article without permission is a violation of federal copyright laws -- http://www.loc.gov/copyright.