The State of Lending: Debt Settlement | Center for Responsible Lending

Debt settlement companies offer the promise of settling a consumer’s debt for a fraction of what they owe. The idea is simple: debt settlement companies offer to negotiate down the outstanding debt (usually from credit cards) owed to a more manageable amount so that a consumer can become debt free. Unfortunately debt settlement carries significant risks that may result in consumers becoming even worse off.

Debt settlement is inherently a risky venture: in order to enroll into debt settlement programs, consumers are required to default on their debt which often results in fees, increased interest rates, and sometimes even lawsuits from creditors. Even after assuming all this risk, consumers are offered no guarantees; in fact, some creditors refuse to negotiate with debt settlement companies at all. Even if a settlement is reached, a consumer unable to keep up with the new settlement arrangement risks falling back into default – and now without the fees paid to the debt settlement company for negotiating the agreement. CRL finds that consumers must settle at least two-thirds of the debt they enroll in a debt settlement program to benefit, a result that many will not achieve.

This chapter examines the debt settlement industry, the risks to consumers, and recommends actions at both the federal and state levels to reduce the potential harm to consumers.

The chapter finds:

  • Debt settlement is a risky strategy for debt reduction – and often leaves consumers more financially vulnerable.

  • Consumers must settle two-thirds of their debt to be better off than they were before – and many consumers are unlikely to reach that level of success.

  • Strong state and federal laws could curb risks associated with debt settlement.

Source: The State of Lending: Debt Settlement | Center for Responsible Lending

JUMBO Reverse Mortgage Facts

JUMBO Reverse Mortgage Facts

  • Borrower(s) minimum age of 62
  • SFR and 2-unit properties – minimum loan amount $850,000.00
  • Condos valued over $500K – spot approval on a case-by-case basis if not FHA approved
  • Maximum loan amount is $4 million
  • No upfront or monthly mortgage insurance premium
  • Mandatory Counseling required – specified agencies only
  • Available for both refinance and purchase transactions
  • Financial Assessment underwrite performed on all applicants

Examples by Age and Purchase Price of the Proprietary Purchase Reverse Mortgage

SFR & 2-Unit | Purchase Price Age Down Payment HomeSafe® Proceeds
$ 850,000 (Min) 62 $ 589,594 $ 260,406
74      493,799      356,201
80      445,342      404,658
88      389,674      460,326
$4,000,000 (Max) 62 $2,841,978 $1,158,022
74 2,419,353 1,580,647
80 2,206,203 1,739,797
88 1,959,978 2,040,022
Condominium
$500,000 (Min) $4M (Max) 62 $ 372,490 $   127,510
74     316,140       183,860
80     287,720     212,280
88     254,890     245,110

These examples are for illustration purposes only.

  • The borrower(s) may retain up to four additional FINANCED properties
  • New-builds must have the Certificate of Occupancy issued prior to closing

This Proprietary Purchase Reverse Mortgage is not associated with the FHA reverse mortgage (HECM) program

NOTICE: This is not an offer to extend credit

Financially Speaking™ James Spray RMLO, CNE, FICO Pro | CO LMO 100008715 | NMLS 257365 | April 9, 2018 | Copyright 2018

Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct for your situation. This information is not legal advice and is for guidance only. You may reproduce this information in whole and not in part, providing you give full attribution to James Spray.

New Credit After Chapter 7 Bankruptcy

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New Credit After Chapter 7 Bankruptcy

This post is written specifically for those who’ve recently been granted a Discharge from a Chapter 7 Bankruptcy. Chapter 7 is type of bankruptcy where the debtor does not make periodic payments to a bankruptcy trustee for 3 to 5 years.

The first step is to establish new credit in a strategic manner. Of course, you must also use your new credit in a responsible manner. In some cases, it is necessary to get your credit reports corrected to establish new credit. We’ll address both steps below.

Step One

First, when establishing new credit. Ignore well-meaning advice to get a $300/500 secured credit card from just any bank that will open an account for you. Start with joining a credit union. With most credit unions, there are no fees. Also, there are no annual fees and no-cost to use many ATMs all over the USA. Take a moment and read my post on credit unions.

In searching for the credit union (CU) to be the fit, do your homework. Call or stop in and ask about secured credit cards (this will lead you to someone that can answer or can get answers to your questions).

Now that you have found your CU, open your Share (savings) account. Save $1,000.00 or more. Secure this savings against a Visa or MasterCard issued by your credit union. To build good and excellent credit scores, use no more than 20% of your credit limit. Ever. For example, on your $1,000.00 credit limit, never have more than $200.00 in use. For best results, payoff the balance monthly. Your higher credit scores get you rewarded with lower interest rates on home and auto loans, insurance, credit cards and better employment opportunities.

Most credit unions will offer an unsecured card after you have established your good credit management practices for one-year. At this time, your savings securing your card will be released and another card issued. Your credit history will follow the new account.

Next, open 2 or 3 lower limit credit card or other revolving accounts (department stores, Internet stores, gas cards, etc.). The key is to have 3 to 4 revolving accounts open and in use occasionally. Do know that credit is a use it or lose it commodity.

On selecting the credit accounts, don’t bother applying to any creditors which were listed in your bankruptcy. Perform a Google Search such as this: “secured credit card + bankruptcy”. In your screening process, avoid those with an annual fee.

After about 9-12 months of opening the accounts as above discussed and using them as above discussed, you should have actual lending scores (FICO® Scores) in the 700-720 range. These techniques have helped many clients over several decades.

Step two

Not everyone will need to take step two. All should read the info in step two.

In order to build new credit after bankruptcy, you may need to get corrections made to one or more of your three credit reports to reflect only accurate information. By accurate information what we mean is to make sure that all your bankrupted accounts reflect a zero-balance due.

Understand that a bankruptcy discharge does not remove your previous credit history from your credit reports. Time does. Seven years from the date of last activity (last use or last payment), the account will be removed from your credit report.

Keep in mind that the older a negative item on your credit report is the less it counts against your credit score. Also, the longer you have information reporting on your credit report, the better it counts for your credit history which results in a better credit score.

As a rule of thumb, by the time the case is Discharged, several months following the filing of the bankruptcy case, most creditors will have reported the accounts as included in bankruptcy. In some instances, a creditor fails to update their record with the credit reporting agencies (CRA).

So, in these instances, let’s talk about getting the incorrect items corrected. Often, the dispute process is neither quick or easy. Understand the CRAs are not your friends. Use caution with what you say or write to a CRA. For specifics on how to dispute information on your credit reports, I suggest you read my blog titled: Credit Repair/Dispute Basics.

A word on entering comments to clarify some situation or another; such comments do not do anything positive for your credit scores or your credit history. It is of no benefit to you to make comments. Everything you say can and will be used against you. This is one of those times to consider the Miranda Warning along with the idiom less is more. When and only if necessary, you may address individual items as requested by your loan officer for an underwriter. Open or unresolved disputes on your credit report(s) can keep you from gaining credit approval.

To begin correcting your reports, you need to get a copy of each of your credit reports. There are three credit reporting agencies: TransUnion, Equifax and Experian. You can get a copy of your three credit reports once a year for free via the Official Site authorized by Federal law: http://www.annualcreditreport.com. It does you no good to only review one or two reports. Review all three of them annually.

For mortgage approval (purchase or refinance), two (2) years following your Discharge, you will be eligible to apply for an FHA, VA or Rural mortgage loan. Four (4) years following your Discharge, you will be eligible to apply for a conventional mortgage loan.

Contact me below or via Quora with specific questions.

Success!

Financially Speaking™ James Spray RMLO, CNE, FICO Pro | CO LMO 100008715 | NMLS 257365 |April 6, 2018 | Copyright 2018

Notice: The information on this blog is opinion and information. While I have made every effort to post and link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct for your situation. This information is not legal advice and is for guidance only. You may reproduce this information in whole and not in part, providing you give full attribution to James Spray.

Ask the Underwriter: My borrower owes a federal tax debt to the IRS… Is this mortgage deal dead? | 2018-02-26 | HousingWire

My borrower owes the IRS approximately $16,000 for tax years 2016 and 2017. They have $20,000 in savings, but were hoping to use that money as a down payment to purchase their first home. Is there a way to get them approved without making them pay off the entire tax debt first or is this a dead deal until it is paid?

Source: Ask the Underwriter: My borrower owes a federal tax debt to the IRS… Is this mortgage deal dead? | 2018-02-26 | HousingWire

This information is current as of February 26, 2018

What the New Tax Law Means for Reverse Mortgage Borrowers

Excellent article, great discussion in the comments. 

https://reversemortgagedaily.com/2018/01/03/what-the-new-tax-law-means-for-reverse-mortgage-borrowers/?utm_source=Reverse+Mortgage+Daily&utm_campaign=81cbb217e7-EMAIL_CAMPAIGN_2018_01_03&utm_medium=email&utm_term=0_48b4357284-81cbb217e7-47152

Psychometrics and FICO Scores — An Odd Match?

Source: Psychometrics and FICO Scores — An Odd Match?

“…In a previous post, I highlighted how Sovcombank is using the EFL score to bring more students into credit. Since then, we have also begun rolling the EFL Score out to all banks in Russia through our Russian Credit bureau partners at NBKI.

EFL harnesses something that every one of us has – a personality – to assess credit risk and empower lenders to lend where others are forced to say no. And this is not a new start-up – EFL has 10 years of experience, including 4 years of research and development at Harvard, and 6 years of real-world lending data across dozens of markets.

All Your Equifax Breach Questions (and Some Answers) in One Place – The New York Times

This debacle is explained quite well, in the awesome NY Times style. Nonetheless,  I scooped them by weeks, modestly speaking.

https://www.nytimes.com/interactive/2017/09/28/your-money/100000005466895.app.html?nytapp=android&_r=0

Update (2/6/18): Report claims CFPB is backing away from Equifax probe – Sources say the consumer agency shows little interest in the agency’s 2017 data breach

John Oliver – Last Week Tonight – On EQUIFAX