Consumer Credit

Feb 10, 2015

Controversial Rate Checker Tool Tweaked

OD_BloggerUnder strong criticism from the Mortgage Bankers Association and other industry trade groups, the Consumer Financial Protection Bureau made tweaks to its controversial Rate Checker consumer tool.

But MBA President and CEO David Stevens said the tweaks do nothing to resolve “fundamental flaws” with the tool and continue to provide “misleading” information to consumers. 

On January 13, the CFPB unveiled this new borrower education tool on its website (Click Here for Rate Checker) ostensibly to help consumers be better informed of rates and other costs when shopping for a home loan. CFPB said this Rate Checker tool will allow consumers to “see what interest rates people with similar financial situations have been offered.”

The tool uses a credit score, state; property location and a down payment percentage to generate an estimate for a borrower of rates available.

The website which indicates rate information for the rate checker is provided by a private firm who collect data from “actual lenders and is updated every business day.” “When the imprimatur of the government is associated with particular data, the public assumes the data are complete and accurate. However, the lenders’ rates incorporated in the tool include only a mix of large banks, regional banks and credit unions. Notably, rates from independent mortgage banks do not appear to be included in the data. Similarly, discount points, origination fees and mortgage insurance are not included, yet are a significant part of the cost of residential finance–and are critical for any website that purports to be a comprehensive borrower decision tool.” 

Source: Mortgage Bankers Association

 

By OD Blogger Consumer Credit, Loans, Mortgage, Real Estate No comments Tags: , , , ,

Jan 31, 2013

FHA Announce Changes To Mortgage Insurence Fees

FHA Commissioner Carol Galante announced a series of changes aimed at protecting FHA’s single family insurance programs. The change most likely to affect home buyers is the announced increase to the annual mortgage insurance premium (MIP) of 10 basis points or 0.10 percent. FHA will also increase premiums on jumbo mortgages (loan $625,500 or larger) by 5 basis points or 0.05 percent.

FHA is reversing the policy put into place in 2001 allowing borrowers to cancel MIP premium payments once the mortgage balance fell below 78 percent of the original loan balance. Under the new policy borrowers will be required to pay annual mortgage insurance premiums for the life of the loan. Borrowers with down payments of 10 percent or more may be exempt from the new premium cancelation policy.

Also included in the new policies are stricter underwriting guidelines for borrowers with credit scores below 620 and debt to income ratios above 43 percent. FHA will require manual underwriting for borrowers falling within the aforementioned criteria  as well as documentation of compensating factors which supports underwriting decision to approve loans.

The FHA commissioner reaffirms the agency commitment to remain a vital source of affordable and sustainable mortgage financing for future generations of American homebuyers.   

Following a few basic steps to understand and improve your credit before applying for your loan will save you thousands of dollars in fees and mortgage payments. Download a FREE credit repair guide, plus a free copy of your credit report with score.

 

 

By OD Blogger Consumer Credit, Mortgage, Real Estate No comments

Sep 25, 2012

How to Improve Your Credit Rating

Your personal credit rating to a great extent determines what loans you’ll qualify for and the interest you’ll pay.

Fair Isaac Corp. (FICO) does the math behind credit scores, including those sold by consumer-reporting agencies Equifax, TransUnion and Experian. Its site http://www.myfico.com/ includes information on fixing or improving your credit rating. The most important step may be to force discipline into your credit use and to be suspicious of quick-credit-repair offers.  Check Fair Isaac Corp. to find out where you stand and how to fix your credit problems  . There are also links to guidance for disputing errors in your credit history.

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By OD Blogger Consumer Credit, Real Estate No comments

Sep 7, 2012

Passage Medical Debt Bill Could Help Credit Scores

WASHINGTON – Sept. 7, 2012 – A bill working its way through the U.S. Congress could open the door to homeownership for those people with lower credit scores, providing the credit ding came from a medical problem that they have since paid off.

If the Medical Debt Responsibility Act passed, consumers would have all bad credit information removed from their score within 45 days of payment. Currently, a problem paying medical bills can lower a potential homebuyer’s credit score even years later.

Terry W. Clemans, executive director of the National Credit Reporting Association Inc. (NCRA), calls it a “common sense bill that everyone should be able to embrace, as consumers typically don’t ‘choose’ to frivolously over-consume medical services.”

A House version of the bill passed 336-82 last year, but the Senate didn’t take it up. A bipartisan letter from 20 members of the House Financial Services Committee has encouraged that group to reconsider the bill (HR 2086) this year.

The Senate version of the bill (S 2149), however, doesn’t have as much momentum.

Most major consumer groups and many real estate associations support passage.

© 2012 Florida Realtors®

By OD Blogger Consumer Credit, Real Estate No comments

Sep 6, 2012

FICO® Score

Let’s Talk About FICO® Score

FICO® (Fair Isaac & Company) credit scoring system is used by Experian to compile credit profiles and assign credit scores used to evaluate consumers credit worthiness. Although there are 2 additional credit scoring systems used by Trans union and Equifax, FICO® is the best known and is considered synonymous with credit scores.

Your FICO® score will be a major factor in determining the monthly payments on your home purchase, so let have a look at some of the factors used in calculating your score. 

    1. Payment history: is probably the most important factor used in calculating FICO® scores. Information relating to bankruptcy, foreclosures, collections and late payments will be evaluated.   The most recent 2 years history has the greatest impact.
    2. Access to credit: the number of open credit lines and the balances on those lines are also important factors. It is better to have a few strong lines with balances at or below 60% of the maximum credit limit.
    3. Quality and credit type: some of the accounts evaluated by credit bureaus during the calculation of credit scores are mortgages, car payments, student loans, credit lines, credit cards plus any other accounts reported to the credit bureaus (rental payment history is in the process of been added as an evaluated account).  Both open and closed accounts are evaluated with seasoned accounts (accounts with payments of 12 months or more) given higher relevance.

FICO® scores ranging from 620 to 740 and above are considered acceptable by most Mortgage Lenders.  Scores above 740 often qualify for the best interest rates.  Contact a Mortgage Professional for assistance in improving your FICO® score.

By OD Blogger Consumer Credit, Real Estate No comments Tags: , , , , ,