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By Andrena Dimitrijevic | Agent in Florida
  • A new credit scoring model

    Posted Under: Home Buying in Miami, Financing in Miami, Credit Score in Miami  |  March 26, 2013 9:00 AM  |  508 views  |  No comments

    "A new credit scoring model will potentially boost scores for many credit applicants and help establish credit for millions of people who previously had little or no credit history."

  • Top 6 reasons mortgage applications are rejected

    Posted Under: Home Buying, Financing, Credit Score  |  October 16, 2011 8:44 PM  |  300 views  |  No comments

    Half of refinance applications are abandoned or rejected, as are 30 percent of purchase mortgage applications, according to the Mortgage Bankers Association. All told, the Federal Financial Institutions Examination Council (FFIEC) says that well over 2 million mortgage applications were rejected last year.

    Want to avoid falling into that number? It's tough -- especially in light of the fact that mortgage lenders have become increasingly restrictive in terms of their lending guidelines since the housing market crash.

    Here, as a cautionary tale and primer on what to expect, are the top six reasons mortgage lenders reject applications.

    1. Income issues. Most failed applications falling into this category have income too low for the mortgage amount they are seeking; often, a spouse's credit issues can create this problem, too, as the income the spouse plans to actually chip in toward the mortgage cannot be considered by a lender.

    But increasingly, the recent vagaries of the job market are also causing this issue, as people who have changed their line of work or have changed from salaried employee to freelancer over the last couple of years can also have their home loan applications rejected based on income.

    2. Muddled money matters. If the mortgage for which you're applying plus your monthly payments on credit card, car and student loan debts will comprise more than 45 percent of your total income, you could have problems qualifying for a home loan. You might also run into problems if you rely too heavily on bonuses, overtime, cash wages or rental income -- all of these can be difficult or impossible to get a mortgage bank to consider, and if they do, they might not take all of it into account.

    3. Credit issues. Today, the mortgage-qualifying FICO score cutoff falls somewhere between 620 and 660, depending on which lender and which loan type you seek. More than one-third of Americans, by some numbers, have credit scores too low to qualify for a home loan. Even if your credit score is high enough to qualify, if you have any late mortgage payments, a short sale, a foreclosure or a bankruptcy in the last two years, loan qualifying could be difficult to impossible.

    4. Property didn't appraise. Since the whole industry had its hand (among other things) smacked for allowing home values to skyrocket in a very short time, appraisal guidelines have tightened up -- some would say, even more than overall mortgage guidelines. So, it is increasingly common to have the property appraise for a price lower than the sale price negotiated between the buyer and seller.

    This is especially common in the refinance realm, as well over a quarter of U.S. homes are now upside-down, meaning the mortgage balance owed is greater than the value of the home. (If you're trying to refinance an upside-down mortgage, consider the FHA Short Refi program -- contact your lender or get referrals to any mortgage broker who makes FHA details to apply.)

    5. Condition problems. With all the distressed properties on the market, and with most nondistressed sellers barely breaking even, more home-sale transactions than ever are falling apart due to condition problems with the property. Many lenders will not extend financing on homes where the appraiser points out problems like cracked or broken windows, missing kitchen appliances, electrical problems, or wood rot.

    And in the world of condos and other units that belong to a homeowners association, if more than 25 percent of units are rented (rather than owner-occupied) or more than 15 percent are delinquent on their HOA dues, new applications for refinance or purchase mortgages on units in the development are likely to be rejected.

    6. Technical difficulties with application. The days when lenders just took your word for it are long, long gone. Applications with incomplete or unverifiable information are doomed.

    If any of these mortgage loan application glitches arise in your homebuying or refinancing process, it's critical that you connect with your mortgage professional, be it your banker or mortgage broker, to determine what course of action to take.

    In some cases, it might be as simple as buying a stove you find at Craigslist and installing it before escrow closes; but with income issues your mortgage pro will need to help you determine whether it makes sense to pay some bills down, get a co-signer, or even wait six months so your income documentation will qualify.
    Tara-Nicholle Nelson

  • CoreLogic launching new borrower credit report

    Posted Under: Home Buying, Financing, Credit Score  |  October 12, 2011 1:37 PM  |  278 views  |  No comments

    NEW YORK – Oct. 10, 2011 – CoreLogic announced a new credit score service, CoreScore, which will give lenders greater insight into a borrower’s outstanding debts and help to understand their credit worthiness. The new CoreScore credit report, which will be available to lenders and consumers, will include credit-risk information, as compliant with the Fair Credit Reporting Act.

    It will not replace current credit reports but aims instead to fill gaps in current credit score reports.

    The report will help “lenders mitigate risk by uncovering debt obligations, and increase new lending opportunities by identifying previously hidden credit behavior that could improve a consumer’s credit profile,” CoreLogic said in a press release announcing CoreScore.

    According to CoreLogic, the reports will include buyer information such as:

    • Properties owned (with and without debt obligations)
    • Mortgage obligations with companies that may not report to traditional credit reporting agencies
    • Property legal filings, such as notices of default
    • Property tax amounts and payment status
    • Estimated market values on all U.S. properties owned
    • Rental applications and evictions
    • Inquiries and charge-offs from payday and online lenders
    • Consumer-specific bankruptcies, liens, judgments and child support obligations

    CoreLogic will pull the information from its real estate database, rental information and public records.

    “CoreLogic Launching New Borrower Credit Report,” HousingWire (Oct. 3, 2011) and “CoreLogic to Act as Supplemental Consumer Credit Repository to Augment Traditional Credit Reports,” CoreLogic (Oct. 3, 2011)

  • Credit scores easier for consumers to get with new rules from Federal Reserve, FTC

    Posted Under: Home Buying, Financing, Credit Score  |  July 8, 2011 12:07 PM  |  250 views  |  No comments

    In my beginning of the year bank foreclosed home list, I usually tell my clients to start the new year by getting their free credit report. 


    This takes it a step further!  Great news for all!

    Consumers who are denied credit or whose existing loan terms become less favorable will soon be able to get free credit scores under new rules from the Federal Reserve Board and Federal Trade Commission.

    Effective July 21, if a credit score is used to set certain credit terms, to deny or revoke credit, or to change existing terms, then banks and others will be required to disclose credit scores and related information to consumers. The new rules also apply to consumers who receive credit, but on terms that are noticeably less favorable than those given to many of the best borrowers.

    Millions of consumers will likely benefit from the new rules, estimates Odysseas Papadimitriou, chief executive of credit card comparison website CardHub.com.

    "Free access to credit scores is a big deal for consumers because it will make the link between credit decisions and the health of their credit history much clearer," he said. "The amount of information contained in a credit report can be overwhelming for many consumers, but the simplicity of a number makes it much easier to understand."

    Under federal law, each of the three nationwide credit reporting agencies — Equifax, Experian and TransUnion — is required to provide consumers with a free copy of their credit report once a year upon request. Consumers can get their credit score from the same reporting agencies but they have to pay a fee. Many other companies also sell credit scores.

    Besides the consumer's credit score, the lender also must now disclose the range of possible scores under the model used to generate the score; the date on which the score was created; the name of the consumer reporting agency or entity that provided the score; and up to four key factors that hurt the credit score, or five factors if the number of inquiries made into that consumer's credit report is a key factor.

    Numerous inquiries into a consumer's credit report can suggest that the consumer has been shopping for credit and might be financially stressed.

    The new Fed rule requiring lenders to divulge the source of their credit score will help consumers understand that many of the "free credit scores" given by different companies are not used by lenders, Papadimitriou said.

    "This will help them see which credit scores are useless and which scores are actually used by lenders making decisions on their access to credit," he said.

    Since 2004, lenders have been required to disclose credit scores when consumers apply for mortgage loans, said John Ulzheimer, president of consumer education at SmartCredit.com.

    But credit score disclosure isn't always required, Ulzheimer said. Some examples:

    • A consumer applies for insurance, utilities or rental housing and the score used is different from that used in loan-related decisions.

    • A lender bases a decision solely on a "proprietary score," one developed by a creditor for its use only. The exception: If the proprietary score uses only information from a credit bureau, then it must be disclosed, Ulzheimer said.

    • A lender uses multiple scores that meet the definition of a "credit score." In that case the lender has the option to choose only one score rather than all the scores.

    • The score disclosure might not clearly identify the brand or type of score the lender used to make the decision. So the consumer must rely on the disclosed score range to determine what score was used. If the range is 300 to 850, then a FICO score was used. If the range is 501 to 990 then a VantageScore was used, Ulzheimer said.

    The rule changes are part of the recently enacted Dodd-Frank Wall Street Reform & Consumer Protection Act.

    The Fed has estimated that it would take lenders, on average, two business days to update systems to comply with the new requirements, although some of the approximately 30 parties that submitted public comments on the rules say it could take weeks or longer.

    Barclays Bank Delaware, part of the financial giant Barclays, told the Fed that it estimates it would take 8,000 hours to comply with the new requirements.

    The Northwest Credit Union Association, representing 194 credit unions in Oregon and Washington, wrote that Dodd-Frank "continues to deluge our members with new regulations, requirements and 'fixes' to unbroken policies."

    "The association views these changes as one more round of additional costs to be borne by our members," it said.

    Kansas City, Mo.-based Commerce Bancshares Inc. said the effect of the new rules and others under Dodd-Frank are having a "staggering" effect on the economics of community banking. It also said that banks shouldn't be asked to explain the credit scores of credit rating agencies.

    By Becky Yerak, Tribune reporter

  • What You Can Do to Improve Your Credit

    Posted Under: Credit Score  |  July 19, 2010 12:24 PM  |  207 views  |  No comments

    Credit scores, along with your overall income and debt, are big factors in determining whether you’ll qualify for a loan and what your loan terms will be. So, keep your credit score high by doing the following:

    1. Check for and correct any errors in your credit report. Mistakes happen, and you could be paying for someone else’s poor financial management.

    2. Pay down credit card bills. If possible, pay off the entire balance every month. Transferring credit card debt from one card to another could lower your score.

    3. Don’t charge your credit cards to the maximum limit.

    4. Wait 12 months after credit difficulties to apply for a mortgage. You’re penalized less for problems after a year.

    5. Don’t order items for your new home on credit — such as appliances and furniture — until after the loan is approved. The amounts will add to your debt.

    6. Don’t open new credit card accounts before applying for a mortgage. Too much available credit can lower your score.

    7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.

    8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.

    This information is copyrighted by the Fannie Mae Foundation and is used with permission of the Fannie Mae Foundation. To obtain a complete copy of the publication, Knowing and Understanding Your Credit, visit www.homebuyingguide.org.

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