Category Archive: Credit Repair

Nov 19

Revised the Legal Credit Repair Guide

Very tricky undertaking tonight, worked all weekend trying to figure out how to shrink the size of the Legal Credit Repair Guide and get the hyperlinks to work in a pdf file format.  For some reason the PowerPoint software made the file grow instead of shrinking it like it was supposed to do and all of the links were dead.

Had a brainstorm while in the gym this morning, looks like it worked! 

Deleted all of the links and printed all of the slides in a PNG format, then pasted all of them back into a blank PowerPoint.  Next, added the URL versions of the links, and then saved the file as a pdf.  It worked, the size cut down to nothing, the quality is high, well high enough. And all of the links worked on my computer at least.  Shot off a copy to my technical guru to see if he approves. 

 

Nov 13

Legal Credit Repair

Credit Repair or Mortgage Fraud?

New page added to the Resource Center that outlines the difference between building a strong credit report and committing mortgage fraud.

Here is the link to the page Credit Repair or Mortgage Fraud?

A link to the Legal Credit Repair Guide

Jun 22

FHA Reverses Recent Changes

June 15th 2012, FHA issued Mortgagee Letter 2012-10 that rescinds two changes outlined back in February in Mortgagee Letter 2012-3.  Both of the sections covered in this month’s letter refer to issues on the borrower’s credit report.  The first item covers how to address disputed accounts and the other one covers collections and judgments.

A disputed account is when an individual submits a formal complaint with one or more of the credit repositories claiming information on their credit report is inaccurate.  In other words they dispute the information.  This tactic is most commonly used in an attempt to remove negative information, such as late payments or collections.  Any third grader would know it is wrong to tell a lie and their parents should know that doing so in order to get a mortgage loan approved is a felony offence.   

An open disputed account is a red flag for any DE underwriter.  In February FHA removed the flexibility underwriters had when they came across a dispute on a credit report.  Basically, any dispute on an account over $1,000 or combination of accounts that totaled over that amount would cause the loan application to be denied. 

I know, if you read the letter it doesn’t say that exactly, but don’t forget I am bilingual, my language of choice is slow southern drawl but am also fluent in mortgage mumbo-jumbo.  Here is how it translates, before February the subject was left up to the underwriter, after that it is only left up to the underwriter if the amount is less than $1,000.     

Actually, I agree with the change that tightened up this loop hole.  Mortgage fraud is serious and it hurts all of us.  Disputing accurate information should not be allowed period unless the borrower has solid evidence like a cancelled check showing the payment was made on time, etc.

Evidently this little change caused quite a ruckus because it has been reverted by the most recent Mortgagee Letter.  I personally believe this is a step in the wrong direction.  I didn’t like removing any discretionary abilities from my underwriters but thought it was the right thing to do for the overall good of the nation.

Here is the gut level truth; people that actually qualify for a mortgage are not in the habit of disputing garbage on their credit report.  Most, not all, but most of the people that have multiple disputes are trying to commit fraud.  The government should not allow it to be easy to do.   So I believe this recent change is a step in the wrong direction.

The second change covered collections and judgments.  In the past the underwriter was able to make a decision on collections, the change in February limited that to collections under $1,000.  Judgments of any size needed to be paid off.  A judgment is simply a collection that has been taken to the next level so I have never understood the logic of ignoring one and not the other.  A large collection could morph into a large judgment and that would always happen when the individual could afford it the least.  I believe that is some kind of financial universal law similar to Murphy ’s Law.

Both of the changes from February have been rescinded which makes it easier to get approved for an FHA mortgage.   

May 09

CreditXpert™ Rides Again

Had a guy call me this morning, said he had been turned down by two loan officers from other mortgage companies because of his credit report.  When I asked why they turned down his loan request he said it was because of a bankruptcy and a low credit score.  The bankruptcy was five years ago, not a reason to decline a mortgage.

He told me his credit score was low, below 580, but when I asked if they gave him a copy of the credit report he said neither had bothered to pull one.  Okay, how do you know the credit score was my next question.  Answer, one of the online free credit reports. Bad, bad, bad, not a true credit score.

We pulled a real credit report and the score was actually 635, only a couple of points below the threshold but the problem had nothing to do with late payments or other negative entries.  In fact, his payment history was absolutely perfect after the BK.  I could see the reason for the low score was two credit cards cranked to the limit, one was $150 above the limit.

We ran CreditXpert and it confirmed my assessment but gave exact numbers to reduce the balance, what a program!  Half an hour later he had an approval letter based on paying down the credit cards.

May 07

Collections on a Credit Report

9am this morning, a lady filled out an application on my web site and I received the notification by email.  Her credit report listed multiple collection accounts and a judgment for nearly $1,000.  Four of the collections were sizable medical bills and a couple of small ones from utility companies.  She acknowledged the judgment and the utilities but said the medical bills should have been covered by insurance.  She was not aware they were in her credit file.

She said her tax refund was due any day and as soon as it arrived she would pay off the judgment and the utilities, in the meantime would contact her insurance company and get to the bottom of the medical bills.  Regardless, she would do whatever is needed to clean up the mess so she could buy a home.  I bet she will follow through on her promise to herself, I was just helping out, she wasn’t promising me.

Contrast, around 11am a gentleman called me saying he was ready to buy a home, asked if I remembered speaking with him last year.  Not really, but I pulled up my notes and it was two and a half years ago, not last year.   Back then he had a total of 14 collections on his credit report and I asked if he had taken care of them.  He acted surprised by my question and asked what they were.

When we last spoke I suggested he begin by paying off the smallest collection first because it was only $25.  So I asked if he had paid it as we discussed. Nope, how about the next one that was only $40? Nope, none, nada, zip, hadn’t paid off a single one.  Combined, all the collections totaled $9,000 but he hasn’t paid a single dollar towards any of them.

He is further away from buying a home today than he was back then; underwriting guidelines have tightened up since then.  If he had followed my suggestions he could be moving in a few weeks.

The wrong way to handle collections is to dispute them.  It is what it is, and disputing accurate information on your credit report just because it is negative in nature is fraud if the purpose is to get a loan.  Besides, having open disputes on a credit report can get a loan application declined.  Underwriters do not like loose ends.  Key point, have you ever tried to remove a dispute from a credit report?  You must dispute the dispute, HAHAHAHA!!  Don’t do this!

Can you offer less than owed on a collection?  Absolutely, but it doesn’t look good if you are trying to borrow money at the same time.  Asking one lender to take less than owed on a $1,000 account doesn’t look good to the lender you are asking $150,000 from.  But one is for a house and the other one was dinner and blue jeans.  It doesn’t matter, it doesn’t look good. 

Pay them off?  Where to start?  Start with the smallest amount that reported or updated their info most recently.  A $25 collection that reported or updated their status last week will cost more points on your credit score than a $2,500 collection that hasn’t been updated in a couple of years.  

Check out the related info on the page, CreditXpert™.

 

 

May 05

CreditXpert™ – New Page Added

There is a new page added to the Buyer’s Section – CreditXpert™ .  It explains how the service helps our clients save thousands of dollars by fine-tuning the structure of the debts listed in a credit report.

This service is provided by CBCInnovis, the company that assembles our credit reports. 

Traditional credit repair companies advise borrowers to dispute accurate information that is negative in nature and that is illegal.  CreditXpert™ does not make suggestions that are dishonest. There is a big difference between lying about what is contained in a report and structuring the content in a positive manner.

This is a major innovation. It will only make suggestions that are 100% legal, and it is provided by the same company that compiled the original credit report, straight from the horse’s mouth. 

Sorry about the horse reference, it is Derby Day after all.

CreditXpert™ will help most home buyers achieve the next best credit position above their existing credit score. This can save a fortune in closing cost and or interest.  Both of these are related to the credit score. 

It can also be the difference between a loan application being approved or declined. All automated underwriting software weighs the entire contents of an application including the credit report.  The more the contents of the credit report matches the approval matrix of the AUS the more likely the application will be approved and the better the terms of the loan will be.  

Check out the New Page.

 

Apr 16

Credit Reports – New Section Added

We have added a new section to assist Kentucky residents understand credit reports.

Credit issues are becoming more frequent as the quality control measures of the underwriting process are tightening up.  We thought it would be helpful to explain the process and help everyone understand credit reports.

It contains a sample of a tri-merged credit report similar to what lenders use to process a loan application.

This section will be an ongoing project but it is off to a good start.

Mar 25

Legal Credit Repair with CreditXpert™

Everyone that knows me professionally is aware of my opinion of the credit repair industry.  It is my belief these guys are the root of the mortgage meltdown. These guys call frequently asking for my turndowns, loan applicants that have had an application rejected. 

Traditional credit repair is based on lying about what is contained in the client’s credit report.  They instruct the client to dispute everything on the report that is negative in nature, even if the information is correct.  These snake salesmen attack the soft underbelly of the credit industry.  Federal laws place the responsibility on the credit grantor to prove the information is correct.  And the timeline to answer a dispute from a creditor is very short.

The credit repair guys know if you dispute everything some of the credit grantors will not respond or may even be out of business and therefore unable to respond.  It’s a numbers game, dispute everything and some of it will go away making the client’s credit score improve.

The only problem with this tactic is it isn’t legal.  If the client knows they were late on a payment and lies about it by disputing the information in order to be approved for a mortgage then it is fraud.  And mortgage fraud is a very, very serious crime. 

I order all of the credit reports for my loan applicants from CBCInnovis.  They recently hosted a seminar for my company and introduced us to a legal alternative to credit repair called CreditXpert™.  What a fantastic product!

It is a web-based software program that reviews an individual’s credit report and makes suggestions of what can be done to increase the credit score.  It is common knowledge that when credit cards are maxed out the credit scores will plummet.  CreditXpert™ will not only make suggestions, it estimates how much each action will add to the credit score.  It doesn’t suggest doing anything wrong, it just fine tunes the debt structure to maximize the credit score using the same matrix used by the credit bureaus.

Buying a property in Kentucky and want to use  CreditXpert™? Visit my online application site or printand use this simple form to get started. If you prefer we can do it over the phone, call my direct line during normal office hours, (502) 753-4127.