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     | Sunday, January 02, 2000 - 08:33 pm  I have a problem! We put our home up for sale and have purchased another with the contingency of ours selling. We went to the lender and she pulled our credit. Our scores were in the mid 500 range. I knew they wouldn't be great, but I never imagined they would be this low. She gave me a copy of my report. I can't believe how much inaccurate information is on it. I found 20 items that are incorrect. The biggest thing is our mortgage company has reported that we are on a repayment plan. We have never been on any type of plan. We do have 2 30 day lates, however. The next problem is there is 8 revolving accounts and a home that doesn't belong to us. Some of this accounts were opened before we were even born. One was opened in 1956 and my husband was born in 1959. Our lender says, it's too late to raise our score and letters won't help. What do we do? Do we back out of the deal, fix the credit report and buy later? This is just awful, we really wanted this particular house. Helpful advice please.
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| | Monday, January 03, 2000 - 05:36 am Unless you can get the purchaser to wait an additional 60 days (worst case), yes, you may lose the house. It will take awhile to clear this up. I wouldn't waste anytime, though. Start cranking out those letters to the credit bureaus now. Here is a good place to start: http://www.creditinfocenter.com/repair/fix2crdt.shtml Make sure you send everything registered mail, and specifically spell out each account which is in error and why it is wrong.
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| | Monday, January 03, 2000 - 06:59 am I don't know the answer to your question, but I have a recommendation for the dispute letters that you send out. Very succinctly and clear point out the damages that you will suffer if this is not remedied quickly. Do not point out that the lender said it is too late to fix the scores. And do not simply say that you like this house. The idea is to give them the impression that you are putting them on advance notice of the damages that you are suffering so that you can set them up for a lawsuit. Even if that is not your intention, it might help to motivate a quick response.
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| | Monday, January 03, 2000 - 08:22 am Kathy: When were the 2 30-day late payments?
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| | Monday, January 03, 2000 - 11:44 am Kathy: When were the 2 30-day late payments? they were in July and Aug of 99. We have a letter from my husband's employer stating that they misinformed my husband of the ability to receive his annual raise in a lump sum. This was something that his company had offered in the past and we had taken this option a few times over the years. He needed 1300.00 worth of dental work that wasn't covered by our dental insurance. He went to his employer and they told him that "yes, he could get his raise in a lump sum". This was 3000.oo that we were expecting. Anyway, we spent the paycheck on the dental work and 2 days before he was going to receive the lump sum check the company told him that their policy had changed. So they wrote a letter of apology, but we fell behind on the house payment for two months.
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| | Tuesday, January 04, 2000 - 07:16 am Kathy: Unless the lender only uses automated underwriting, or is completely score driven, there is no reason that written explanations cannot be considered. The organizations pushing automated underwriting make grand overtures encouraging underwriters to ignore the score if the data is incorrect. Is it a conventional, a government, or a non-conforming loan?
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| | Tuesday, January 04, 2000 - 08:49 am I suggest you approach the Seller about a creative financing solution until such time as you can get your credit repaired. Solutions like a lease-option or land contract (sometimes called contract for deed or agreement for deed) for a 6 month or one-year duration should be sufficient to buy you the time you need to repair your credit like you wish. Solutions like this violate the due-on-sale clause of the underlying mortgage but 1) The lender isn't likely to find out, unless the homeowner's insurance names the new persons and 2) It normally takes the lender four to six months to find out when the insurance is fiddled with and 3) The lender normally suggests you pay their assumption fee of 1.5 points and accept a blended rate, which isn't pleasant but is hardly the end of the world either. Creative solutions like this would normally require a real estate attorney to handle the close instead of an escrow company and the Buyer would be likely to absorb the extra cost. Once the credit problem is worked out the house can be refinanced. As a safety precaution I suggest you include some kind of verbage to allow you to extend the term of the contract in case something goes wrong, like a payment of 5% of the principal would extend the contract for another year. Your real estate attorney can suggest other great ideas for escrowing the deeds and stuff that will help to keep the relationship between you and the Seller working smoothly and completely error-free.
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| | Tuesday, January 04, 2000 - 12:31 pm Sean: Is her credit (everything but the score) not correctable immediately (in time to meet the contract terms) by using a Residential Mortgage Credit Report? Will it take "a 6 month or one-year duration" to correct the score? Are you saying the mortgage holder would allow an assumption (give Kathy a loan) today by saying, "The lender normally suggests you pay their assumption fee of 1.5 points and accept a blended rate, which isn't pleasant but is hardly the end of the world either." You said, "Creative solutions like this would normally require a real estate attorney to handle the close instead of an escrow company and the Buyer would be likely to absorb the extra cost." Is that normally the case for all regions of the country?
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| | Tuesday, January 04, 2000 - 12:37 pm I agree with Greg, my experience is that with the right letter and mortgage companies, underwriters will consider giving you a loan, especially after you straighten out the rest of your report. Don't give up on the conventional lenders yet. Shop mortgage brokers, there are lots of them out there.
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| | Tuesday, January 04, 2000 - 01:43 pm Greg: I don't know if the report can be cleaned up but the person said, "We knew our scores wouldn't be great..." this leads me to believe that even cleaned up it might not reach the magic 650 number. Normally when people sell a house they feel a sense of relief, like a problem has been solved and a weight lifted off of their shoulders. The Seller of their intended new residence probably has that feeling -- which will be destroyed when the Buyer indicates to her that he/she will not qualify for a mortgage. The Seller may be willing to "wheel and deal" to keep that emotional sense of relief going, especially if the term is short like 6 to 12 months. I would certainly agree that letters of explanation from creditors would enable the entire thing to be cleared up quickly and expeditiously. This could be quickly accomplished for the items on her credit profile that aren't hers but what response would the borrower get from her current mortgage company? Isn't there a possibility that they might initially mistakenly confirm that the information on the credit profile is correct? My personal experience is that "DEL 30" notations on mortgages has a very depressing effect on your ability to get refinanced. Most of the lenders I know of insist you have a good score and no lates on your mortgage in the past 24 months. I'm sure you could find a mortgagee that would waive that requirement -- for a solid fee. Their letter of explanation as to why it occurred is nice -- but meaningless. Who cares why the person became late the point is that they did become late. Why couldn't they charge the medical expenses (a modest $3,000) on credit cards? The answer is most likely that they didn't have that much available credit. Lack of available credit has a depressing effect on your score, as we all know. None of us have asked Kathy the reasons why they didn't score higher (and they may be meaningless considering the mixed credit profiles) so we have no certain way of knowing. Real estate attorneys have a price tag, to be certain, but they do a better job than an escrow company and escrow companies come with price tags of their own. It's not an unreasonable fee to pay -- I would never buy a property just with an escrow company to handle the paperwork. I insist on a real estate attorney to handle my closings and I pay for him myself. It's far less expensive to pay to have it done right in the first place. Finally, when a lender finds out someone they don't know has assumed a mortgage they're never happy. On the other hand their choices are either to 1) Put up with it or 2) Foreclose. What lender wants to foreclose? Suppose a lender didn't discover you'd assumed a loan for 12 months and when they did they didn't get a chance to talk to you about it for 3 more months. A quick review of the previous 15 month's payments show that you've never been late. Do you think they'll hit you up with fees and increase your interest rate or do you think they'll try to go through a foreclosure? The fastest foreclosure possible still takes 3 months and 10 days (in my state) and they can't accept payments during that time without invalidating their foreclosure. Many foreclosures take 6-9 months. No way the bank will go for a foreclosure. The same cannot be said if you assume the mortgage and spend the next 12 months constantly behind a payment. That won't work at all.
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| | Tuesday, January 04, 2000 - 02:30 pm Actually, I have no idea what our score was before the lates on our mortgage. I can tell you that up until that point every item on our credit report showed current for the past 2 1/2 years. I do know that we applied for a personal loan back in july 99 and when the lender called back he told my husband that he "rarely tells people this, but your credit is excellent." We do not keep much revolving credit at all. We have one major credit card and two department stores. We have two car loans as well. when I made the statement of "knowing that the credit wasn't great," I was referring to the lates on our mortgage.
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| | Tuesday, January 04, 2000 - 02:51 pm I would go straight to the Seller of the property you want and tell him that you've run into a snag with financing, because your credit profile got mixed in with someone else's and you just need some more time to get it straightened out. I would say that the Seller is probably as anxious to sell as you are to buy and that something could be worked out. I doubt you sat down with the Seller ahead of time to determine his motivations and needs, but perhaps his Realtor® if he has one could help you understand better how to keep the sale together. Remember this isn't just your problem -- it's the problem of everyone who stands to gain a commission off of this deal. Chances are excellent they'll want to help. I figure it will take at least 60 days to get your credit profile straightened out (possibly longer) and that it can't hurt to start right away with dispute letters to the credit reporting agencies. It's too bad you didn't pay the $24 to get your credit profiles up front so you knew what you were up against, but that's not that helpful of a thing to say right now. Where is the Seller living? If he's living in the property would it be that much of a hassle for him to stay there longer? Does the Seller need the house to sell so he can close on another one he's already made an offer on? If you were willing to increase the size of your earnest money deposit would he be willing to give you the extra time?
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| | Tuesday, January 04, 2000 - 03:38 pm I have seen plenty of people with EXTREME problems due to "creative" financing. If you don't have to move, stay there, work on your credit, get pre-approved, then start looking for the house. Sometimes real estate people will do just about ANYTHING to close the deal and get their commission. You have to decide whether the new house is worth the STRESS over the DEADLINE to get the loan, possibly many thousands in points and interest and maybe even getting sued. Christine
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| | Tuesday, January 04, 2000 - 05:05 pm Kathy: Is it a conventional (meets Fannie Mae, Freddie Mac guidelines), a government (FHA or VA), or a non-conforming (none of the above) loan? Sean: Is her credit (everything but the score) not correctable immediately (in time to meet the contract terms) by using a Residential Mortgage Credit Report (sometimes known as a "full-factual" report)? You said, "I would certainly agree that letters of explanation from creditors would enable the entire thing to be cleared up quickly and expeditiously." Only in rare cases are letters from the creditors necessary with the RMCR. Incorrect entries are confirmed with telephone calls. You asked, "This could be quickly accomplished for the items on her credit profile that aren't hers but what response would the borrower get from her current mortgage company? Isn't there a possibility that they might initially mistakenly confirm that the information on the credit profile is correct?" No, not with an RMCR. But, Kathy has confirmed that the two late mortgage payments are legitimate. You said, "Most of the lenders I know of insist you have a good score and no lates on your mortgage in the past 24 months." For minimum down payments, that may be true. But the borrowers are selling a house and may have much more than 3% down. The higher the security (the higher the down payment) the more likely the lender will approve the loan-- even with the lates. That's nothing new. You said, "Their letter of explanation as to why it occurred is nice -- but meaningless. Who cares why the person became late the point is that they did become late." The explanation is not meaningless; lenders still listen, and are not willing to make such a quick judgment. Credit scoring and automated underwriting have not completely taken over, yet. I agree, however, that if they had the $3000 in credit available-- or could have gotten it-- they made a very bad move. These people have a complicated case-- one that, actually, credit scoring may be able to overcome and allow them to get the loan. That is supposedly what scoring and automated underwriting are all about: taking the entire picture into consideration, and not using arbitrary rules like having to have no lates in the last 24 months. But with a report as inaccurate as she describes, we may never know. This is a perfect example of one of the serious shortcomings of automated underwriting: no way to correct scores in a time frame necessary to complete a real estate transaction. Should they read this, the proponents of scoring would possibly cry foul, saying that reports are indeed accurate. I would respond, "Show me the numbers." A recent study quoted by one of your California U.S. House members in introducing a bill to give consumers a free credit report: "In fact, some studies have shown that up to one third of credit reports could contain serious mistakes." http://thomas.loc.gov/cgi-bin/query/R?r106:FLD001:E00544 You said, "Creative solutions like this would normally require a real estate attorney to handle the close instead of an escrow company and the Buyer would be likely to absorb the extra cost." Is that normally the case for all regions of the country? You said, "Finally, when a lender finds out someone they don't know has assumed a mortgage they're never happy." How could someone possibly assume a mortgage loan without the lender knowing? The lender approves the assumption. Are you talking about a land contract? You said, "Suppose a lender didn't discover you'd assumed a loan for 12 months and when they did they didn't get a chance to talk to you about it for 3 more months. A quick review of the previous 15 month's payments show that you've never been late. Do you think they'll hit you up with fees and increase your interest rate or do you think they'll try to go through a foreclosure?" Those aren't the only two options. If you are talking about a land contract arrangement, the buyer has the option of going to any lender he wants-- he doesn't have to stay with the same lender and pay higher than market fees and rates. What is magic about a credit score of 650? http://creditscoring.com
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| | Tuesday, January 04, 2000 - 06:59 pm Greg: I am not familiar with "RMCR." If all her problems can be corrected that way (and if they are, why did the lender indicate they weren't?) then kudo's to the capitalist market for providing a solution. I am proceeding based on the assumption that her lender doesn't use "RMCR." At any rate even if she did use RMCR and they constructed an accurate credit picture there I doubt the credit reporting agencies would update their information based on RMCR's findings. Accordingly she'd have to dispute things with the big 3 anyway to restore a good credit profile. Greg: "Is [the Buyer paying for an attorney] normally the case for all regions of the country?" I have no idea what is "normal" or "normally the case" anywhere. I know that real estate contracts are done by mutual agreement. Whether it is "normally the case" that one party or the other pays is completely irrelevant. What the two people involved agree to is all that matters. The words "normally the case" are used by Realtors® to try to browbeat their clients into accepting something and making the sale go through. The idea that what may be the cost of the Seller in one portion of the country is the Buyer's responsibility in another portion of the country just goes to show that "normally the case" means nothing. Should Kathy wish to persuade the Seller to pay for the cost of an attorney then that's just fine by me. Greg: "This is a perfect example of one of the serious shortcomings of automated underwriting: no way to correct scores in a time frame necessary to complete a real estate transaction." I'd just point out that Fair Isaac made available a model that would permit mistakes to be corrected on the fly and the person's application rescored immediately and both Fannie Mae and Freddie Mac refused to use it. Any problems with "automated underwriting" are not caused by Fair Isaac but by the quasi-governmental organizations that dominate the secondary mortgage market. I should also like to point out that it's the responsibility of credit reporting agencies, credit grantors and the borrower's to ensure that the information in the repository's database is as accurate as possible. Non-automated underwriting is going to run into the same problems with inaccurate information that automated underwriting will. A letter explaining that she had a "good reason" to miss payments because of failure to get a lump sum payout due to changes in a company's policy is nonsense. There is no "good reason" for missing payments that you've agreed to make. Considering that the medical costs were small, I wonder if double those costs wouldn't have pushed them directly into foreclosure... oh but wait, I forgot ... the lender would feel ok about that foreclosure if he got a letter of explanation from the company the debtor worked for... silly me. As for how you assume a loan without the lender knowing ... you just tell the person who is currently paying that you'll take over payments for him. You start making those payments. You just assumed the loan. Many times lenders don't check the name on the check that comes into them to make sure it matches the name on the account. As for a land contract it is a form of seller financing and does not involve a commercial lender at all. The underlying mortgage(s) are "wrapped" together. For maximum safety of all concerned normally a trustee is appointed who receives the payments from the owner, pays the underlying obligations and forwards any additional monies on to the previous owner. It is extremely unlikely that the lender would discover that one of their loans had been assumed without their knowledge and consent because they don't hire someone to sit down at each county recorder's office and look at every new grant deed recorded so they'll know when the public records show a new owner for one of their properties. Normally a lender would become suspicious only when they received a new certificate of insurance that named the lender and the new owner as the insured parties. Then they'd say, "Why does the insurance name Mr. Jones as the insured when Mr. Smith is the one that owns the property?" When a lender discovers that the due-on-sale clause has been violated they have the right to call the entire principal balance of the loan due and payable but they certainly won't do that if 1) There is little or no equity in the property; 2) The person could easily refinance and get a lower rate than they are currently paying; or 3) The person represents a reasonable risk and is willing to pay the assumption points and accept a blended rate of interest. Since we were figuring Kathy would refinance the property as soon as possible (perhaps in as short as 2 months) even if they did call the entire loan due and payable it wouldn't matter, would it? Christine: I have personally purchased a few creatively financed properties in my time and except for a certain amount of tenseness associated with balloon payments, I have never had any problems. On the other hand, I don't count on stock forms out of real estate guru's handbooks and underpaid escrow agents to handle it properly. I use a real estate attorney instead.
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| | Tuesday, January 04, 2000 - 08:53 pm This conversation has become very interesting! First of all, I didn't get a loan because I didn't want a loan. I may be stupid, but I thought explanations were acceptable. Everyone I know has had to explain something when buying a home. Also, I would have never allowed a medical bill to put me into a forclosure. Like I said, the house payment was due, we used the pay check and expected the money from the lump sum. 2 days before the check was to be picked up we found out the policy had changed. We also could have borrowed the money from our 401k, but we didn't. I had no idea that a 30 day late could effect my credit so much. I guess, I just didn't educate myself enough when it comes to credit! I bet if you walked down the street and asked random people if they thought a 30 day late could do this much harm they would be surprised to find out that it can. Next item; the home we are buying is being built. The seller is a builder. Do you think they would be willing to wait? I doubt it. The do have another phase that will close in June, so we could buy the same house on a different street. I preferred this one on a cul de sac location. I am very irritated with this "score" system. I don't like it at all. I made two phone calls today and had errors removed by creditors who had reported inaccurate and outdated information. They apologized. Big deal! What did that do for me yesterday? I'm frustrated with the system. I can tell you that there are 20 inaccurate items on our credit report. What the heck are my rights? I have no rights. All I get is an apology. Big deal. Oh and the purchase price of the home is 218,000 with 10% down. The loan would have been a conventional loan.
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| | Tuesday, January 04, 2000 - 10:02 pm RMCR = Residential Mortgage Credit Report Details are at http://www.bayhouse.com/mortgage-credit.html I have personally consulted literally hundreds of people whose lives were ruined by lousy real estate attorneys and "deal makers." There is a TREMENDOUSLY HUGE difference between an investor making creative deals and someone as unsophisticated as Kathy who might end up losing her ONLY home. She didn't even know to get preapproved before looking at houses, and that's recommended in any newspaper and on TV so often. HOW COULD SHE MISS THAT??? Based on the info provided by Kathy, I would NOT approve that loan. When you can't make your mortgage payment because of a $1,300 dental bill, you've got some serious problems. I'd look at some compensating factors such as a LOT of cash left over AFTER the new deal closes, the payments being lower than previously, and 75% or lower LTV. The longer I think about this, the more I feel that they're going to be in trouble again. Why didn't they know of all the "incorrect" accounts that aren't theirs? With that low score, did they have credit cards? Or are they all maxed out? How did they get the current house? I'm not saying they're bad people, just not very financially sophisticated. And that's costing them a lot of money, making them high risk borrowers. For $150 I used to sit down with buyers and review their application and credit. I learned that things usually were quite different from what they told me when they scheduled. Not because they lied to me, but because they didn't know any better. They didn't know what was important to an underwriter. In my experience, it's very dangerous to advise people like Kathy to proceed with the purchase without reviewing the COMPLETE loan application and RMCR, AND at least an hour on the phone or in person to discuss all the problems. Sean, I'm curious, how much do you pay your attorney? Per transaction? Per hour? Christine
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| | Tuesday, January 04, 2000 - 10:15 pm I hadn't seen Kathy's post before I posted the previous one. New homes are almost always a bad investment. Just like new cars. 90% LTV? No way.
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| | Wednesday, January 05, 2000 - 08:10 am I moved the posting about new versus "used" homes to the Real Estate section.
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| | Wednesday, January 05, 2000 - 08:18 am She didn't even know to get preapproved before looking at houses, and that's recommended in any newspaper and on TV so often. HOW COULD SHE MISS THAT??? I came here for advice and to educate myself, not to be insulted. I do know about pre approval and I did purchase a home 2 years ago.By the way, I called a lender for pre approval a few days before we made a deposit on this home. She asked me income questions and what our last years W2 showed as income. She also asked about our credit and I told her about the mortgage lates. She said "your fine, you can buy anything you want in that new developement." When I bought my current home I had a lender run the credit, etc...prior to making a deposit and an offer. I assumed I would have to make an explanation for the lates. I didn't "think" that my credit report could have accrued this much inaccuracy in a 26 month period.
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| | Wednesday, January 05, 2000 - 08:35 am Sean: You said, "I am not familiar with 'RMCR.'" You should be. It has been a basic, standard real estate finance document for a long time. Ask any credit preparation service or mortgage banker. It is not an arcane secret. It is used in a large number of transactions, but is used less now because of automated underwriting and agencies and lenders allowing "merged" credit reports using no human intervention. You asked, "If all her problems can be corrected that way (and if they are, why did the lender indicate they weren't?) then kudo's to the capitalist market for providing a solution. I am proceeding based on the assumption that her lender doesn't use 'RMCR.'" The lender is either lazy or ignorant. It is a standard document priced at $45 to $55 and any fool mortgage company can get one. It is the Chevrolet Impala of credit reports for the mortgage industry. You said, "At any rate even if she did use RMCR and they constructed an accurate credit picture there I doubt the credit reporting agencies would update their information based on RMCR's findings. Accordingly she'd have to dispute things with the big 3 anyway to restore a good credit profile." That is irrelevant. Correcting inaccuracy is the point of the RMCR and an entire credit report preparation business revolves around it. Her national repository (Equifax, Experian, and Trans Union) in-file reports remain the same unless she is successful in her dispute resolution, but that is a moot point. The RMCR does not reflect any inaccurate data; again, that's the idea of the RMCR: verified data turned into useable information. You said, "Greg: 'Is [the Buyer paying for an attorney] normally the case for all regions of the country?' I have no idea what is "normal" or "normally the case" anywhere. I know that real estate contracts are done by mutual agreement. Whether it is "normally the case" that one party or the other pays is completely irrelevant. What the two people involved agree to is all that matters." But previously, you said, "Creative solutions like this would normally require a real estate attorney to handle the close instead of an escrow company and the Buyer would be likely to absorb the extra cost." If you "have no idea what is "normal" or "normally the case" anywhere," then why did you say it would "normally require a real estate attorney"? You said, "I'd just point out that Fair Isaac made available a model that would permit mistakes to be corrected on the fly and the person's application rescored immediately and both Fannie Mae and Freddie Mac refused to use it. Any problems with "automated underwriting" are not caused by Fair Isaac but by the quasi-governmental organizations that dominate the secondary mortgage market. Yeah, NO kidding. You have previously grilled and lambasted me for not asking questions of Fair, Isaac and posting them on creditscoring.com. Well, you just made the point, yourself: they are not in control. They appear in the media and blab about credit scoring and its wonders (but their appearances are only a defensive move; after the release of creditscoring.com (September, 1998), they hired their PR specialist, Mr. Watts to deal with the public), but in reality, they are a hired gun for the national repositories, brought on to do a job: give the repositories a way to calculate the score. Then you said, "I should also like to point out that it's the responsibility of credit reporting agencies, credit grantors and the borrower's to ensure that the information in the repository's database is as accurate as possible." Right. Including the score. Fair, Isaac doesn't have jack to do with it. That's why I concentrated on the national repositories. And what do they do when they have to appear in public and respond to me or anybody else complaining? They send their boy from their association, Associated Credit Bureaus to speak on their behalf. Even when called in for the FTC's forum last summer, they actually sent ACB. Oh, that's real good for the spirit of competition and the free market: have one guy speak for the entire industry. It is not a situation that actually fosters excellence, is it? Fannie Mae and Freddie Mac have no control over the national repositories and nothing is stopping the repositories from instituting a system to update their data so a score can be changed. What are they doing about it? You said, "A letter explaining that she had a 'good reason' to miss payments because of failure to get a lump sum payout due to changes in a company's policy is nonsense." Who are you quoting with the words "'good reason'"? You said, "oh but wait, I forgot... the lender would feel ok about that foreclosure if he got a letter of explanation from the company the debtor worked for... silly me." First of all, they didn't have a foreclosure, so don't try to lead this conversation into an area of irrelvance. Second, if you are not familiar with what an RMCR is, you are not familiar enough with the practices of mortgage lending to make the evaluation you did. That the borrower had no idea of the debilitaing effect of the mortgage late payments, is willing to sign a statement to that effect, and has an otherwise perfect history is relevant. But if the repositories had their act together and could change the score, none of that would be necessary. If it is believed that the score is an accurate evaluation of a person's risk, the explanation is all but moot: unreliable, inconsistent, biased human evaluation is gone. Unfortunately, due to credit reporting bungling, the ideal is far from reachable. You said, "As for how you assume a loan without the lender knowing ... you just tell the person who is currently paying that you'll take over payments for him. You start making those payments. You just assumed the loan." You make that sound like a common occurance. Is it? Today, how many people do you know have that arrangement? Perhaps you should change your terminology. Government backed FHA and VA loans are legally assumable. Fannie Mae and Freddie Mac qualified loans are not. Read the promissory notes and attached settlement (closing) agreements. See the FHA loan application document: "NOTICE TO HOMEOWNERS, Assumption of HUD/FHA-Insured Mortgages, Release of Personal Liability," and, also, Form HUD-92210-1 ("Approval of Purchaser and Release of Seller"). You should refer to what you are talking about as something else, but it is certainly not an assumption as defined by the contracts-- and in reality. It sounds more like squatting, renting or buying on land contract. The loan-- and financial responsibility thereof-- still belongs to the mortgagor (borrower/owner of the house) who allowed someone else to move into their house without selling it to them. Should there be a deficiency balance after forclosure, the occupant won't pay, the original borrower will. You said, "Since we were figuring Kathy would refinance the property as soon as possible (perhaps in as short as 2 months) even if they did call the entire loan due and payable it wouldn't matter, would it?" Ask lenders. She's not likely to get any conventional or government loan under a "refinance" conversion of a land contract or lease/option to buy before living in the property for 12 months. Maybe a purchase, but not a refinance. And no, that's not hair-splitting. Loan-to-value ratios are different for purchases than refinancings. Most of this is irrelevant. Your quickness to offer advice to have the seller give a "lease-option or land contract (sometimes called contract for deed or agreement for deed)" is reminiscent of the fantasy world of late-night infomercials giving advice to the masses only to sell books. It sounds good, but is little help in indivudual situations. Carleton Sheets mentality (oh, brother). You can continue with your creative financing war stories if you wish, but I think Kathy is more after a solution to her credit problem. Kathy: is creative financing an option with the builder (who probably has sub-contractors, salaries, materials, and expenses to start their next project) who probably needs the cash from the sale? Sean: Again, what is magic about a credit score of 650?
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| | Wednesday, January 05, 2000 - 08:35 am Kathy: I'm going to say a few things to you that may not sound that nice, so I'm apologizing in advance. If I'm too harsh on you it's just because you are reminding me a lot of my ex-fiancee in your post. The reason why explanation letters aren't that good is because usually they're just a lot of bull. For example your letter is designed to tell the lender that you didn't pay your bill on time because of a medical expense in the amount of $1,300. The truth of the matter is you didn't pay your bill on time because being late 30 days just isn't that big of a deal to you. You're not alone. Fannie Mae has done a study that shows a lot of people think that a few delinquencies here and there are a minor problem. Any delinquency of any kind is a major problem. Mortgage delinquencies are doubly bad. No one sits down and says, "Aw, heck I'm a little bored so I guess I'll just go into foreclosure today." But foreclosures happen. Bankruptcies happen. Evictions and repossessions happen. All these things start by a person becoming a little late on a payment. Being late, even one day is a big deal. I have never been late on any payment on anything in the past 7 years and I still have problems obtaining credit. You say you're irritated with this "score system" and you go on to talk about incorrect things on your credit profile. Don't misclassify inaccurate credit information as a "scoring" problem. A scoring problem would be needing 690 to get a credit card, scoring 689 and finding out that one of the reasons you didn't score better was because you had "Too few revolving accounts." Now that's a scoring problem (and it's hilarious too). Christine: I use Mike Jack as my attorney and there is a hybrid form. He charges per transaction but if something deviates from the norm and he has to step in and fix it, it goes to an hourly thing. He's good! He's really good. I think he bills out at $380/hour. Escrow companies can screw you. Here's a true story, I bought a condo as a rental property and received "creative" seller financing (this was my first real estate deal). The Seller had purchased the property from Fannie Mae in foreclosure, rehabbed it, and was selling it. Unbeknownst to anyone at the time Fannie Mae had deeded the property to Kyle Peironi when the person's name is Kyle Pieroni. The escrow company didn't catch the misspelling. They just looked at him and said, "Sure it's Kyle. He does a lot of biz here, notarize him." The grant deed to me, the deed of trust and the title insurance all showed his name misspelled. When I went to refinance the property I couldn't get it reconveyed. The notary (who didn't personally know Kyle) correctly pointed out that his name was Pieroni not Peironi and she refused to notarize. I mean, I was AT the freakin' table with the loan funded and the deal couldn't go through. My rate lock was expiring in two days and I knew they'd need to repull my credit reports because it's their policy to repull credit if it's more than 30 days old. Not only would the inquiry hurt me, but I had carefully paid down all my credit cards with a loan from the Bank-of-Mom-and-Dad right before applying the first time and now they were back up to their normal levels. I knew my score would suffer and it's a good thing I'm 26 cuz my blood pressure went through the ceiling!!! A freakin' misspelling that a busy escrow agent didn't catch and now I was telling the Seller I wouldn't pay anymore. He said he'd foreclose. I told him he couldn't, cuz his name wasn't on the deed of trust. I threatened to sue everyone, including the drunk outside on the step that begged me for change on the way in. We called the title company and they told me I was S.O.L. cuz they weren't paying anything on that policy because it specifically excluded a first trust deed from one "Kyle Peironi" and by God that's what I had. So sorry, better luck next time. My rate lock expired, my repulled credit had a 645 score (so sorry, Sean... Fed raised the rates plus you're no longer getting our best rate how does an extra 1.5 percent on that mortgage sound?) I didn't get the refinance (still haven't refinanced that condo) plus I lost my non-refundable $300.00 application and $300.00 appraisal fee. That's when I met Mike Jack. He had the whole thing straightened out in 45 minutes and negotiated with the errors and ommissions insurance of the escrow notary (the exact details of the settlement I can't disclose). But now I use him for all my closings. Once bitten, twice shy.
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| | Wednesday, January 05, 2000 - 10:26 am Kathy: I'm going to say a few things to you that may not sound that nice, so I'm apologizing in advance. If I'm too harsh on you it's just because you are reminding me a lot of my ex-fiancee in your post. Thanks for the warning! Obviously I am a bit green when it comes to this stuff. I blame my mortgage broker for some of my misunderstandings. She told us that she recently obtained a loan for a client who had a bankruptcy two weeks prior to the purchase of a new home. I don't have judements, forclosures, repossessions or anything of that nature. People with these problems buy homes. So yes! What is the big deal about a few lates? I understand where you are comming from, but why should my lates be as "terrible" as a bankruptcy or a forclosure?
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| | Wednesday, January 05, 2000 - 10:53 am Sean, could you maybe repost your first buying experience in the Real Estate Section?
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| | Wednesday, January 05, 2000 - 11:13 am Kathy wrote: >I came here for advice and to educate myself, not to be insulted. Kathy, maybe once you get over being insulted, you might just realize how little you know and how many problems you really have. > I do know >about pre approval and I did purchase a home 2 years ago.By the way, I >called a lender for pre approval a few days before we made a deposit on this >home. She asked me income questions and what our last years W2 showed as >income. She also asked about our credit and I told her about the mortgage >lates. She said "your fine, you can buy anything you want in that new developement." You might want to read http://www.bayhouse.com/loanshop.html What you got when you called that lender had absolutely nothing to do with preapproval. You got a sales pitch and you fell for it. Next time, DO get the preapproval. >When I bought my current home I had a lender run the credit, >etc...prior to making a deposit and an offer. I assumed I would have to make >an explanation for the lates. I didn't "think" that my credit report could >have accrued this much inaccuracy in a 26 month period. You're living your life on "thinking" and "assuming." You CALL for preapproval and get nothing in writing. You liked what you heard, so you believed it, like most consumers. I'd like you to post the location and name of the person/company who told you "you're fine, you can buy anything you want in that new developement." This outfit is scum and potential borrowers should avoid them like the pest. It also appears that the person who told your husband in July 99 that you had excellent credit was just having fun with you. I can't imagine getting 20 incorrect accounts in 2 years, but 6 months seems nearly impossible. Yet, I'm still puzzled about your approval for a low rate loan as recently as July 99. Which is the same time you couldn't make your mortgage payment. Something doesn't seem right. You're 30 days late on your mortgage in August, even though you got a loan in July? I realize that there are a lot of people who think that paying late is no big deal. After all, you pay hefty late fees. But if you want to have that NEW house, you just got to play by the rules or pay the price. Now that you learned the hard way, you can deal with your problems and change your payment/savings habits. Or you can run from broker to broker and *maybe* eventually pay an arm and a leg for lousy financing. Your choice. Good luck, Christine
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| | Wednesday, January 05, 2000 - 12:26 pm What you got when you called that lender had absolutely nothing to do with preapproval. You got a sales pitch and you fell for it. Next time, DO get the preapproval. --- Thanks, I am learning a lot by reading this board and I do appreciate your help. I will get pre approval in the future. You're living your life on "thinking" and "assuming." You CALL for preapproval and get nothing in writing. You liked what you heard, so you believed it, like most consumers.-- I'm not a real estate professional. I put my trust in the person who is. Am wrong to do that? If I went to a physician for medical advice, I would trust what he tells me. Are you telling me that a person in this profession can't be trusted? I'd like you to post the location and name of the person/company who told you "you're fine, you can buy anything you want in that new developement." This outfit is scum and potential borrowers should avoid them like the pest.--Can I do that? I will if it's allowed. It also appears that the person who told your husband in July 99 that you had excellent credit was just having fun with you. I can't imagine getting 20 incorrect accounts in 2 years, but 6 months seems nearly impossible. --Well, this was before the lates on the mortgage. Do you think 2 mortgage lates could have that large of an effect on our score. How many points does a mortgage late lower a score??? Yet, I'm still puzzled about your approval for a low rate loan as recently as July 99. Which is the same time you couldn't make your mortgage payment. Something doesn't seem right. You're 30 days late on your mortgage in August, even though you got a loan in July?-- When did I say we had s low rate approval in July 99? Last time we had a low rate approval was back in Nov 97. I was referring to another form of credit in July 99. I realize that there are a lot of people who think that paying late is no big deal. After all, you pay hefty late fees. But if you want to have that NEW house, you just got to play by the rules or pay the price.--- So what is you advice? I want a new home, but I can wait. It doesn't have to be NOW. Our new home was purchased with the contingency of this house selling by today, Jan 5, 2000. I have my out if I want it. They told us they would extend our contingency another week. What about my out on the listing of this home. Can I cancel it? Now that you learned the hard way, you can deal with your problems and change your payment/savings habits. I cetainly will. I realize how "dumb" I was to assume that a late wasn't a large problem. I now understand that I was wrong. Thank you for your help. I sincerely mean it. Or you can run from broker to broker and *maybe* eventually pay an arm and a leg for lousy financing. --- I don't want to do this. I guess I better go with the common sense side of my brain and back out of the deal. Thanks again. Kathy
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| | Wednesday, January 05, 2000 - 01:08 pm Kathy, I'd really appreciate it if you'd post your mortgage experience in the Finance Section. Most people think like you, they trust the advice of the professionals. The sad reality is that not being an expert yourself, you don't know when you're bs'd. And what's even worth, it applies to all professions. Our society as well as our government accepts exaggerations and even outright lies as a necessary marketing tool. As far as your listing agreement goes, I hope it is contingent on your successful purchase. If not, discuss it with the agent. To get into more detail, please post in the Real Estate Section. Thanks, Christine
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| | Wednesday, January 05, 2000 - 01:52 pm It's not good to get emotionally attached to a house. A house is a serious investment and a bad choice may cost people a good deal of money. I've known too many people who "fall in love" with a house only to fall right out of love with it once they move in and they begin to see all the flaws it has.
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| | Wednesday, January 05, 2000 - 02:50 pm Greg: I missed your post initially because I was posting at the same time, but now I have seen it. Greg: "The lender is either lazy or ignorant." You're probably right and it's probably the former. They want to have people come in, belt out a nice 730 score with 25% down and good income. It makes life easy and profitable. Greg: "But previously, you said, 'Creative solutions like this would normally require a real estate attorney to handle the close instead of an escrow company and the Buyer would be likely to absorb the extra cost.'" I misspoke myself. I had meant to say that in order to handle a complicated transaction like this properly that a real estate attorney should be consulted, unless the person is sufficiently professional to properly handle such a transaction themselves. Greg: "Well, you just made the point, yourself: [Fair Isaac is] not in control. They appear in the media and blab about credit scoring and its wonders (but their appearances are only a defensive move; after the release of creditscoring.com (September, 1998), they hired their PR specialist, Mr. Watts to deal with the public), but in reality, they are a hired gun for the national repositories, brought on to do a job: give the repositories a way to calculate the score." You are correct that Fair Isaac is not the one in control. The ones in control are the people because 1) They agree to go through all this to buy a house and they could boycott it, if they wanted to, and 2) They are the voters that control the government that has permitted FNMA and FHLMC to have immunity from regulation and disclosure. That does not, however, prevent Fair Isaac from having useful information and I would have talked with them regarding the matter and posted it on any site I put up regarding credit scoring. Greg: "[It is the responsibility of the national credit repositories to ensure the accuracy of the credit bureau information]. Including the score." It is impossible for us to say that Kathy's score is or is not accurate. The only way to say if it is inaccurate would be to group thousands of people with the same score together and observe the delinquencies that occur on their credit profiles over the next 24 months. Greg: "[N]othing is stopping the repositories from instituting a system to update their data so a score can be changed. What are they doing about it?" The national repositories have toll-free numbers anyone can call to have their profiles checked and updated. In addition Equifax will repair the information and turn the score around in a very short time to permit underwriting a mortgage loan in a very short period of time. Go Equifax. Greg: "First of all, they didn't have a foreclosure..." Yes, because the lender held off. A lender is legally entitled to begin foreclosure proceedings on the first business day following the day a payment is legally due. There is no requirement that they wait even one day, yet they held off for 30 days twice in a row. Very nice of them. Greg: "That the borrower had no idea of the debilitaing effect of the mortgage late payments...is relevant." Good, then you loan them the money to buy their house and they'll thank you very kindly for it. Every other sane lender would laugh at a letter saying, "Gee we didn't know it was important to pay on time before, but now we sure do mister and we'll pay on time diligently from now on. Do we qualify now?" Greg: "You make [creative financing] sound like a common occurance. Is it? Today, how many people do you know have that arrangement?" The best information I have is that one in four real estate transactions involve some form of seller financing. In addition many people place their houses in trust or move their properties into being owned by a corporation or a LLC. In those cases the trust, corporation or LLC assumes the loan without the approval of the lender. Greg: "You should refer to what you are talking about as something else, but it is certainly not an assumption as defined by the contracts..." Assumption simply means "to take over." Assumption of command means to take over command. Assumption of payments means to take over payments. There is nothing complicated about this. What you are referring to is not assumption but is novation: (Law) A substitution of a new debt for an old one; also, the remodeling of an old obligation. Also notice that at this point it's completely moot. The property is owned free and clear so there is no due-on-sale clause to be violated. Greg: "Ask lenders. She's not likely to get any conventional or government loan under a "refinance" conversion of a land contract or lease/option to buy before living in the property for 12 months." Actually that's not true. You can easily get a property refinanced the day you move into it, the only difficulty is that buying a property for $80,000 and then trying to get a loan for $80,000 claiming that the property is worth $100,000 is going to run into severe roadblocks, even if you can prove you did a lot of nice work on improving the property. The banks will (in accordance with FNMA guidelines) take the most recent sale price in the last 12 months or the appraisal amount whichever is lower to be the value used to calculate the LTV ratio. Greg: "[Your advice] is reminiscent of the fantasy world of late-night infomercials giving advice to the masses only to sell books." Actually, I think the point of late night infomercials is to buy property not with poor credit, but to buy property with no money down -- perhaps even over-financing to purchase a property and place cover costs or place cash in your pocket. Considering that Kathy is willing and able to place 10 percent down, I don't consider them in the same league at all. I should also like to point out that land contracts are saleable on the secondary market, so the seller wouldn't need to carry paper for a long period of time at all. American Note is just one of the many companies that provides this service. I believe they will buy the trust deed, note or contractual obligation at the closing table. Contact them, if you like. The magic of a 650 score -- I had meant to say 660 but had a mental abberation. That is the score FHLMC wants to see when they purchase a loan on the secondary market, although it's more complicated than that because they purchase bundled loans. Accordingly it may be possible for a lender to bundle a bad loan with a good loan and still have an acceptable risk-adjusted weighted average coupon yield.
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| | Wednesday, January 05, 2000 - 08:38 pm Sean: This is funny. Arguing semantics doesn't help anything in a forum about real estate, finance and credit. So, why don't we use a legitimate authority on the subject to define the terms rather than a layman's dictionary. How about FANNIE MAE?! OK! Here are their definitions: "assumable mortgage - A mortgage that can be taken over ("assumed") by the buyer when a home is sold. assumption - The transfer of the seller’s existing mortgage to the buyer. See assumable mortgage. assumption clause - A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property. assumption fee - The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage." http://www.homepath.com/glotexta.html If it were as easy as looking it up in a standard dictionary of the English language, there would be no reason for people like Lexxus/Nexxus or West's Law to exist, would there? A valiant effort by you to backpedal your way out of another wild statement. But let's move on. I don't think you have had enough, yet. Uh, oh! Realtor.com concurs with those definitions!: http://www.realtor.com/Glossary/default.asp Want some more? How about the MORTGAGE BANKERS ASSOCIATION!: http://www.mbaa.org/consumer/ (click on Mortgage Terms) You said, "They are the voters that control the government that has permitted FNMA and FHLMC to have immunity from regulation and disclosure." Untrue. Here's a page on a government server called "Oversight of Government Sponsored Enterprises: Fannie Mae & Freddie Mac" http://www.hud.gov/fha/gse/gseweb3.html Here's another goodie: [From the National Mortgage News web site front page, January 4, 2000]: "HUD Presses Fannie for AU Info The Department of Housing and Urban Development is pressing Fannie Mae to provide proprietary information about its automated underwriting system, but the government-sponsored enterprise is insisting that HUD set up a system to protect this information from competitors. In a Dec. 21 letter, HUD threatened to take enforcement actions against Fannie Mae officials if they did not provide the requested information about Desktop Underwriter. Fannie Mae's submission "was grossly incomplete and did not provide the information necessary for HUD to perform its legal responsibilities," according to the letter signed by HUD general counsel Gail Laster. "Further delay in this long overdue fair housing review of Fannie Mae's underwriting guidelines will not be tolerated by the Department." HUD is trying to determine whether the AU systems used by Fannie Mae and Freddie Mac discriminate against minorities. "HUD takes its regulatory responsibilities seriously and the letter is a sign of that," a HUD official said Tuesday. Fannie Mae spokesman David Jeffers noted that there is no dispute over HUD's right to this information. "This will be resolved," he said, "because they as a regulator have a strong interest in living up to their responsibility to keep these materials confidential." Freddie Mac has not received a similar HUD letter. However, the GSE has refused to provide proprietary information on Loan Prospector until HUD establishes safeguards to protect confidential information." Now you probably think I set you up on that one-- but IS THAT A DOOZY, or what? What in the world are you talking about? What immunity? You said, "That does not, however, prevent Fair Isaac from having useful information and I would have talked with them regarding the matter and posted it on any site I put up regarding credit scoring." Armchair criticism. Be my guest: Go ahead with your web site, your interactive CD, your instructional/motivational tapes, your TV show, your book, your movie-of-the-week, your report with a blue-ribbon panel of experts. I didn't waste my time with them because they play the Out Game, at one point saying "... Fair, Isaac does not calculate credit scores... ". I think that is hilarious, so I'm letting them have their way. creditscoring.com is about accountability, and Fair, Isaac is not accountable. Get this: according the staff of a radio talk show, they invited Fair, Isaac to be on the same show with me but they refused. Any time they're ready. I'll even donate web space to them if they want to make some case other than the lousy one they've already made on their own web site. I traveled to a forum in Washington to meet them face-to-face and ask my questions, and did so. Fair, Isaac had their chance to answer them and they blew it. See the questions and see how they didn't answer them at http://www.creditscoring.com/pages/bigmeeting.htm Maybe I should hire the 60 Minutes team to get their attention. Do you have any ideas? How 'bout we just invite them to this forum? They'll be here in a million years. Things are going just fine in the Release My Score business, Sean. Federal legislation proposed in September to release the scores isn't too bad. You said, "It is impossible for us to say that Kathy's score is or is not accurate." That's balderdash thrown up to confuse new readers to this forum. Call me crazy, but 20 incorrect items PROBABLY means an inaccurate score. But don't listen to just me. The vaunted Fair, Isaac-- in answering their own question: "How can I improve my credit score?"-- says "Make sure the information in your credit report is correct, too. If you find errors, contact the credit bureau and your lender." http://www.fairisaac.com/servlet/SiteDriver/Content/927#11 Sounds like the credit bureaus have a real accuracy problem when the public has to be constantly reminded to check their data. It's the same song and dance every time they open their mouths, and they don't even see how ridiculous it sounds. It doesn't exactly instill public confidence in the credit reporting system when the authorities constantly harp on their own inaccuracy. "The national repositories have toll-free numbers anyone can call to have their profiles checked and updated. In addition Equifax will repair the information and turn the score around in a very short time to permit underwriting a mortgage loan in a very short period of time. Go Equifax." "Equifax" and "Go" are hard to use in the same sentence together. You're killing me. OK, everybody, let's play along: Seeeeeaaaaaaan? What's "a very short time"? Does that solve the ultimate problem if the other two of the three are still blowing it? What's the phone number? You said, "The best information I have is that one in four real estate transactions involve some form of seller financing." Where'd you get that gem? And, I asked how many people you knew. You said, "Also notice that at this point it's completely moot. The property is owned free and clear so there is no due-on-sale clause to be violated." Not my problem you gave her advice without getting the facts. Gosh, be careful! She might have gone right out and tried what you suggested, only to find a big fat roadblock. You said, "Greg: 'Ask lenders. She's not likely to get any conventional or government loan under a "refinance" conversion of a land contract or lease/option to buy before living in the property for 12 months." Then you said, "Actually that's not true." No, it is true. And, why would anybody, in their right mind, refinance a property the day they move in (presumably, you mean the day they get a loan), and pay all the extra fees-- other than to dupe the guidelines? You said, "The banks will (in accordance with FNMA guidelines) take the most recent sale price in the last 12 months or the appraisal amount whichever is lower to be the value used to calculate the LTV ratio." Not that I really think I should be discussing Fannie Mae guidelines with a person who doesn't know what an RMCR is, but what LTV is allowed for this fantasy refinance? And, WhAt In tHe WoRlD does this have to do with Kathy's situation? Concerning infomercial mentality, you said, "Considering that Kathy is willing and able to place 10 percent down, I don't consider them in the same league at all." It's the same genre. You don't want to see it because you're in it. You said, "The magic of a 650 score -- I had meant to say 660 but had a mental [aberration]. That is the score FHLMC wants to see when they purchase a loan on the secondary market." Glad you cleared that up... sort of. See http://www.creditscoring.com/pages/forumtranscript.htm#page90 where Freddie Mac is running through another one of the "myths": "People without credit scores cannot obtain a mortgage. As Pam said, that's just not true. We buy a lot of below 620 FICO scores. That number comes from the industry letters that Fannie and Freddie published in 1995, and some folks had believed that lenders were going to turn that into kind of a bright line below which you are sent into the darkness to wail and gnash your teeth." Fannie Mae (the more prominent Government Sponsored Enterprise) said, "But I will state again unequivocally --did I say that right --that we do not have a minimum credit score in our automated underwriting system. Again, we do not have a minimum credit score in our automated underwriting system." http://www.creditscoring.com/pages/forumtranscript.htm#page170 When I started looking into credit scoring, I was astounded at the volume of incorrect information. I'm astounded here, too. Back up your wild, out-of-control statements. Had enough?
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| | Thursday, January 06, 2000 - 08:59 am Wow you sure post too much, but hey -- I can throw down the links too, let's try a little something about assumptions and proceed from there to a legal dictionary in which the word assumption does not occur but the word novation does. Wow maybe I got a bad dictionary. It is Canadian after all, let's try this one and look for assumption. Oops! It's not there! That's ok novation isn't either. Third legal dictionary looking for assumption. Still no, let's try novation. Bingo, it's there defined as: "The substitution of a new contract for an old one. A novation may change one of the parties to the contract or the duties that must be performed by the original parties" (emphasis added). My conclusion? Assumption is not a legal word, so you can grab any dictionary and look it up just like I did (see above). Assumption merely means to take over. Novation is the proper legal way to refer to what banks would like you to do. Let's move on. It's impossible to say if Kathy's score is accurate or inaccurate. Just because Kathy's score is based on inaccurate information means nothing. Remember that a person can, and often does, have three different FICO scores from three different credit bureaus and those scores may vary quite a bit depending on the different information in those bureaus. A person can have scores of 400, 600 and 800 simultaneously. Are those scores inaccurate? Not at all. Scores group people into groups with specific statistical risks. The only way to say that score is inaccurate is to demonstrate that the statistical risk predicted for that group isn't the statistical risk that occurs. A person who scores in the 300's may still pay a loan you give them. A person who scores in the high 800's may still not pay as agreed. A score doesn't indicate anything about a borrower personally it just indicates that if you put 999 people like them together than a certain percentage will become "seriously delinquent" as defined by Fair Isaac. As for Seller financing, I pulled out my mortgage sheet here (I manage other people's properties you know, and I have to keep track of their mortgages for them). I'm responsible for paying 19 mortgages and 4 of them are with private parties and one of them is a debt assumption (without novation). The most common type of seller financing is the 80-10-10 where a buyer obtains a new 80% loan, places 10% down and has the seller carry back 10 percent. These firsts conform to FNMA standards and can be sold on the secondary market.
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| | Thursday, January 06, 2000 - 11:11 am Sean: You said, "They are the voters that control the government that has permitted FNMA and FHLMC to have immunity from regulation and disclosure." Is that true?
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| | Thursday, January 06, 2000 - 11:46 am FNMA and FHLMC are immune from a variety of regulations. For example they do not have to report to the Security Exchange Commission ("SEC") nor are they overseen by that agency like other corporations. Maybe this made sense when they were a branch of the federal government since any relevant information could be pried from them via the Freedom of Information Act. Since that is no longer the case they should be required to report to and become subject to the jurisdiction of the SEC just like everyone else.
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| | Thursday, January 06, 2000 - 01:51 pm Wow, you sure post too many untrue statements, Sean. You last post: what a zing-0-roonie. Too bad it makes no sense. You said, "You are correct that Fair Isaac is not the one in control. The ones in control are the people because 1) They agree to go through all this to buy a house and they could boycott it, if they wanted to, and 2) They are the voters that control the government that has permitted FNMA and FHLMC to have immunity from regulation and disclosure. That does not, however, prevent Fair Isaac from having useful information and I would have talked with them regarding the matter and posted it on any site I put up regarding credit scoring." Hokey smokes. From that, I thought we were talking about lending, not investing. Kathy is not concerned about Fannie Mae's not submitting a 10-Q (that sounds like a radio station) or reporting to the SEC (and, by the way, that's the SecuritIES AND Exchange Commission-- you are making me laugh, hard, here Want to split hairs? You came to the right place). You last post shows your penchant for malarkey when someone calls you on one of your irresponsible statements. Fannie Mae and Freddie Mac do not have "immunity from regulation and disclosure," they are regulated by HUD. Here's a page on a government server called "Oversight of Government Sponsored Enterprises: Fannie Mae & Freddie Mac": http://www.hud.gov/fha/gse/gseweb3.html Duh. What would that be? Playing Pattycake? Tiddlywinks? I even gave you another example about HUD breathing down their necks last month about automated underwriting. Amazingly, you still deny it. Stay on the topic: lending, remember? The FHA is not regulated by the SEC, either. So, what? Doesn't have jack to do with lending. This is a forum entitled "Real Estate, Finance and Credit," not "Investing and SEC Requirements." Try your smoke screen on somebody else. You haven't had enough, so I'll give you some more: You said, "The national repositories have toll-free numbers anyone can call to have their profiles checked and updated. In addition Equifax will repair the information and turn the score around in a very short time to permit underwriting a mortgage loan in a very short period of time. Go Equifax." This isn't like that number you gave for Fair, Isaac where you suggested consumers lie to get the reason codes, is it? One more time. OK, everybody, let's play along: Seeeeeaaaaaaan? What's "a very short time"? Does that solve the ultimate problem if the other two of the three are still blowing it? Whhhaaaatttt's the phhhhonnnne nuuuummmmberrrrr?
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| | Thursday, January 06, 2000 - 02:48 pm Really, the SEC has nothing to do with lending? Great let's exempt Bank of America, Citibank and Washington Mutual from filling out any SEC forms and permit completely unregulated "insider trading" therein. Suggest you put a petition for same up on your website. As for Fair Isaac's number, I don't suggest lying at all. I merely suggest pressing option 2 and speaking into the phone, "Please fax me your frequently asked questions list on credit scores. My fax # is (213) 555-1212. Thank you." There's no lying involved. As for Equifax turn-around time I understand they can have a reworked score in 3 business days. How will this help if the others are screwed up? Simple. Let's suppose Mr. Consumer goes to ABC Mortgage company to get a real estate loan. ABC is not a portfolio lender and they want to resell their loan on the secondary market. Accordingly they are complying with FNMA guidelines and they pull a triple-merged credit report with scores. The consumers scores come back 583 (Equifax), 560 (Experian) 635 (Trans Union). It is customary that they take the middle score (I'll get into why that's crap in a minute) and so the consumer is going to get a 583 score. That basically means they can't get a conforming conventional loan so the lender is thinking either high-risk or FHA-insured. But wait! There's an inaccuracy on the consumer's credit ... a repossession from her mother (same name) is showing up on her Experian and Equifax credit profile (not Trans Union though). A quick call to Equifax and 72 hours (and a reasonable fee) later the Equifax profile is corrected and she has her new Equifax score: 664. Again we choose the middle score (Trans Union) at 635 so now we have something that can be underwritten. Forty days later her loan is funded. Yay. Of course if all three bureaus had unacceptable scores then getting just one fixed wouldn't do the job. The reason for that is FNMA's insistence on using the middle score. What's so special about the middle score? Even worse if only two credit bureaus are polled the underwriting guidelines insist the lowest score be taken. Why the lowest? Why not the highest? Since FICO scores are statistically validated one score is just as valid as the other. A person can have a score of 500, 600 and 700 from three bureaus and all three scores are valid. It makes sense for a lender to select the top score because this will result in them being able to do more business without any increase in the percentage of non-performing loans.
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| | Thursday, January 06, 2000 - 05:16 pm Your cheap game of putting words in my mouth is seen by anyone looking at this exchange as corny tricks. I didn't say the SEC has nothing to do with lending. In your little world, everything has everything to do with everything affording you the opportunity to make your oblique hackneyed comments. I said, "The FHA is not regulated by the SEC, either. So, what? Doesn't have jack to do with lending." In other words, mentioning the SEC-- a far-off agency-- with the loan lending guidelines and underwriting is a red herring and subterfuge. You can wade through that morass of impractical, irrelevant information you're trying to give to Kathy if you want. Please, be my guest. We'll all ignore your oh, so clever deception. Or maybe I should embrace this: we'll dig into how the SEC affects the secondary mortgage market-- and while we're at it we can check on how it affects the pork belly, television, heavy industry, and super... markets. Then we can talk about how the textile and job markets affect the primary mortgage market... and vice versa! Yeah! That would be an excellent, practical use of this forum. OK, you're in charge! Still coming back for more? Don't worry, I'll get back to your other incredible, uninformed, nonsensical, irrelevant twisted logic. But for now, I'm limiting you to one topic so you don't go-off again rambling about everything under the sun (i.e., SEC filings when someone is trying to find out how to correct her credit... puh-leeze). You don't like answering my questions because the answers would be too embarrassing for you. For the third time: Whhhaaaatttt's the phhhhonnnne nuuuummmmberrrrr?
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| | Thursday, January 06, 2000 - 06:01 pm Sheesh! The really funny part is, you people seem to LIKE to listen to these two argue! I see NO ONE complaining like they do about me or rcb's posts, but these two are WAY worst than Bob or I. Why don't you two just go out back, whip em out, and measure?
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| | Friday, January 07, 2000 - 07:42 am Mr. William Scott Lockwood III (Spock)(Bill): Please post that under the "Test, SPAM, Incoherent and Moronic Postings" topic. It falls under the latter.
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| | Friday, January 07, 2000 - 08:14 am Greg: Your question as to what is the phone number, it is accomplished by facsimile. You must be an Equifax customer (direct) and use their software to get triple merged reports through their mortgage department. So no using Credco or anyone like that. If you want more information suggest you contact (888) 202-4025. I'm still trying to get a copy of the press release out of their public relations department. They indicated they can actually have it turned around in 48 hours. P.S. If you notice the time of my last post you'll notice it was after business hours in Georgia, which is where Equifax is located. That makes it hard to get an instant answer to satisfy your curiosity, but rest assured Greg I'll get the answer. Aaaaannnnnndddddd yyyyyyoooooouuuuu dddddooooonnnn'ttttt hhhhaaavvveee ttooo sssppeeeaaakk liiiikke ttthhhhiiiiiiiisss.
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| | Friday, January 07, 2000 - 08:16 am Well, I have at times wondered whether some of Greg's and Sean's arguments should be in a separate topic. But since at least part of their postings are on topic, I decided not too. They've been contributing to my forums for a long time, maybe years? They could have their own category if they wanted to: Greg vs Sean? :) They insult each other and seem to be ok with it. So I'm too. That's different from being rude and obnoxious to the other posters. These last two weeks without rcb and William Scott Lockwood III have been very productive as well as enjoyable. Wished we could keep it that way. Christine
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| | Friday, January 07, 2000 - 08:27 am I'm new to this board and have enjoyed it very much...but this thread boggles my mind. Why do some people have to detract from the valuable information by having "squabbles" and insulting one another???? I'm just one person on this board, but probably not the only one who feels this way.
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| | Friday, January 07, 2000 - 09:06 am Christine, I don't know what you mean by that. I haven't gone anywhere. Bob is still on his honeymoon, although they are back from Tenn. now. Don't worry, he'll be back too I’m sure. Greg, Don't even get me started, pantywaist. I've carped bigger than you. Scott
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| | Friday, January 07, 2000 - 09:07 am Excuse me, that should have read, "Crapped".
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| | Friday, January 07, 2000 - 09:08 am Sean: Previously you said, "A quick call to Equifax and 72 hours (and a reasonable fee) later the Equifax profile is corrected and she has her new Equifax score: 664." So, it isn't a "quick call," then. It is a fax. And it's not 72 hours, but 48 (wow!)(but, not including the time to find a mortgage company that uses "Equifax (direct))." And, hey, folks: remember, YOU have to find a mortgage company that USES "Equifax (direct)." Be sure to include that condition in any rate shopping and interviewing of potential lenders (that should weed out quite a few low rates and financing options. Good luck. Hey, I know, Sean: let's give out Equifax's number for people to call them and get a list of the companies that use "Equifax (direct)" (and put more money into Equifax's coffers, so they can continue to search for ways of educating the public about scoring (see http://creditscoring.com/letters/equifax.htm). And mortgage credit report preparation companies lurking here: according to Sean, you guys are out of luck... sorry. If I were you, I'd get on the horn to your Equifax representative, post-haste, and try to get in on this bonanza (before everybody finds out and Equifax's offering this puts you out of business). Sean, what's the fee? You said it is reasonable, so you should know. And, how is any fee "reasonable" when Equifax and their creditor partners created the problem in the first place? I do have to talk liiiiike thaaaaat (a metaphor for extending one's words in a sing-songy voice to make fun of your statements) to force your hand. And it worked. We still have no telephone number to make that "quick call" (Oh, brother). If this were the easy panacea you said it was, we wouldn't be having this conversation; it would be well publicized. Are they keeping it a secret because they couldn't handle the demand? This just keeps getting better and better; you're making it up as you go along. We're still waiting for the phone number for Kathy to make that quick call. Are you saying there is none, now? Poor Kathy. Hopefully she is still here; she might have left thinking all she has to do is make a "quick call." That's one of the problems with your postings: you make everything sound soooooo simple. Welcome back to reality, everybody. Sean, are you still on that kick about not wanting the scores to be released "in writing" to consumers?
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| | Friday, January 07, 2000 - 10:04 am Mr. William Scott Lockwood III (Spock): Let it rip, but leave out the irrelevant name-calling. I need foils with, at least, some credibility to prove my points. Speaking of which, you aren't a Trekkie, are you?
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| | Friday, January 07, 2000 - 11:46 am If Kathy has inaccuracies on her credit profile she should call (800) 270-3435 and they will be corrected. You try to make it sound so sinister, Greg, that Equifax is offering a better product and encouraging people to sign up directly with them in order to use the product. Gasp... how horrible that they would offer incentives for people to use their services. It should be outlawed... or at least heavily regulated. As for Equifax's pricing system, it's complicated but basically there is a minimum monthly fee. Even if you order no credit profiles you get charged that fee. Each credit profile has a certain cost, but they offer bulk discounts. The more you order the less per report. The cost to have the credit profile updated and the scores repulled is the same as a cost for a credit profile with score.
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| | Friday, January 07, 2000 - 12:57 pm Sean: I just called that number (800-270-3435) and an operator named Isabel told me that Equifax doesn't produce a score called Beacon, they only provide the software to users. I confirmed it with her by asking the yes or no question: "Does Equifax produce a broad-based risk score called 'Beacon' that is delivered with in-file credit reports?" She said something about Equifax producing the software that users can use to create a score. I asked her the same question over and over in different ways. She wouldn't say that Equifax produces a broad-based risk "Beacon" score. I asked for her supervisor and she asked for my last name. I asked Isabel's last name and she refused to give it to me, so I told her she wouldn't be getting mine. Her supervisor, Sonya, repeated the same song and dance about the Beacon. She gave me a number to call Fair, Isaac and ask them my questions. I got the name of her supervisor: Tanya. I asked for Tanya, but Sonya wouldn't connect me. I asked where Tanya could be reached, and she said at the same number. She also said Tanya was there at the moment, but wouldn't be speaking to me. That's the same baloney I was given when I called them almost two years ago. I didn't post that conversation on creditscoring.com, but now I think I might. See the letters section at http://creditscoring.com/letters/equifax.htm where the same thing happens. Before all that, I asked Isabel how long it would take them to correct an entry on my credit report. She said that it could take up to 30 days, not 48 hours, and not 72 hours. You would have thought they would have learned by now. You said, "As for Equifax's pricing system, it's complicated but basically there is a minimum monthly fee. Even if you order no credit profiles you get charged that fee. Each credit profile has a certain cost, but they offer bulk discounts. The more you order the less per report." What isn the world are you talking about? What is the fee to have the score changed? Your answer should be given in dollars. Or are you doing this just to extend your game? OK, I'll play: is it... LESS THAN $1000? Is it... LESS THAN $500? Is it... LESS THAN $100? LESS THAN $50? THAN $10? $5? How much does Kathy have to pay to have it done in 48 hours? You don't know, do you?
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| | Friday, January 07, 2000 - 01:24 pm If Kathy is dealing with an Equifax serviced lender then it would definitely be under $10.00 for the lender to have her score updated in 48 hours and back to her. Really, Greg -- you go about this all the wrong way. You either want to approach these people having them think you're a lender (by calling the sales line @ 888-202-4025, and expressing interest in their products) or by having them think you're a reporter soon to be doing a story on credit scoring. You get much more knowledgable and helpful people on the line when you do that, believe me. I feel that the reporter angle is more true to what we do. You should try it sometime, it works much better then calling up Equifax, getting someone on the other end whose only job is to copy down all the information you give them so that it can be handed off to an accuracy investigator, and trying to discuss the intricate policies of Equifax as a whole.
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| | Friday, January 07, 2000 - 09:11 pm Sean: Keep talking about that $10 and 48 hour thing; the credit report vendors will love it. I went about trying to get my score and find out how to increase it the way any logical consumer would, not the secret Walter Mitty way you suggest. You have a need to lie that I don't. That's why your influence is weak. You won't be issuing any reports if you misrepresent yourself. But please, go ahead: lie to them about who you are, then publish your findings on the Internet. There are free web pages to be had all over the place. Or are you just content to be reactionary? As I said previously, my campaign to get my credit score is going along just fine-- even better than I had anticipated. I won't be taking any advice from you on how to get it done because I don't want to lose. Twenty-five questions-- largely unanswered-- were handed in at an official federal government forum on the subject and posted on creditscoring.com. Anybody who reads the transcript of that meeting will see that all I did was stand up, state who I was, ask the top five questions, and sit down. As the FTC officials requested, I handed the 25 to them, in writing. I'm not miffed by the industry ignoring the questions; I think it's hilarious... and actually, the more they stay clammed-up, the worse they look, with the stark, unanswered questions standing there like an elephant in the living room. When it all comes to a head, they'll look terrible. They've trapped themselves. Hey, guess what? Traffic to creditscoring.com is way up since Sunday. The nearest I can tell is that somebody wrote it up in a Sunday paper. It was like that when USA Today mentioned it, too. How's the publicity on your side going? creditaccuracy.com (Part 2) is just around the corner, too-- this isn't a one-act play (to the three national credit reporting agencies: Hi, there! (winky-winky)). What are the names of the "Equifax serviced lenders"? Is the price for the credit score correction $9, $8, $7 or $6? You don't know, do you? What "we" do? Give me a break-- speak for yourself.
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| | Friday, January 07, 2000 - 09:19 pm If Kathy has inaccuracies on her credit profile she should call (800) 270-3435 and they will be corrected. I don't think so, but I'm willing to try. MY mortgage broker told me it was "too late" She said that there is nothing we could do about the score at this point. She gave me some story about another guy who had perfect credit, but his credit report had inacurrate information and HE HAD TO PAY A HIGHER RATE BECAUSE OF IT. Sounds like the system is a big screwy mess. I have to defend myself and I didn't do anything wrong. I didn't put some other guys information on our report. I spent the entire day going over all the WRONG information and boy is it nuts. It says we have 2 AMEX cards, both opened in 1961. My husband was born in 59 and I was born in 64. A Chase card that has been opened since 1956. A GMC carpayment, that we never had. A home, not the one I'm living in. 5 department stores, Jacobson's, Hudson's, Sears,Sak's and Brooks Bros. We live in California. The only one of those stores here are Sears. Never even owned a card. 2 Montgomery Wards cards. One is ours and one is NOT. A Citi bank Visa that isn't ours. 2 comerica bank revolving cards..NOT ours! All of these cards are open! Tell, me these open accts can't be hurting our score? Add those to the few that are actually ours and we look like the biggest credit card couple on earth! What's FOA bank? Got one of those on there too. Never heard of it. Then there are items from a very long time ago. 9 and 10 years that do belong to us, but they should have been deleted, right? Like I said, our report is so off base...I have no idea if it's hurting us or not! I can't believe I am being judged on something so ***** up! Right now, I'm praying that my current home doesn't get a decent offer before our contingency expires Wednesday. I feel like I've taken everyone for a ride here, from my new home to our realtor. You know what really stinks? I'm afraid to fix all of this and then have someone run my report...because my frigin score might be affected. I hate credit bureaus. There has got to be a better way.
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| | Saturday, January 08, 2000 - 12:24 am Don't feel alone Kathy, by any means. I found out from attorneys today that depostions that were scheduled to take place next week (i.e. Experian, Equifax,TU, Fleet Bank, Portfolio Recovery Associates) do not want to depose my husband or I YET because THEY "can't possibly do a deposition without 10 years of our medical histories". Why? Because they want to confuse the issue, the merits of the case, and attempt to say any stress we claim to have suffered the last several years of trying to return our credit status back to the excellent credit rating we had (prior to their multitude of reporting errors and violations)is from some other stress in our life. Still to date they accept no responsibility, express no remorse and only want to further victimize us by refusing to deal with the damaging effects of their actions. Why wouldn't they want to depose us on the merits of the case? Because they have no defense. If you have the facts on your side, argue the facts...If you have the law on your side, argue the law...If you have neither, attack the lawyers and plaintiffs! Read about my nightmare at http://www.consumeraid.org/creditnightmare.htm and then you tell me if it were you, would it cause you any frustration, anxiety or stress? Would it cost you financially due to grossly inaccurate scores since 1996?? According to the denfendants..NO. Their answer is "so what?" However, I will let the jury decide because thankfully, they do not have the right to quantify our damages, neither financially or emotionally. No matter what they think of themselves, there really is a higher power than them out there, and that it where my strength (and faith) comes from.
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| | Saturday, January 08, 2000 - 02:11 pm Greg: "That's why your influence is weak." That had me rolling, Greg. I don't seek influence, but I guess that comment works better as an insight into you and your agenda. I have no agenda and no plan for humanity. All I have is the belief that the credit repositories (and everyone else for that matter) should be permitted to do whatever they want to do unless there is clear, provable and measurable harm to someone else. **************************** Back to a previous question, Greg -- do you admit that there is no special legal definition of assumption and that novation is the proper legal word to use for assuming a loan the bank's way?
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| | Saturday, January 08, 2000 - 03:55 pm All I have is the belief that the credit repositories (and everyone else for that matter) should be permitted to do whatever they want to do unless there is clear, provable and measurable harm to someone else. ~~~I don't agree at all. Why should I live in fear of someone eles' mistake. I have control over my own mistakes, but to say that they can do whatever they want because they aren't intending to hurt me is bull. Kathy
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| | Saturday, January 08, 2000 - 08:48 pm Sean, Are you saying that Denise and Kathy did NOT suffer damages?
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| | Sunday, January 09, 2000 - 01:26 pm Sean: If you say "land contract," they would understand. If you say, "lease, with option to buy," they would understand. How is this relevant to Kathy? If she asks the seller to let her live in the house and own it through "novation," then nobody will know what she is talking about. That doesn't help her. It also doesn't help to use the word "assumption" because that does not describe what you suggested either. If you say "novtion" (defined by he link you gave to http://www.duhaime.org/dict-no.htm#N as "Substitute a new debt for an old debt cancelling the old debt." (which, of course, makes no sense in terms of usage of English-- it should say "The substitution of a new debt... ")) in real estate circles, most people wouldn't know what you are talking about. Right? To answer your question: "do you admit that there is no special legal definition of assumption and that novation is the proper legal word to use for assuming a loan the bank's way?" Is this, a court of law? Law school? No, Your Honor, I do not admit anything, Judge Wapner, sir. The definition-- practical and legal-- of "assumption" comes within the contracts signed by the parties and the lending guidelines. I gave links to credible authorities in the field of real estate (above) who use the contracts. Take up your needling street lawyering with them. If you would like to-- or absolutely must-- use the word "novation" as a substitute, I am sure a court would allow it, as long as everybody involved understands what you mean. The most common type of assumable loans I know of are FHA and VA loans. Here is a page at hud.gov called "Administration of Insured Home Mortgages" that talks about assumptions. The words "assumption" or "assume" appear 30 times. "Novation" does not appear. Directive Number: 4330.1. I searched hud.gov at http://www.hud.gov/search.html for the word "assumption." 724 documents were returned. I searched for "novation" and 8 documents appeared (some flukes because of the word "renovation," none relevant to this topic. Go see for yourself. More? http://www.altavista.com/cgi-bin/query?sc=on&q=loan+assumption&kl=XX&pg=q http://www.altavista.com/cgi-bin/query?sc=on&q=assumable+mortgage&kl=XX&pg=q Now try this: http://www.altavista.com/cgi-bin/query?sc=on&q=loan+novation&kl=XX&pg=q There's my final answer, Regis; what in the world is the point? And here are some questions you haven't answered, yet, relevant to this thread: What are the names of the "Equifax serviced lenders"? Is the price for the credit score correction $9, $8, $7 or $6? You don't know, do you?
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| | Sunday, January 09, 2000 - 05:37 pm Greg, did you see the new Section: Sean vs. Greg Could you PLEASE take it there? Personally, I'd really like to know which one of you is right. And if you hit that "New Conversation" button frequently to argue point by point, I might even find out. Thank you so much, Christine
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| | Monday, March 06, 2000 - 08:45 am Kathy, Hang in there, it seems the "thread" had gotten carried away with themselves. The most important thing is to get your credit report corrected. The best thing to do is to continue going through your credit report line by line. Check on the accuracy of both you and your husbands social security linked to the inaccurate credit reports, did you or your husband cosign for anyone or had any power or attorney etc;? My husband just filed our taxes and was told by the IRS that his social security was incorrect in the system...you never know, nothing is fool proof. I have dealt with trying to get inaccurate information from my credit report, and it is not easy to find any one to help you,and not pay a lot out of your pocket. I sent my complaint to the proper governing agency and the better buisness bureau..guess who helped me more on the inaccuracy? it wasn't the slow government. The big three are not there to help you, the burden of proof is on you. Best of luck to you.
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