Data Facts Blog


From Data Facts: 5 Things Not to do After You Apply for a Mortgage

Buying a home can be one of the most stressful adventures a person can embark upon. From choosing the home, negotiating the price, obtaining a mortgage loan, to securing ownership, there are many pitfalls that can derail the plan.

Consumers often mistakenly believe that it is clean sailing after the mortgage loan process has been started. If the credit score it good, they are good to go, right. Wrong.

There are negative actions that can be taken even after the mortgage loan has been applied for that can decrease or annihilate the chances of getting that loan closed.

Today we are going to discuss the 5 No-No’s. These are the actions that a consumer needs to AVOID after applying for a mortgage loan.

#1: Don’t charge new credit card debt. In many cases, the mortgage loan was narrowly secured based on the consumer’s debt ratio or credit score. In these instances, even a few hundred dollars in new debt can cause the ratios to swing out of favor or credit scores to drop.  Postpone any new purchases on credit. Opt instead to pay cash.

#2:  Don’t quit your job.  The mortgage loan will be figured on your (and maybe your spouse’s) income. Your employment status will be checked again before the loan closes, and if the bank finds out you are unemployed, the mortgage loan will most likely fall through. Quitting your job is one of the most surefire ways to spoil the mortgage loan process.

#3:  Don’t buy a car.  If you get car fever during your mortgage process, REFRAIN from acting on it. A car loan will show up as a new inquiry on your credit report, AND the debt could possibly skew your debt ratios enough to mess up your chances of closing on your mortgage. Trust me, a car is not worth losing your dream home.

#4: Don’t miss payments. Forgetting to pay a bill or paying it late has a tremendously negative impact on a credit score. Just one late payment could tank your credit score to the point that the new mortgage would be unattainable. Practice diligence in paying your bills on time, especially when trying to obtain a mortgage.

#5: Don’t pay off old collections. It is a common misconception that “cleaning up” your credit by paying off old collection will help you look better to creditors. This is often not the case. By paying off an old collection, the date of last activity (which is how the credit scoring model looks at collections) will be brought to the present. The old collection will look like it just happened, which could result in a credit score drop of 100 points or more!  Leave old collections alone, and only pay them at closing, if required.

Securing a mortgage is a big endeavor. It takes lots of time and energy. Be sure to avoid these 5 common pitfalls to ensure you get the mortgage you want!

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

Advertisements

Social Security Numbers and Mortgage Fraud

The social security card looks like an innocent little thing. However, its 9 digit number packs a powerful wallop during the mortgage process.  People who commit mortgage fraud often attempt to utilize other people’s socials to acquire mortgage loans.

According to Fannie Mae’s Fraud Finding Statistics , for the 2011 and 2012 mortgages where misrepresentations were discovered,   8% of the misrepresentations involved social security numbers. This, unfortunately, is an increase from 2010.

Mortgage fraud is a rampant practice in today’s real estate climate, with fake or stolen social security numbers often at the heart of the scams. Fraudsters have several ways of gaining access to a person’s social:

1: Purse or wallet snatching: a thief may utilize this very common practice to gain access to a consumer’s private information.

2: Phone scams: fraudsters call a person with a phony story. Examples of this are scammers telling the person he/she has won a great amount of money, or posing as the person’s bank or credit card companies. In these cases, thieves ask for identity verification in the form of a social security number.

3: Computer hacking: websites where private information is stored may be hacked in order to retrieve social security numbers.

Once fraudsters have secured a valid social security number, they can utilize it to open credit cards, get hired for jobs, AND obtain a mortgage.

Criminals who set their sites on mortgage fraud often set up complex networks and intricate scams to commit mortgage fraud. One person will steal the social security number, while another fraudulent person applies for the mortgage. A group working this way can rack up tens of thousands of dollars in cash without the consumer’s knowledge.

How can consumers protect themselves?

–          Leave it at home. Never carry your social security card in a purse or wallet. This practice will eliminate the possibility of a thief stealing it in a purse or wallet snatching incident.

–          Guard the number closely. Only give out the number on a call that you initiated.  Beware of anyone calling or emailing you asking for your social security number.

–          Report a theft immediately.  If you feel your social security number has been compromised, report it to the FTC, the 3 credit bureaus, and the Social Security Administration immediately. Doing damage control up front will save you big headaches down the road.

How can mortgage lenders protect themselves?

–          Closely check the credit report. Scour it thoroughly for any discrepancies in the applicant’s social security number.

–          Run a social security verification on every borrower. For added protection, this process makes certain the social matches the person trying to obtain the mortgage.

It’s a sad fact of life there are criminals out there who prey on honest people by fraudulently acquiring their social security number. However, by being vigilant (whether you are a consumer or a mortgage lender), these criminals can be thwarted and the incidences of mortgage fraud can be decreased.

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

7 Steps to Protect Your Finances During a Divorce

We all hope it never happens to us. The “D” word.  Divorce.

It’s a sad fact that lots of marriages end in divorce, and sometimes the relationship is contentious and hostile. If you are facing divorce, protect yourself and your finances with these simple tips:

1.  Keep detailed records.  The first step is to commit to making certain that all financial arrangements and obligations are well-documented.  If you end up having problems with a creditor for a debt that is not your responsibility, documentation can help clear the issue up faster and with less effort.

2. Dissolve every joint account.   This is one of the biggest mistakes that divorcing couples make. One person will keep a joint account, and the other person finds out months or years later that the account has been paid late or sent to collection. Be aware that divorce decrees do not supersede contracts. In other words, if you and your ex split certain debts in the divorce, but your name is still on the debt, YOU ARE STILL RESPONSIBLE FOR THE PAYMENT OF THAT DEBT.  This is a biggie, and can completely tank your credit score and ruin your finances.

Remove your spouse’s name on any accounts that you plan to keep (such as your car, etc). Move the utilities and any other bills into one name. If you share joint credit cards, divvy up the balance and open a credit card in just your name, and transfer the balance over to the new account. BE SURE all joint credit cards are closed.

3.  Sell the house if possible. The best idea is to sell the house and split any profits. It is imperative to not walk away from your house with your name still on the mortgage.  If selling the house is not an option, the person who ends up with the house needs to refinance it in his/her name alone as quickly as possible.

4.  Divide all assets. Split all cash, property, and any other assets during the divorce. Do not share assets with an ex.

5.  Be on guard online.  An ex can do some real damage when armed with passwords to bank and credit card accounts. The first action should be password protecting your computer and your cell phone (this will ensure your ex does not add a sneaky spyware).  Change ALL of your passwords on all of your accounts to something your soon to be ex would not know. Do not use birthdays, anniversaries, mother’s name, dog’s name, or anything else that your former beloved would be able to figure out.  Phrases like “bobpleasedie” or “lovereallystinks” probably aren’t good ideas, either.  A long password (10 characters or more) with letters in upper and lower case and numbers is the best option.

6.  Check your credit report. This is a good all-round rule for everyone. However, it’s especially important after going through a divorce.  Pull a credit report every 3-4 months, and scour it to make certain all joint accounts are closed and that there are no accounts you do not recognize. Follow up on any errors and get them cleared up immediately.

7.  Change your will and life insurance beneficiaries.  When moving on after a divorce, make certain to review all important documents, and implement changes where necessary. Remove the ex’s name from your will and any insurance policies in which he/she is named.

Divorce is never a fun endeavor. However, by being educated about the financial facts and following these simple tips, you can make it much easier to move forward and avoid the financial pitfalls that many people fall into when ending a marriage.

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

Credit Score Success from Scratch; a Simple Recipe

A high credit score is like a homemade meal; it takes time, patience, and cannot be whipped up instantly.  Let’s look at the recipe to build a great credit score from scratch:

First, you need to have the ingredient of credit. People who don’t have any credit are not showing the credit scoring model their financial management skills.  A credit card, home loan, or car note is a main ingredient in the credit score recipe.  Remember: you are not required to carry a credit card balance. Using a credit card will help build your credit even if you pay it in full every month.

Second, make sure you pay a lot of attention. Pay those credit obligations on time, because timely payment is the single most important aspect of building a good credit score.  You can gain lots of points by having a good history of on time payment, and, conversely, you can spoil your credit score with just a few missed or late payment patterns.

Third, keep those credit card balances low. Credit card balances are like salt, less is more.  The credit scoring model looks at your credit card balance in relation to your credit limit (this is called a credit utilization ratio). The lower the ratio, the more positively it affects your credit score. Make sure to never charge over 30% of your total credit limit, because you don’t want to get penalized.

Fourth, keep those old credit cards open and use them every now and then. You will get points for a long, lengthy credit history.

Fifth, don’t add too many ingredients all at once. If you don’t have any credit and are just starting out, don’t open too many credit cards too fast. One line of credit every year or so will work out great.

Sixth, remember to have more than one ingredient, if possible. The scoring model likes to see that a person can manage a mix of credit. Having installment loans (mortgage or car) and revolving loans (credit cards) will give a boost to your score.

Seventh, keep an eye on it. Check your credit report at least once a year and examine it carefully.  Make sure there aren’t any errors (such as creditors that you don’t recognize, late payments or collections reporting incorrectly, etc). This happens all the time, and the sooner you catch it, the better off you will be. Dispute any incorrect information to get it removed.

Attaining a great credit score takes a little time, self discipline, and attention. However, putting in the effort will assure that you can get the best deals on mortgage, auto, and credit card rates. Following the recipe we just laid out is a great start to help you cook up a great credit score!

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

From Data Facts: A Quick Check of Your Compliance Standards

Red tape, bureaucracy, paperwork!  Whatever you want to call them, compliance rules and regulations can be time consuming and confusing.

However, complying is very important, and should be a top priority. The penalties for non-compliance are just too stiff to ignore.  Here are a few tips to help make sure you (as a mortgage lender) are in compliance with federal and state regulations. *

Befriend the FCRA:

The Federal Fair Credit Reporting Act regulates the operation of consumer reporting agencies, and also affects you as a user of information. It regulates how a consumer’s information may be used, and restricts who has access to this sensitive information.   In order to be in compliance, one needs to have a thorough understanding of the FCRA.

Store your paperwork:

The Federal Equal Opportunities Act states that a creditor must preserve all written or recorded information connected with an application for 60 months. In keeping with the ECOA, Data Facts, Inc. requires that you retain the credit application and, if applicable, a purchase agreement for a period of not less than 60 months.

 Properly dispose of sensitive information:

As part of the Fair Credit Transaction Act of 2003, if a consumer report is being used for a business purpose, it is subject to the Disposal Rule.   This rule calls for the proper disposal of information in consumer reports and records to protect against “unauthorized access to or use of the information.”

Guard your emails:

Email hacking is becoming more and more prevalent. Periodically review how your organization is using email to exchange information. Make sure sensitive information that is being sent via email is protected by using Winzip password protection, and by never sending social security numbers in the body of the email.

Have a plan for a breach: 

If you have not already done so, establish processes and procedures (in a written plan) for responding to and containing security violations, unusual or suspicious events and similar incidents. The goal should be to limit damage or unauthorized access to information assets and to permit identification and prosecution of violators.

 Know your state laws.

Certain states have passed restrictions in addition to the FCRA. Make sure to be familiar with any additional laws in your state, and follow these rules carefully to maintain full FCRA compliance.

 Maintaining compliant procedures and processes is an integral part of doing business in the mortgage industry.  By taking the time to become comfortable with the laws and regulations, you will be better able to protect yourself and your business from lawsuits, fines, and penalties.

*(This is not intended to provide legal advice. You should consult your own company’s Human Resource and Legal departments and/or obtain legal advice).

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

FHA Changes Their Stance On Collection Accounts…..for now

FHA had decided to implement a new rule that would not provide home loans to applicants with collections of over $1000, unless those balances were paid off before closing.  

The rule (Mortgagee Letter 2012-3) was announced by the agency in March and set to take effect on April 1.  Affecting all potential home buyers who were showing an unpaid collection on their credit reports, this new stance was expected by housing analysts to have a negative impact on the housing market.  

FHA was going to require buyers to pay off collections of over $1000 before a mortgage loan would be extended.  The FHA attributed the change in policy to their ongoing effort of building a stronger portfolio.

The worry from mortgage experts was that this would be especially detrimental to young, first-time homebuyers.  These borrowers most likely would not go through the tedious process of paying off old collection accounts, due to the expense and the frustrating difficulty in dealing with creditors.

According to an article on Builderonline.com   “JPMorgan Chase analysts estimated the rule would cut demand for FHA loans by 10% to 20% in the next few months.”

The ruling has now been postponed to not take effect until July 1. This will give FHA time to seek additional input on this section and work to clarify guidance, as appropriate.

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company that provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

Things You Need To Know About Harp 2.0

Millions of homeowners are underwater on their mortgages, owing more than their homes are worth. This year HARP (Home Affordable Refinance Program) has been re-vamped to allow more homeowners to refinance their mortgages.

This is great news, as Corelogic estimates that 11 million homeowners are underwater and could benefit from assistance. The new changes to HARP will allow the homeowner to refinance regardless of how much their home has dropped in value.

There are some guidelines in order to refinance under HARP. In order to be eligible:

–  The mortgage must be owned by Fannie or Freddie (and originated before June 1, 2009)

–   The mortgage must have been paid on time for the last 6 months, and have no more than 1 30 day late in the last 12 months

–   The current loan-to-value ratio must be over 80%

–   Previous participants in HARP are not eligible

This is GREAT news for homeowners who have kept up with their payments!  These homeowners can move forward in the program right away. Remember, this program is available through December  2013.  Even if a homeowner currently has some recent late payments, if they can get and stay current, they can eventually take advantage of HARP to refinance their home.

Fees have been reduced for HARP loans, and in most cases, an appraisal is not needed.  Lenders can utilize  Automated Valuation Models (AVM’s) to instantly determine the home’s value.

Lenders must then show that the homeowner reaps at least one of these benefits by participating in HARP:

–   The new loan reduces the size of the monthly payment

–   By refinancing, the loan is changed to a more stable loan product

–   The new loan reduces the interest rate

–   The refinance moves the loan to a shorter term

These new changes are expected to help millions of homeowners refinance to a more manageable, stable loan, and allow them to stay in their homes and avoid foreclosure.

 

~~Susan McCullah is the Product Development Director for Data Facts, a 22 year old Memphis-based company that provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

Mortgage Triggering; Who is calling my customers?

Mortgage triggering is a frustrating, pull-your-hair out phenomenon that rears its ugly head frequently during a refinance boom. If you are a mortgage lender and haven’t experienced it yet, lucky you.

Mortgage triggering is the process that some lenders use to gain customers.

Basically, lenders purchase these ‘trigger leads’ from the bureaus or other companies. The leads are consumers who have recently had their credit pulled in order to qualify to buy a home. Once purchased, the lenders call these consumers, (who could be YOUR customers) and extend them a firm offer of credit.
This process is covered by the FCRA as a legal practice. (FCRA, 15 U.S.C 1681). The wording of the language is: ‘to obtain a consumer’s private information an institution must have consent OR present a firm offer of credit in their solicitation’. So, when lenders buy these leads, they must call, email, or mail a firm offer of credit to the consumer.
The argument for triggering is that is gives consumers a choice. Triggering offers consumers more than one option for a mortgage loan.
The argument against triggering is that unscrupulous loan officers may make ‘too good to be true’ statements, or run a bait and switch scheme using the consumers’ information.
Through the years, Data Facts has answered this question many times. Customers are confused and frustrated by the sometimes multiple phone calls they receive from competing lenders. They feel their private information has been sold. And it has.

How customers are triggered: lenders set up their criteria based on the credit score, LTV ratio of the loan, and even the geographic area of consumers they wish to target. Once set up, the consumers that fit these criteria are monitored by the triggering company. When a consumer that is on this list has their credit pulled for a mortgage loan, this triggers in the system. The lender then receives this information, and calls the consumer with an offer.
How to guard against it:
1: Educate your customers. Warn them that they may receive calls with competing offers, and they may be ‘too good to be true.’ Simply knowing to expect the calls from other lenders will decrease the frustration most consumers feel about this practice.
2. Tell your customer to opt out. If a consumer opts out of prescreened offers, this will stop the trigger leads. They can opt out at http://www.optoutprescreen.com. The catch; this process takes 5 days to take effect, so if their credit has already been pulled, this will not block the offers immediately.
3. Advise your customer to get on the do not call list. All trigger leads are supposed to be scrubbed against the do not call list. Consumers can add their name to the list by calling 1-888-382-1222 from the phone they wish to register, or register their number at http://www.donotcall.gov. Again, this takes a few days to take effect.

There is no sure fire way to protect your customers from receiving these trigger calls. However, if you arm them with the pertinent information, you can minimize the possibility of losing a customer to your competitors.

Increase Your Credit Score: High Tech and Low Tech Ways

Protect your credit score! Whether you are a high tech smartphone addict or barely use email, here are some everyday tips that you can put in place. These routine practices will boost your credit score to the top of the charts:
1: Make sure your credit report is accurate. If your credit score is being calculated from incorrect information, it may be suffering greatly. It’s estimated that 25% of credit reports contain some sort of error.
High tech way: You may request a copy of your credit report from http://www.annualcreditreport.com once every 12 months free of charge. This website is provided by the 3 main credit bureaus. Reviewing your credit report is a great way to catch any mistakes BEFORE they damage your credit.
Low tech way: You may request your credit report by phone or by mail. By phone:  call 1-877-322-8228 and you will go through a simple verification process. Your report will then be mailed to you within 2 -3 weeks. By mail:   download and complete the Request Form (available on the website) and mail it to

 Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
Your report will be delivered in 2-3 weeks
2: Pay your bills on time. Payment history is 35% of your credit score, so paying your bills on time needs to be a top priority.
High tech way: Techies have many options of apps that can be used to track spending and bill pay. http://www.mint.com and http://www.pageonce.com are 2 of the many apps that can set up all of your bills in one place. These apps remind you when bills are due, track spending, etc.
Another way to make sure you don’t miss any payments is to set up automatic payments from your online banking to your mortgage, auto, and credit card providers. This will ensure that you don’t rack up any late pays, which can tank your credit score.
Low tech way: If you are still walking to the mailbox to get your bills, put this practice in place; pay your bills the day they arrive. This may sound a little hard core, however, paying them when you receive them has its benefits. The bill won’t get a chance to lose itself in the pile on your desk, AND you don’t have to think about it anymore.
Another low tech option is to have a desk calendar that has all of your monthly bills marked on the date they need to be mailed (not the date they are due). Put the calendar in a place where you can see it every day, so the due date doesn’t sneak by you.
3: Keep your credit card balance low: Behind paying bills on time, account balances are the most important factor in your credit score (30%). Running up those credit card balances close to the limit has a dramatically negative impact on your credit score. Don’t let this happen to you!
High tech way; as mentioned in #1, there are many apps that can help you track you spending and budget. By following a budget, you can see where your money goes, and plan for bigger expenses (new furniture, vacations, etc) without charging up your plastic.
Low tech way: get a pencil and paper and make a budget. Track you spending to make sure that you know where your money is going. Open all of your credit card statements the day they arrive, and try your best to pay off your balances every month.
High tech and Low tech tip: While using credit cards responsibly DOES help raise your score, it’s a good all-round financial practice to make sure you are not racking up useless debt.
If you do end up using your credit cards and can’t pay the balance off every month, MAKE SURE you do not charge up more than 30% of your limit (ex: on a credit card with a $10,000 limit, never charge more than $3,000). Keeping your balances low will go a long way toward boosting your credit score.
4: Don’t close, lose, or ignore those old credit cards. Length of credit history is 15% of your credit score. The optimum credit history is 30 years long! Work hard to make sure those old credit cards are doing their job to raise your score.
Remember, credit cards must be used once every 6 months to be included in your credit score.
High tech way: set up one of your bills to automatically charge to your oldest credit card. It does not matter how small the amount. Any new balance will update that credit card at the credit bureaus so that all that great long credit history is showing up on your credit report.
Low tech way: carry your oldest credit card in your wallet and be sure to use it once a month to buy either gas or groceries. This purchase will keep your card active and counting positively in your credit report. Pay it off at the end of the month so you are not hit with any finance charges.
Putting some or all of these tips into place can go a long way toward maximizing your credit score and ensuring the best rates on your mortgage, car, and credit card loans. And, whether we are high tech or low tech, this should sound good to all of us.

~~Susan McCullah is the Product Development Director for Data Facts, a 22 year old Memphis-based company that provides mortgage product solutions to lenders nationwide.

How Your Credit Score May Be Stealing Your Money

Posted in Credit Score,Mortgage,Uncategorized by datafactssolutions on August 10, 2011
Tags: , ,

Burglars and purse snatchers have nothing on your credit score! A low score can be stealing money right out of your pocket every month. This can add up over time to hundreds of thousands of dollars.
Here’s how:
Mortgage loans: Let’s say you have a 650 credit score and bought a $200,000 house with a 30 year fixed rate loan. You are going to have to finance it at a rate 1-2% higher than the person rocking a 750 credit score. Over the course of 30 years (360 payments) this difference can add up to around $49,000!
Auto Loans: the average American trades cars every 5 years. Based on this estimate, a person buying a $25,000 car with a 650 credit score will pay approximately $5400 more for EACH CAR than the person with a 750 score.
Credit cards: a person with a 650 score has probably had some late payments and may have maxed out their credit cards. They will not get the great terms and plentiful options that a person with a higher score will enjoy. The average household carries $7300 in credit card debt (Yikes!). If we assume this amount, a person with the 650 credit score will pay $552 more in interest per year than a person with the 750 credit score.
Gulp.
So, if you have a 650 credit score, here’s how much your credit score will steal from you over a 40 year period:
Mortgage: $49,000
Auto: $43,000
Credit Cards: $22,000
Total amount the 650 credit score has stolen: $114,000
The figure would be much larger if this money had been invested in a mutual fund. At a 6% rate, this amount of money would have grown to about half a million dollars.
Remember; protect yourself! Lock your doors, lock your windows, don’t talk to strangers, and keep that credit score high!
Coming soon! Tips on how to make sure you have a top notch credit score.
~~Susan McCullah is the Product Development Director for Data Facts, a 22 year old Memphis-based company that provides mortgage product solutions to lenders nationwide.

« Previous Page