STOP! Don’t Mess Up Your Home Mortgage!

You’ve gone to your lender and been approved for a home mortgage.  You’ve found the home of your dreams.  But just when you are about to close, the lender says you are no longer approved.  What happened?

Since the infamous “mortgage meltdown” a few years back, lenders as well as industry regulations have gotten much stricter.  The latest tightening of the screws comes from Fannie Mae. The mortgage titan’s Loan Quality Initiative, which went into effect June 1, requires lenders to track “changes in borrower circumstances” between application and closing.  While these rules aren’t new, Fannie is enforcing them more vigorously.

The new rules simply want to ensure the new home loans are deemed “low risk” for default or buyback.  Basically, lenders want to be assured that this is the type of borrower that has the ability to repay this loan in full.  With the increase in regulation and scrutiny over any changes, even seemingly small changes can implode your pending mortgage.

Following are three things borrowers can do to mess up their next mortgage closing.

Get a new credit card or auto loan

Get a new credit card or auto loan, and you could find yourself no longer approved for that mortgage loan.

Lenders have long admonished mortgage applicants to avoid getting new credit cards and auto loans while home loans are in underwriting. Fannie’s Loan Quality Initiative adds urgency to this request.

For example, picture a borrower who gets a car loan a week before closing on the mortgage. The mortgage lender doesn’t know about it. Later, the borrower misses a couple of mortgage payments.

Fannie Mae can look back, discover the undisclosed auto loan and make the lender buy back the bad mortgage. That’s a money loser for the lender.

So at the eleventh hour, most lenders check credit for new accounts.

Even merely opening an account — without charging anything to it — can be a mistake.

Charge up credit cards

Charging up credit cards with thousands of dollars’ worth of appliances, tools and yard equipment is another surefire way to muck up a closing. It’s best to leave those cards alone.

Don’t increase your credit card balances at all. Mortgage approval is based partly on debt-to-income ratio.  The lender looks at the borrower’s minimum monthly  debt payments and compares them to income. If the ratio of debt payments to income is too high, the borrower could be turned down for a mortgage.

Fannie encourages mortgage lenders to recalculate debt-to-income ratios just before closing. If a spending spree sends the debt-to-income ratio too high, the mortgage could be doomed. For this reason, borrowers should wait until after closing the mortgage before buying furniture, a refrigerator or a lawn mower on credit.

Change jobs

Changing jobs is another good way to derail a mortgage before closing. Other potential deal-breakers include staying with a current employer, but switching from a salaried position to one where primary income comes from commissions or bonuses.

Any slight change in income could cause you to not qualify.

The main thing to remember is, keep everything exactly the same as the day you got approved.  No new car.  Don’t apply for a credit card so you can get brand new furniture.   And definitely don’t change your job.

H.A.R.P. Has Been Extended!

The H.A.R.P. (Home Affordable Refinance Program) program which enables struggling homeowners to refinance their mortgage, whose home value has declined, has extended its application deadline to December 31^st 2015.

H.A.R.P. is a federal-government program designed to help homeowners refinance at today’s low mortgage rates even if they owe as much or more on their mortgage than their home is worth. The goal is to allow borrowers to refinance into a more affordable or stable mortgage. Most homeowners eligible for a HARP refinance are able to reduce their monthly payment by lowering the interest rate on their mortgage. Other homeowners can use HARP to convert their adjustable mortgage into a more predictable, fixed-loan program. You also have the option to do a HARP refinance for a shorter-term loan, which will help you build equity in your home at a faster pace.

To be eligible for a HARP refinance homeowners must meet the following criteria:

• The loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
• The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.

• The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
• The current loan-to-value (LTV) ratio must be greater than 80 percent.
• The borrower must be current on their mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months. 

Borrowers should contact their existing lender or any other mortgage lender offering HARP refinances.  For more information, please go to http://harpprogram.org/

 

Partners Against Crime. Data Facts Helps You Combat Lending Fraud.

The prevalence of mortgage fraud is still a scary fact.

According to the FBI, 13 billion dollars were lost in fraudulent mortgage loans in 2012. Over 60% of mortgage fraud includes ID discrepancies and in most cases the fraudster uses a mixture of accurate and “borrowed” information. These crooks operate this way hoping that lenders will not check every bit of information and the loan will be approved.

Luckily, there are reports available to mortgage lending companies to combat this issue, and offer some protection. This can help preserve the bottom line.

Fannie Mae, Freddie Mac and the CFPB are continuously working to stay a step ahead of these people. In order for them to stay ahead of the game, they are constantly changing regulations. That makes it difficult for lenders to keep track of these constantly changing regulations. They are requiring that lenders have a rather robust process for assessing the quality during the loan origination.

A member of the board of directors for the National Consumer Reporting Association (NCRA) and Executive Vice President of Data Facts Inc, Julie Wink, explains it. “Fraud is a big issue in the lending world, and it isn’t going away anytime soon. Data Facts strives to offer our customers the solutions they need to close their mortgage loans. Our fraud products are an easy, cost effective way to minimize the risk of processing a fraudulent loan.

Tools from a third party vendor can help catch errors and/or identify intentionally fraudulent information. Lenders can utilize these reports to verify identity and other commonly misrepresented piece of information that lead to fraud. Lenders are able to compare loan application data to their origination, servicing, or other customer databases to identify issues such as multiple applications, occupancy concerns, or erroneous or fraudulent social security numbers. Data Facts offers “build your own” packages for customized reporting that flags suspicious reports and helps lenders stay in compliance.

Julie Wink sums it up: “Everyone in the mortgage industry must do their part to combat fraud. We are offering these products to assist our customers in reaching their goal of no fraudulent loans.

Click Here to download our eBook: Time is Money: Detect Lending Fraud Faster!

About Data Facts Inc

Since 1989, Data Facts has provided information you trust and rely on to make sound lending, hiring, and other business decisions. They have a reputation for providing premier lending solutions that include an Appraisal Platform, multiple Verifications Services, Flood Certifications, Fraud Solutions and Credit Reporting. These solutions ensure that lenders close more loans faster and easier than ever.

Data Facts has offices located throughout the United States and serves a wide variety of customers within the United States and Internationally. They are a 100% woman owned, diversified supplier and offer solutions that minimize risk and keep you in compliance.

Look Before You Leap on the Social Media Bandwagon

As more and more people sign on to Facebook, Twitter, Pinterest, and the many other social media sites available, hiring professionals are becoming more tempted to take a peek at the information before hiring an applicant. Who can blame them? There is virtually a goldmine of potentially  valuable information to be gleaned from a person’s profile, blog, photograph, or collection of tweets.  Lending institutions could benefit greatly by knowing about a mortgage professional’s online presence up front.

However, this type of investigation is not without its risks.  There is a sea of controversy swirling around about utilizing social media to screen job candidates, and whether or not a company should do it.

According to a survey recently by Careerbuilder, 37% of companies use social media to screen their applicants, and 11% of companies plan to use it in the near future. Social media allows hiring managers to gain unprecedented access to information about the applicant.  They can discover negative aspects (vulgar language, bad grammar, illegal activities) and also positive information (charity work, good communication skills, awards received) with just a few clicks of a mouse.  Banks and mortgage companies in particular could benefit from this type of information. Someone who will not represent the lending institution in a professional manner online could be detrimental to the business’s reputation and public persona.  Just one faux pas by an employee can sometimes take a company years to recover!

However, there are drawbacks. A profile also may show information about a person’s race, age, religion, or disability; all of which are illegal to use in the hiring process. Once an employer sees this information, they cannot ‘unring the bell.’  Once you have it, there is no way to prove it had no bearing on the hiring process.   Employers that use social media sites to make employment-related decisions without taking the time to implement them into their current hiring policy processes could be violating employment and privacy laws.

While it’s not illegal to look at a candidate’s social media footprint, it’s advisable to consider several matters before you hop on the internet to check out a potential employee.

Here are 7 steps to follow if your company decides to utilize social media in its pre-employment screening process:

1. Develop a clear policy. When planning to utilize social media in your hiring process, one of the most important steps is to have a policy. Set in place the sites that will be screened, and the information you will be trying to find.  While positive and negative information may be uncovered about the candidate, the best practice is to look for relevant information related to their work. While you don’t really need to be privy to someone’s partying habits or the fact that they kissed a boy in the streets of New Orleans, you would need to know about unsavory behaviors like racial slurs, threats of violence, or misleading information about their work history or education background.

2. Get the applicant’s consent.  It’s considered best practice to follow the same notice and disclosure policies as you normally would with any pre-employment screen.  Advise the applicant that part of your company’s screening process entails checking their social media footprint, and gain their consent to do so.

3. Remember that consistency is the key.  One of an employer’s most important defenses in a lawsuit is consistency within company policies.  Social media screening policies should be written in black and white, and should specifically outline the sites screened and the information being sought. This policy needs to be applied to EVERY candidate.  You can get yourself into trouble by using a ‘go with your gut’ strategy and screening only those people you feel may be hiding something.  If the policy states you do not screen Twitter tweets because you feel they have no relevant information about job performance, don’t suddenly look at it if the candidate looks sneaky or has too many piercings.

4.  Use a third party to perform the search.  If the person conducting the hiring performs the social media search themselves, it is a given that they will eventually see information they should not use in the hiring process. Examples of this are a person’s age, race, religion, health condition, etc. Using a third party, independent researcher to perform the search will greatly reduce this risk.  The researcher (which can be someone from outside the hiring department but still within the company OR a third party background screening company) should work from a list the hiring manager has pre-defined that they want to discover about the candidate.  Upon completion, the researcher can return his findings, while omitting any information that is illegal to use in a hiring decision.  This practice will ensure that the person or people making the hiring decision do not have access to protected information.

5. Do not friend the applicant or ask them for their passwords! Both actions are big No No’s and can bring on all kinds of trouble.  When utilizing social media for screening purposes, view only public information. Do not ‘friend’ or ‘connect’ with the applicant so you can see additional, private information. And never ask the applicant for the passwords to their social media accounts. Most social media sites have privacy sections in their agreements for service that ban a user from sharing his login information. Additionally, several states have even gone so far as to already pass legislation banning companies from asking for individual’s passwords. This needs to be viewed as a big invasion of privacy and avoided at all costs.

6. Have a clear, understandable reason if you reject the applicant.  If a social media search returns information that causes you to reject an applicant, an employer needs to be able to point to legitimate hiring requirements as a reason to not hire a person (such as evidence the person has badmouthed their current employer, participated in illegal activities, used bad judgment, lied about their background, etc).

7. Give the applicant a chance to explain. If a piece of information is found on social media that would weigh against the applicant’s chances of being hired, do not write them off immediately. Showing the applicant what was found on social media, telling them why it’s a concern, and giving them a chance to explain is an important part of the screening policy. Perhaps the negative information was inaccurate or misleading. There is also a chance it was a different person of the same name. The applicant deserves the chance to refute the information.

It is highly recommended and advisable for any lending institution to implement these steps into their pre-employment screening policy BEFORE they begin utilizing social media to screen applicants.

And remember, while social media sites can offer up lots of valuable information on a potential job candidate and his fit within the company, this should not be the only background screening tool utilized in the hiring decision. In order to make a sound hiring decision, social media screening should be used thoughtfully in conjunctions with the traditional methods of screening.

Using social media sites to screen job candidates is not risk-free, especially since there has yet to be many clear laws or court cases defining this area. When implemented into an employer’s current policy and with guidelines intelligently drawn, social media screening can supply a better, all-round understanding of the job candidate.

Susan McCullah

Product Development Director

Data Facts, Inc. has been providing you the Information You Trust since 1989. Susan is the Product Development Director for Data Facts, a 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. Susan can be contacted at info@datafacts.com or http://www.datafacts.com.

DATA FACTS, Inc. to Attend the MBA’s 100th Annual Convention and Expo

Data Facts will be introducing a full suite of products that will help streamline the lending process and keep Lenders in compliance. In today’s financial climate, it is becoming more evident by utilizing bundled services from a single provider Lenders will be able to serve clients more effectively, profitably and will emerge as industry leaders.

Data Facts’ President & CEO, Daphne Large, serves as the 2013 NCRA President, and Julie Wink, Data Facts’ Executive Vice President, serves as the Co-Chair of the Education and Compliance Committee. Data Facts has worked closely with the NCRA for many years, and the NCRA is delighted to have both Large and Wink in such influential positions in 2013. This past June, both Daphne and Julie attended the NCRA Lobby Day in Washington DC. While there, they spoke to various government agencies and public officials, lobbying for better regulations that impact our industry.

The Mortgage Bankers Association (MBA) is the national association representing the entire real estate finance industry. The MBA is an influential voice for real estate finance, leading the charge to create a sustainable and vibrant future for all industry participants. The National Mortgage Banker’s Association provides mortgage companies and banks information that is both timely and critical. This year’s conference will celebrate the Association’s 100th year anniversary.

Daphne Large, Data Facts’ CEO, is proud to be a part of the conference. “We have always supported the local MBA’s and are thrilled to be exhibiting at the national level. We believe the MBA serves the industry well, and know we will have a positive experience both in exhibiting at the conference and attending the informative sessions that are planned. Our customers count on us to be well informed, and the conference will expand our knowledge of the hot topics in the industry.”

About Data Facts Inc

Since 1989, Data Facts has provided information you trust and rely on to make sound business decisions. Data Facts has offices across the United States and provides crucial information for a broad variety of business needs, such as background screening for employment, tenant screening for residential firms, and up-to-date financial background data for mortgage companies. Our top of the line technology delivers information quickly, accurately and securely. For more information about Data Facts visit  http://www.datafacts.com. Follow us on Twitter @DFlending or @DFscreening. ‘Like’ us on Facebook at “Data Facts Lending Solutions” and “Data Facts Background Screening.”

~~Stacie Shelton is a member of the Marketing Team at Data Facts, Inc. Since 1989, Data Facts has provided information you trust and rely on to make sound business decisions. Our CEO, Daphne Large is the 2013 NCRA President and our EVP, Julie Wink is the Co-Chair NCRA Education and Compliance Committee. We provide information for a broad variety of business needs, such as background screening for employment, tenant screening for residential firms, and up-to-date financial background data for mortgage companies. Our top of the line technology delivers information quickly, accurately and securely. For more information about Data Facts visit www.datafacts.com. Follow us on Twitter @dflending and Facebook at “Data Facts Lending Solutions.”

Mortgage Triggering: Who is contacting my customer?

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 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. Your name may have already been sent out on a list that hasn’t mailed yet, so you may still receive items some time after you have opted out.

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 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.

~~Stacie Shelton is a member of the Marketing Team at Data Facts, Inc. Since 1989, Data Facts has provided information you trust and rely on to make sound business decisions. Our CEO, Daphne Large is the 2013 NCRA President and our EVP, Julie Wink is the Co-Chair NCRA Education and Compliance Committee. We provide information for a broad variety of business needs, such as background screening for employment, tenant screening for residential firms, and up-to-date financial background data for mortgage companies. Our top of the line technology delivers information quickly, accurately and securely. For more information about Data Facts visit www.datafacts.com. Follow us on Twitter @dflending and Facebook at “Data Facts Lending Solutions.”

7 WAYS TO CLOSE LOANS FASTER AND STAY IN COMPLIANCE

In today’s financial climate, it is becoming more evident by utilizing bundled services from a single provider Lenders will be able to serve clients more effectively, profitably and will emerge as industry leaders.

Why should you bundle services? First of all, one vendor equals fewer headaches. It standardizes operations and saves time. You don’t have to call, email and wait for responses from multiple vendors. Secondly, it builds a stronger relationship. This makes for a more positive overall experience. Lastly, it helps you to stay in compliance. Compliance is ALWAYS a top priority. Bundling services minimizes the risk of being out of compliance by having all your paperwork from ONE source. Your chosen vendor should be constantly providing compliance information for your records.

Credit

Buying a home can be one of the most stressful adventures a consumer 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. Credit Education can help streamline the loan process. The more that the consumer knows on the front end, the easier the process will be.

When looking for a Credit Reporting Agency (CRA), there are a few things that you need to know. 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.

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.

Debt Monitoring

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. The Fannie Mae LQI initiative is meant to keep the amount of loan buy-back low by verifying the quality of a purchaser before it closes. Debt Monitoring allows loan officers to monitor their borrowers during the “Quiet” period between when the loan application is made and when it closes. The borrower is monitored on a daily basis and if there is a change in their credit history, the loan officer is notified within 24 hours.

Accessing the tradeline changes by pulling a soft pull credit report is another method of satisfying the Fannie Mae LQI initiative. Soft pulls – as they are known in the industry because they do not have an impact on a person’s credit score – instantly accesses any credit history changes between origination and closing.

Automated Appraisal Platforms

Don’t risk the stiff penalties that are being imposed for non-compliance. Automated appraisal ordering platforms are a great way to maintain compliance for UCDP and the Dodd-Frank Act. Look for a vendor that allows you to use your own appraisal vendors and allows you to maintain control of the process. The best product will be one that maintains appraiser rotation with total transparency, logs all communication between the lender and appraiser, and allows the appraisal to be uploaded straight to the UCDP. A certificate of compliance or some other form of written documentation should be provided with every appraisal that is generated through the system.

Look for an automated appraisal platform that lets you choose if you want to override service areas for all of the appraisers in your panel, or only certain appraisers. You have the option to have a “mixed” panel: a panel where you have specified service areas for certain appraisers, but kept the appraiser-entered service areas for others.

When you have controlled the service areas and qualifications of appraisers in your panel, the areas that you have entered will override the appraiser’s settings in the appraiser profile. This will give you more control over your order processes to make sure the appraiser with the right expertise gets the order.

Fraud Prevention

Regulators and secondary market investors are requiring originators to validate more of the borrower and property data using independent third-party sources to help combat this trend. With the changing regulations loan officers must be constantly aware of growing fraud trends.

Approximately 60% of mortgage fraud includes ID discrepancies. It is a good idea to implement an automated investigation of the borrower’s identity into your best practices. Utilize a system that instantly searches millions of databases and validates the person’s name is actually connected to the social security number, address, phone number, date of birth, etc. This will allow a lender to easily catch and circumvent high-risk identity mortgage fraud in close to 9 out of 10 instances.

Verification Services

Tax Return Verifications are a great way to combat income fraud. Look for an easy to order platform, from which you can order directly. Your vendor should review the documents before submitting to ensure that the IRS does not reject the order. The IRS will still charge you a processing fee, even if they reject the order.

Social Security verifications prove that the person across the desk from you really is who they say that they are.  Easy to read reports add that extra layer of protection to make sure that you have covered all your bases.

Mortgage Verifications will verify mortgage payments, payment history and the name of the creditor. Employment verification checks dates of employment, salary and the position held. Verification of deposit will verify funds in a checking or savings account and the current balance.

Flood Certifications

Over the last several years FEMA has made over 83,000 flood map panel changes affecting 92% of the US population. This means millions of properties may have a flood status change. According to the FDIC Annual report for 2011, 80% of the fines issued by the FDIC in 2011 were flood related. The Biggert-Waters Flood Insurance Reform and Modernization Act passed in June 29, 2012 included an increase for penalties against lenders from $350 to $2,000 for each flood violation and eliminated the annual cap on flood violation fines. Ease your compliance worries by signing up with a vendor that has the dedicated staff and funds.

Make sure that your vendor is partnered with a reputable flood certification vendor. Flood Certification has improved greatly with regards to technology. Vendors no longer are pulling actual maps to locate specific properties. Everything has been digitized, so information can be gained within seconds. 95% of flood certifications can come back within just a few seconds. Your flood certification portfolio should have the latest flood data throughout the entire life of the loan and will also make sure you receive any revised flood certifications within 60 days of the new maps becoming effective so you can take the appropriate next steps as quickly as possible.

With new regulations being implemented daily, there are more requirements than ever to get a loan approved. Bundled services are the way of the future. They reduce turnaround time, improve productivity, improve the bottom line and keep you in compliance. By utilizing bundled services from a single provider, Lenders can set themselves apart in a highly competitive market.

Johnna Leeds

Vice President of Compliance

Data Facts, Inc. has been providing you the Information You Trust since 1989. Johnna Leeds is the Vice President of Compliance. She has been with Data Facts since 1996. She is a member of NAPBS, and currently serves on the NAPBS Best Practices Group, Litigation Avoidance, Criminal Records Reporting Practices and Breach Prevention committees. Johnna can be contacted at http://www.datafacts.com.

Back On Track: The Housing Market Is Changing For The Better

The housing market is improving much faster than anyone would have expected a year ago. Nationally, the prices of homes increased by 10% since February of 2012. However, many in the industry think that this may be cause for concern. They are nervous that the fast pace of recovery will cause another bubble.

Housing prices have remained positive throughout the seasonally slow winter months. “Home prices ended the first quarter of 2013 in a similar fashion to how they started the year, stable and in positive territory,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital. “It has been seven years since home price growth continued throughout winter. This is very strong evidence of the start to a new leg of the recovery, one that should give further confidence to consumers and lenders alike that the recovery is real. As buyers become more confident the recovery is sustainable, this sentiment should grow to create a positive feedback loop.” It even appears that prices will still go higher. Here are a few reasons this may be the case:

• The inventory of homes available for sale has fallen to the lowest amount in 20 years.
• Since 2008, Homebuilders are not adding as many newly constructed homes to the market. Rising costs of building materials and labor are causing builder confidence to be low. “Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values,” said Rick Judson, NAHB chairman and a home builder from Charlotte, N.C. “While sales conditions are generally improving, these challenges are holding back new building and job creation.”
• Banks are selling fewer foreclosures. “Although the overall national foreclosure trend continues to head lower, late-blooming foreclosures are bolting higher in some local markets where aggressive foreclosure prevention efforts in previous years are wearing off,” said Daren Blomquist, vice president at RealtyTrac. “Meanwhile, more recent foreclosure prevention efforts in other states have drastically increased the average time to foreclose, which could result in a similar outbreak of delayed foreclosures down the road in those states.”
• Investors have purchased many available homes, converting them to rental properties.
• Borrowers aren’t willing or able to sell at such low prices.
• Tighter Lending standards mean that sellers are afraid they will not qualify for a new loan.
• Demand has increased dramatically due to first-time homebuyers. Rising rents and falling interest rates make monthly payments less than what it costs to rent. Also, the demand is currently higher than the available supply.
  Low interest rates allowing qualified buyers to borrow more money. Today’s historically low interest rates have given American homeowners a significant boost to their purchasing power. In the pre-bubble period from 1985 through 1999, when rates for a 30-year fixed mortgage ranged between six percent and 13 percent, Americans spent 19.9 percent of their median monthly incomes, on average, on mortgage payments for a typical, median-priced home, according to Zillow. At the end of the fourth quarter of 2012, with mortgage rates in the 3 to 4 percent range, U.S. homeowners paid 12.6 percent of their monthly income on mortgage payments, down 36.9 percent from historic, pre-bubble norms, according to Zillow.

Prices may be rising quickly but tight credit standards are keeping everything in check. The housing market is healing but could potentially be in for more instability until more people purchase homes in which they want to live.

~~Stacie Shelton is a member of the Marketing Team at 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.

News Release: Senators Introduce Bill to Help Americans Struggling with Medical Debt

Medical Debt Responsibility Act helps consumers whose credit scores have been damaged by medical emergencies

WASHINGTON, DC – January 28: Oregon’s Senator Jeff Merkley introduced legislation to prohibit companies from using paid off or settled medical debt in assessing consumer credit scores. The Medical Debt Responsibility Act, which is cosponsored by Senators Dick Durbin (D-IL), Chuck Schumer (D-NY), Tom Harkin (D-IA), Sherrod Brown (D-OH), Robert Menendez (D-NJ) and Richard Blumenthal (D-CT), could help as many as 75 million Americans.

 

“Oregonians shouldn’t have to pay more on their mortgage or their credit card simply because they had the bad luck to need medical care,” said Merkley. “Unforeseen accident or illness can happen to any one of us. We can’t change that fact, but we can change the law so that responsible working families aren’t hit with unfair credit reports for years after medical debt has been paid off.”

 

“Ohioans shouldn’t be penalized on their credit scores because of medical debt that they have repaid,” Brown said. “No one chooses when they fall ill or get hurt and no one’s credit score should be permanently tarnished due to temporary health issues.”

 

“After a sudden illness or medical emergency and the skyrocketing cost of critical treatment, the last thing families should have to deal with is a plummeting credit score,” said Durbin.  “But all too often unresolved medical debt bills, including those stuck in insurance red tape through no fault of the consumer, are provided to credit reporting agencies with serious negative consequences for consumers.  This practice unfairly damages a consumer’s credit score for years after the debts have been paid in full.  Our legislation would restore fairness in the system by ensuring that medical billing problems don’t become part of a patient’s permanent credit record.”

 

“A good credit score is critical for Iowans that want to obtain a loan, a new credit card, or a mortgage—but medical debt, even when paid off, can leave an unfair mark on a credit report,” said Harkin. “Oftentimes consumers are billed incorrectly, and are unaware that they have been left with medical debt. The Medical Debt Responsibility Act would ensure that consumers are treated fairly and are not punished for unexpected medical emergencies.”

 

“The unpredictable expense of medical debt should not confine consumers to a lifetime of bad credit,” Senator Blumenthal said. “Penalizing consumers for repaid or settled medical debt is an unfair and unnecessary practice that must be stopped.”

 

Currently, medical debt collections can significantly damage a consumer’s credit score for years, even after the debt has been settled or paid off.  As a result, consumers can be denied credit or pay higher interest rates when buying a home, obtaining a credit card, or applying for a small business loan.

Medical bills differ in a number of ways from other bills. The bills are often submitted first to insurance, and it can take considerable time to determine the accurate amount actually owed by the consumer. Consumers must navigate a complex and confusing billing system and wait for decisions from one or more insurance companies to find out how much they owe. For this reason, consumers often do not learn that they are delinquent on a medical bill until they hear from a collection agency, by which time their credit score has already suffered.

In addition, medical debt is atypical because consumers have little choice over whether to incur medical expenses or how much debt they accrue. Due to this unique nature of medical debt, its predictive value on credit reports is low.

The Medical Debt Responsibility Act fixes this problem by prohibiting consumer credit agencies from using paid off or settled medical debt collections in assessing a consumer’s credit worthiness.  In addition, the bill will require the creditor or credit rating agency to expunge the medical debt from the consumer’s record within 45 days from the day it is paid off or settled.

The Medical Debt Responsibility Act was endorsed last Congress by the American Medical Association, Consumers Union, Mortgage Bankers of America, NAACP, and the National Home Builders Association.