A HReal HRisk HR can help HReduce | BCP Business Center

By Lesley Fair

Today is Data Privacy Day. You’ve educated your staff about limiting access to sensitive information, locking up confidential paperwork, and securing the network. But Latanya Sweeney, the FTC’s new Chief Technologist, just clued us in about a potential security vulnerability you, your HR team, and your web master can do something right now to correct.

It can happen on any site, but it’s common for universities, research institutions, non-profit organizations, and even tech companies to include links to the CVs of professors, scientists, executives, and other staff. For the most part, those resumes list scholarly publications and academic interests. But scroll through all that high-minded content and you may get to the down-and-dirty stuff identity thieves live for: dates of birth, home addresses, and even Social Security numbers.

On this topic – and a whole lot of others – when Latanya Sweeney talks, we listen. And here’s why. Yes, Latanya is an Ivy League Big Brain Academic. (And we mean that in the nice way, of course.) But she also has the tech credentials to speak geek with the very best of ‘em. And if that weren’t enough, for years she’s been a leading thinker about how privacy and technology policy affects consumers.

Here are some steps you can take immediately to help plug the potential gap Latanya is warning about:

HR professionals: Survey the faculty or management pages of your site and have your web master take down any CVs or resumes that include the kind of personal information ID thieves could exploit. Explain to your colleagues why it’s a risk they shouldn’t be taking. As new staff members are hired, implement a policy not to upload documents that include sensitive data. Executives and staff will appreciate that you’re looking out for them – and for the reputation of your institution or business.

Academics and professionals: If the CV or resume posted on your employer’s site or your personal homepage includes your Social Security number, date of birth, or other personal information, take the page down. If it’s a link to a .pdf, revise the document to get rid of the data crooks could exploit. Pass the word to your colleagues, mention it in your next staff meeting, or print this page and post it where they’ll see it.

Job applicants, graduate students, and others with an interest in promoting their credentials online: Be savvy about what you include on your CV, resume, or webpage. There’s just no reason for posting your Social Security number or date of birth where it’s accessible to some random web surfer. And your home address? These days, isn’t it more likely legitimate employers would contact you via email?

Those steps can reduce your risk from here on in, but what can you do if your personal information is already out there? Go to annualcreditreport.com and exercise your right to one free copy of your credit report from each of the three major national credit reporting companies. Stagger your requests and monitor your report once every four months.

A HReal HRisk HR can help HReduce | BCP Business Center.

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.

Debt Relief Act Extended Through 2013

For the past few years, homeowners were able to utilize a tax break (part of the Mortgage Forgiveness Debt Relief Act) when dealing with a short sale.  Fortunately for many, this debt relief has been extended until the end of 2013.

Under the United States Federal Tax Code, any debt that is forgiven is treated as debt discharge income . As such, short sales with a deficiency balance could be counted as income on the difference between the mortgage balance and the sale price.

EX: If a person has a $200,000 mortgage balance, and short sold their home for $150,000, the deficiency balance is $50,000. Under the original Tax Code, the  $50,000 would be reported as income and taxed.  This can cost the homeowner 2 ways:

1: In this example, tax on $50,000 of income can rack up to thousands of dollars.

2: An extra $50,000 of income could raise the homeowner to an entirely new tax bracket.

The Mortgage Forgiveness Debt Relief Act, however, forgives the difference between the debt owed and the sale price, up to 2 million dollars on a primary residence.

The Act-which passed in 2007- was scheduled to expire at the end of last year, but Congress did some last minute maneuvering to extend it out another year, due to the still struggling housing market.

Homeowners may choose to short sale for a variety of reasons:

• They are late on the mortgage payments
• They are not eligible for HARP, or any other refinancing
• They owe more on the home than it’s worth
• They can no longer afford the home , due to job loss or other circumstance
• They have tried unsuccessfully to sell the home at a price that would cover the mortgage balance

Homeowners choosing to short sale can sometimes face large drops in their credit score.

According to CNN/MONEY, shorts sales have tripled over the last 3 years.  In some areas of the country, short sales make up almost half of the area home sales.

With this extension, homeowners who are underwater can breathe a little easier for a few more months, knowing this option is still in play.

~~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

 

Spending Mistakes Smart People Make Over the Holidays

December is a time for families and friends to come together over the holidays. However, the last month of the year can also be a big budget buster that can leave you broke and in debt if you aren’t careful.

We have created a breakdown of mistakes smart people make over the holidays that result in January being hard to bear.  Avoiding these actions can help you make certain you roll into January with some money left in your pocket and your credit score intact.

The “I’ll pay it off next month” blunder.  Perhaps the best thing you can do for yourself is to set a budget for the holidays, and pay for those plans with cash. Using a credit card for holiday purchases sets you up to overspend. Paying for gifts you bought in December all the way through April is nobody’s idea of fun. Not to mention the negative affect those credit card charges could have on your credit score.

The “I’ll know it when I see it” shopping plan. Scour sales papers BEFORE your shopping trip to get an idea of the items you will be buying, and the cost. Shopping without a plan is like going into the grocery store hungry; it sets you up to overspend on impulse items.

The “it’s a bargain” trap. Don’t fall for the deep discount prices and one-day only ads. These ploys can break your budget and rack up lots of credit card charges. If the item wasn’t on your list and included in your budget, don’t buy it.

The “open a credit card today” ambush. Sure, an extra 10 or 15% off for simply opening a store credit card sounds great. However, don’t be taken in by this offer. A new credit card will show up as an inquiry on your credit report, and will give you the urge to use it lavishly. Just say no.

Now, those are goofs that deal with shopping. However, other activities can be budget breakers during the holiday season.

The “this dress makes me look skinny” argument. While we all like a new outfit, do you really need that new dress, new purse, or new cufflinks for your holiday party? Do you really not already own an outfit you can wear? Make sure you don’t overspend on clothing for the holidays that will end up only being worn once.

The “eat, drink, and be merry” boo-boo. Holidays inspire quality time with friends and family. However, expensive meals and overindulging in alcohol can tank your budget. Plan ahead for nights out, and suggest less expensive venues if your budget is tight.

Being aware of these holiday budget saboteurs is the first step to success. By avoiding these mistakes, you can keep your bank account and credit score high! Don’t let money mistakes over the holidays turn HO HO HO into NO NO NO!

~~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.

 

4 Tips for Reviewing Your Credit Report

You have probably read the advice everywhere:  CHECK YOUR CREDIT REPORT!  However, what does that really mean? What are you supposed to be checking?

While pulling your credit report at least once a year is very good advice, a person needs to know what to look for when reviewing their information. Start with these tips to make certain you are making the most out of the credit report:

1: Check out identifying information. Look over the names, addresses, and social security numbers appearing on the credit report. While slight misspellings are common, alarms should sound if an entirely different name or address is associated with your social security number, or if there are multiple social security numbers showing up on the report.

2: Examine the creditors. All tradelines of credit should be reviewed closely. Note any creditors that you are not familiar with. Also review the balances on each account, looking for discrepancies.

Another important piece of information that is in the creditor tradelines area is joint or individual account information. This tells you if you are the only one on the account, or if you share it with another person.

3: Note any late payments. Accounts showing late have the single biggest impact on your credit score. The date of the late payment should be reviewed to see if the account really was paid late, or if the late was reported in error.

4: Review all public records: Serious financial missteps such as bankruptcies, foreclosures, collections, and tax liens will show up in this section. Go over these closely to see if any of the items are reported in error.  If you have relevant public records in this section, make certain the dates are reported correctly.

The hope when assessing your credit report is that you will find no surprises.  That is not, however, always the case. Various reports have found that up to 25% of credit reports contain errors.

What should you do if you find errors on your credit report?

Contact the bureaus. Write all 3  bureaus (either on their website or by mail) and tell them about the error.  Send copies of any documentation that backs up your claim.

Notify the creditor. Send the creditor a letter saying that you dispute the item, along with copies of documents that give evidence to your claim.

Follow up. The credit bureaus have 30 days to investigate your dispute. They will then contact you to give you the outcome.

Implementing these tips can help you understand your report, catch any errors or mistakes, and assist you in staying on top of your reported credit history.  Pulling and reviewing your credit report once a year is an important aspect of maintaining a successful financial life.

~~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.

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.

The Sticky Truth about Collection Accounts

Collection accounts can be a huge headache for consumers, and can wreak havoc on a credit score.

Debt collection in the United States is estimated to be a 12 billion dollar industry.  The way it works, in a nutshell, is when an account becomes overdue to the point the creditor does not think they will get their money, they sell the debt to collection agencies for pennies on the dollar.  The collection agency then attempts to recover what is owed.

Dealing with collections:

If a consumer has a debt sent to collections, he should receive a letter from the collection agency notifying him of the situation. If the collection is an error (reported incorrectly, or is not the consumer in question), he should contact the collection agency immediately to resolve the matter.

However, if it is a true collection, the consumer does have rights afforded to him under the Fair Debt Collection Act.

1: The collector cannot threaten you.

2: You can request the collector to not contact you, or only contact you by mail

3: A collector may not contact you before 8 in the morning or after 9 at night

3: The collector cannot tell you that you owe more than you really do

4: They may not publish the names of people who will not pay them

5: They are also not allowed to misrepresent themselves as credit reporting companies, attorneys, or government officials.

Once a person determines that the collection is valid, there are a couple of avenues to explore:

–          Pay the collection. A consumer may choose to negotiate with the collection agency and pay the balance of the collection. In this scenario, the consumer needs to MAKE CERTAIN that the collector sends all offers in writing.

–          Not pay the collection.  Deciding to not pay a collection may result in the collection agency suing the consumer. If the agency wins, the consumer’s wages may be garnished to repay the debt.

Unfortunately, either way negatively affects your credit score. Once a collection has been reported to the credit bureaus, it remains on the report for 7 years, whether or not the debt is paid off.

And, beware of paying old collections! Sometimes, consumers will mistakenly believe that paying off a collection account that is several years old will help to increase their credit score, and this is not the case. Paying off an old collection brings the date of last activity to the present, and the effect of the collection is felt all over again (which usually means the credit score drops).

A good rule of thumb is to try your very best to stay current on your payments. If you fall behind, strive to not let the account go into collections. If you do end up with collection accounts, be prepared to deal with collection agencies, and brace yourself for a credit score drop.  Once a collection hits your credit report, managing your other credit accounts wisely is the best way to rebuild your credit score.

(For more information on collection accounts and consumer’s rights, read the FTC’s Debt Collection FAQ’s).  

 ~~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.

Data Facts Answers Question About Authorized User Accounts

Question:  “In the past, our mortgage company has encouraged borrowers who have either little credit or are rebuilding their credit to become an authorized user on the account of a spouse, parent, or sibling. Recently, however, we have heard that authorized user accounts are no longer factored into a person’s credit score, and will not help increase a credit score. What is true?  Help!”

Data Facts answers: The designers of the credit scoring formula model (FICO) meant for authorized user accounts to be utilized for a person with good credit and a long credit history to be able to assist their children, spouses, or siblings with their credit history. When an account holder adds another person to their account as an authorized user, that person gets all the benefit of the good payment history. In lots of cases, this dramatically increases a person’s credit score.

Sneaky people began to exploit this practice. Websites popped up selling “piggybacking”. A person with less than stellar credit history could be added to a complete stranger’s credit, and artificially boost his score.  These websites charged thousands of dollars, and paid people with good credit to add dozens of stranger’s names to their credit accounts!

In an attempt to eliminate this practice, the credit score model builders for Fair Isaac originally decided that their new scoring model- FICO 08- would NOT consider authorized user accounts in the formulation of the credit score.

 After further research, however, they reversed this decision. Eliminating authorized user accounts would wipe out millions of consumers’ credit scores who utilize the authorized user status legitimately (they are authorized users on their parents’, spouse’s, children’s, or siblings’ accounts). The model builders decided to allow the authorized user status to still be figured into the credit scores. (Keep in mind the model builders have added additional- although undisclosed- measures that will close the piggybacking loophole).

Allowing authorized users accounts to be figured into the credit score is great news to millions of consumers who maintain that status legitimately. However, if you are an authorized user, try to follow these tidbits of advice:

 – Make sure the main account holder has a good credit history. An authorized user does not need to be on accounts that have just been opened, or accounts with late payments or high balances. The goal is to use the account to boost a credit score. A credit line that is new, paid late, or almost run to the limit will most likely result in the score dropping.

–  Open at least some accounts in your name. While an authorized user designation does figure into the credit score, some lenders remove those accounts from consideration during lending decisions. Consumers should realize it’s risky to rely on authorized user accounts for their entire credit history. It is recommended that consumers be a main or joint borrower on at least a couple of credit lines.

–  Be sure you trust the main account holder. If the main account holder begins paying late or runs up the balance, your credit will be affected (remember, however, an authorized user will not be responsible for the debt).  Make certain the account holder is someone you trust to make good financial decisions before becoming an authorized user on their account.

When employed correctly, the authorized user designation continues to be a helpful tool which consumers can utilize as a boost to their credit history. It is not a long-term solution, and should be used as only one small portion of the credit building plan.

~~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.