Fla. Gov. Crist Celebrates Improving Market
Florida Gov. Charlie Crist met with 10 real estate professionals from all over the state this week to celebrate an upswing in the state’s real estate market. Here’s what they had to cheer about:
● Mortgage interest rates fell below 5 percent.
● Sales of existing homes have climbed for six consecutive months.
● Florida’s single-family home sales rose 20 percent and condominiums were up 25 percent in the 12 months ending in March, according to the Florida Association of REALTORS®.
● The $8,000 federal first-time homebuyer credit is drawing in new customers.
The association urges Crist and state legislators to expand the state’s down-payment assistance to first-time homebuyers and strengthen consumer protections for buyers of foreclosed properties.
Source: St. Petersburg Times, Steve Bouquet (04/16/2009)
Sunday, April 19, 2009
Federal Housing Rescue Plan Launches
The Obama Administration’s program to rescue distressed home owners got off the ground this week. The program was announced on Feb. 18, but it took several weeks to put the bureaucracy in place.
Six of the nation’s largest banks signed up to participate, the Treasury Department announced Wednesday. They are JPMorgan Chase, Wells Fargo, Citigroup, GMAC Mortgage, Saxon Mortgage Services, and Select Portfolio Servicing.
Treasury says it is allocating $50 billion to the program. The Department of Housing and Urban Development will provide the rest.
The plan calls for loan servicers to reduce interest rates so a family’s monthly mortgage obligation is no more than 38 percent of its pre-tax income. Loan servicers also can reduce loan balances. After the loans are modified, the government then provides enough money to reduce payments to 31 percent of income.
Participating servicers get $1,000 a year for each modification and another $1,000 a year for three years if the borrower remains current. Servicers get an extra $500 if they do the modifications before the borrower falls behind in his payments—and the borrower gets $1,500. Also, homeowners get $1,000 a year for five years if they remain current on their payments. The money must be used to reduce their principal balances.
Source: CNN, Tami Luhby (04/16/2009)
Six of the nation’s largest banks signed up to participate, the Treasury Department announced Wednesday. They are JPMorgan Chase, Wells Fargo, Citigroup, GMAC Mortgage, Saxon Mortgage Services, and Select Portfolio Servicing.
Treasury says it is allocating $50 billion to the program. The Department of Housing and Urban Development will provide the rest.
The plan calls for loan servicers to reduce interest rates so a family’s monthly mortgage obligation is no more than 38 percent of its pre-tax income. Loan servicers also can reduce loan balances. After the loans are modified, the government then provides enough money to reduce payments to 31 percent of income.
Participating servicers get $1,000 a year for each modification and another $1,000 a year for three years if the borrower remains current. Servicers get an extra $500 if they do the modifications before the borrower falls behind in his payments—and the borrower gets $1,500. Also, homeowners get $1,000 a year for five years if they remain current on their payments. The money must be used to reduce their principal balances.
Source: CNN, Tami Luhby (04/16/2009)
Wednesday, April 15, 2009
Credit Repair: How to Help Yourself!
You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail, and maybe even calls offering credit repair services. They all make the same claims:
“Credit problems? No problem!”
“We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”
“We can erase your bad credit — 100% guaranteed.”
“Create a new credit identity — legally.”
The Federal Trade Commission (FTC) says do yourself a favor and save some money, too. Don’t believe these claims: they’re very likely signs of a scam. Indeed, attorneys at the nation’s consumer protection agency say they’ve never seen a legitimate credit repair operation making those claims. The fact is there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan.
Recognizing a Credit Repair Scam
Everyday, companies target consumers who have poor credit histories with promises to clean up their credit report so they can get a car loan, a home mortgage, insurance, or even a job once they pay them a fee for the service. The truth is, these companies can’t deliver an improved credit report for you using the tactics they promote. It’s illegal: No one can remove accurate negative information from your credit report. So after you pay them hundreds or thousands of dollars in fees, you’re left with the same credit report and someone else has your money.
If you see a credit repair offer, here’s how to tell if the company behind it is up to no good:
* The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
* The company doesn’t tell you your rights and what you can do for yourself for free.
* The company recommends that you do not contact any of the three major national credit reporting companies directly.
* The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.
* The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
* The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.
If you follow illegal advice and commit fraud, you may find yourself in legal hot water, too: It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information.
Your Rights Regarding Credit Repair
No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Some people hire a company to investigate on their behalf, but anything a credit repair clinic can do legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):
* You’re entitled to a free report if a company takes “adverse action” against you, like denying your application for credit, insurance, or employment. You have to ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
* Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it. The three companies have a central website, a toll-free telephone number, and a mailing address for consumers to order the free annual credit reports the government entitles them to. To order, click on annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
You can use the form in this brochure, or you can print it from ftc.gov/credit. You may order reports from each of the three consumer reporting companies at the same time, or you can stagger your requests, ordering one from each company throughout the year from the central address. Don’t contact the three nationwide consumer reporting companies individually or at another address because you may end up paying for a report that you’re entitled to get for free. In fact, each consumer reporting company may charge you up to $10.50 to purchase an additional copy of your report within a 12-month period.
* It doesn’t cost anything to dispute mistakes or outdated items on your credit report. Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under the FCRA, contact the consumer reporting company and the information provider.
Helping Yourself
Step 1: Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of any documents that support your position. In addition to providing your complete name and address, your letter should identify each item in your report you dispute; state the facts and the reasons you dispute the information, and ask that it be removed or corrected. You may want to enclose a copy of your report, and circle the items in question. Send your letter by certified mail, “return receipt requested,” so you can document that the consumer reporting company received it. Keep copies of your dispute letter and enclosures.
Your letter may look something like the one below.
Sample Dispute Letter
Date
Your Name
Your Address,
City, State, Zip Code
Complaint Department
Name of Company
Address
City, State, Zip Code
Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.
This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.
Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.
Sincerely,
Your name
Enclosures: (List what you are enclosing.)
Consumer reporting companies must investigate the items you question within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it is required to investigate, review the relevant information, and report the results back to the consumer reporting company. If this investigation reveals that the disputed information is inaccurate, the information provider has to notify the nationwide consumer reporting companies so they can correct it in your file.
When the investigation is complete, the consumer reporting company must give you the results in writing, too, and a free copy of your report if the dispute results in a change. If an item is changed or deleted, the consumer reporting company is not permitted to put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider. If you ask, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You also can ask that a corrected copy of your report be sent to anyone who received a copy during the past two years for employment purposes.
If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay for this service.
Step 2: Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct — that is, if the information is found to be inaccurate — the information provider may not report it again.
Reporting Accurate Negative Information
When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. To calculate the seven-year reporting period, start from the date the event took place. There is no time limit on reporting information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance.
The Credit Repair Organizations Act
Credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. And before signing, know that a credit repair company cannot:
* make false claims about their services
* charge you until they have completed the promised services
* perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.
Before you sign a contract, be sure it specifies:
* the payment terms for services, including the total cost
* a detailed description of the services the company will perform
* how long it will take to achieve the result
* any guarantees the company offer
* the company’s name and business address
Have You Been Victimized?
Many states have laws regulating credit repair companies. State law enforcement officials may be helpful if you’ve lost money to credit repair scams. Don’t be embarrassed to report a problem with a credit repair company. While you may fear that contacting the government could make your problems worse, remember that laws are in place to protect you. Contact your local consumer affairs office or your state Attorney General (AGs). Many AGs have toll-free consumer hotlines; check the Blue Pages of your telephone directory for the phone number or www.naag.org for a list of state attorneys general.
If You Need Help
Just because you have a poor credit report doesn’t mean you can’t get credit. Creditors set their own standards, and not all look at your credit history the same way. Some may look only at recent years to evaluate you for credit, and they may give you credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.
If you’re not disciplined enough to create a workable budget and stick to it, to work out a repayment plan with your creditors, or to keep track of your mounting bills, you might consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But remember that “nonprofit” status doesn’t guarantee free, affordable, or even legitimate services. In fact, some credit counseling organizations — even some that claim non-profit status — may charge high fees or hide their fees by pressuring consumers to make “voluntary” contributions that only cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
If you are considering filing for bankruptcy, be aware that bankruptcy laws require that you get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust, the website of the U.S. Trustee Program. That’s the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Be wary of credit counseling organizations that say they are government-approved, but do not appear on the list of approved organizations.
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and can help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
Do-It-Yourself Check-Up
Regardless of your credit history, financial advisors and consumer advocates recommend reviewing your credit report periodically for three important reasons:
1. The information in your credit report affects whether you can get a loan or insurance — and how much you will have to pay for it.
2. It’s important to make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
3. It can help you deter, detect and defend against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.
For More Information
To learn how to improve your credit worthiness and find legitimate resources for low or no-cost help, please see the following publications at ftc.gov/credit.
* Your Access to Free Credit Reports — Explains why it is important to monitor your credit history, how to request a report, and how to dispute errors.
* How to Dispute Credit Report Errors — Explains how to dispute and correct inaccurate information in your credit report. Includes a sample dispute letter.
* Building a Better Credit Report — Learn how to legally improve your credit report, how to deal with debt, how to spot credit-related scams, and more.
* Knee Deep in Debt — Discusses options to help you get back in the black, including: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy.
* Fiscal Fitness: Choosing a Credit Counselor — Defines debt repayment plans, explains the differences between secured and unsecured debt, and offers questions to ask credit counseling agencies if you consider using their services.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
October 2008
“Credit problems? No problem!”
“We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”
“We can erase your bad credit — 100% guaranteed.”
“Create a new credit identity — legally.”
The Federal Trade Commission (FTC) says do yourself a favor and save some money, too. Don’t believe these claims: they’re very likely signs of a scam. Indeed, attorneys at the nation’s consumer protection agency say they’ve never seen a legitimate credit repair operation making those claims. The fact is there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan.
Recognizing a Credit Repair Scam
Everyday, companies target consumers who have poor credit histories with promises to clean up their credit report so they can get a car loan, a home mortgage, insurance, or even a job once they pay them a fee for the service. The truth is, these companies can’t deliver an improved credit report for you using the tactics they promote. It’s illegal: No one can remove accurate negative information from your credit report. So after you pay them hundreds or thousands of dollars in fees, you’re left with the same credit report and someone else has your money.
If you see a credit repair offer, here’s how to tell if the company behind it is up to no good:
* The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
* The company doesn’t tell you your rights and what you can do for yourself for free.
* The company recommends that you do not contact any of the three major national credit reporting companies directly.
* The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.
* The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
* The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness.
If you follow illegal advice and commit fraud, you may find yourself in legal hot water, too: It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to apply for credit and provide false information.
Your Rights Regarding Credit Repair
No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Some people hire a company to investigate on their behalf, but anything a credit repair clinic can do legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):
* You’re entitled to a free report if a company takes “adverse action” against you, like denying your application for credit, insurance, or employment. You have to ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
* Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it. The three companies have a central website, a toll-free telephone number, and a mailing address for consumers to order the free annual credit reports the government entitles them to. To order, click on annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
You can use the form in this brochure, or you can print it from ftc.gov/credit. You may order reports from each of the three consumer reporting companies at the same time, or you can stagger your requests, ordering one from each company throughout the year from the central address. Don’t contact the three nationwide consumer reporting companies individually or at another address because you may end up paying for a report that you’re entitled to get for free. In fact, each consumer reporting company may charge you up to $10.50 to purchase an additional copy of your report within a 12-month period.
* It doesn’t cost anything to dispute mistakes or outdated items on your credit report. Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under the FCRA, contact the consumer reporting company and the information provider.
Helping Yourself
Step 1: Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of any documents that support your position. In addition to providing your complete name and address, your letter should identify each item in your report you dispute; state the facts and the reasons you dispute the information, and ask that it be removed or corrected. You may want to enclose a copy of your report, and circle the items in question. Send your letter by certified mail, “return receipt requested,” so you can document that the consumer reporting company received it. Keep copies of your dispute letter and enclosures.
Your letter may look something like the one below.
Sample Dispute Letter
Date
Your Name
Your Address,
City, State, Zip Code
Complaint Department
Name of Company
Address
City, State, Zip Code
Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.
This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.
Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.
Sincerely,
Your name
Enclosures: (List what you are enclosing.)
Consumer reporting companies must investigate the items you question within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it is required to investigate, review the relevant information, and report the results back to the consumer reporting company. If this investigation reveals that the disputed information is inaccurate, the information provider has to notify the nationwide consumer reporting companies so they can correct it in your file.
When the investigation is complete, the consumer reporting company must give you the results in writing, too, and a free copy of your report if the dispute results in a change. If an item is changed or deleted, the consumer reporting company is not permitted to put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider. If you ask, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You also can ask that a corrected copy of your report be sent to anyone who received a copy during the past two years for employment purposes.
If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay for this service.
Step 2: Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct — that is, if the information is found to be inaccurate — the information provider may not report it again.
Reporting Accurate Negative Information
When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. To calculate the seven-year reporting period, start from the date the event took place. There is no time limit on reporting information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance.
The Credit Repair Organizations Act
Credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. And before signing, know that a credit repair company cannot:
* make false claims about their services
* charge you until they have completed the promised services
* perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.
Before you sign a contract, be sure it specifies:
* the payment terms for services, including the total cost
* a detailed description of the services the company will perform
* how long it will take to achieve the result
* any guarantees the company offer
* the company’s name and business address
Have You Been Victimized?
Many states have laws regulating credit repair companies. State law enforcement officials may be helpful if you’ve lost money to credit repair scams. Don’t be embarrassed to report a problem with a credit repair company. While you may fear that contacting the government could make your problems worse, remember that laws are in place to protect you. Contact your local consumer affairs office or your state Attorney General (AGs). Many AGs have toll-free consumer hotlines; check the Blue Pages of your telephone directory for the phone number or www.naag.org for a list of state attorneys general.
If You Need Help
Just because you have a poor credit report doesn’t mean you can’t get credit. Creditors set their own standards, and not all look at your credit history the same way. Some may look only at recent years to evaluate you for credit, and they may give you credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.
If you’re not disciplined enough to create a workable budget and stick to it, to work out a repayment plan with your creditors, or to keep track of your mounting bills, you might consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But remember that “nonprofit” status doesn’t guarantee free, affordable, or even legitimate services. In fact, some credit counseling organizations — even some that claim non-profit status — may charge high fees or hide their fees by pressuring consumers to make “voluntary” contributions that only cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
If you are considering filing for bankruptcy, be aware that bankruptcy laws require that you get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust, the website of the U.S. Trustee Program. That’s the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Be wary of credit counseling organizations that say they are government-approved, but do not appear on the list of approved organizations.
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and can help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
Do-It-Yourself Check-Up
Regardless of your credit history, financial advisors and consumer advocates recommend reviewing your credit report periodically for three important reasons:
1. The information in your credit report affects whether you can get a loan or insurance — and how much you will have to pay for it.
2. It’s important to make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
3. It can help you deter, detect and defend against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.
For More Information
To learn how to improve your credit worthiness and find legitimate resources for low or no-cost help, please see the following publications at ftc.gov/credit.
* Your Access to Free Credit Reports — Explains why it is important to monitor your credit history, how to request a report, and how to dispute errors.
* How to Dispute Credit Report Errors — Explains how to dispute and correct inaccurate information in your credit report. Includes a sample dispute letter.
* Building a Better Credit Report — Learn how to legally improve your credit report, how to deal with debt, how to spot credit-related scams, and more.
* Knee Deep in Debt — Discusses options to help you get back in the black, including: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy.
* Fiscal Fitness: Choosing a Credit Counselor — Defines debt repayment plans, explains the differences between secured and unsecured debt, and offers questions to ask credit counseling agencies if you consider using their services.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
October 2008
For home buyers, rock bottom prices tough to pinpoint Homes are starting to sell again, but prices will keep falling, real estate observers say.
BY MONICA HATCHER
mhatcher@MiamiHerald.com
The explanation for a surge in sales of South Florida homes last month can be found in a one-bedroom condo on the 29th floor of a Brickell Avenue condo tower.
The Club at Brickell Bay unit sold in 2006 for $410,000. Five days after real estate agent Doug DeWitt listed the foreclosed unit earlier this month for $114,000, 12 bidders swarmed, offering cash. The sale -- above the asking price -- is set to close next week.
''I am standing on the bottom,'' DeWitt said. The agent says eight of his 15 foreclosure listings now have contracts with buyers. ``Prices do not go lower than this.''
Bargains like the Brickell Bay unit continue to draw buyers back into the market at a quickening pace, February numbers showed. Analysts have said that increasing sales, along with steep declines in home prices, would signal the beginning of a long-awaited recovery in the region's ailing housing market.
February's sales figures, combined with low mortgage rates and government moves to restart lending, suggest the market has reached a pivotal point.
But most analysts believe prices still have much farther to fall and that recovery remains at least a year away -- although, as the frenzy over DeWitt's condo shows, what constitutes a market bottom depends greatly on the neighborhood and type of property.
''The sales trend is positive and we're going to see an increase in sales throughout the year,'' said William Hardin, director of real estate programs at Florida International University, ``But there is no doubt about it, prices have to come down.''
By how much is where opinions begin to vary.
Hardin said the worst of the price declines have passed. He expects them to level off around the end of the year, based on improved affordability, pent-up demand and low interest rates.
Moody's Economy.com is more pessimistic.
The research firm estimates prices will drop a further 51 percent in both Miami-Dade and Broward from November 2008 before they reach a trough in the first half of 2011. Moody's uses the highly-regarded S&P/Case-Shiller index for its calculations, which unlike Florida Association of Realtors numbers tracks sales of the same homes over time.
''It's very severe,'' said Chris Lafakis, who analyzes the South Florida economy for Moody's Economy.com. He agreed with Hardin that price declines will begin to slow in four to five months, but said ongoing job losses will offset the impacts of increased affordability and other factors.
''We're losing a tremendous number of jobs in southeast Florida and the pace of job losses is undermining any recovery,'' he said. ``While homes are more affordable, job losses are going to take away from the number of people who are willing and able to buy homes.''
Lafakis also said falling home prices will actually contribute to increased foreclosures because homeowners who bought during the boom and have lost money walk away rather than continuing to pay their mortgages. While expected to peak this summer, foreclosures will ''remain at very high levels'' after that, he said.
But that's a little too severe for Jack McCabe, a South Florida real-estate consultant who considers himself among the most pessimistic observers of the current market.
Based on Realtor data and inhouse sources, he predicted prices will bottom out in the middle part of 2010, declining a further 20 percent from current levels for homes, and perhaps 35 percent more among condos. From the boom to the bottom, he says single-family homes will lose at least 40 percent. A big reason is the sheer number of homes for sale in South Florida.
In February, the number of sales was way up over the same month last year. Still, the 1,893 properties that changed hands represented a mere 3 percent of the roughly 64,000 houses and condos for sale on the Realtors' Multiple Listing Service. At that pace, it would take three years to work through the supply. Real estate analysts generally consider a market healthy when there is a housing supply of about six months because it indicates a balance between buyers and sellers.
One positive sign: the overall number of homes and condos on the market is down by double-digits over a year ago. Shrinking inventory is an important precursor to reaching pricing stability.
In Broward, the number of single family homes for sale fell by 20 percent from last year. In Miami-Dade, single family home inventory fell 13 percent.
McCabe said Broward, indeed, would recover faster than Miami.
The gloomy forecasts should not deter buyers who stumble across their dream home at a price they can afford, said Helen Jeanne Nicastri, an international real estate marketing specialist and chairwoman of the Master Brokers Forum.
''You cannot time the bottom of the bottom of the market. There are many bottoms and it depends on what you want to buy, every niche has a different bottom,'' Nicastri said.
DeWitt and others said the best deals were being gobbled up within days of being listed and that homes in desirable neighborhoods like Weston and Coral Gables were changing hands more quickly than in the past.
However, areas like Homestead, flush with foreclosures and unsold properties, are likely to continue sliding into the distant future. And, condo prices in Miami-Dade are likely to remain in the sinkhole for as many as five to seven years.
But again, everybody's bottom is different.
For Felix Fuentes it occured Feb. 28 when he closed on a three-bedroom foreclosure that sits on 1.25 acres in Hialeah Gardens. It's blocks from his childrens' school and minutes from babysitter in-laws.
He picked it up for $350,000, marked down from its last sale price of $830,000 about two years ago. His total monthly mortgage payments, taxes and insurance: $1,900.
''Where can you find a place where you can keep horses! I will never find this size property for this amount of money in the future. I would buy it again 100 times over,'' Fuentes said.
mhatcher@MiamiHerald.com
The explanation for a surge in sales of South Florida homes last month can be found in a one-bedroom condo on the 29th floor of a Brickell Avenue condo tower.
The Club at Brickell Bay unit sold in 2006 for $410,000. Five days after real estate agent Doug DeWitt listed the foreclosed unit earlier this month for $114,000, 12 bidders swarmed, offering cash. The sale -- above the asking price -- is set to close next week.
''I am standing on the bottom,'' DeWitt said. The agent says eight of his 15 foreclosure listings now have contracts with buyers. ``Prices do not go lower than this.''
Bargains like the Brickell Bay unit continue to draw buyers back into the market at a quickening pace, February numbers showed. Analysts have said that increasing sales, along with steep declines in home prices, would signal the beginning of a long-awaited recovery in the region's ailing housing market.
February's sales figures, combined with low mortgage rates and government moves to restart lending, suggest the market has reached a pivotal point.
But most analysts believe prices still have much farther to fall and that recovery remains at least a year away -- although, as the frenzy over DeWitt's condo shows, what constitutes a market bottom depends greatly on the neighborhood and type of property.
''The sales trend is positive and we're going to see an increase in sales throughout the year,'' said William Hardin, director of real estate programs at Florida International University, ``But there is no doubt about it, prices have to come down.''
By how much is where opinions begin to vary.
Hardin said the worst of the price declines have passed. He expects them to level off around the end of the year, based on improved affordability, pent-up demand and low interest rates.
Moody's Economy.com is more pessimistic.
The research firm estimates prices will drop a further 51 percent in both Miami-Dade and Broward from November 2008 before they reach a trough in the first half of 2011. Moody's uses the highly-regarded S&P/Case-Shiller index for its calculations, which unlike Florida Association of Realtors numbers tracks sales of the same homes over time.
''It's very severe,'' said Chris Lafakis, who analyzes the South Florida economy for Moody's Economy.com. He agreed with Hardin that price declines will begin to slow in four to five months, but said ongoing job losses will offset the impacts of increased affordability and other factors.
''We're losing a tremendous number of jobs in southeast Florida and the pace of job losses is undermining any recovery,'' he said. ``While homes are more affordable, job losses are going to take away from the number of people who are willing and able to buy homes.''
Lafakis also said falling home prices will actually contribute to increased foreclosures because homeowners who bought during the boom and have lost money walk away rather than continuing to pay their mortgages. While expected to peak this summer, foreclosures will ''remain at very high levels'' after that, he said.
But that's a little too severe for Jack McCabe, a South Florida real-estate consultant who considers himself among the most pessimistic observers of the current market.
Based on Realtor data and inhouse sources, he predicted prices will bottom out in the middle part of 2010, declining a further 20 percent from current levels for homes, and perhaps 35 percent more among condos. From the boom to the bottom, he says single-family homes will lose at least 40 percent. A big reason is the sheer number of homes for sale in South Florida.
In February, the number of sales was way up over the same month last year. Still, the 1,893 properties that changed hands represented a mere 3 percent of the roughly 64,000 houses and condos for sale on the Realtors' Multiple Listing Service. At that pace, it would take three years to work through the supply. Real estate analysts generally consider a market healthy when there is a housing supply of about six months because it indicates a balance between buyers and sellers.
One positive sign: the overall number of homes and condos on the market is down by double-digits over a year ago. Shrinking inventory is an important precursor to reaching pricing stability.
In Broward, the number of single family homes for sale fell by 20 percent from last year. In Miami-Dade, single family home inventory fell 13 percent.
McCabe said Broward, indeed, would recover faster than Miami.
The gloomy forecasts should not deter buyers who stumble across their dream home at a price they can afford, said Helen Jeanne Nicastri, an international real estate marketing specialist and chairwoman of the Master Brokers Forum.
''You cannot time the bottom of the bottom of the market. There are many bottoms and it depends on what you want to buy, every niche has a different bottom,'' Nicastri said.
DeWitt and others said the best deals were being gobbled up within days of being listed and that homes in desirable neighborhoods like Weston and Coral Gables were changing hands more quickly than in the past.
However, areas like Homestead, flush with foreclosures and unsold properties, are likely to continue sliding into the distant future. And, condo prices in Miami-Dade are likely to remain in the sinkhole for as many as five to seven years.
But again, everybody's bottom is different.
For Felix Fuentes it occured Feb. 28 when he closed on a three-bedroom foreclosure that sits on 1.25 acres in Hialeah Gardens. It's blocks from his childrens' school and minutes from babysitter in-laws.
He picked it up for $350,000, marked down from its last sale price of $830,000 about two years ago. His total monthly mortgage payments, taxes and insurance: $1,900.
''Where can you find a place where you can keep horses! I will never find this size property for this amount of money in the future. I would buy it again 100 times over,'' Fuentes said.
Tuesday, April 14, 2009
Possible State Funding for 1st Time Home Buyers
States Contemplate Loans for Home Buyers
The $8,000 first-time home buyer mortgage tax credit, which is part of the Recovery and Reinvestment Act of 2009, is a great boon. But, it doesn’t help people who don’t have money for a down payment and closing costs.
Now some states are contemplating offering an $8,000 loan to home buyers before they close on the condition that they repay the loans as soon as they get their federal tax credits.
The idea has been adopted in Missouri, which advances the money to those who take out first mortgages offered through the state’s housing finance authority. The New York State Builders Association is lobbying the State of New York Mortgage Agency to adopt a similar strategy.
“A lot of states are trying to get through the technical aspects of this," says Gregory Brown, an assistant vice president for government affairs at the National Association of Home Builders. "I feel very confident they’ll find a way to make it work.”
Meanwhile, some home builders are taking matters into their own hands, offering programs that purchase the tax credit from borrowers prior to closing.
“This is a legitimate monetizing program that actually works,” says David Abrahamson, vice president of S.E. operations for American Home Key Mortgage Company, which makes the loans for many participating builders in the southeast.
Source: The New York Times, Bob Tedeschi and HousingWire.com, Paul Jackson (04/10/2009)
The $8,000 first-time home buyer mortgage tax credit, which is part of the Recovery and Reinvestment Act of 2009, is a great boon. But, it doesn’t help people who don’t have money for a down payment and closing costs.
Now some states are contemplating offering an $8,000 loan to home buyers before they close on the condition that they repay the loans as soon as they get their federal tax credits.
The idea has been adopted in Missouri, which advances the money to those who take out first mortgages offered through the state’s housing finance authority. The New York State Builders Association is lobbying the State of New York Mortgage Agency to adopt a similar strategy.
“A lot of states are trying to get through the technical aspects of this," says Gregory Brown, an assistant vice president for government affairs at the National Association of Home Builders. "I feel very confident they’ll find a way to make it work.”
Meanwhile, some home builders are taking matters into their own hands, offering programs that purchase the tax credit from borrowers prior to closing.
“This is a legitimate monetizing program that actually works,” says David Abrahamson, vice president of S.E. operations for American Home Key Mortgage Company, which makes the loans for many participating builders in the southeast.
Source: The New York Times, Bob Tedeschi and HousingWire.com, Paul Jackson (04/10/2009)
The $8000 First Time Home Buyer Tax Credit Explained!
I have been talking to and hearing lots of people talk about this tax credit for new home buyers and one thing is clear to me - there is a lot of confusion. I think a lot of it stems from the media talking so much about the proposed plans for it that now that the final version of it is approved, the details are different.
Originally, the plan was talking about $15,000, but it was going to be difficult for many to qualify for the whole amount, but the final version is a $8000 credit that most should see in their bank account.
Let me interject that I am not a tax-guy and everything I am writing here is from my own research. So, if I am missing anything, please share it in the comments below.
Who is eligible for the tax credit
- First-time home-buyers (from what I understand buyers who haven’t owned a home in the last 3 years would also qualify as “first-time” buyers)
- Buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers could receive a partial credit.)
Rules to remember
- The purchase of the home must be made between Jan. 1, 2009 and Nov. 30, 2009.
- The buyers must live in the house for 3 years or more, or they will have to pay back the tax refund.
- The refund amount is $8000 or 10% of the home’s value - whichever one is less.
Tax rebate, refund, credit, deduction?
As Obama’s plan has developed, there have been lots of ideas tossed around from the Senate and the House, but let’s look at the final product. The examples below assume that you qualify for the homebuyer credit from the requirements above.
It is not a tax-deduction.
An example of a tax-deduction would be someone making $50,000 a year would only have to pay taxes on $42,000 ($50K-$8K=$42K). While that is nice, this is a whole lot better for individual taxpayers.
It is a tax credit.
Since it is a tax credit, it will show up a tax refund for most people. For example, if you paid $3000 in taxes this year and after doing your taxes found out that the IRS owed you a $500 refund, you would now get $8500 back.
From what I understand the only way you wouldn’t get at least $8000 back is if after doing your taxes you owed $1000 to the IRS, you would then get a refund check of $7000 ($8000-$1000).
What you need to do to get it
- Buy a house before November 30th, 2009.
- Claim it on your tax return.
According to CNN, there aren’t any special forms to fill out, or any other hoops to jump through to get it. While on a national level, I am not very excited about the excessive spending that our government has been partaking in, but I am planning on taking advantage of this deal. Have you already taken advantage of the homebuyer credit - or do you plan to?
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