Friday, August 19, 2011
Wednesday, March 17, 2010
Step away from 'free' credit reports to the real thing
By Susan Tompor
Detroit Free Press
When you're shopping for a free credit report — totally free — you can skip that singing pirate in the commercials. Free isn't free with this guy unless you buy something else — but what would you expect from a pirate?
If you're confused by which "Free Credit Report" is really free — and plenty of consumers are — things should soon clear up.
Beginning April 1, some ads for free credit reports will have to include disclosures that you might have to spend money for credit monitoring or other services to get a "free" credit report from that outfit. By Sept. 1, such disclosures will be mandated in all TV and radio ads.
You also have a legal right to get a free report on your credit through www.AnnualCreditReport.com or by calling 877-322-8228. But federal law only provides for free credit reports — not credit scores. So you still might find yourself a bit flustered.
The Federal Trade Commission was required to change its Free Credit Report rules under a section of the Credit CARD Act of 2009, co-authored by U.S. Sen. Carl Levin, D-Mich. In a statement, Levin said it's critical for people to have access to their credit report because so many businesses rely on the information to screen consumers for credit cards, loans, major purchases and interest rates.
This is the first major change in credit-report rules since 2003, when Congress enacted the law giving everyone free access to one report each year. Tim Burns, public affairs director for the Better Business Bureau serving Eastern Michigan, said more than 10,000 consumer complaints were filed nationwide in the past three years against Experian's Consumerinfo.com and FreeCreditReport.com.
Generally, people thought their reports were free, but did not know they were signing up for other costly services. In February, a Wisconsin college student became the lead plaintiff in a class-action suit against Experian charging that the ads for FreeCreditReport.com were deceptive. The suit noted a New York Times report that Experian spent about $54 million on its advertising campaign in 2008. Burns said most consumers who have worked through the BBB have been able to get refunds. And now, if you go to www.freecreditreport.com, you'll see a disclaimer at the top that says: "Free credit reports are available under Federal law at: AnnualCreditReport.com."
An Experian spokesperson said via e-mail recently that "Experian just received the final rules issued by the FTC regarding the marketing of free credit reports, and we are currently reviewing them to determine the appropriate actions to support our business. We remain committed to clearly and conspicuously disclosing to consumers that the free report we offer is not the free annual credit file disclosure provided by federal law." If you order a free credit report at the Experian site, you do get one — when you also begin a free trial membership in Triple Advantage Credit Monitoring. If you don't cancel that membership within the seven-day trial period, you'll be billed $14.95 a month.
"Free credit reports aren't supposed to produce $15-per-month charges on a person's credit card," Sen. Levin said.
Detroit Free Press
When you're shopping for a free credit report — totally free — you can skip that singing pirate in the commercials. Free isn't free with this guy unless you buy something else — but what would you expect from a pirate?
If you're confused by which "Free Credit Report" is really free — and plenty of consumers are — things should soon clear up.
Beginning April 1, some ads for free credit reports will have to include disclosures that you might have to spend money for credit monitoring or other services to get a "free" credit report from that outfit. By Sept. 1, such disclosures will be mandated in all TV and radio ads.
You also have a legal right to get a free report on your credit through www.AnnualCreditReport.com or by calling 877-322-8228. But federal law only provides for free credit reports — not credit scores. So you still might find yourself a bit flustered.
The Federal Trade Commission was required to change its Free Credit Report rules under a section of the Credit CARD Act of 2009, co-authored by U.S. Sen. Carl Levin, D-Mich. In a statement, Levin said it's critical for people to have access to their credit report because so many businesses rely on the information to screen consumers for credit cards, loans, major purchases and interest rates.
This is the first major change in credit-report rules since 2003, when Congress enacted the law giving everyone free access to one report each year. Tim Burns, public affairs director for the Better Business Bureau serving Eastern Michigan, said more than 10,000 consumer complaints were filed nationwide in the past three years against Experian's Consumerinfo.com and FreeCreditReport.com.
Generally, people thought their reports were free, but did not know they were signing up for other costly services. In February, a Wisconsin college student became the lead plaintiff in a class-action suit against Experian charging that the ads for FreeCreditReport.com were deceptive. The suit noted a New York Times report that Experian spent about $54 million on its advertising campaign in 2008. Burns said most consumers who have worked through the BBB have been able to get refunds. And now, if you go to www.freecreditreport.com, you'll see a disclaimer at the top that says: "Free credit reports are available under Federal law at: AnnualCreditReport.com."
An Experian spokesperson said via e-mail recently that "Experian just received the final rules issued by the FTC regarding the marketing of free credit reports, and we are currently reviewing them to determine the appropriate actions to support our business. We remain committed to clearly and conspicuously disclosing to consumers that the free report we offer is not the free annual credit file disclosure provided by federal law." If you order a free credit report at the Experian site, you do get one — when you also begin a free trial membership in Triple Advantage Credit Monitoring. If you don't cancel that membership within the seven-day trial period, you'll be billed $14.95 a month.
"Free credit reports aren't supposed to produce $15-per-month charges on a person's credit card," Sen. Levin said.
Wednesday, February 24, 2010
New-home sales fall to record-low level
Tax credit can't halt decline to 309,000 annual pace in January
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) -- Sales of new U.S. homes plunged 11.2% in January to a seasonally adjusted annual rate of 309,000, the lowest rate on record dating back to 1963, the Commerce Department estimated Wednesday.
The third-straight drop in sales on a month-to-month basis was unexpected. Economists surveyed by MarketWatch forecast sales to rise slightly, to a pace of 355,000, with buyers taking advantage of a new federal tax credit.
"The housing market remains very, very distressed," wrote Dan Greenhaus, chief economist for Miller Tabak & Co.
"There may have been some weather-related issues playing havoc with the sales data but clearly, these results are extremely unnerving," wrote Jennifer Lee, an economist for BMO Capital Markets. "There is nothing positive to glean from this report."
U.S. stock markets fell after release of the report, which coincided with release of congressional testimony by Federal Reserve Chairman Ben Bernanke, who said the economy remains fragile and needs low interest rates for an extended period of time.
Data on sales for December were revised higher to a seasonally adjusted annual rate of 348,000, up from 342,000 previously reported.
Sales of new homes are down 6.1% compared with January 2009's 329,000 units, which was the previous record low.
The number of homes for sale rose 0.4% to 234,000 in January. At the January sales pace, it would take 9.1 months to sell that inventory, up from 8.0 months in December and the highest monthly supply since May.
Government statisticians have low confidence in the monthly report, which is subject to large revisions, and large sampling and other statistical errors.
In most months, the government isn't sure whether sales rose or fell. The standard error in January for instance, was plus or minus 14%.
The government says it can take up to five months to establish a statistically significant trend in sales. Over the past five months, sales have been on a 362,000 seasonally adjusted annual pace, down from 382,000 in the five-month interval through December.
Sales had risen fairly steadily in the first half of 2009 before plateauing last fall. Seasonally adjusted sales have now fallen three months in a row.
With mortgage rates still very low and prices down, most analysts had concluded that the recent decline in sales was due to the impending expiration of the first-time homebuyers' credit in November.
As it happened, Congress extended the tax credit through June and expanded it to include repeat buyers. But the tax credit didn't help sales in January.
Sales of new homes are recorded once a sales contract is signed, not at closing. Some homes are sold before ground is broken on construction.
Details
Home builders had been slashing their inventory of unsold homes for more than a year to a 38-year low before January's 1,000 increase. The number of homes for sale that are under construction fell to a record low of 100,000.
Builders have cut back on production of new homes, but they still face headwinds from unsold existing-homes as foreclosures continue to mount up.
If a home isn't sold before it's finished, it's taking a record 14.2 months to sell it after completion -- a reflection of the mismatch between more expensively priced homes in the inventory and lower-priced homes that have been selling.
The median sales price of a new home sold in January was $203,500, down 2.4% compared with a year earlier. Cheaper homes were selling better than expensive ones: 47% of sales were for less than $200,000, up from 43% in December. Meanwhile, 38% of sales were for $200,000 to $400,000, down from 41% in December.
Sales were down in three of four regions: down 35% in the Northeast, down 12% in the West and down 10% in the South. January's sales were up 2% in the Midwest, the government's data showed.
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) -- Sales of new U.S. homes plunged 11.2% in January to a seasonally adjusted annual rate of 309,000, the lowest rate on record dating back to 1963, the Commerce Department estimated Wednesday.
The third-straight drop in sales on a month-to-month basis was unexpected. Economists surveyed by MarketWatch forecast sales to rise slightly, to a pace of 355,000, with buyers taking advantage of a new federal tax credit.
"The housing market remains very, very distressed," wrote Dan Greenhaus, chief economist for Miller Tabak & Co.
"There may have been some weather-related issues playing havoc with the sales data but clearly, these results are extremely unnerving," wrote Jennifer Lee, an economist for BMO Capital Markets. "There is nothing positive to glean from this report."
U.S. stock markets fell after release of the report, which coincided with release of congressional testimony by Federal Reserve Chairman Ben Bernanke, who said the economy remains fragile and needs low interest rates for an extended period of time.
Data on sales for December were revised higher to a seasonally adjusted annual rate of 348,000, up from 342,000 previously reported.
Sales of new homes are down 6.1% compared with January 2009's 329,000 units, which was the previous record low.
The number of homes for sale rose 0.4% to 234,000 in January. At the January sales pace, it would take 9.1 months to sell that inventory, up from 8.0 months in December and the highest monthly supply since May.
Government statisticians have low confidence in the monthly report, which is subject to large revisions, and large sampling and other statistical errors.
In most months, the government isn't sure whether sales rose or fell. The standard error in January for instance, was plus or minus 14%.
The government says it can take up to five months to establish a statistically significant trend in sales. Over the past five months, sales have been on a 362,000 seasonally adjusted annual pace, down from 382,000 in the five-month interval through December.
Sales had risen fairly steadily in the first half of 2009 before plateauing last fall. Seasonally adjusted sales have now fallen three months in a row.
With mortgage rates still very low and prices down, most analysts had concluded that the recent decline in sales was due to the impending expiration of the first-time homebuyers' credit in November.
As it happened, Congress extended the tax credit through June and expanded it to include repeat buyers. But the tax credit didn't help sales in January.
Sales of new homes are recorded once a sales contract is signed, not at closing. Some homes are sold before ground is broken on construction.
Details
Home builders had been slashing their inventory of unsold homes for more than a year to a 38-year low before January's 1,000 increase. The number of homes for sale that are under construction fell to a record low of 100,000.
Builders have cut back on production of new homes, but they still face headwinds from unsold existing-homes as foreclosures continue to mount up.
If a home isn't sold before it's finished, it's taking a record 14.2 months to sell it after completion -- a reflection of the mismatch between more expensively priced homes in the inventory and lower-priced homes that have been selling.
The median sales price of a new home sold in January was $203,500, down 2.4% compared with a year earlier. Cheaper homes were selling better than expensive ones: 47% of sales were for less than $200,000, up from 43% in December. Meanwhile, 38% of sales were for $200,000 to $400,000, down from 41% in December.
Sales were down in three of four regions: down 35% in the Northeast, down 12% in the West and down 10% in the South. January's sales were up 2% in the Midwest, the government's data showed.
Sunday, February 21, 2010
Seattle Times Misses the Mark... Again
This Sunday's paper had an article in the real estate section that I was less than impressed with. Of course, the Seattle Times pulled an AP story to fill some space, but you think that they could do better.
The article in question is: "Rates on home loans drop again, but will they soon spike?" written by Alan Zibel. The article makes use of the Freddie Mac interest rate survey that is published weekly. This is a useless number. If you are looking for a mortgage there is nothing to be gained by knowing what rates were. That was then, this is now. Yesterday's rate is just plain not available.
Also, the published rate does not include information about whether or not points were paid for the rates that are used in the survey. If you want to pay points, you can go way below market. Instead, look at today's rates compared with where they will likely be tomorrow.
Also, the article speaks about the Fed's MBS (mortgage-backed security) purchasing program that has been keeping rates down. Here's two points that I'll make about what is said in the article:
1. The Fed has said in no uncertain terms that it would take a major issue for them to intervene further and buy more bonds. We don't need false hope.
2. The Fed has been phasing out their purchasing for a while now. It's not just ending "Cold turkey."
The real scoop on rates is that they're going up. It's already started and it will continue. The Fed just raised the discount rate by 0.25% which indicates that they see inflation as a possible issue. Inflation is the mortal enemy of mortgage rates. Remember the rates in the 80's?
I don't mean to just complain about the Times' choice for articles- I just get annoyed because they seem to just be filling space with articles that really say nothing. Mortgage rates are complicated. I've made it my career to learn and try to understand the market so that I can properly advise my clients. I think these articles are confusing. The real question is: why did the article open with information about rates in December?
The article in question is: "Rates on home loans drop again, but will they soon spike?" written by Alan Zibel. The article makes use of the Freddie Mac interest rate survey that is published weekly. This is a useless number. If you are looking for a mortgage there is nothing to be gained by knowing what rates were. That was then, this is now. Yesterday's rate is just plain not available.
Also, the published rate does not include information about whether or not points were paid for the rates that are used in the survey. If you want to pay points, you can go way below market. Instead, look at today's rates compared with where they will likely be tomorrow.
Also, the article speaks about the Fed's MBS (mortgage-backed security) purchasing program that has been keeping rates down. Here's two points that I'll make about what is said in the article:
1. The Fed has said in no uncertain terms that it would take a major issue for them to intervene further and buy more bonds. We don't need false hope.
2. The Fed has been phasing out their purchasing for a while now. It's not just ending "Cold turkey."
The real scoop on rates is that they're going up. It's already started and it will continue. The Fed just raised the discount rate by 0.25% which indicates that they see inflation as a possible issue. Inflation is the mortal enemy of mortgage rates. Remember the rates in the 80's?
I don't mean to just complain about the Times' choice for articles- I just get annoyed because they seem to just be filling space with articles that really say nothing. Mortgage rates are complicated. I've made it my career to learn and try to understand the market so that I can properly advise my clients. I think these articles are confusing. The real question is: why did the article open with information about rates in December?
Monday, February 8, 2010
Harney's Article on "Cash-In" Refi's
The Seattle Times had an article from Ken Harney about "Cash-In" refinancing this Sunday. I thought that the article was great. The article states that there was a major jump in refinances in which borrowers brought money in to the transaction to close. I am seeing this phenomenon and related to the article. They postulated that one of the main reasons for the change was the weak savings rate and the ability for sophisticated borrowers to earn higher rates of interest.
My experience has been that it is more a factor of people that need to refinance for one reason or another that have to bring in cash to bring their LTV (loan-to-value) ratio into the current guidelines. The "New Frontier" that is mortgage lending really has almost no tolerance for high-LTV loans. Many borrowers find that even though they may not be underwater, they just plain don't have the equity required to refinance into the current low rates. The government has made special programs to 'help' people refinance even if their equity has vanished. It's been my experience that the program is mostly ineffectual and that many borrowers are left high and dry.
Particularly hard hit are the condo owners out there. Condo guidelines are particularly restrictive (although they have been loosening a bit lately) and often require lower LTV's then that required for single-family homes.
Long story short- overall, I think it's a good article and recommend anyone out there that is facing this type of situation read it. If nothing else, it will be therapeutic to know that there are others out there that are in the same situation. We're all in it together folks. Things are getting better, it just takes time.
My experience has been that it is more a factor of people that need to refinance for one reason or another that have to bring in cash to bring their LTV (loan-to-value) ratio into the current guidelines. The "New Frontier" that is mortgage lending really has almost no tolerance for high-LTV loans. Many borrowers find that even though they may not be underwater, they just plain don't have the equity required to refinance into the current low rates. The government has made special programs to 'help' people refinance even if their equity has vanished. It's been my experience that the program is mostly ineffectual and that many borrowers are left high and dry.
Particularly hard hit are the condo owners out there. Condo guidelines are particularly restrictive (although they have been loosening a bit lately) and often require lower LTV's then that required for single-family homes.
Long story short- overall, I think it's a good article and recommend anyone out there that is facing this type of situation read it. If nothing else, it will be therapeutic to know that there are others out there that are in the same situation. We're all in it together folks. Things are getting better, it just takes time.
Thursday, February 4, 2010
Growing Pains With New GFE
It's been a little over a month since the new GFE was introduced. I have had the pleasure to present it to several clients and am seeing a lot of bewildered looks. I am doing my best to put this confusing document into plain English, but seriously- HUD really messed up on this one. It wouldn't surprise me if we see another revision of this document in the next year or so.
I see the point for the new GFE- greater disclosure, more transparency, less "hidden fees" and so on. The hope is that dishonest loan officers will no longer be able to change fees during the loan process. Everyone has heard of someone who was shocked at their signing because the fees were much higher than originally quoted. This has been a big problem in the past with shady LO's looking to bilk the unsuspecting.
One of the big problems with the new form is that the fees are not itemized. Sure, you can look at it as being simpler to see consolidated fees, but don't you want to know where the money is going?
Also, on the new form there is no place to put the "Cash to Close" or the "Total Monthly Payment." I've been in the business for a while, and those are the two things that most people care about. The reason for this change is that HUD no longer wants us to quote insurance or property taxes. They only want us to quote things that are directly related to the mortgage- regardless if you are impounding the taxes and insurance or not. Instead of "PITI" (principal, interest, taxes and insurance) we now have "PIMI" (principal, interest and mortgage insurance).
My answer to the two problems that I've listed is adding two forms to my initial meeting- a loan summary and an itemization of fees sheet.
I'm sure that things are going to get smoother and smoother as we all adjust to the changes and more rules are clarified.
I see the point for the new GFE- greater disclosure, more transparency, less "hidden fees" and so on. The hope is that dishonest loan officers will no longer be able to change fees during the loan process. Everyone has heard of someone who was shocked at their signing because the fees were much higher than originally quoted. This has been a big problem in the past with shady LO's looking to bilk the unsuspecting.
One of the big problems with the new form is that the fees are not itemized. Sure, you can look at it as being simpler to see consolidated fees, but don't you want to know where the money is going?
Also, on the new form there is no place to put the "Cash to Close" or the "Total Monthly Payment." I've been in the business for a while, and those are the two things that most people care about. The reason for this change is that HUD no longer wants us to quote insurance or property taxes. They only want us to quote things that are directly related to the mortgage- regardless if you are impounding the taxes and insurance or not. Instead of "PITI" (principal, interest, taxes and insurance) we now have "PIMI" (principal, interest and mortgage insurance).
My answer to the two problems that I've listed is adding two forms to my initial meeting- a loan summary and an itemization of fees sheet.
I'm sure that things are going to get smoother and smoother as we all adjust to the changes and more rules are clarified.
Wednesday, January 20, 2010
More FHA News, and This Is Not So Good...
So, we've all known that there are some major reforms coming on FHA insured loans this year. The FHA is operating in the red due to the number of foreclosures and needs to make some changes in order to keep things on track.
The changes are planned to roll out either in the spring or summer and include some of the following:
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