The Basic Steps of Foreclosure
By Jennifer Dixon
(MCT)—Fannie Mae has publicly assured homeowners going through foreclosure that they will be protected from losing their homes while applying for a federally funded loan modification. They can apply for a modification at any point before or during the foreclosure process. If a modification is approved, homeowners can keep their homes if they make their adjusted payments. Absent that, here are the stages of a typical foreclosure:
1) In default: A loan is in default when a mortgage payment is 30 days late.
2) Warning: When a loan is 60 days past due, the bank, credit union or mortgage company warns that foreclosure is the next step.
3) Proceedings begin: After 90 days, the lender refers the loan to its foreclosure department, and hires a local lawyer to begin foreclosure proceedings.
4) Sale advertised: The lender’s lawyer advertises the property for sale for four consecutive weeks in a local newspaper. The sheriff’s sale date is listed in the advertisement.
5) Sale held: The sale is held on the published date. A sheriff’s employee conducts a courthouse auction and the highest bidder wins, usually the bank that owned or serviced the mortgage.
6) Sheriff’s deed: The winning bidder gets a sheriff’s deed that lists the last date the homeowner can redeem, or take back, the property, usually six months from the date of the sheriff’s sale. During this redemption period, the homeowner can live in the property or try to sell it.
7) Redemption period: To redeem a property, the homeowner must pay off the mortgage and all interest and late fees, court and attorney fees, title and appraisal fees, taxes and insurance. Otherwise, they will be evicted from the home.
(c) 2011, Detroit Free Press.
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
Wednesday, August 31, 2011
Tuesday, August 30, 2011
Tips for Struggling Homeowners
Tips for Struggling Homeowners
(MCT)—Struggling to make your mortgage payments? Already in default?
Housing counselors say the most important advice is not to wait to get help. Read the notices and contact your lender or loan servicer to discuss your situation. Putting off these talks will likely make things worse.
And also know your rights:
—You do not have to miss a payment to qualify for the U.S. Home Affordable Modification Program, known as HAMP.
—Under HAMP, a bank is not to proceed with a foreclosure sale until a borrower has been evaluated for HAMP, and if eligible, an offer has been made.
—To learn more about HAMP, go to http://www.makinghomeaffordable.gov/. Housing counselors and lenders can tell you of other programs or payment alternatives.
—Housing counselors are certified to give free advice about finances and are to know what they’re doing, says Greg Sterns, financial education manager at Lighthouse of Oakland County in Pontiac, Michigan, a nonprofit that offers housing and financial counseling.
Sterns said housing counselors also may refer borrowers to other free legal services, as well.
(c) 2011, Detroit Free Press.
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
(MCT)—Struggling to make your mortgage payments? Already in default?
Housing counselors say the most important advice is not to wait to get help. Read the notices and contact your lender or loan servicer to discuss your situation. Putting off these talks will likely make things worse.
And also know your rights:
—You do not have to miss a payment to qualify for the U.S. Home Affordable Modification Program, known as HAMP.
—Under HAMP, a bank is not to proceed with a foreclosure sale until a borrower has been evaluated for HAMP, and if eligible, an offer has been made.
—To learn more about HAMP, go to http://www.makinghomeaffordable.gov/. Housing counselors and lenders can tell you of other programs or payment alternatives.
—Housing counselors are certified to give free advice about finances and are to know what they’re doing, says Greg Sterns, financial education manager at Lighthouse of Oakland County in Pontiac, Michigan, a nonprofit that offers housing and financial counseling.
Sterns said housing counselors also may refer borrowers to other free legal services, as well.
(c) 2011, Detroit Free Press.
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
Saturday, August 20, 2011
July Market Update
Michigan Market Update - July 2011
July sales and buyer activity followed the same positive path as the prior four months. It is too early to see if any of the stock market uncertainty will trickle down to our local real estate sales but the big offset to any financial market concerns was the statement by the Federal Reserve to keep interest rates low for the next two years. Certainly a reduction in consumer spending, specifically auto, will cause a slowing of our local recovery, but as we saw throughout this recession, low rates and low prices have drawn thousands of people into the market.
Locally sales rose about 8% over last July, which was expected, and anything less would have been a concern since last year sales fell off once the tax credits expired. Buyer inquires, written contracts and home values (in some cases), have shown a steady rise for the past four months (on a seasonally adjusted basis). Not quite a trend you can take to the bank, but all good news. You will not see these same positive numbers for Michigan for a few months since the national indexes such as Case-Shiller use date that is anywhere from 4 months to 2 years old (example; a short sale written in 2009, based on 2009 values that finally closes in June of 2011 will show up on Case-Shiller as a 2011 sale with a 2009 price). The national data will begin to show what we see everyday late this year.
One of the biggest challenges in a market that is changing direction is managing the mixed signals of the Seller's need to still be aggressive in pricing and Buyer's need to be aggressive in their asking price for the multiple bid properties. Time on Market is a great way to look at how each should approach their asking/offer price.
The vast majority of homes that sell are on the market for less than 90 days. A home on the market for over 90 days has only a 21% chance of selling. So for Sellers, if their home has been on the market for more than three months, it is time for a price or condition change. For Buyers, if they are bidding on a home that has been on the market for less than 90 days, expect some aggressive competition for the home.
Please remember you may call or email about any property you're interested in no matter who the property is listed by.
Thank you,
Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644
suzanneo@realestateone.com
http://www.movingmetrodetroit.com
July sales and buyer activity followed the same positive path as the prior four months. It is too early to see if any of the stock market uncertainty will trickle down to our local real estate sales but the big offset to any financial market concerns was the statement by the Federal Reserve to keep interest rates low for the next two years. Certainly a reduction in consumer spending, specifically auto, will cause a slowing of our local recovery, but as we saw throughout this recession, low rates and low prices have drawn thousands of people into the market.
Locally sales rose about 8% over last July, which was expected, and anything less would have been a concern since last year sales fell off once the tax credits expired. Buyer inquires, written contracts and home values (in some cases), have shown a steady rise for the past four months (on a seasonally adjusted basis). Not quite a trend you can take to the bank, but all good news. You will not see these same positive numbers for Michigan for a few months since the national indexes such as Case-Shiller use date that is anywhere from 4 months to 2 years old (example; a short sale written in 2009, based on 2009 values that finally closes in June of 2011 will show up on Case-Shiller as a 2011 sale with a 2009 price). The national data will begin to show what we see everyday late this year.
One of the biggest challenges in a market that is changing direction is managing the mixed signals of the Seller's need to still be aggressive in pricing and Buyer's need to be aggressive in their asking price for the multiple bid properties. Time on Market is a great way to look at how each should approach their asking/offer price.
The vast majority of homes that sell are on the market for less than 90 days. A home on the market for over 90 days has only a 21% chance of selling. So for Sellers, if their home has been on the market for more than three months, it is time for a price or condition change. For Buyers, if they are bidding on a home that has been on the market for less than 90 days, expect some aggressive competition for the home.
Please remember you may call or email about any property you're interested in no matter who the property is listed by.
Thank you,
Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644
suzanneo@realestateone.com
http://www.movingmetrodetroit.com
Friday, August 5, 2011
Small Money Saving Tips That Add Up
Small Money Saving Tips That Add Up
By Barbara Pronin
Let's face it: A dollar only goes so far, especially these days with the price of gasoline at outrageous highs. Saving, for many, has been put on the back burner in favor of wringing the most from every dollar we have.
But savings don't have to be huge to add up in a meaningful way, says Trent Hamm, founder of the financial website simpledollar.com. Hamm offers 10 little money-saving tips that can add up to big dollars over time:
•Switch bank accounts: Instead of paying maintenance fees and earning next to zero interest, switch to a bank like ING Direct, where you will earn interest on both savings and checking accounts.
•Master the 30-day rule: Wait 30 days when tempted to make a significant purchase. You may find the urge to own it fades.
•Make your own gifts: You can make food mixes, cookies, soaps and many other gifts that cost less and mean more, especially when presented to the recipient with a heartfelt note.
•Invite friends in: Almost any activity at home costs less than going out. Have dinner. Play games. Watch a rented movie-and keep your hand out of your pocket.
•Make a list: Don't go to the grocery store without a list. It will help you buy only what you need and discourage impulse buys.
•Try generic brands: the only difference between a name brand and a market brand may be only the marketing, and the savings can add up.
•Clean out closets: Clear out what you don't need and have a yard sale, give it to a consignment shop, or donate it to charity for the tax deduction.
•Clean your car's air filter: It only takes a few minutes, and a clean air filter can save up to 7 percent on gas mileage.
•Swap babysitting: If you live in a neighborhood with lots of kids, swapping babysitting chores with a neighbor or two will save everyone money.
•Start a garden: It's an inexpensive hobby if you have a yard and it will provide exercise while saving you money on produce.
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
By Barbara Pronin
Let's face it: A dollar only goes so far, especially these days with the price of gasoline at outrageous highs. Saving, for many, has been put on the back burner in favor of wringing the most from every dollar we have.
But savings don't have to be huge to add up in a meaningful way, says Trent Hamm, founder of the financial website simpledollar.com. Hamm offers 10 little money-saving tips that can add up to big dollars over time:
•Switch bank accounts: Instead of paying maintenance fees and earning next to zero interest, switch to a bank like ING Direct, where you will earn interest on both savings and checking accounts.
•Master the 30-day rule: Wait 30 days when tempted to make a significant purchase. You may find the urge to own it fades.
•Make your own gifts: You can make food mixes, cookies, soaps and many other gifts that cost less and mean more, especially when presented to the recipient with a heartfelt note.
•Invite friends in: Almost any activity at home costs less than going out. Have dinner. Play games. Watch a rented movie-and keep your hand out of your pocket.
•Make a list: Don't go to the grocery store without a list. It will help you buy only what you need and discourage impulse buys.
•Try generic brands: the only difference between a name brand and a market brand may be only the marketing, and the savings can add up.
•Clean out closets: Clear out what you don't need and have a yard sale, give it to a consignment shop, or donate it to charity for the tax deduction.
•Clean your car's air filter: It only takes a few minutes, and a clean air filter can save up to 7 percent on gas mileage.
•Swap babysitting: If you live in a neighborhood with lots of kids, swapping babysitting chores with a neighbor or two will save everyone money.
•Start a garden: It's an inexpensive hobby if you have a yard and it will provide exercise while saving you money on produce.
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
Top Trend in Kitchen Remodeling Uncovered
Top Trend in Kitchen Remodeling Uncovered
For years, we've heard that if you want to sell your home, start by remodeling your kitchen. Why? Because it has the highest return on investment. But in today's age, when most homeowners are choosing to stay put longer rather than sell, how does that impact kitchen home improvement projects? And how do these projects change, depending on influences like families with young children, generational wants, sustainable trends and the like? Moen®, a leading faucet brand in North America, takes a look at today's American kitchen-no longer a place to simply cook and eat, it's now the "real" living room-a place for living, working and entertaining.
"Given the current economic challenges, it's no surprise that consumers are saving rather than spending. And when they do spend, they're doing so from cash on hand; rather than credit," says Jack Suvak, senior director of research and insights, Moen. "This change in spending behavior has had a dramatic impact on remodeling projects. Most homeowners are choosing to perform 'room lifts'-small updates to personalize a room-rather than undertake major remodels."
Suvak continues, "Plus, homeowners are choosing to personalize renovations to fit their needs, rather than update a room for the next family that will be living in the house. In the kitchen, this might include everything from creating solutions that better integrate the management of electronic devices, to creating 'kid level' storage areas, to adding safety features for aging boomers."
Kitchen Influences: Children, Generations and More
The kitchen has evolved from a closed-off satellite to the most open, doted-upon room in the house. How are homeowners creating live-in value in this hub of activity?
Families with Children
Moen's research found that families with children living in the home are even more engaged in their kitchens than their counterparts without kids; and are more likely to view the kitchen as a place where activities or conversations frequently happen. With regard specifically to kitchen remodeling, respondents with children are significantly more likely than those without children to have remodeled or made improvements to their kitchen in the past year, used a kitchen designer or architect, or spent more on kitchen improvements. And families with children living in the home are far more likely to say they would spend more money on their kitchen remodel if they had it to do over.
When Moen queried designers about the challenges of creating live-in value for families with children, there are clear differences for families with kids of different ages. As children grow older, the kitchen evolves from a potentially dangerous place to a space for sharing food preparation and cooking experiences. Designers stated the number one concern when remodeling kitchens for families with children in each of three age groups are:
1.
Younger than five years old: Safety
2.
Age five to 12 years old: Places for kids to play or work
3.
Age 13 or older: Ability to have two or more cooks in the kitchen at one time
Utilizing this research, sample ideas to perform "room lifts" for families with children include: creating a "kid zone" (away from the stove) to enable room for child-friendly cooking, putting in a desk-like environment for computer work or homework, or adding an island with a faucet and sink, to allow for two prep areas.
Generational Differences
While families with children have very specific desires in terms of creating a kitchen with live-in value, so do the different generations.
By far, Millenials (age 18-34) have the highest demands in what they would want in a dream kitchen. The majority of their "wish list" items include those with technological advances, such as:
•A microwave that allows for swiping a package bar code, enabling the microwave to cook to exact directions
•A TV screen built into a kitchen wall or appliance
•Technology that would allow putting a dish in the oven, programming it to refrigerate and then turning the heat on from a phone or computer
Boomers (age 45-64) also had specific "wish list" items, mostly around entertaining large groups. Examples include:
•A cook-top with special-purpose features (built-in grill or wok, rotisserie attachment)
•Commercial or professional-grade appliances
•Built-in coffee pot connected directly to plumbing
•An oven that dramatically reduces cooking times without microwaves
Green in Certain Categories
Contrary to what many might believe, designers say their clients are more concerned about the project costs than being green. The costs of environmentally friendly products and materials are still seen as higher than non-green products; and these higher costs discourage consumers who are already reluctant to spend more on their kitchen remodels.
That being said, there are certain categories that homeowners who are creating live-in value want to be sustainable, more than others:
•Energy-efficient appliances are almost standard in product selection
•Cabinetry, countertops and flooring that use sustainable or natural materials such as bamboo, cork and stone are being requested more frequently
•More consumers are asking about energy-efficient lighting, as well as water-saving faucets and showering for their homes
•More consumers are showing concern about air quality by requesting non-toxic, low-VOC finishes
"As the demand for water-saving functionality increases, Moen continues to introduce options to help homeowners achieve stylish looks with faucets and showerheads that feature flow optimization, without sacrificing performance," adds Suvak.
Move Over, Dining Room
Since 2004, Moen has observed that homeowners were not using their dining rooms as often, and the kitchen/family room was taking on a more significant role in the home habitat. That observation has not changed over the last decade, and even this simple thought has an impact on how remodeling projects create live-in value:
•Laptops are now a kitchen utility; because homeowners don't want to be isolated in the home office or den-meaning designers must now allocate an area for laptop and mobile device recharging
•Second sinks are becoming more prevalent on center islands, so the cook can interact with the family while prepping or cleaning up from a meal
•The lack of good space and industrial design leads to using the sink, and area around the sink, as storage
Copyright© 2011 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
For years, we've heard that if you want to sell your home, start by remodeling your kitchen. Why? Because it has the highest return on investment. But in today's age, when most homeowners are choosing to stay put longer rather than sell, how does that impact kitchen home improvement projects? And how do these projects change, depending on influences like families with young children, generational wants, sustainable trends and the like? Moen®, a leading faucet brand in North America, takes a look at today's American kitchen-no longer a place to simply cook and eat, it's now the "real" living room-a place for living, working and entertaining.
"Given the current economic challenges, it's no surprise that consumers are saving rather than spending. And when they do spend, they're doing so from cash on hand; rather than credit," says Jack Suvak, senior director of research and insights, Moen. "This change in spending behavior has had a dramatic impact on remodeling projects. Most homeowners are choosing to perform 'room lifts'-small updates to personalize a room-rather than undertake major remodels."
Suvak continues, "Plus, homeowners are choosing to personalize renovations to fit their needs, rather than update a room for the next family that will be living in the house. In the kitchen, this might include everything from creating solutions that better integrate the management of electronic devices, to creating 'kid level' storage areas, to adding safety features for aging boomers."
Kitchen Influences: Children, Generations and More
The kitchen has evolved from a closed-off satellite to the most open, doted-upon room in the house. How are homeowners creating live-in value in this hub of activity?
Families with Children
Moen's research found that families with children living in the home are even more engaged in their kitchens than their counterparts without kids; and are more likely to view the kitchen as a place where activities or conversations frequently happen. With regard specifically to kitchen remodeling, respondents with children are significantly more likely than those without children to have remodeled or made improvements to their kitchen in the past year, used a kitchen designer or architect, or spent more on kitchen improvements. And families with children living in the home are far more likely to say they would spend more money on their kitchen remodel if they had it to do over.
When Moen queried designers about the challenges of creating live-in value for families with children, there are clear differences for families with kids of different ages. As children grow older, the kitchen evolves from a potentially dangerous place to a space for sharing food preparation and cooking experiences. Designers stated the number one concern when remodeling kitchens for families with children in each of three age groups are:
1.
Younger than five years old: Safety
2.
Age five to 12 years old: Places for kids to play or work
3.
Age 13 or older: Ability to have two or more cooks in the kitchen at one time
Utilizing this research, sample ideas to perform "room lifts" for families with children include: creating a "kid zone" (away from the stove) to enable room for child-friendly cooking, putting in a desk-like environment for computer work or homework, or adding an island with a faucet and sink, to allow for two prep areas.
Generational Differences
While families with children have very specific desires in terms of creating a kitchen with live-in value, so do the different generations.
By far, Millenials (age 18-34) have the highest demands in what they would want in a dream kitchen. The majority of their "wish list" items include those with technological advances, such as:
•A microwave that allows for swiping a package bar code, enabling the microwave to cook to exact directions
•A TV screen built into a kitchen wall or appliance
•Technology that would allow putting a dish in the oven, programming it to refrigerate and then turning the heat on from a phone or computer
Boomers (age 45-64) also had specific "wish list" items, mostly around entertaining large groups. Examples include:
•A cook-top with special-purpose features (built-in grill or wok, rotisserie attachment)
•Commercial or professional-grade appliances
•Built-in coffee pot connected directly to plumbing
•An oven that dramatically reduces cooking times without microwaves
Green in Certain Categories
Contrary to what many might believe, designers say their clients are more concerned about the project costs than being green. The costs of environmentally friendly products and materials are still seen as higher than non-green products; and these higher costs discourage consumers who are already reluctant to spend more on their kitchen remodels.
That being said, there are certain categories that homeowners who are creating live-in value want to be sustainable, more than others:
•Energy-efficient appliances are almost standard in product selection
•Cabinetry, countertops and flooring that use sustainable or natural materials such as bamboo, cork and stone are being requested more frequently
•More consumers are asking about energy-efficient lighting, as well as water-saving faucets and showering for their homes
•More consumers are showing concern about air quality by requesting non-toxic, low-VOC finishes
"As the demand for water-saving functionality increases, Moen continues to introduce options to help homeowners achieve stylish looks with faucets and showerheads that feature flow optimization, without sacrificing performance," adds Suvak.
Move Over, Dining Room
Since 2004, Moen has observed that homeowners were not using their dining rooms as often, and the kitchen/family room was taking on a more significant role in the home habitat. That observation has not changed over the last decade, and even this simple thought has an impact on how remodeling projects create live-in value:
•Laptops are now a kitchen utility; because homeowners don't want to be isolated in the home office or den-meaning designers must now allocate an area for laptop and mobile device recharging
•Second sinks are becoming more prevalent on center islands, so the cook can interact with the family while prepping or cleaning up from a meal
•The lack of good space and industrial design leads to using the sink, and area around the sink, as storage
Copyright© 2011 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
Thursday, August 4, 2011
Avoid credit dings when mortgage shopping
Avoid credit dings when mortgage shopping
How to steer clear of 'borrower in distress' label
By Jack Guttentag
Borrowers in distress often contact many lenders hoping to find one who will approve them. For this reason, multiple inquiries can have a negative impact on a consumer's credit score. But multiple inquiries can also result from loan applicants shopping for the best deal. The challenge to the scoring system is to distinguish borrowers in shopping mode from borrowers in distress mode.
Hard inquiries vs. soft inquiries
Consumers need not be concerned about inquiries they make, such as ordering a credit report. Self inquiries don't affect the credit score. Neither do inquiries from your existing creditors, potential employers, or businesses considering whether or not to solicit you. These are sometimes called "soft inquiries."
The inquiries that may affect your credit score are those by new credit grantors to whom you have given your Social Security number along with explicit authorization to check your credit. These are "hard inquiries."
Distinguishing borrowers in shopping mode from those in distress: The ignore rule
Two credit-scoring rules developed by Fair Isaac Corp., which pioneered the development of credit-scoring models, are designed to protect the scores of borrowers who shop multiple lenders for the best deal. The quotes below are from www.FICO.com.
The "ignore rule" is that "the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring."
The 30 days includes the day of the score, which is not evident from the wording. It is a good rule, but borrowers are not warned about other types of credit that are not ignored. A very important one is credit cards. Because I happened to need a new business card while researching this article, I decided to see what impact my card shopping would have on my score.
I had a mortgage lender friend make a credit inquiry to obtain my score, then I shopped two card issuers and had my friend inquire again. My score had dropped 13 points. All credit card inquiries are treated as indicators of distress.
Mortgage borrowers today face the hazard that the 30-day period can expire while their loan is still being processed. If the lender decides to recheck the borrower's credit, which some do as a standard practice, the mortgage inquiries that had previously been ignored will then hit the score.
Distinguishing borrowers in shopping mode from those in distress: The consolidation rule
The "consolidation rule" is that "the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score."
The consolidation rule is expressed in such a way that most readers interpret it to mean that mortgage, auto and student loans are consolidated together. That is how I read it originally. In fact, what it means is that all mortgage loans are consolidated, all auto loans are consolidated, and all student loans are consolidated. If you shop for one of each type, they constitute three inquiries.
The shopping period during which inquiries are consolidated is 15 days in one version of the scoring model and 45 days in another. Because borrowers don't know which model is being used by their credit grantor, they should assume the period is 15 days.
But the most serious concern about the consolidation rule is whether the scorers can accurately associate inquiries with the correct loan type, especially in the case of mortgages.
Does consolidation always work?
One of the motivations for this article was a claim made to me by Jack Pritchard, a long-term mortgage veteran, that mortgage inquiries were not always consolidated because the reporting system did not always identify them accurately.
I posed this issue to Fair Isaac Corp. and was told that "the credit reporting system is a voluntary one and ... lenders report what they choose to report to the bureaus, and each bureau represents that information a little differently on its credit reports."
While this reply confirmed that proper identification could be an issue, Fair Isaac claims that their systems work around this problem by giving the borrower the benefit of any doubt. If the system is not sure, it consolidates.
But this leaves open the possibility that the system has no doubt but is wrong. Pritchard pointed to mortgage inquiries from credit unions and finance companies as particularly prone to misclassification because other types of loans are originated out of the same offices. At his suggestion, I asked Fair Isaac what would happen if a mortgage shopper generated an inquiry from a credit union and a finance company?
The reply was that "the credit inquiries would in all likelihood be de-duplicated by the FICO scoring algorithm. Inquiries from both credit unions and finance companies are eligible for de-duplication." The italics are mine, and clearly suggest that there is no assurance that "de-duplication" (Fair-Isaac-speak for consolidation) will occur.
Bottom line for now
A case can be made that loan inquiries should be added to the list of borrower characteristics, such as sex, race and ethnicity, that, as a matter of public policy, can't be used in developing credit scores. The information could continue to be compiled and provided to lenders, but could not be used by the credit-scoring algorithm.
Meanwhile, borrowers shopping for credit should minimize the number of hard inquiries by ordering their own score, which does not count as an inquiry, providing that score to all the vendors they shop. You tell them that they can check your credit when you are ready to authorize it. This will reduce the number of hard inquiries to one, from the vendor you finally select. And do not seek new credit cards during the period you are shopping for a loan.
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
How to steer clear of 'borrower in distress' label
By Jack Guttentag
Borrowers in distress often contact many lenders hoping to find one who will approve them. For this reason, multiple inquiries can have a negative impact on a consumer's credit score. But multiple inquiries can also result from loan applicants shopping for the best deal. The challenge to the scoring system is to distinguish borrowers in shopping mode from borrowers in distress mode.
Hard inquiries vs. soft inquiries
Consumers need not be concerned about inquiries they make, such as ordering a credit report. Self inquiries don't affect the credit score. Neither do inquiries from your existing creditors, potential employers, or businesses considering whether or not to solicit you. These are sometimes called "soft inquiries."
The inquiries that may affect your credit score are those by new credit grantors to whom you have given your Social Security number along with explicit authorization to check your credit. These are "hard inquiries."
Distinguishing borrowers in shopping mode from those in distress: The ignore rule
Two credit-scoring rules developed by Fair Isaac Corp., which pioneered the development of credit-scoring models, are designed to protect the scores of borrowers who shop multiple lenders for the best deal. The quotes below are from www.FICO.com.
The "ignore rule" is that "the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring."
The 30 days includes the day of the score, which is not evident from the wording. It is a good rule, but borrowers are not warned about other types of credit that are not ignored. A very important one is credit cards. Because I happened to need a new business card while researching this article, I decided to see what impact my card shopping would have on my score.
I had a mortgage lender friend make a credit inquiry to obtain my score, then I shopped two card issuers and had my friend inquire again. My score had dropped 13 points. All credit card inquiries are treated as indicators of distress.
Mortgage borrowers today face the hazard that the 30-day period can expire while their loan is still being processed. If the lender decides to recheck the borrower's credit, which some do as a standard practice, the mortgage inquiries that had previously been ignored will then hit the score.
Distinguishing borrowers in shopping mode from those in distress: The consolidation rule
The "consolidation rule" is that "the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score."
The consolidation rule is expressed in such a way that most readers interpret it to mean that mortgage, auto and student loans are consolidated together. That is how I read it originally. In fact, what it means is that all mortgage loans are consolidated, all auto loans are consolidated, and all student loans are consolidated. If you shop for one of each type, they constitute three inquiries.
The shopping period during which inquiries are consolidated is 15 days in one version of the scoring model and 45 days in another. Because borrowers don't know which model is being used by their credit grantor, they should assume the period is 15 days.
But the most serious concern about the consolidation rule is whether the scorers can accurately associate inquiries with the correct loan type, especially in the case of mortgages.
Does consolidation always work?
One of the motivations for this article was a claim made to me by Jack Pritchard, a long-term mortgage veteran, that mortgage inquiries were not always consolidated because the reporting system did not always identify them accurately.
I posed this issue to Fair Isaac Corp. and was told that "the credit reporting system is a voluntary one and ... lenders report what they choose to report to the bureaus, and each bureau represents that information a little differently on its credit reports."
While this reply confirmed that proper identification could be an issue, Fair Isaac claims that their systems work around this problem by giving the borrower the benefit of any doubt. If the system is not sure, it consolidates.
But this leaves open the possibility that the system has no doubt but is wrong. Pritchard pointed to mortgage inquiries from credit unions and finance companies as particularly prone to misclassification because other types of loans are originated out of the same offices. At his suggestion, I asked Fair Isaac what would happen if a mortgage shopper generated an inquiry from a credit union and a finance company?
The reply was that "the credit inquiries would in all likelihood be de-duplicated by the FICO scoring algorithm. Inquiries from both credit unions and finance companies are eligible for de-duplication." The italics are mine, and clearly suggest that there is no assurance that "de-duplication" (Fair-Isaac-speak for consolidation) will occur.
Bottom line for now
A case can be made that loan inquiries should be added to the list of borrower characteristics, such as sex, race and ethnicity, that, as a matter of public policy, can't be used in developing credit scores. The information could continue to be compiled and provided to lenders, but could not be used by the credit-scoring algorithm.
Meanwhile, borrowers shopping for credit should minimize the number of hard inquiries by ordering their own score, which does not count as an inquiry, providing that score to all the vendors they shop. You tell them that they can check your credit when you are ready to authorize it. This will reduce the number of hard inquiries to one, from the vendor you finally select. And do not seek new credit cards during the period you are shopping for a loan.
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
Wednesday, August 3, 2011
When Did Americans Start Playing It Safe?
When Did Americans Start Playing It Safe?
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
Monday, August 1, 2011
Helping Your Child Deal with Friends Who Get Mean
http://rismedia.com/2011-07-17/helping-your-child-deal-with-friends-who-get-mean/
By Heidi Stevens
RISMEDIA, July 16, 2011—(MCT) —A girl at your daughter’s lunch table is aiming some petty barbs at her. (“Who invited you to the conversation?”) How should you coach her to respond?
Parent Advice
• Coach her to ignore the nasty comments and practice looking through people. In the first place, if she says nothing, she can’t be misquoted. She can’t add fuel to the fire or get in trouble with teachers if she says nothing. Besides, mean girls hate to be ignored. — Marie Grass Amenta
• A talk about what it takes to be a good friend could be in order, but let your child figure this one out. If you always step in, you are communicating that you don’t think that she is capable of dealing with problems. I recently heard of a college freshman who didn’t get her way about something and her mother stepped in and placed a call to the university. If you don’t teach your kids to cope they never grow up and you can never let go! — Dawn Lantero
Expert Advice
Before you start crafting responses, help your daughter pinpoint what she truly is upset about, says Michelle Anthony, co-author of “Little Girls Can Be Mean: Four Steps to Bully-Proof Girls in the Early Grades” (St. Martin’s Griffin).
Is it the biting comment? Does she feel teamed up on? Is she hurt that another girl she considers a friend didn’t come to her defense?
“How you help guide her should be 100 percent dictated by what she’s most upset about,” says Anthony. By asking the right questions, you can help her defuse the situation and learn to analyze the complicated world of female friendships.
“What defines a friendship for you?” Anthony suggests. “What are some qualities that matter? Let’s go through some of these girls and see if they have these qualities. Is one of your friends different when you’re alone together than when you’re all in a group? And is that OK because you really like the fun alone time, or is that not OK because a friendship should be a friendship no matter where you are and who’s around?”
Next you can ask her what she wants to accomplish. “Fix the friendship? Find a way to move away from the friendship? Find a way to confront the mean girl? What she decides to do dictates what you try to help her do,” Anthony says.
Coaching her to stick up for herself in the moment is great, Anthony says, but assure her that she’s not a failure if she decides to remain mum.
“We always want our kids to be assertive, but we’re never surprised when they can’t be,” says Anthony. “We tell them, ‘If this isn’t the right situation, you can choose one that’s better for you. You don’t have to respond on the spot if that’s awkward or embarrassing for you.’ You don’t want her to feel like a double failure because she decided she was going to say something and then didn’t say it.”
Help your daughter determine a time and place to confront the situation on her terms—before or after school, for example.
And as good as it may feel to help her craft a biting zinger, resist the temptation.
“That never helps,” says Anthony. “It just elevates the tension and rivalry and causes kids to choose factions, which never helps your own daughter. You want to help her make kind and respectful choices.”
(c) 2011, Chicago Tribune.
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
By Heidi Stevens
RISMEDIA, July 16, 2011—(MCT) —A girl at your daughter’s lunch table is aiming some petty barbs at her. (“Who invited you to the conversation?”) How should you coach her to respond?
Parent Advice
• Coach her to ignore the nasty comments and practice looking through people. In the first place, if she says nothing, she can’t be misquoted. She can’t add fuel to the fire or get in trouble with teachers if she says nothing. Besides, mean girls hate to be ignored. — Marie Grass Amenta
• A talk about what it takes to be a good friend could be in order, but let your child figure this one out. If you always step in, you are communicating that you don’t think that she is capable of dealing with problems. I recently heard of a college freshman who didn’t get her way about something and her mother stepped in and placed a call to the university. If you don’t teach your kids to cope they never grow up and you can never let go! — Dawn Lantero
Expert Advice
Before you start crafting responses, help your daughter pinpoint what she truly is upset about, says Michelle Anthony, co-author of “Little Girls Can Be Mean: Four Steps to Bully-Proof Girls in the Early Grades” (St. Martin’s Griffin).
Is it the biting comment? Does she feel teamed up on? Is she hurt that another girl she considers a friend didn’t come to her defense?
“How you help guide her should be 100 percent dictated by what she’s most upset about,” says Anthony. By asking the right questions, you can help her defuse the situation and learn to analyze the complicated world of female friendships.
“What defines a friendship for you?” Anthony suggests. “What are some qualities that matter? Let’s go through some of these girls and see if they have these qualities. Is one of your friends different when you’re alone together than when you’re all in a group? And is that OK because you really like the fun alone time, or is that not OK because a friendship should be a friendship no matter where you are and who’s around?”
Next you can ask her what she wants to accomplish. “Fix the friendship? Find a way to move away from the friendship? Find a way to confront the mean girl? What she decides to do dictates what you try to help her do,” Anthony says.
Coaching her to stick up for herself in the moment is great, Anthony says, but assure her that she’s not a failure if she decides to remain mum.
“We always want our kids to be assertive, but we’re never surprised when they can’t be,” says Anthony. “We tell them, ‘If this isn’t the right situation, you can choose one that’s better for you. You don’t have to respond on the spot if that’s awkward or embarrassing for you.’ You don’t want her to feel like a double failure because she decided she was going to say something and then didn’t say it.”
Help your daughter determine a time and place to confront the situation on her terms—before or after school, for example.
And as good as it may feel to help her craft a biting zinger, resist the temptation.
“That never helps,” says Anthony. “It just elevates the tension and rivalry and causes kids to choose factions, which never helps your own daughter. You want to help her make kind and respectful choices.”
(c) 2011, Chicago Tribune.
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
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