With Credit getting harder to get, people are paying closer attention to their Credit Scores and Credit Reports.  Your credit score will determine not only if you can get credit, but what interest rates you will pay on everything from credit cards, car loans, and even mortgages.

There are 4 major players in how this all works-3 Credit Bureaus (Equifax, Transunion, and Experian) and 1 Credit Scoring company (Fair Issac).

The Credit Bureaus are the company’s that collect credit and payment information from your creditors (credit card companies, banks, mortgage companies, and even vendors like your cell phone provider.  The amount of credit you have, what your balances are, what your monthly payment obligations are all recorded here.  (If you have accounts at a Credit Union, some Credit Unions do not report this information to the bureaus.)

Fair Isaac is the company that gathers information about people from the 3 credit bureaus and formulates a credit "Score" or FICO score for individuals.  This is a number ranging from about 500-850 that gives creditors a "quick" way to determine the riskiness associated with lending money or extending credit to individuals.

There are many places that advertise where you can get a FREE credit report, but most of these services are really trying to sign you up for a long term ongoing program to keep you updated on activity on your credit bureau, identity theft protection, etc..  They will charge a fee for these "enhanced" services.  These companies include FreeCreditReport.com, among others.

The only really FREE annual credit report company is this one:

https://www.annualcreditreport.com/cra/index.jsp

IMPORTANT!-This service will not issue you a Credit Score, but will provide you with the information that Fair Isaac would use to calculate that score.  The credit report is important because it will allow you to see if there are errors on your report that could affect your FICO score.

Don’t hesitate to call us if you find any errors in your report and we can tell you how you can go about fixing them with the bureaus.

Make sure you know who you are doing business with!

Another example of loan fraud by a local mortagge broker!

Bremer is victim in $1 million bank fraud

• The buyer places an offer on the property that’s significantly more than the asking price on the condition that the seller kicks back all or some of the extra money.
• The appraisal is obviously inflated.
• Neither the buyer nor the buyer’s agent has ever seen the property.
• The buyer wants to use a different title company than the one that the seller’s agent has chosen.
• The buyer or buyer’s agent claims that the extra money will be used for home repairs or renovations or paid to a contracting company to handle the repairs or renovations.

If you notice any of these warning signs, put a stop to the transaction, refuse toget involved, and contact the lender to report your suspicions. If the lender won’t listen to you, call Freddie Mac’s mortgage fraud hotline at 1-800-4FRAUD8 (1-800-437-2838) or contact your state attorney general

This summary by: Ralph R. Roberts, GRI, CRS is a real estate and mortgage fraud forensics expert and author of Protect Yourself from Real Estate and Mortgage Fraud: Preserving the American Dream of Homeownership (Kaplan Publishing).

New rules will impact buyers with low downpayments. Another reason to price your home competitively from the start!

The Twin Cities area has been determined to be a declining market by a major mortgage insurance company.  Major lenders are now instituting new guidelines to reduce their exposure in case of loan defaults.

The past real estate boom was fueled in large part by the ability of many buyers to use low or zero down financing to enter the marketplace and increase demand for housing. While this was a good thing, it is hard to argure that these highly leveraged loans, combined with declining values and rate adjustments on option/arm loan products all contributed to the current mortgage mess.

With these new lending guidelines, the ability of buyers to use this type of financing will be severly hampered if the price of the property is not priced slightly (about 5%) below the appraised value.

Keep this in mind when pricing your home!  Not only do we have to sell your home to the buyer, but to the appraiser and the mortgage comany as well!

Read below for details from US Bank Home Mortgage:

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REVISED USBHM DECLINING MARKETS POLICY

The industry is in considerable turmoil due to declining markets and the impact on Maximum Financing on properties located in those markets. U.S. Bank Home Mortgage Wholesale Division has distributed a memo clarifying their position on the issue. Highlights from the memo:

• If the appraisal indicates the subject property is located in a "Declining Market" or there is an "Oversupply" in the market or the AUS Feedback indicates Declining Values, then the loan will be subject to a 5% reduction if maximum financing is requested.
• Required private mortgage insurance must be provided by one of our three approved primary vendors: MGIC, Radian or RMIC. If required mortgage insurance is unable to be secured at the maximum requested terms, the loan must either be reduced by the required 5% or declined.

Be Careful Who You do Business With!!!

Avoid fraudulent business practices in your Real Estate Transaction

For most people, Buying or Selling a home will be the largest financial transaction they will make in their lifetime.    When you engage in a real estate transaction, it will require you to have direct or indirect business relationships with practitioners of several different areas of specialization (Realtor, Real Estate Broker, Mortgage Originator, Title/Escrow Company, Home Inspector, Appraiser, etc…)

Throughout time, in all professions, there have always been practitioners who have done things that are unethical or illegal.  Taken as a whole, this has always been a small fraction of practitioners, and the Real Estate Industry is no exception.

That said, a practitioner who wants to bend the rules or engage in unlawful practices can have a devastating effect on your life if you are unfortunate enough to get involved with one of these people.   Even here in Minnesota, in the Twin Cities, there have documented cases of such scams as equity stripping, straw buyers, appraisal fraud, mortgage fraud, escrow funds fraud and the list goes on.  Some of the affected parties in these cases had no idea they were being taken advantage of until it was too late.  See this article from the Star Tribune.

Your real estate transaction all starts with your real estate salesperson.  A good agent who has a history of successful transactions will also have relationships with professional of every other related field you will need to complete your transaction smoothly and safely. While all real estate salespeople have to be licensed by the MN Department of Commerce, not all salespeople are Realtors.  Realtors have to join the Board of Realtors and abide by the Realtors Code of Ethics.

As experienced Realtors, we have relationships with reputable mortgage brokers, title/escrow companies, home inspectors, appraisers, etc…  We have helped hundreds of families complete their real estate transactions smoothly.  We have the track record, testimonials and references to prove it.