Posts Tagged ‘America Is Strengthened Through Successful Homeownership’

America Is Strengthened Through Successful Homeownership

Posted by Joel pate in Uncategorized. Tagged: , , , , , , , , ,

The desire to responsibly and successfully own a home is growing again within the hearts of families. And that’s good news not only for the continued rebirth of America’s housing economy but it is also great news for the fabric of the American Family and society.

I believe that America is strengthened through successful homeownership.

The days of subprime loans are gone and I hope forever this time. Low doc loans have their place with 20% to 50% down products for business owners and retirees for example-borrowers with lots of assets, years of experience, and great credit scores. It’s pretty ridiculous to require overreaching requirements to finance a 50% loan to a guy with a million dollars in the bank. But for the average consumer, they were and always will be a bad idea.

There are only two proven drivers to lowering foreclosures:

  • Homebuyer education
  • 20% down payment

I guess that proves that political call for “skin in the game?” But it doesn’t. Why? The only time a borrower will put down 20% is when they have additional assets that will serve as a bridge over the troubled waters of job loss or other financial setbacks. But at the same time, it’s pretty hard to think that allowing a FHA borrower to walk into closing with his last two pennies he has to his name and walk out a homeowner is an acceptable idea. That policy may need to be reconsidered as well.

Job loss continues to be the major driver of default in the housing market along with its twins: divorce and a major medical event.

Job loss alone is responsible for 70% of the defaults according to job loss protection insurance company Mortgage Payment Protection Inc. That will never change. That’s why every mortgage loan should include a job loss protection insurance policy especially for first time homebuyers or to home buyers with very few assets to fall back on when they have to weather the inevitable financial storm.

Another factor that continues to plague the homebuyer, and for that matter the marketplace, are the systemic problems with the credit report and thus credit score markets. I stop short of blaming it on the credit reporting agencies because it is simply not that simple. Sure, they have problems as demonstrated again recently by the jury verdict in Julie Miller vs. Equifax Information Systems, LLC, but the data furnisher’s have their own problems.

The Consumer Finance Protection Bureau now regulates both the CRA’s and the larger data furnishers. The verdict is out on this agency, but its definitely an initial win for the consumer; that is until the CFPB goes to far, as they already have in some cases, and actually make it more expensive and difficult for lenders to provide low cost loans to consumers.

From my perspective, if a consumers credit report is 100% accurate, he deserves the credit and credit score that he or she has. Period. But, I’ve never seen a completely accurate credit report.

As evidenced by every tri-merge mortgage credit report provider’s rush to market and profit from rapid rescoring products, errors are apparently rampant on consumers credit report and the CRA’s have developed yet another way to profit from that fact. Perhaps the system should be reversed.  If I find an error on my credit report, it should cost the CRA and data furnisher $75 per bureau. Perhaps the fine could go towards a job loss protection program for all homebuyers?

With only a small fraction of U.S. consumers checking their credit annually, errors are bound to exist and delays and denials occur when the consumer needs his credit to purchase a home, car, insurance, or for a job. So the consumer needs to get their act together too.

As a recent study by the Federal Trade Commission proves “the number of errors are eye opening,” according to Howard Shelanski, director of the FTC’s Bureau of Economics. He went on to say, “The results of this first of its kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”

So, who’s to blame? Wrong question. That question reminds me of the mess we have in Congress and the White House these days. It’s everyone’s fault and more importantly its everyone’s problem. But let’s concentrate on the future and to solving the problem. To do that, will require that we all work together.

At the end of the day, it is the consumer that must first take appropriate action to manage his financial house. Starting with education and professional advice, the consumer can obtain the information that he needs to become credit worthy and to verify the information on his credit report is indeed accurate. Since it is always the individual persons problem, it is ultimately the individual consumers job one to resolve it.

To do that, the industry participants must stop presuming that the consumer is guilty until proven innocent. And should stop placing barriers in the way of the consumer’s attempt to correct errors on their credit report. There must be a reconciliation among all industry participants, including the sullied credit repair industry, to find effective and economical ways to work together to obtain the often overlooked goal: a 100% accurate consumer credit report that is factual, accurate, and timely. Nothing else is OK with me, or legal.

In the coming articles, it will be my pleasure to present to you documented and substantiated evidence that errors, that are ultimately corrected, are rampant, causing denials of mortgage loans. We will also document the efforts taken by consumers and their paid professionals to obtain what the federal law has provided to them as their expected legal right: The right to have a 100% accurate credit report and thus score. Each of these documented initial denials resulted in a home closing.

Remember, if America is indeed strengthened through successful homeownership, it is everyone’s job to establish and maintain a clear path forward to that end.



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