Skip to main content

Credit's Costs, Part II

Right up front, I’m going to admit that this week’s edition is going to be HEAVILY borrowed nay, copied word for word from an article recently written by Ken Harney, a gentleman who covers housing issues on Capitol Hill for The Washington Post Writers Group.  He does a great job of citing rules and sources it would be sort of dumb for me to try and rewrite it and try to pass it off for my own product.  Read on:

You’ve almost certainly seen or heard pitches for “credit-repair” services promising to clean up your credit problems, reduce your debt or even raise your credit score by 100 points.

But experts warn that these services can do far more harm than good to mortgage seekers — even get them rejected on the spot.

In fact, the Consumer Financial Protection Bureau has won two new legal settlements worth more than $2 million in penalties against credit-repair companies.

The CFPB alleged that Prime Credit, IMC Capital, Commercial Credit Consultants and Park View Law charged clients illegal advance fees and misled customers about what could be done for them. The defendants neither admitted nor denied the allegations, but they agreed to the settlements.

Under federal law, credit-repair companies may seek payment only when they can document improvements made for a client. Up until then, consumers shouldn’t have to pay a cent. But the companies in the settlements required an initial “consultation” charge typically of $59.95, hundreds of dollars for a “set-up fee” and monthly fees of $89.99.

For typical clients — and there were thousands of them — the companies sent letters to the national credit bureaus challenging “much of the negative information” in credit reports, “even if that information was accurate,” according to the CFPB. The companies then didn’t follow up or determine whether they had raised clients’ scores.

“We run into the damage they do every week,” said Joe Petrowsky, president of Right Trac Financial Group in Connecticut. But “you can’t get a mortgage with outstanding disputes” on your credit files.

Thomas Conwell III, CEO of Michigan-based Credit Technologies, which provides credit reports to lenders, says, “There is nothing any credit-repair company can do that consumers can’t do for themselves faster and at no cost.”

I realize I wrote about this not too long ago, but I believe these recent developments concerning the CFPB’s actions warrant bringing this back for a second look.  Keying off of Mr. Conwell’s comments above, potential home buyers can do this for themselves and we can help direct their efforts.  They should save that money and buy themselves a nice house-warming gift!  With anything left over, we wouldn’t say no to a box of doughnuts or a pizza.

Comments

Popular posts from this blog

An Age-Old Concept Reaping Future Rewards

W hy are social media like Facebook and Instagram so darn popular among real estate and mortgage folks?   Hint: the top reason might be an endless supply of memes, cat videos, and the chance to be snarky, but the other reason runs a VERY CLOSE second.   Give up?   Answer:   They’re free – and they really help even the playing field by enabling a one-person shop look and market like an organization who employs an army of wordsmiths and graphic artists. This new century is glorious, right?   With that in mind, let me re-introduce you to a centuries-old concept that is equally glorious – and can help IMPROVE the playing field for you, regardless of the size of your team: karma.   On the subject of “free”, I’m not suggesting that you work for free, but when you freely give of yourself and your knowledge, you’ll see a greater payoff, I promise! Recently, an agent came to us with a question: she has a client who is looking to sell his condo.   It...

The Power of Doubt

We find ourselves in that weird week between Christmas and New Year’s – that week that feels a bit like the Twilight Zone where no one’s sure what’s real and what isn’t.   Because of that, most people tend to focus on one of two things: eating as much as possible or setting goals for the upcoming year.   The former is squarely focused on the present – how much can I stuff into my gaping maw at this very moment before I pass out and/or puke – while the latter is focused on the future.    Last week, before the Twilight Zone kicked into full gear, I read a short article that resonated with me, and I think it’ll prick up your metaphorical ears, too.   The author of the article is a gentleman who professionally trains Olympic athletes, and he highlights the talents of a particular athlete from the Philippines who is training to be a marathon runner.   He points out that this runner is not a professional athlete, nor does she receive any type of financ...

Get to the Point (Posted February 29, 2016)

As you may have already noticed, there’s some amateur art included in this week’s newsletter.   While it’s certainly better than a crayon drawing that might grace a refrigerator that’s supposed to be “mommy” but looks more like a B-movie creature, we all acknowledge there’s a reason the guy in our office who drew this . . . i s still working in our office rather than making a living elsewhere.   Be that as it may, there’s a point to the picture: is this how you’re allowing your client to choose their mortgage company?   In many cases, it’s probably not too far off.   Agreed, it’s wise to stay on the right side of the law and be sure you’re never accused of “steering”.   With that in mind, many agents tell their clients that it’s completely their decision as to what mortgage company they use (and it is, of course) and effectively step back from the entire conversation – using the illustration to the left, they’re putting the blindfold ...