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

Post a Comment

Popular posts from this blog

The Definition of Insanity (in Real Estate)

More than a couple of years ago, I witnessed something that makes me laugh and cringe at the same time.  Having lunch at a local restaurant, I spied a real estate agent and a loan originator having what I would characterize as a “first date”. I couldn’t help but overhear little snippets of their conversation, and as far as I could tell, things were going relatively well . . . at least until the agent asked the LO this question: “So, do you like to sit at open houses with agents?”  I immediately looked to the LO’s face awaiting the response.  I didn’t need to hear another single word coming out of the LO’s mouth because his face said everything:  you would have thought the agent had asked him if he enjoyed bobbing for apples in a pool of acid judging by the look on his face.  While his face was communicating complete revulsion, his lips said, “Yes, of course.”  And that’s when I looked over at the agent’s face to see, ...
Post a Comment
Read more

Time for a New York-Style Housing Fix

Previously, I’ve written about a man who works in our office who lived in New York City back in the late ‘80s and early ‘90s – let me assure you that while that does seem like a very long time ago, it’s not nearly as far bac k as when the wheel was invented and humankind learned to harness the power of fire. If you’ve been to New York City recently and blissfully walked around Harlem to get chicken and waffles at Sylvia’s on Malcolm X Boulevard between 126 th and 127 th Streets or stopped in at Keybar on 13 th Street between First Avenue and Avenue A to wedge yourself into a cozy corner next to their notable fireplace, you wouldn’t get a sense that these areas were once . . . not as welcoming and glitzy as you now see them. Our office mate has told some fairly interesting stories of living in those and other areas of New York City that give a much different sense.   In the late ‘80s/early ‘90s, no matter how many great things you heard about Sylvia’s food, 127 th Str...
Post a Comment
Read more

Change: the Only Sure Thing

Which headline is better for grabbing your attention and prompting you to read the article to which it’s attached: “Credit Reports to Exclude Certain Negative Information, But Read on to See if This Even Applies to You” or “ Credit Reports to Exclude Certain Negative Information, Boosting FICO Scores”?   Obviously, the former is less than tantalizing while the latter makes you say, “Tell me more!”   I was in the “tell me more” camp, and the folks at The Wall Street Journal sucked me into their vortex. The development, set to go into practice on July 1 st , is certainly a departure from how the Big Three (Experian, TransUnion , and Equifax) have done things in the past, but it’s not going to wave a magic wand and make bankruptcies, foreclosures, short sales, etc., go away.   It’s sort of a bittersweet development.   Let me explain: Many tax liens and civil judgments will be removed from people’s credit reports if they don’t include a complete list of a...
Post a Comment
Read more