by The Jamison Group, 11500 W Olympic Blvd #360, Los Angeles, CA 90064, PH (877) 256-8162, Web: http://www.creditcrm.com/
Last month I wrote about the newest version of the FICO score to be installed and available via TransUnion; FICO 08. Since I wrote that article FICO has announced three more new scores to be released some time this month. These new scores and details about those score are;
1. The FICO Mortgage Score – This score is actually a variation of the FICO score currently available at Equifax, which is called BEACON. This new score, which comes at the request of players in the mortgage industry, is meant to give them a better understanding of credit risk posed by mortgage borrowers rather than just general credit risk across all different types of accounts. This new score is what’s referred to in the credit scoring industry as an “Industry Option” score. The Industry Option score uses the standard FICO score as a foundation and then adjusts that score up or down based on the consumer’s credit risk for a specific type of loan, in this case a mortgage loan. So, for example, if my FICO score at Equifax is 750 but I’ve managed my previous mortgage loans very responsibly it is likely that my mortgage score will be slightly higher. This is because I actually pose less risk to mortgage lenders because I’ve exhibited that I can manage mortgage debt based on previous experience, which is displayed on my Equifax credit report. This score will be available some time in April. LEARN MORE ON HOW CREDITCRM CAN MAKE YOU THE CREDIT EXPERT BY HELPING YOU OPEN YOUR OWN CREDIT RESTORATION BUSINESS. CLICK HERE TO LEARN MORE
2. The FICO Auto Score – The industry option scores do not stop for just mortgage lenders. There is actually an entire suite of these scores available for other lenders as well. They are available for credit card issuers, auto lenders, personal finance lenders and installment lenders. TransUnion will be making the FICO Auto Industry Option score available immediately to lenders who loan money to consumers who are buying a car, new or used, or are refinancing an existing car loan. The new auto score is expected to easily outperform the previous auto score version at TransUnion. According to FICO, “auto lenders may be able to identify as many as 5 percent to 15 percent more potential delinquencies among consumers as they could with the previous FICO auto score.” This increased predictive power will help to accomplish two things sorely needed in the auto-lending environment. First, it will allow lenders to loan more money into a dying auto market. And second, it will allow healthy auto lenders to loan deeper into the credit score pool because of the increased ability to identify the future bad accounts before they even make it to their books.
3. The FICO Bankcard Score – In addition to the auto score available at TransUnion FICO has also made available it’s newest Industry Option score designed specifically for credit card issuers. This new score, called the Bankcard Industry Option, does the same things as the mortgage and auto versions, which is to give credit card issuers a better crystal ball to use when making decisions about whether or not to approved or deny credit card applications and whether or not to modify the terms of an existing credit card customer’s account. It’s my belief that of all of the industry specific scores, this is the most commonly used. According to FICO this newer score will also do a better job of identifying riskier credit card users than the previous version of the same score. According to FICO, “…testing found that the new scores could potentially increase issuers\' delinquency prediction rates by 6 percent to 12 percent…” This is a significant improvement especially when you apply the average loss of a credit card account for a major credit card issuer who might have 30 million active credit cards in circulation.
One of the biggest hurdles to implementing one of these new scores is the work to accommodate a new, different scoring model. This is one of the reasons VantageScore, a product of the credit bureau’s joint venture VantageScore Solutions hasn’t done well. It’s a different score with a different score range and likely performs very differently than a FICO score.
LEARN MORE ON HOW CREDITCRM CAN MAKE YOU THE CREDIT EXPERT BY HELPING YOU OPEN YOUR OWN CREDIT RESTORATION BUSINESS. CLICK HERE TO LEARN MORE
In order to make the transition from previous versions of FICO to these newer scores as painless as possible FICO has done a good job of keeping the structure of the newer scores identical to that of the older versions. The score range is still 300 to 850. And the new scores maintain the same set of adverse action codes, also commonly referred to as score factor codes or reason codes. They have also maintained the same minimum scoring criteria, which means if a bank has traditionally seen a 2% “no score” rate, they should continue to see the same.
FICO releases a new generation of scoring models every few years for each of the three national credit reporting agencies; Equifax, Experian and TransUnion. And in most cases it doesn’t make the headlines when it happens. Given the current state of the economy and especially the credit environment any time a newer better score becomes available it seems to draw more attention. This probably won’t change any time soon.
Best Real Estate News
Sunday, May 10, 2009
To Rent or Buy in 2009?
find the article at: "http://www.car.org/tools/smart/new/rentvsbuy/"
Given recent changes in home prices and the current low mortgage rate climate, there have been significant gains in affordability for prospective first-time homeowners. Earlier in 2009, a provision in the Stimulus Bill provided for a first-time Homebuyer Tax Credit of 10 percent of the purchase price of the home up to $8,000. The CALIFORNIA ASSOCIATION OF REALTORS® analyzed the difference between renting and buying a home in light of recent market and policy developments. Housing costs and tax implications of buying a home and renting a home were computed as a part of the analysis.
Assumptions:
• The household currently rents a 3-bedroom, 2-bathroom
apartment at the prevailing rent and purchases rental insurance.
The prevailing rent for a 3-bedroom, 2-bathroom apartment was
$1,855 per month (Q4 2008, latest available). The household
purchases renter’s insurance at a cost of $247 per year or
$20 per month.
• The household considers the purchase of a home at the entry-
level price, which is 85 percent of the statewide median price.
The monthly cost of housing is equal to the mortgage payment,
taxes, and insurance.
• The entry-level home is priced at $248,000, or 85 percent of the
prevailing median-priced home of $291,800.
• The monthly payment including taxes and insurance (PITI) was
calculated using a 10 percent down payment, a 40 percent
qualifying ratio, the prevailing one-year ARM mortgage rate,
and a 1.038 percent assumed insurance costs and property
taxes. The monthly PITI payment under these assumptions
is $1,630.
Tax Benefits of Owning Versus Renting
Existing tax laws allow homeowners to itemize and deduct the mortgage interest and property taxes from their taxable income. In addition, for First-Time Buyers purchasing a home between Jan. 1 and Nov. 30, 2009, the Homebuyer Tax Credit substantially elevates the tax benefit of buying a home this year. For example, consider two households earning the same income—$48,900 a year—which is also the minimum income needed to purchase the statewide entry-level home price of $248,000. The household that purchases a home (First-Time Buyers) at this price along with the prevailing market factors will give that household a tax deduction of over $15,800 in the first year of ownership as well as the one-time tax credit of $8,000 at that home price. The other household that continues to rent (Renters) will most likely only be eligible for the IRS Standard deduction of $10,900, less than that of their home buying counterparts without even factoring in the $8,000 tax credit. In the first year, the taxable income for the First-Time Buyers is roughly $5,000 lower than that for the Renters, and the difference in the tax liability totals over $8,700 in favor of the First-Time Buyers, mainly due to the Homebuyer Tax Credit in 2009.
Click on slide to view larger image
The tax benefit in subsequent years of homeownership decreases as the mortgage note approaches maturity, the amount of interest declines each year assuming all else remains constant. However, the overall tax liability savings in the first five years of ownership is well over $11,000 for the First-time Buyer household.
Cost of Owning Versus Renting
With the current market environment, prospective first-time buyers will also save when taking into account the monthly out-of-pocket expenses of owning versus renting. Using the same two household scenarios, the First-time Buyer’s monthly PITI is $1,630. That is $250 less than the Renter’s monthly expense of renting a 3-bedroom/2-bathroom apartment including renter’s insurance for $1,875. In 12 months, the First-time Buyer household saves nearly $3,000 in monthly out-of-pocket housing expenses compared to the Renter household. That differential jumps to nearly $15,000 in five years of owning a home.
Click on slide to view larger image
While these comparisons consider the tax benefits and cost savings homeownership offers prospective home buyers, there are many other nonmonetary benefits of homeownership, including an overall economic stimulus to the lagging economy. In addition, homeownership tends to boost social benefits such as education and civic involvement, as well as lower crime rate and welfare dependency. The many benefits of homeownership coupled with the bargains that can be found in today’s real estate market, makes 2009 a special year to buy a home, especially for first-time buyers.
Given recent changes in home prices and the current low mortgage rate climate, there have been significant gains in affordability for prospective first-time homeowners. Earlier in 2009, a provision in the Stimulus Bill provided for a first-time Homebuyer Tax Credit of 10 percent of the purchase price of the home up to $8,000. The CALIFORNIA ASSOCIATION OF REALTORS® analyzed the difference between renting and buying a home in light of recent market and policy developments. Housing costs and tax implications of buying a home and renting a home were computed as a part of the analysis.
Assumptions:
• The household currently rents a 3-bedroom, 2-bathroom
apartment at the prevailing rent and purchases rental insurance.
The prevailing rent for a 3-bedroom, 2-bathroom apartment was
$1,855 per month (Q4 2008, latest available). The household
purchases renter’s insurance at a cost of $247 per year or
$20 per month.
• The household considers the purchase of a home at the entry-
level price, which is 85 percent of the statewide median price.
The monthly cost of housing is equal to the mortgage payment,
taxes, and insurance.
• The entry-level home is priced at $248,000, or 85 percent of the
prevailing median-priced home of $291,800.
• The monthly payment including taxes and insurance (PITI) was
calculated using a 10 percent down payment, a 40 percent
qualifying ratio, the prevailing one-year ARM mortgage rate,
and a 1.038 percent assumed insurance costs and property
taxes. The monthly PITI payment under these assumptions
is $1,630.
Tax Benefits of Owning Versus Renting
Existing tax laws allow homeowners to itemize and deduct the mortgage interest and property taxes from their taxable income. In addition, for First-Time Buyers purchasing a home between Jan. 1 and Nov. 30, 2009, the Homebuyer Tax Credit substantially elevates the tax benefit of buying a home this year. For example, consider two households earning the same income—$48,900 a year—which is also the minimum income needed to purchase the statewide entry-level home price of $248,000. The household that purchases a home (First-Time Buyers) at this price along with the prevailing market factors will give that household a tax deduction of over $15,800 in the first year of ownership as well as the one-time tax credit of $8,000 at that home price. The other household that continues to rent (Renters) will most likely only be eligible for the IRS Standard deduction of $10,900, less than that of their home buying counterparts without even factoring in the $8,000 tax credit. In the first year, the taxable income for the First-Time Buyers is roughly $5,000 lower than that for the Renters, and the difference in the tax liability totals over $8,700 in favor of the First-Time Buyers, mainly due to the Homebuyer Tax Credit in 2009.
Click on slide to view larger image
The tax benefit in subsequent years of homeownership decreases as the mortgage note approaches maturity, the amount of interest declines each year assuming all else remains constant. However, the overall tax liability savings in the first five years of ownership is well over $11,000 for the First-time Buyer household.
Cost of Owning Versus Renting
With the current market environment, prospective first-time buyers will also save when taking into account the monthly out-of-pocket expenses of owning versus renting. Using the same two household scenarios, the First-time Buyer’s monthly PITI is $1,630. That is $250 less than the Renter’s monthly expense of renting a 3-bedroom/2-bathroom apartment including renter’s insurance for $1,875. In 12 months, the First-time Buyer household saves nearly $3,000 in monthly out-of-pocket housing expenses compared to the Renter household. That differential jumps to nearly $15,000 in five years of owning a home.
Click on slide to view larger image
While these comparisons consider the tax benefits and cost savings homeownership offers prospective home buyers, there are many other nonmonetary benefits of homeownership, including an overall economic stimulus to the lagging economy. In addition, homeownership tends to boost social benefits such as education and civic involvement, as well as lower crime rate and welfare dependency. The many benefits of homeownership coupled with the bargains that can be found in today’s real estate market, makes 2009 a special year to buy a home, especially for first-time buyers.
Saturday, May 9, 2009
Foreclosure Scams and the Foreclosure Consultant Law
Copyright© 2008 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
Legal Department
TABLE OF CONTENTS
I. Introduction
II. Foreclosure-Related Scams (Questions 1 to 11)
III. Foreclosure Consultant Law
A. General Overview of the Foreclosure Consultant Law (Questions 12 to 16)
B. Applicability of the Foreclosure Consultant Law (Questions 17 to 30)
C. Requirements of the Foreclosure Consultant Law (Questions 31 to 47)
IV. Additional Information (Questions 48 to 50)
I. INTRODUCTION
REALTORS® commonly consider the filing of a notice of default as the beginning of the foreclosure process. However, it may also be the start of something sinister. The public recording of a notice of default can act as a beacon to unscrupulous people who, under the guise of offering assistance, seek to take advantage of homeowners in distress. To protect homeowners in foreclosure, California’s foreclosure consultant law strictly regulates the activities of people who perform foreclosure-related services, including real estate agents to a limited extent.
This legal article discusses the issues surrounding foreclosure-related scams, with special attention given to the ways that REALTORS® and their clients can distinguish between legitimate and illegal enterprises. This article also provides REALTORS® with legal and practical guidelines for complying with the foreclosure consultant law.
FULL STORY
Legal Department
TABLE OF CONTENTS
I. Introduction
II. Foreclosure-Related Scams (Questions 1 to 11)
III. Foreclosure Consultant Law
A. General Overview of the Foreclosure Consultant Law (Questions 12 to 16)
B. Applicability of the Foreclosure Consultant Law (Questions 17 to 30)
C. Requirements of the Foreclosure Consultant Law (Questions 31 to 47)
IV. Additional Information (Questions 48 to 50)
I. INTRODUCTION
REALTORS® commonly consider the filing of a notice of default as the beginning of the foreclosure process. However, it may also be the start of something sinister. The public recording of a notice of default can act as a beacon to unscrupulous people who, under the guise of offering assistance, seek to take advantage of homeowners in distress. To protect homeowners in foreclosure, California’s foreclosure consultant law strictly regulates the activities of people who perform foreclosure-related services, including real estate agents to a limited extent.
This legal article discusses the issues surrounding foreclosure-related scams, with special attention given to the ways that REALTORS® and their clients can distinguish between legitimate and illegal enterprises. This article also provides REALTORS® with legal and practical guidelines for complying with the foreclosure consultant law.
FULL STORY
Homebuyer Tax Credit Chart
Copyright ã 2009 CALIFORNIA ASSOCIATION OF REALTORS â (C.A.R.). Legal Department. --------------------------------------------------------------------------------
For California homebuyers, tax time is now tax relief time too. Thanks to two recent laws, a California homebuyer may qualify for $18,000 in tax credits for buying his or her piece of the American dream. The two tax credits are a first-time homebuyer credit up to $8,000 under federal law, and a new home credit up to $10,000 under California law. For more information on the tax credit laws, C.A.R.’s Legal Department has a legal article entitled Housing Stimulus Laws of 2009 which is available for members only.
Here’s a quick summary of the two tax credit laws.
For California homebuyers, tax time is now tax relief time too. Thanks to two recent laws, a California homebuyer may qualify for $18,000 in tax credits for buying his or her piece of the American dream. The two tax credits are a first-time homebuyer credit up to $8,000 under federal law, and a new home credit up to $10,000 under California law. For more information on the tax credit laws, C.A.R.’s Legal Department has a legal article entitled Housing Stimulus Laws of 2009 which is available for members only.
Here’s a quick summary of the two tax credit laws.
8 No-Cost and Low-Cost Ways to Tweak Your Listings
Got a listing that needs a new look? Here are some inexpensive ways to make it shine.
By Maggie Sieger | February 2009
Chances are the decor in that listing you just took is a lot like most people's wardrobes: There are a few items that went out of style a decade ago, but they're so comfortable that it's impossible to see them go.
"We grow accustomed to our space, and we stop seeing it," says Melissa Birdsong, vice president of trend, design, and brand for Lowe's, the home improvement giant. "People tend to become blind to their own things."
But everything needs updating eventually. Birdsong suggests home owners cast a fresh eye on their living space, pretending that they've just moved in and are assessing the previous occupant's design choices.
Betsy Westman, a broker-owner with Westman Realty in Grand Rapids, Mich., says real estate professionals can have a big impact on updating a home's look by helping clients brainstorm new ideas and by being straightforward about outmoded design elements. The following tips can help get a home up-to-date without breaking the bank.
FULL STORY
By Maggie Sieger | February 2009
Chances are the decor in that listing you just took is a lot like most people's wardrobes: There are a few items that went out of style a decade ago, but they're so comfortable that it's impossible to see them go.
"We grow accustomed to our space, and we stop seeing it," says Melissa Birdsong, vice president of trend, design, and brand for Lowe's, the home improvement giant. "People tend to become blind to their own things."
But everything needs updating eventually. Birdsong suggests home owners cast a fresh eye on their living space, pretending that they've just moved in and are assessing the previous occupant's design choices.
Betsy Westman, a broker-owner with Westman Realty in Grand Rapids, Mich., says real estate professionals can have a big impact on updating a home's look by helping clients brainstorm new ideas and by being straightforward about outmoded design elements. The following tips can help get a home up-to-date without breaking the bank.
FULL STORY
Wednesday, May 6, 2009
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