Tuesday, September 25, 2007

REVISING MORTGAGE RULES: CAN THERE BE AN AGREEMENT?

With the expectation that hundreds of thousands of homeowners are likely to lose their houses as subprime mortgages are scheduled to raise interest rates over the next 18 months, Democrats propose that "Fannie Mae and Freddie Mac, which guarantee conventional mortgages of up to $417,000, [be allowed to] buy and hold many billions of dollars’ worth of additional mortgages in their own portfolios."

The Bush administration has been, and still remains somewhat, opposed to such a move, reasoning that taxpayers everywhere are put at risk if the investments turn out to be bad for such government-sponsored companies.

To read about how the Bush administration and the Federal Reserve are moving closer to an agreement with House and Senate Democrats regarding this issue, click here.

Wednesday, September 19, 2007

FED CUTS RATE; MARKETS SOAR!


Fed cuts prime lending rate by 1/2 % from 5.25% to 4.75% in a dramatic move.

Stock market reacts with large gain.

Impact on mortgage rates and the housing market not clear at this time.

To read the whole article click here.
Fed Cuts Rate By Half A Point
by: Vikas Bajaj, NY Times

There was something for just about everyone in the Federal Reserve’s decision yesterday to cut its benchmark interest rate by half a point (from 5.25% to 4.75%).

For homeowners, it could lead to lower mortgage rates in the months to come. For investors, it could help stabilize and bolster volatile share prices. For Wall Street financiers and for companies across America, it could eventually make borrowing easier and cheaper.

“This is a bold move,” said James T. Swanson, chief investment strategist at MFS Investment Management, a mutual fund company in Boston. “It’s going to alleviate concerns that the credit market will kill the economy.”

The rate cut, to 4.75 percent, was twice as large as most investors had expected, and it showed in the market’s reaction. The Standard & Poor’s 500-stock index rose 2.92 percent, to 1,519.78, and the Dow Jones industrial average rose 335.97 points, or 2.51 percent, to 13,739.39. It was the biggest single-day gain for both indexes since early 2003.

Many commercial banks followed the Fed and cut the prime rate they charge their best customers for loans. In the commodity markets, gold and oil prices both surged yesterday afternoon. The dollar fell to a new low against the euro.

Investors in the futures market are now betting that the Fed will cut rates at least once more this year, to 4.5 percent, at the meeting in late October. But the central bank was more guarded. Noting that “some inflation risks remain,” the Fed said that its actions would have to balance concerns about slowing growth against the threat of inflation.

For the broader economy, changes in the Fed’s target short-term interest rate, which banks charge one another, usually takes several months to a year to have a noticeable impact.

The average rate for a 30-year fixed mortgage stood at 6.31 percent last week, down from its high for the year of 6.74 percent in June, Freddie Mac said. The rate could fall further if the Fed’s move and statement encourage investors to buy more mortgage-backed securities, which are used to finance loans.

To read the full article go to: http://www.nytimes.com/2007/09/19/business/19cnd-markets.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1190223776-8XlJtNOrYT07wNcOxCRmYA

Monday, September 10, 2007

7 FAST FIXES FOR YOUR CREDIT SCORE

By Liz Pulliam Weston

So you've had a few problems getting the bills paid lately, and you're wondering what you can do to repair the damage.

You've got plenty of company. There are more than 30 million people in the United States with credit blemishes severe enough (and credit scores under 620) to make obtaining loans and credit cards with reasonable terms difficult.

Or maybe your credit is OK, but you'd like to make it better. After all, the better your credit, the lower the interest rates you can secure on mortgages, car loans and credit cards. Know the score In order to improve your credit score, it's important to know where you stand currently. Despite all the media attention given to free credit reports, you still have to pay to find out your credit score, the three-digit number ranging from 300 to 850 that is the key to your borrowing costs. You can obtain your FICO credit scores, the ones lenders use, from MyFico.com. Or you can get Experian's "consumer education" version here.

Now you're ready to take the seven steps to speedy credit repair:

1) Pay down your credit cards. Paying off your installment loans (mortgage, auto, student, etc.) can help your score, but typically not as dramatically as paying down -- or paying off -- revolving accounts like credit cards. The credit-scoring formulas like to see a nice, big gap between the amount of credit you're using and your available credit limits. Getting your balances below 30% of the credit limit on each card can really help. While most debt gurus recommend paying off the highest-rate card first, a better strategy here is to pay down the cards that are closest to their limits.

2) Use your cards lightly. Racking up big balances can hurt your score, regardless of whether you pay your bill in full each month. What's typically reported to the credit bureaus, and thus calculated into your score, is the balance reported on your last statement. (That doesn't mean paying off your balances each month isn't financially smart -- it is -- just that the credit score doesn't care.) You typically can increase your score by limiting your charges to 30% or less of a card's limit. If you're having trouble keeping track, consider using a check register to track your spending, logging into your account frequently at the issuer's Web site, or using personal finance software like Microsoft Money or Quicken, which can download your transactions and balances automatically.

3) Check your limits. Your score might be artificially depressed if your lender is showing a lower limit than you've actually got. Most credit-card issuers will quickly update this information if you ask. If your issuer makes it a policy not to report consumers' limits, however -- as is the usual case with American Express cards and those issued by Capital One -- the bureaus typically use your highest balance as a proxy for your credit limit. You may see the problem here: If you consistently charge the same amount each month -- say $2,000 to $2,500 -- it may look to the credit-scoring formula like you're regularly maxing out that card.You could go on a wild spending spree to raise the limit, but a more sober solution would simply be to pay your balance down or off before your statement period closes. Check your last statement to see which day of the month that typically is, then go to the issuer's Web site about a week in advance of closing and pay off what you owe. It won't raise your reported limit, but it will widen the gap between that limit and your closing balance, which should boost your score.

4) Dust off an old card. The older your credit history, the better. But if you stop using your oldest cards, the issuers may stop updating those accounts at the credit bureaus. The accounts will still appear, but they won't be given as much weight in the credit-scoring formula as your active accounts, said Craig Watts, an executive at Fair Isaac & Co., one of the leading credit scorers. That's why Ferguson often recommends to her clients that they use their oldest cards every few months to charge a small amount, paying it off in full when the statement arrives.

5) Get some goodwill. If you've been a good customer, a lender might agree to simply erase that one late payment from your credit history. You usually have to make the request in writing, and your chances for a "goodwill adjustment" improve the better your record with the company (and the better your credit in general). But it can't hurt to ask. A longer-term solution for more-troubled accounts is to ask that they be "re-aged." If the account is still open, the lender might erase previous delinquencies if you make a series of 12 or so on-time payments.

6) Dispute old negatives. Say that fight with your phone company over an unfair bill a few years ago resulted in a collections account. You can continue protesting that the charge was unjust, or you can try disputing the account with the credit bureaus as "not mine." The older and smaller a collection account, the more likely the collection agency won't bother to verify it when the credit bureau investigates your dispute. Some consumers also have had luck disputing old items with a lender that has merged with another company, which can leave lender records a real mess.

7) Blitz significant errors. Your credit score is calculated based on the information in your credit report, so certain errors there can really cost you. But not everything that's reported in your file matters to your score. Here's the stuff that's usually worth the effort of correcting with the bureaus:
-Late payments, charge-offs, collections or other negative items that aren't yours. -Credit limits reported as lower than they actually are-Accounts listed as "settled," "paid derogatory," "paid charge-off" or anything other than "current" or "paid as agreed" if you paid on time and in full.
-Accounts that are still listed as unpaid that were included in a bankruptcy.
-Negative items older than seven years (10 in the case of bankruptcy) that should have automatically fallen off your report.
You actually have to be a bit careful with this last one, because sometimes scores actually go down when bad items fall off your report. It's a quirk in the FICO credit-scoring software, and the potential effect of eliminating old negative items is difficult to predict in advance.

Some of the stuff that you typically shouldn't worry about includes:
-Various misspellings of your name.
-Outdated or incorrect address information.
-An old employer listed as current.
-Most inquiries.
-If the misspelled name or incorrect address is because of identity theft or because your file has been mixed with someone else's, that should be obvious when you look at your accounts. You'll see delinquencies or accounts that aren't yours and should report that immediately. However, if it's just a goof by the credit bureau or one of the companies reporting to it, it's usually not much to sweat about.

Two more items you don't need to correct:
-Accounts you closed listed as being open.
-Accounts you closed that don't say "closed by consumer." Closing accounts can't help your score, and may hurt it. If your goal is boosting your score, leave these alone. Once an account has been closed, though, it doesn't matter to the scoring formulas who did it -- you or the lender. If you messed up the account, it will be obvious from the late payments and other derogatory information included in the file.

4 other credit mistakes Other actions to beware when you're trying to improve your score:
-Asking a creditor to lower your credit limits. This will reduce that all-important gap between your balances and your available credit, which could hurt your score. If a lender asks you to close an account or get a limit lowered as a condition for getting a loan, you might have to do it -- but don't do so without being asked.
-Making a late payment. The irony here is that a late or missed payment will hurt a good score more than a bad one, dropping a 700-plus score by 100 points or more. If you've already got a string of negative items on your credit report, one more won't have a big impact, but it's still something you want to avoid if you're trying to improve your score.
-Consolidating your accounts. Applying for a new account can ding your score. So, too, can transferring balances from a high-limit card to a lower-limit one, or concentrating all or most of your credit-card balances onto a single card. In general, it's better to have smaller balances on a few cards than a big balance on one.
-Applying for new credit if you've already got plenty. On the other hand, applying for and getting an installment loan can help your score if you don't have any installment accounts, or you're trying to recover from a credit disaster like bankruptcy.

By the way, all these suggestions work best if you have poor or mediocre scores to begin with. Once you've hit the 700 mark, any tweaking you do will tend to have less of a positive impact.And if your scores are in the "excellent" category, 760 or above, you'll probably be able to eke out only a few extra points despite your best efforts. There's really no point, anyway, since you're already qualified for the best rates and terms. Here's one area where it's really OK to rest on your laurels and worry about something else.

Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board

Thursday, September 06, 2007

ON PREDICTING THE REAL ESTATE MARKET

Jeff Schoenfield, Frank's colleague and fellow member of the invitation only Allen Hainge CyberStars, offers this opinion about predicting the real estate market. I couldn’t agree more!

"The real question (whether you are a potential buyer or seller) of course is when will the market turn? While I don't have a crystal ball you can be assured of one thing: The turn of the market will NOT be announced by headlines in USA Today and other national and local publications stating 'Real Estate Market Bottom Reached - Now Time to Invest!'. Rather, the news reported will still be mainly negative even as the market turns. We also do know that prices are the best they've been in some time and there are bargains available. By the time the market actually turns and everybody knows about it the best values will be behind us and buyers will have missed their opportunity to get a true bargain."

Jeff Schoenfield
Broker/Owner
RE/MAX All Pro, Realtors, Inc.
Gatlinburg, TN
Jeff@Gatlinburg-Homes.com

Wednesday, September 05, 2007

Show Your Support: Please Join Us in the FLY THE FLAG Campaign


On Tuesday, September 11th, 2007, an American flag should be displayed outside every home, apartment, office, and store in the United States.


Every individual should make it their duty to display an American flag on this sixth anniversary of our country's worst tragedy. We do this in honor of those who lost their lives on 9/11, their families, friends, and loved ones who continue to endure the pain, and those who today are fighting at home and abroad to preserve our cherished freedoms.

In the days, weeks and months following 9/11, our country was bathed in American flags as citizens mourned the incredible losses and stood shoulder-to-shoulder against terrorism. Sadly, those flags have all but disappeared. Our patriotism pulled us through some tough times and it shouldn't take another attack to galvanize us in solidarity. Our American flag is the fabric of our country and together we can prevail over terrorism of all kinds.

Thank you for your participation.