Feb 26

There are two things that can help you get approved for the best rates on an auto loan. The first is money for a down payment, and the second is your credit score. Before you try to get an auto loan for a new car, ask yourself when the last time you checked your credit score was. Just a few points in your credit rating can be the difference in having to pay an extra $200 a month, which mean you might have to settle for the car without all the features.

 

Only a small percentage of people fall in the excellent credit rating category. If you do, then you have nothing to worry about. If your score is 760 points or higher, you’ll get approved for the best possible rates. Most people, however, fall in the good to fair credit rating, which means you may have some negotiating to do in order to avoid getting ripped off.

Your credit score not only determines the amount of money you can borrow to buy your new car, but it is typically used by insurance agencies to determine how much you need to pay on your auto insurance. Those bordering between fair credit and good credit can save a few thousand dollars a year just by increasing their credit score a couple points, which is something that is incredibly easy to do.

But first you need to know where you rating stands in relation to the national average. With the recent changes in the credit rating system, you might be surprised to see how your score was effected.

Feb 12

Foreclosure prevention has become the new calling card for con artists. Reports say perpetrators are collecting large fees upfront in return for loan modifications and mortgage refinances that may never materialize. 

Famous con men like Charles Ponzi and Frank Abagnale probably wouldn’t have wasted their time with loan modification scams-but apparently, there are quite a few criminals out there who aren’t so particular.

State agencies around the country are warning homeowners about a sharp rise in mortgage loan modification scams. Maryland’s Department of Labor, Licensing and Regulation, the New Jersey Department of Banking and Insurance, the Nevada Division of Mortgage Lending, and others, are spreading the word to distressed homeowners: Don’t pay upfront fees for a mortgage loan modification.

Mortgage fraud 101

The scammers are collecting several hundred or several thousand dollars from distressed homeowners on the promise of a quick and easy foreclosure prevention solution. They’ll usually tell the homeowner not to bother with free foreclosure prevention services offered by non-profits; they argue that the non-profits don’t have the staffing or leverage to act quickly on the homeowner’s behalf.

Sometimes, the scammers stick around and attempt to negotiate with the lender. Unfortunately, the for-profit company has no greater chance of negotiating a workout than a non-profit agency or the homeowner himself. The problem with this scenario is that the scammer consumes the homeowner’s time and money, but offers no greater chance of resolution in return. Worse yet, if the homeowner waits too long for the scammer to solve the problem, the foreclosure could become unpreventable.

Prosecuting these individuals can be problematic; they usually call themselves for-profit loan counselors, which is a line of business that’s not prohibited by law.

In some situations, however, the scammers might collect the money and then vanish, without even attempting to negotiate the promised loan modification or mortgage refinance. This practice is illegal, but the authorities can only prosecute the scammers they can find.

Spotting mortgage fraud

Homeowners can avoid becoming victims of mortgage fraud by declining any loan modification service that requires an upfront fee. Distressed homeowners should also be suspicious about anyone who promises a quick and painless mortgage resolution for one simple reason: there’s just no such thing.

Steps for foreclosure prevention

State agencies and authorities are advising distressed homeowners to contact their loan servicers as soon as problems arise. From there, the homeowner should also:

  • Review the U.S. Department of Housing and Urban Development’s guide to avoiding foreclosure.
  • Check with the state’s finance, banking, or lending agency to locate state-funded programs or state-run agencies that can assist with loan modifications and mortgage refinances
  • Contact an experienced non-profit agency such as HOPE NOW

Charles Ponzi swindled investors, and Frank Abagnale scammed money from banks and bank depositors. Now, a new class of con artist is going after desperate homeowners. If you or someone you know is facing foreclosure, help spread the message that no one should be paying upfront fees for loan modifications.

Feb 1

The Subprime-mortgage subprime mortgage crisis was sparked by the uptick in interest rates on adjustable-rate mortgages. Homeowners suddenly found themselves unable to make higher mortgage payments, and foreclosures soon followed. The same ugly scenario could repeat itself with credit cards.

Our economy has been bruised and battered after the housing market bust. It now appears that a new crisis-a credit card market meltdown-may be imminent.

This emerging cause for concern is related to the changes in credit card terms that banks are instituting to protect themselves from future losses. Credit card companies are increasing interest rates and reducing credit limits at the drop of a hat, causing strapped consumers to scramble to make escalating payments.

Harsh penalties

The fallout from the economic crisis has many credit card companies on the defensive. They’re reviewing all credit card terms, and doing everything to minimize their risk exposure among questionable customers. If you’re late on a payment, for example, you can expect an immediate increase in your interest rate.

While it may be fair to assess a penalty in the event of a late payment, the reaction by credit card companies is proving too severe for many cardholders. There have been numerous cases of banks raising rates to 20 percent or higher, which can significantly impact a person’s minimum monthly payment if she carries a balance.

Financial crisis, Act II

If those minimum payments skyrocket, another subprime-like financial crisis may be on the horizon. With the subprime market meltdown, declining home values made re-qualifying for a new home loan impossible. This pulled the rug out from under people who carried an adjustable-rate mortgage. Unable to qualify for a new loan, they were forced to make payments on the mortgage with the new higher rate.

The payments proved too high for many homeowners, and their homes fell into foreclosure. A similar scenario is occurring with credit cards. Consumers who have household budgets already stretched to the breaking point can’t afford significant increases in their monthly credit card payments.

Another drag on the economy

The revision in credit card terms could have drastic long-term consequences for the economy as a whole. Consumer spending makes up two-thirds of the economy’s overall activity. While incurring excessive debt isn’t a solution, neither is scaring shoppers. If people live in mortal fear of using their credit cards because a spike in their interest rate could ultimately lead to a home foreclosure, then many people will opt to pass on the trip to the shopping mall.

Not all the blame can be levied on credit card companies, which are doing everything they can to keep their heads above water. A more realistic penalty could be used to curb poor money management habits. It would help consumers in the short run, and aid the economic recovery in the years ahead.