Year-after-year the largest lenders in the country push for regulations to stack the deck against hometown mortgage companies.  Usually the tactics take the form of sweeping Real Estate Settlement and Procedures Act (RESPA) reforms that are disguised as consumer protection rules but apply only to mortgage brokers while loan originators for lenders remain unchecked and legally unlicensed.  The latest cash cow for the Big Banks at the expense of consumers, mortgage brokers and residential property appraisers is the new Home Value Code of Conduct (HVCC) policy.  How could something that sounds so righteous be so unjust?  While it is important to ensure that home appraisals are high quality and accurate, the new policy has prompted the opposite result.

As of May 1, 2009, Fannie Mae and Freddie Mac are no longer purchasing loans from lenders using “appraisal reports completed by an appraiser selected, retained, or compensated in any manner by any third party.”  Lenders may only accept appraisal reports from a pre-approved list of appraisers or unregulated Appraisal Management Companies (AMC’s).  In one fell swoop this regulation has put countless independent real estate appraisers out of business.  Instead of appraisals being supplied by professionally licensed appraisers operating in local markets values are now determined by unlicensed and inexperienced paper pushers on behalf of AMC’s.  The AMC’s keep up to 40% of the appraisal fee, and guess who gets to have ownership in the Appraisal Management Companies?  The Big Banks themselves!

On May 1^st CNBC reported “that it puts good solid appraisers out of business, complicates the loan process for mortgage brokers, and inevitably hurts consumers.”  The Wall Street Journal on June 9^th proclaimed that “Appraisals are becoming one of the biggest obstackles for Americans trying to sell their homes, refinance their mortgages or tap into home-equity credit lines.”

Here are some typical scenarios being reported that have resulted in higher costs, less choices, and difficulty in borrowing:

• If a borrower applies for a mortgage and pays for an appraisal from an AMC they will not only pay considerably more for the appraisal but it is only valid if you get your loan from that lender.  If the borrower finds better terms with another lender they are required to purchase another appraisal.  Prior to this regulation the mortgage broker would order the appraisal from a local professional and all lenders would utilize that appraisal and retain the right to review the findings.
• Because the proerty inspectors for the AMC’s are receiving only a percentage of the appraisal fee they are reluctant to spend extra time or effort resolving any underwriting inquiries regarding the property value.  Compounding the problem is that the substandard appraisals being conducted by the AMC’s generate excessive underwritng conditions that are atypical with accurate value determinations conducted by licensed local appraisers.  This has unreasonably drawn out the loan process and in many cases borrowers have been denied financing due to inaccurate appraisals.
• Prior to the implementation of the HVCC mortgage brokers would typically speak to an appraiser to prior to a borrower paying for an appraisal to ascertain whether the value might be too low to support a mortgage.  Now, it’s cash up front then roll the dice.

Ironically, the HVCC arose out of a lawsuit involving one of the nation’s largest mortgage lenders accused of conspiring to inflate real estate appraisals.  Over-regulation has once again taken the place of enforcement, leaving consumers and small businesses to pick up the tab.  Somehow Big Banks have convinced Government that the fox is the best minder of the chicken coop.

When Can I Buy A Home Again After Foreclosure or Short Sale?
One of the concerns a consumer has after experiencing a bankruptcy, foreclosure, or short sale (referred to as a “preforeclosure sale” by Fannie Mae) is the ability to obtain credit to purchase another home. Fannie Mae has updated its credit guidelines. This legal article summarizes those guidelines.

Q 1. How long is the time period after a foreclosure before a consumer can be eligible to obtain credit to purchase a home?

A Five years from the date the foreclosure sale was completed.

Additional requirements that apply after 5 years and up to 7 years following the completion date are as follows:

. The purchase of a principal residence is permitted with a minimum 10 percent down payment and minimum representataive credit score of 680.

. Purchase of a second home or investment property is not permitted.

. Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time.

. Cash-out refinances are not permitted for any occupancy type.

(Source: FNMA Announcement 08-16, 6-25-08 )

When financing a property in today’s real estate market, the ability to get finance in the first instance, and the interest rate charged will all be a reflection of your credit score.

recent research shows that over two thirds of Americans have errors and other unverifiable information on their credit reports. These errors could be dragging down their credit score and in many instances result in credit denial. Odds are very good that your credit score is actually lower than it should be. The most unfortunate thing is that it is more than likely that you will be yet another one of the many millions of Americans who will continue to suffer with an unfair credit score because you will are not prepared to take the necessary action to repair your credit.

Most Americans want to believe that the credit reporting system works. That generally speaking people earn their bad credit by their irresponsible actions and that there is nothing they can do about it but let time take its course. But study after study shows the credit reporting system frequently does not work. This is why the Fair Credit Reporting Act and other consumer protection legislation give you the right to do something about it,the right to make sure your credit score as accurate as possible and consequently to ensure that you have the highest credit score possible.

So why is it that, even though everyone has the right to dispute the negative items in their credit reports, very few people actually ever do? It certainly isn’t be because they don’t understand the importance of a high credit score. After all, it doesn’t take a genius to figure out the benefits of a good credit score when it can be the difference between paying $2,500/month and $1,8000/month for the exact same house mortgage, or the diffence in car payment, insurance premiums and credit card interest rates.

The reason people do not repair their credit is usually a mix of apathy and lack of understanding of the credit reporting system as a whole, and a lack of understanding of the actions that can be taken. Lack of knowledge is generally a very costly excuse! Too many people assume the credit reporting system is some official government bureaucracy with an extensive system of checks and balances designed to ensure the safekeeping of their credit history. This couldn’t be further from the truth.

The credit bureaus at the center of the credit reporting system are not official organizations. Instead, they are massive, for-profit corporations that collect personal information from your creditors and make money by selling this information in the form of your credit reports, to anyone that wants the information.

So how do they ensure that this information is correct? If a creditor reports something that is incorrect, how do the credit bureaus make sure it doesn’t end up on your credit reports?

The answer to both of these questions, is they don’t. Your creditors report information, the credit bureaus record it, and for most people, that is the end of the story.

Nobody at the credit bureaus or in the government is going to make sure your credit reports are accurate, or even care if they are. The way the credit reporting system is set up, there is only ever one person who will bother to check up on your credit reports – and that person is you. You are ultimately the most important piece of the credit reporting puzzle.

Making sure your credit score is where it should be is your responsibility. Repairing your credit reports is a task you will have to initiate procatively because no one out there will do it for you.

It is your right and your responsibility to dispute the questionable negative items in your credit reports and the sooner you do so,the better. You can work to repair your credit on your own or you can enlist the help of a credit report repair firm like Credit Justice Services.

So regardless of Whether you attempt to repair your credit on your own or with the help of a credit repair expert, by taking an active role in the credit reporting system, you can ensure your credit score is as good as it can be and by doing so you will have an advantage over the millions of people out there with bad credit who haven’t taken any action to do something about it.

For more information visit: www.creditjusticeservices.com