Your credit is about to get better

NEW YORK – Feb. 16, 2017 – The three major credit bureaus, and one forward-thinking debt collector, are making changes that could allow millions of people to get loans they’ve unfairly been denied.

Equifax, Experian and TransUnion plan to remove civil lawsuit judgments – where a creditor has sued and won in court – and many tax liens from people’s credit reports starting July 1. Striking those public records could improve the scores of as many as 14 million people – some by enough to qualify for mortgages and other loans that are currently beyond their grasp.

Meanwhile, leading debt collection company Encore Capital Group has shortened the time it reports paid collections from seven years to two. The company, which owns Midland Credit Management, Midland Funding, Asset Acceptance and Atlantic Credit & Finance, also promises not to report new collection accounts to the bureaus if debtors start making payments within 90 days after Encore notifies them of the debt.

The moves are long overdue, because the system for reporting serious black marks has been broken for years. Credit-scoring companies have long known that people who settle their old debts are a much better risk than those who don’t – but credit scores typically don’t reflect that fact.

The latest versions of FICO and VantageScore ignore paid collection accounts, and FICO’s newest score treats unpaid medical debts less harshly than other overdue bills. But most lenders still use older versions of credit scores that count collections against consumers, which can prevent people from getting loans and credit cards, or cause them to pay higher interest rates. The problem is particularly acute in mortgage lending, where mortgage buyers Fannie Mae and Freddie Mac require lenders to use FICO scores that are several generations out of date.

Stripping collections from reports ensures they can’t be factored into credit scores, which are based entirely on credit bureau data.

The bureaus have already agreed to kick other types of collections to the curb. As part of a massive settlement with 31 state attorneys general two years ago, the bureaus promised to stop reporting collections resulting from traffic tickets, library fines and other mishaps that didn’t stem from a credit account or consumer agreement to pay. The bureaus also vowed to remove paid medical bills, and medical debts now have a 180-day “waiting period” to allow insurance payments to be applied.

Public records such as judgments and tax liens are another source of problematic data, since many aren’t properly verified or updated, and correcting errors can be tough. Civil court judgments are particularly fraught, since many people don’t know they’re being sued. Creditors are typically granted default judgments, which means they win – even when they sue over debts that are technically too old or that aren’t even owed – because the debtor didn’t show up.

The number of lawsuits has soared as debt buyers snap up delinquent bills for pennies on the dollar and then turn to the courts for judgments. The costs of filing are so cheap that in some states creditors sue over bills as small as $60, according to a ProPublica investigation.

To be reported after July 1, a public record must have minimum identifying information, including name, address and Social Security number or date of birth, and the data must be updated every 90 days. Experian estimated that 96 percent of civil judgments and about half of all tax liens wouldn’t meet the new enhanced public record criteria.

Credit scoring firm FICO recently analyzed what would happen if the bureaus dropped all judgments and any tax lien that couldn’t be verified, using 30 million consumer records purged of that data that were provided by the bureaus. The credit scoring company found 6 percent to 7 percent of roughly 200 million consumers with FICO scores had such records, and that scores rose a median 10 points, says Ethan Dornhelm, vice president for scores and analytics.

Most people who have judgments and liens have other credit problems, which limits how much their scores can rise. That’s also the reason the change would have “no material effect” on FICO scores’ ability to predict risk, Dornhelm said. But the changes could be enough to allow people who just miss lenders’ credit score cutoffs to qualify for loans. To get a conventional mortgage, for example, borrowers typically need a minimum 620 credit score, while getting most FHA loans require a 580 score.

Clearing the garbage data from credit reports would affect more than credit scores, of course. Credit information is used by insurers to set premiums, landlords to grant apartments and employers to hire and promote. Making sure credit report data is accurate – and relevant – helps people save money and live better lives.

© Copyright 2017, Metro. All rights reserved. Liz Weston is a certified financial planner and columnist at NerdWallet.

50.1% in Fla. say ‘It’s a good time to buy a house’

GAINESVILLE, Fla. – Feb. 16, 2017 – Homeownership nationwide is at a record low, but a slim majority of Floridians (50.1 percent) say it’s a good time to buy a house, according to a newly released University of Florida (UF) survey conducted in October and November. Only 19.3 percent thought it was a bad time, while the remaining 30.6 percent were uncertain.

A recently report from the U.S. Census Bureau found that the Florida homeownership rate dropped 8 percentage points to 64.4 as of 2016 – the lowest since the government started tracking the rate in 1984. Florida’s homeownership rate peaked at 72.4 percent in 2006 on the beginning fringe of the Great Recession.

However, the Florida homeownership rate is still higher than the U.S. rate, as it was before the Great Recession hit. The U.S. homeownership rate peaked at 69.0 percent in 2004 before falling 5.6 percentage points to 63.4 percent in 2016.

Reasons to buy
Among the survey respondents who favored buying a home now, the most common reason given was favorable interest rates (46.1 percent), a situation that might change in the months ahead as the Federal Reserve increases rates.

Other reasons are low home prices (18.7 percent), the availability of many homes (13.6 percent) and favorable economic conditions (12.4 percent).

Of those who thought it was a bad time to buy a house, unfavorable economic conditions topped the list (41.5 percent) followed by high house prices (31.1 percent) and difficulty qualifying for a mortgage (11.4 percent).

Opinions varied by gender, with “good time” chosen by 52.4 percent of men but only 47.2 percent of women. Positive attitudes also increased with age: 37.9 percent of young adults under age 30 said “good time” compared with 54.4 percent of those age 60 or older.

Why buy a home?
A home purchase depends largely on economic conditions and the purchaser’s lifecycle factors, such as forming a household or the exit of young family members from the home.

“Homeownership is seen as an important way to accumulate wealth and build assets over time, in particular among low-income and minority groups,” says Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research and an author of the study. He says some Floridians may not have the means to invest in the stock market, but their home will likely appreciate in value over time, provide a legacy to the next generation and could be used as collateral for a loan in times of need.

Regardless of volatility in house prices and maintenance costs, owning a home is not only associated with personal financial gains, but it also benefits the community.

“Homeowners have greater incentive to care about their community because their home values depend on both the physical characteristics of the house and the neighborhood,” Sandoval says.

The American Dream?
Since World War II, homeownership has been considered part of the American Dream. Is that dream still alive in Florida?

In the survey, 45 percent of Floridians strongly agreed (14.2 percent) or agreed (30.8 percent) that “owning a home is necessary to live The American Dream.” Over a quarter (26.8 percent) neither agreed nor disagreed, while 21.4 percent disagreed and 6.8 percent strongly disagreed.

There were significant differences by race and region regarding homeownership and the American Dream: 42.7 percent of whites agreed or strongly agreed compared with 51.5 percent of non-whites. Only 38.2 percent of those in North Florida agreed or strongly agreed, but over half (50.5 percent) of those in Southeast Florida agreed.

Renter attitudes
The survey sample included 362 non-owners who were also asked about their own likelihood of buying a house. Almost a third (32.3 percent) said they were unlikely to ever buy a house, while 10.8 percent planned to buy in the next year, 44.5 percent in the next five years and 12.4 percent in the next 10 years.

“Following the Great Recession, mortgage lending practices tightened,” Sandoval said. “Slow job growth together with the debt load of young adults, many of whom are paying down student loans, have prevented the entrance of new buyers to a rebounding housing market.”

UF has graphs and survey details posted online.

© 2017 Florida Realtors

Mortgage interest deduction could be irrelevant

WASHINGTON – Feb. 10, 2017 – The chairman of the tax-writing House Ways & Means Committee joined Realtors® at the National Association of Realtors® (NAR) 2017 Federal Policy Conference in Washington yesterday, and he urged Realtors to stay engaged over the next year while Congress considers a full-scale reform to the United States tax code.

“We have a historic opportunity – the first time in 30 years – to completely reform the tax law,” Rep. Kevin Brady (R-Texas) told hundreds of Realtors who were in Washington on Feb. 8 for the conference that NAR holds annually to educate members on the issues expected to dominate the Washington agenda for the year.

In 2017, NAR expects tax reform to be high on the list of priorities taken up by Congress and the new administration. Reform of the secondary mortgage market – Fannie Mae and Freddie Mac – is also on the agenda later in the year, along with flood insurance reauthorization and reform.

Brady introduced Realtors to a tax reform blueprint that House Republicans are working on. While it will probably go through changes, it stands a good chance of being the main vehicle for any tax reform effort that gets taken up in the House.

The blueprint, as first proposed, would broaden the tax base by condensing tax brackets from seven to three, with tax rates of 33, 25 and 12 percent, respectively. It would also increase the standard deduction to almost twice its current level, and it would eliminate many itemized deductions, including those for state and local taxes.

The mortgage interest deduction and the deduction for charitable contributions would remain, but because of the higher standard deduction, it’s likely that most homeowners would no longer have an incentive to itemize and save more money by taking the standard deduction, which concerns NAR.

Real estate investments

On the commercial side, the blueprint doesn’t specifically repeal 1031 like-kind exchanges. However, Brady admitted that the committee is considering eliminating the provision.

The blueprint would allow owners to deduct 100 percent of the cost of new business assets, including buildings (but not land) in the first year of ownership. Brady along with Rep. Peter Roskam (R-Ill.), chair of the tax policy subcommittee of the Ways & Means Committee, said the accelerated expensing could go a long way to offsetting the 1031 exchange as an investment incentive, but they wanted to hear from Realtors more about their concerns.

“We haven’t made our decisions yet,” said Roskam. “We’re listening.”

Maintaining 1031 exchanges is a top priority for NAR. In the question and answer period, a Realtor said that two-thirds of commercial investment is spurred directly or indirectly by the exchanges.

Fannie Mae, Freddie Mac reform

At the conference, Realtors also heard about the prospects for secondary mortgage market reform. The big ideological debate on that issue centers around whether the federal government should continue to back mortgages sold in the secondary market.

A staff aide at the conference said legislation has been introduced to help make the debate easier by allowing more private sector parties to buy the risk held by Fannie Mae and Freddie Mac. Other legislation would touch on a common securitization platform Fannie and Freddie are working on, which would allow private insurers to get into the market more.

“These are things we can agree on and make the decision [about federal backing] easier once we get there,” he said.

NAR wants to see the federal government stay in the market to ensure the viability of affordable, 30-year, fixed-rate mortgages and also ensure mortgages are available in bad times as well as good.

Flood insurance

On flood insurance, congressional aides said many lawmakers want to avoid the kind of short-term reauthorizations of the National Flood Insurance Program that the market saw several years ago. NAR supports early reauthorization of the program, which expires later this year.

Source: Realtor Magazine

© 2017 Florida Realtors

5 Things Every Loving Homeowner Should Know About Their Own Home

By Matt Christensen | Feb 8, 2017


Your relationship with your home is one that will hopefully last a long time, so it pays to learn its most intimate details. And not to be weird, but we really do mean intimate: what turns it on (or off), what makes it hot (or cold), and its delicate inner workings.

Because, after all, your home takes care of you—it keeps you warm, safe, well-fed—so it has every right to act a little high-maintenance and demand some TLC in return. Neglect your house, and there could be hell to pay later in the form of floods, electrical outages, and worse.

So as a sort of how-deep-is-your-love kind of test, ask yourself if you know these five things about your home—and if not, maybe you should go find out.

Love is a two-way street!

Q: Where is the main water shut-off valve?

Imagine you’re anywhere in your house where water is a feature: bathroom, kitchen, laundry room. They’re all connected by a network of pipes that come from your main water source. If any of those tangential pipes springs a leak, you’ll need to shut off the water until it can be fixed.

Every home is different, but you can likely find your main valve near the perimeter of your house, at ground level, nearest your water meter. If your water pipes are visible (in the basement, for example), follow them until you reach the main inlet and valve.

It’s possible your shut-off valve could be in a crawl space, closet, or somewhere out of the way, but it should definitely be in plain sight, rather than covered over with drywall. But rather than sit there and wonder, be sure to ask the previous home seller before you move in or check your home’s blueprints for a clue.

Q: Where is your circuit box, and is it properly labeled?

A circuit box is your house’s bodyguard against sudden spikes in electricity that run through the wires. Know your circuit box! It may enable you to avoid hiring a technician for simple electrical issues.

Most circuit boxes are located in a house’s basement, but some are also found in garages or utility closets. The switches inside correspond to rooms and sets of outlets in your home. Hopefully, they’re labeled properly—and if not, you should get on that pronto to avoid a tortuous guessing game every time you need to turn your power on and off.

If power suddenly goes out in a room (usually because you have too much plugged into one outlet), you can identify the tripped circuit by the switch that’s flipped in the opposite direction to the others. That means you may need to plug in your lava lamp elsewhere.

Q: What is a thermocouple, and do you know how to change it?

When your furnace goes out, you’ll be left in the cold—but not if you know how to change its thermocouple.This is the part of the furnace that shuts off the gas if your pilot light goes out, preventing that gas from seeping into your home. (You know, the gas that can kill you if left to run amok.)

If the furnace won’t stay lit, there’s a good chance you have a faulty thermocouple. Learning how to replace or adjust yours can be the difference between a $10 trip to the hardware store, and a $90/hour visit from a technician. Most thermocouples are held in place by brackets, which can be gently unscrewed to insert the replacement thermocouple.

Keeping a spare thermocouple on hand during winter is especially smart, because furnace problems can be more inconvenient—and costly—during the peak times of the year.

Q: Where are all your filters, and when was the last time they were replaced?

Lots of appliances in your home have filters. In fact, any device that conducts air or water should have some sort of filter in place to remove impurities and particulates. Changing these filters routinely can save you money, and keep you safe, which is why it’s helpful to know when they’re due to be replaced. Furnace filters should be replaced every two to three months; HVAC, ice maker, and water dispenser filters must change at least once a year. But that varies based on the manufacturer, so be sure to check your maintenance manual and not let it slide.

Q: Does your home have a sump pump, and do you know how to maintain it?

A sump pump is a pump (duh) installed in certain basements and crawl spaces to keep these areas of your home dry, which it does by collecting water that tries to seep in and moving it far, far away (or at least as far as the drainage ditch in your yard). They’re especially common in regions where basement flooding is an issue. Without a sump pump, the invading water can result in thousands of dollars in damage.

The good news, though, is that sump pumps are relatively easy to maintain. Check both lines, in and out, to make sure they’re not clogged with debris, and make sure the float component (this is the little bob that floats upward when water begins to fill the sump pit, activating the pump) can move smoothly.


Homeowners Use Tax Refunds as Lifeline

The foreclosure picture continues to improve in the U.S., according to the recently released Black Knight Financial Services Mortgage Monitor.

An increase in cure activity, defined as a borrower paying their mortgage current from some stage of delinquency or foreclosure, helped in part to improve delinquencies in December 2016 according to the report. It also said more than 450,000 borrowers paid themselves current on their mortgages, representing a 17 percent monthly rise.

The inventory of loans in foreclosure declined by more than 30 percent year-over-year, edging out 2013 for the highest rate of decline on record. Severely delinquent foreclosures, defined as those that haven’t made a payment in over two years, dropped by 38 percent from 2015. Less delinquent foreclosure inventory dropped by 21 percent.

December also saw only 59,700 foreclosure starts, a 24 percent decline from the same time one year ago.

The report also noted a decline in prepayment. Prepayments from borrowers with a credit score of 720 or higher fell by 22 percent, but prepayments declined by only 8 percent for those with sub-680 credit scores.

The report also examined the affects tax season has on mortgage performance. According to Black Knight analysts, more than 40 percent of American taxpayers file their tax returns by the first weekend in March, with nearly one in five having done so within the first two weeks of tax season.

“Incentive undoubtedly plays a part, as Americans who file early are more likely to receive a refund than those filing later and also receive larger refunds on average,” the analysts said.

Their data also found that mortgage cures spike during February and March, suggesting many Americans use their tax returns to make past due payments on their mortgage.

“The increase in cures is observed across the delinquency and foreclosure spectrum,” but it is most pronounced in the early and moderate stages of delinquency,” they said. “This makes sense in that a tax refund may be sufficient to pay a few months of past due mortgage payments, but is likely not enough to bring a homeowner out of severe delinquency.”

The analysts said if history is any predictor, they expect as many as 290,000 borrows to pay their loan current in February and March, on top of normal cure volumes for a normal month.

U.S. foreclosures drop to 9-year low

IRVINE, Calif. – Feb. 2, 2017 – In 2016, distressed sales hit a nine-year low, according to ATTOM Data Solutions latest report. In the U.S., 16.2 percent of single-family home and condo sales were distressed sales – bank-owned sales, short sales or foreclosure auctions sold to third-party buyers – down from 18.8 percent of all sales in 2015.

Bank-owned (REO) sales hit a 10-year low, accounting for 8.0 percent of all sales in 2016, down from 10.0 percent in 2015.
Short sales – homes that sold for less than the combined amount of loans secured by the property – hit an eight-year low, and accounted for 5.5 percent of all 2016 home sales, down from 6.0 percent in 2015.
Foreclosure auction sales (trustee’s sales or sheriff’s sales) sold to third-party investors (not including those going back to the foreclosing lender) hit a nine-year low, and accounted for 2.8 percent of all home sales in 2016, down from 2.9 percent in 2015.
“The housing market hit several important milestones in 2016, with distressed sales at a nine-year low and home prices at a 10-year high – just barely below the pre-recession peak in 2006,” says Daren Blomquist, senior vice president at ATTOM Data Solutions.

“This was all good news for home sellers, who realized their biggest average profits since purchase nationwide in 2016,” Blomquist adds. “Even distressed property sellers are benefitting from this hot seller’s market, with a record-high share of homes at foreclosure auction being purchased by third-party buyers rather than reverting back to the foreclosing bank.”

While foreclosures were generally down, the share sold to third-party investors hit a record high, however: Third-party foreclosure-auction buyers accounted for 28.5 percent of all completed auctions in 2016, with the rest (71.5 percent) going back to the foreclosing lender. That’s an increase from 23.5 percent in 2015 and the highest share since ATTOM first recording the numbers in 2000.

Two Florida cities made ATTOM’s top-5 list for total numbers of foreclosures sold to third-party buyers, with Miami at No. 1 (4,954), followed by Philadelphia (4,043), Atlanta (3,657), New York-Newark-Jersey City (3,495) and Tampa (3,163).

“Increased competition at the foreclosure auction is resulting in higher sales prices there, which can even result in surplus proceeds going to the distressed homeowner in some cases after other lien holders have been paid,” Blomquist says.

“Our analysis of sales prices at completed foreclosure auctions in 2016 shows the smallest average loss from the property’s previous sale price since 2007, with 29 percent of properties nationwide selling for more than the previous sales price at the foreclosure auction,” he says. “In a handful of markets … more than 50 percent of properties sold at foreclosure auctions in 2016 sold for more than their previous sale price.”

In a separate analysis of home prices, ATTOM found that 89 percent of metro areas it tracked saw home prices increases last year, and a few areas saw double-digit increases, including some Florida cities. Among 201 metropolitan statistical areas with a population of at least 200,000 and sufficient home price data, those with double-digit gains include Tampa-St. Petersburg (up 14.0 percent), Denver (up 11.3 percent), Portland, Oregon (up 12.1 percent); Orlando (up 10.1 percent) and Jacksonville (up 12.9 percent).

Among 201 metropolitan statistical areas with a population of at least 200,000 and sufficient home price data, 89 metro areas (44 percent) reached new all-time home price peaks in 2016; and 106 of 201 areas (53 percent) reached new all-time home price peaks since 2010.

© 2017 Florida Realtors