Credit Technologies, Inc.

“We’ve Never Seen a Legitimate Credit-Repair Operation” 
Steven Baker, director of the Federal Trade Commission’s Chicago regional office.

Credit repair can damage your credit report, FICO score and finances...

Despite the phenomenal claims made by most credit repair companies, all they do is dispute trade lines in the name of the consumer. The filing of a consumer dispute is the only method anyone other than the creditor, a credit reporting agency or the repository itself has to affect change in any repository file.  A credit repair company cannot do anything the consumer cannot do themselves for free and faster, in fact – they cannot even obtain a copy of the consumers’ credit report as credit repair companies are prohibited access to Experian, Trans Union and Equifax. 

Consumers can obtain free copies of all three repository files in minutes at AnnualCreditReport.com and if errors are found, dispute them online at no cost. They are also provided a toll-free number to reach a live person that can answer questions and assist them with the process if needed, including faxing documentation all at absolutely no cost. Except for credit rescoring, this is fastest method possibly of updating a consumer’s credit file.  

Here’s the step-by-step for the only free credit repair solution

Credit Repair poses real risks to Consumers…

Besides the monetary risks associated with credit repair, the actions of a credit repair company can damage your FICO score.  Most credit repair companies simply dispute every derogatory item appearing on your credit report. Those creditors that verify the disputed items often update the data reported to the repositories including the reporting dates. The result of frivolously disputing trade lines often results in lowering your FICO scores. The dispute process also means you are providing your current address to creditors, which can also result in new collection contacts and phone calls. Here are a few other warning signs to look out for…

Charging up-front fees in violation of Federal law
Many credit repair firms violate Federal law by requiring up-front fees often disguised as “account set-up” or analysis fees. Some require you to purchase a training manual for hundreds of dollars just to access “free” credit repair. Credit Repair Organizations Act – Public Law 90-321, 82 Stat. 164 “404. Prohibited practices. b) Payment in Advance. — No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed.”  The entire text of the CROA is available at http://www.ftc.gov/os/statutes/croa/croa.shtm

Does not accept credit cards (or attempts to disguise PayPal^® as a merchant account)
This is an important warning sign, it often means the firm is unable to gain approval to process credit cards (a physical inspection and positive financial history is required). Companies with questionable pasts or practices instead will often require you pay using a third party credit card processing company, check by phone, ACH/direct debit or other means which may provide less protection in the event of fraud. Some will demand post-dated checks before providing any service (you’re expected to trust them with your confidential credit and banking information, but they don’t trust you for payment.) 

Web based, no physical location or allows contact by email only
Any company can provide a few positive references. Do your homework on any credit repair firm before sharing any confidential credit data or credit card information with them. You can verify how long their website has existed using any domain lookup tool such as  http://www.domaintools.com/ You will often find that although they may claim to have been in business for “decades”, in reality their websites are newly formed. Most credit repair companies found on the Internet are simply re-selling services provided by other companies – so you’re often unable to determine just who will have access to your personal information.

A Special Warning For Mortgage Professionals

In an attempt to help mortgage applicants qualify, (or as a means to generate additional income), we often see mortgage brokers and bankers recommending credit repair for their borrowers.  While there are usually options to assist consumers in improving their FICO scores (often in 24 hours) – credit repair is almost always a bad choice.  Aside from the problems identified above, credit repair presents a special risk to mortgage professionals. 

Engaging in credit repair is a violation of every repository contract – regardless of the credit reporting agency you utilize.

Over the years we have seen numerous audits conducted by the repositories that result in the termination of that broker or lenders access to credit data. These audits are often triggered by borrowers, who at the recommendation of credit repair companies, frivolously dispute items contained in a credit report provided to them by a mortgage professional. The repositories monitor patterns on frivelous disputes received, matching them to recent inquires into that consumer’s credit report.  All three repositories (Experian, Trans Union and Equifax) publish a monthly list of mortgage companies (and individuals) which are barred access to credit data through every credit reporting agency – Essentially putting that firm out-of-business.

Mortgage professionals – Before recommending your applicant dispute items on his/her credit report, either directly or through a credit repair company, it’s important that you understand how the data on your applicants credit report impacts their FICO score and the potential impact of any changes (see Mortgage Alchemy.) Because FICO scoring is often counter-intuitive (e.g. paying off a collection account usually results in lowering the consumers FICO score)  the best advice is to first talk to your credit reporting agency. Here are a few examples of how what you don’t know may be hurting your applicants…

• When reviewing a tri-merge report, it’s often difficult (depending on your credit provider, it may be impossible) to determine what is being reported by each repository. In many cases, you are unable to tell which items to dispute through which repository.  The merge logic used to produce the tri-merge is often responsible for errors on the tri merge report, in which case no dispute of the repositories is needed.
   
• If your borrower disputes any trade line, that item is locked from any further actions until the dispute is resolved. It might have been possible through re-scoring tools to correct the item in as little as 24 hours. This would no longer be an option once a dispute is lodged.
   
• There are other options that are much faster than filing a dispute (such as e-Oscar whereby the trade line can be updated in minutes.)
   
• It is possible that removing an item (even if that item contained derogatory data) can cause a drop in the FICO score, or worse yet – that item might have been part of the minimum required to produce the FICO score. Once removed – you’ve lost your FICO score entirely.

You can’t un-ring a bell, unless you are certain of what you’re dealing with and the resulting change (if any) to the credit score, it’s best to have your credit reporting agency confirm your actions will provide the expected results. If your credit reporting agency can’t provide these crucial services, you need a new CRA.

Thomas P. Conwell III
President, Credit Technologies, Inc.^®
Director, National Credit Reporting Association (NCRA)

© Copyright 2009, Credit Technologies, Inc. – All Rights Reserved.  *PayPal^® is a registered trademark of PayPal, Inc.

House Introduces HVCC Legislation

On Friday, June 26, Representatives Childers (D-MS) and Miller (R-CA) introduced H.R. 3044, a bill calling for an 18 month moratorium on the HVCC. NAMB President Marc Savitt, CRMS called the legislation a “victory for consumers and members of the industry alike.

To view NAMB’s press release, click here. For a copy of H.R. 3044, click here.

Red Flag requirements take effect August 1, 2009 requiring more than 2,000,000 entities – virtually all types of lender including banks, credit unions, mortgage brokers and lenders, auto/motorcycle dealers, utility companies and cell phone providers take significant steps to detect and prevent identity theft.

 Credit Technologies provides a simple, free way for mortgage professionals to learn how to comply with FACTA section 114 (commonly referred to as the “Red Flag” rules.) EasyRedFlag is a fully interactive webinar-style training course designed to dramatically simplify FACTA Red Flag compliance – and is provided free of charge to all mortgage professionals. This interactive online course teaches you how to comply with FACTA Red Flag including:

• Covered accounts – How to develop the required detection, response and mitigation methods
• Required procedural and training documents – Implementing the annual update requirements
• Simple, free online solutions and templates to create the needed documents and processes
• State and Federal enforcement and penalties for non-compliance

“Every mortgage professional should attend this webinar to understand the requirements, and a simple way to comply – all provided by Credit Technologies absolutely free of charge.”

The EasyRedFlag Webinars run about 45 minutes with lots of Q&A time at the conclusion to address your specific questions and concerns. Register for an upcoming webinar at  http://credittechnologies.com/RFregistration.asp.   

For more information on Red Flag compliance, or any mortgage credit, FICO scoring or other mortgage related information, please visit www.CreditTechnologies.com

Due to unprecedented increases in 4506 volume, typical IRS Service Center turn-around times are increasing – and are now approaching 2 business days. This increase in volume is likely a result of more lenders requiring tax and W-2 transcripts be executed on every file.

In an effort to provide the fastest turn times under these new circumstances, we have adjusted our suggested cut off time to 11:00AM Eastern. The IRS is often treating requests received after 11:00 as having been received the following day.

Please try and submit your 4506T requests no later than 11:00AM. This earlier transmittal time gives us the best chance of obtaining your needed tax data within the expected 24 hours time frame. We will continue to monitor the situation and keep you advised of any further changes.

For more information on ordering and pricing, please contact your sales representative or visit http://www.credittechnologies.com/4506_Lender.asp

Please call 800.445.4022 Option 4 should have any further questions or concerns.

In an effort to get important communications in the hands of our clients faster, we have begun using Twitter as a communication forum. In addition to our existing communication channels, we’ll transmit time sensitive data via twitter including product or service updates, technology issues including any service outages, compliance and regulatory updates and any issues of competitive value to our clients.

To follow CT on Twitter, please visit http://Twitter.com/credittech

A: There are 2 reasons a borrower’s score may differ between credit reports – even if those reports were produced at virtually the same time.

1) Different Repository Data

FICO scores can vary between repositories and credit reports - even when created at virtually the same time.

This accounts for most of the score differences.  Remember that the FICO score is based on what’s contained in that consumer’s repository file at the moment the score was created. If an item has been updated (e.g. a balance changes, or new delinquency appears) the resulting score will change. Even the existence of a new revolving or finance account inquiry will have a negative impact on your borrowers FICO score.

A common reason for differences in repository data (and consequently FICO scores) are data set issues. Here’s a frequent occurrence,

You run a credit report on Bob Smith, and use his current address where he’s resided for the past year. The lender then runs a credit report under Robert A Smith Jr. (the applicant’s full name) and also includes his prior address of 10 years. It’s a virtual certainty that these variations will return different credit data, and different FICO scores. To avoid these and other problems caused by data set issues (missing files and scores, merged or mixed files…), make sure you run the applicants full name, including any suffix and at least two years of residence history

2) Different Scoring Models
Make sure you’re comparing “apples to apples.” Look at the scoring models used when comparing credit reports to make sure both reports are using the same FICO scoring models. Currently utilized  models include,

Experian – Fair Isaac Version 2
Trans Union – FICO Classic 04 or 98 (Previously known as Emperica)
Equifax – Beacon 5.0
(FICO 08 will be available late 2009)

You may recall hearing about other scoring models. “Next Gen Scores” were a scoring model created by Fair Isaac that never caught on.  The GSEs’ (FNMA, FMAC…) do not, nor does any lender we are aware of accept Next Gen scores. Also watch out for Vantage scores which is a scoring model developed by the repositories and often sold in consumer channels including FreeCreditReport.com and AnnualCreditReport.com. They are also not used in mortgage lending and usually produce score values higher than FICO scores. These higher score values often add to consumer frustration when applying for a mortgage as an applicant may have acquired a copy of their credit file through a consumer channel, and incorrectly believes they are looking at their FICO scores.

Have a question about credit reporting, FICO scoring or rescoring? We welcome your questions and comments and may include them in future editions of Q? in CTNe.ws -  Simply enter your question or comment in the comments section, or if you prefer you can email us at Questions@CreditTechnologies.com.

© Copyright 2009 , Credit Technologies, Inc. – All Rights Reserved.  FICO^® is a registered trademark of the Fair Isaac Company

Taylor, Bean and Whitaker has joined the growing ranks of lenders requiring executed 4506 transcripts. From their 5/28/09 alert…

Transcript Requirements – Effective with loans locked on or after 10 June, 2009, TB&W will require lenders to provide Tax Transcripts for all loans where income is used to determine eligibility (FHA and VA Streamline refinances are exempt). If the borrower is a W-2 wage earner, the lender must obtain the most recent available one tax year’s tax return transcript. If the borrower is self employed or derives income used for qualifying purposes from commissions, dividends, interest, or other sources besides base pay, the lender must obtain the most recent available two year’s tax return transcripts. 

Tax return, W-2 and 1099 transcripts are available in about 24 hours – For more information on ordering and pricing – please click here.

If not a “black Friday” – Friday May 1st, 2009 will certainly be dark gray for most mortgage brokers and lenders. New requirements take affect that will instantly change the way most mortgage professionals do business.

HVCC is a joint agreement between Freddie Mac and Fannie Mae, the Federal Housing Finance Agency (FHFA), and the New York State Attorney General to “enhance the independence and accuracy of the appraisal process, and provide added protections for homebuyers, mortgage investors and the housing market.” Under this new requirement, most appraisals will be ordered by the lender through an Appraisal Management Company (AMC.) This agreement poses many additional challenges to mortgage professionals including;

• Broker contact with an appraiser is now all but eliminated and comp-checks prohibited, it will be much more difficult to obtain an estimated valuation prior to determining if a mortgage is viable for that applicant or property.
• The cost concessions demanded by many AMCs and additional work requirements (form 1004mc – Market Conditions Report) are forcing many of the most experienced appraisers out of business. The AMC process rewards those appraisers with the lowest fees and fastest turn time – neither of which supports higher quality work.
• The appraisal will not be available until AFTER the broker has submitted the loan package rendering much of the documentation submitted incomplete or inaccurate. This further complicates loan processing and decisioning. and will significantly increase the work load on already over-burdened lenders. Some project 3 times the number of applications being submitted as the broker cannot effectively weed-out non-viable transactions.
• Increased costs and delays for consumers – It will typically take much longer (weeks) to obtain the property appraisal, which may significantly alter the lending terms. Should a different lender be required – there is a high probability that the new lender may not accept the previous appraisal and require a new appraisal be ordered at significant cost to the consumer and resulting in additional delays.

The May 1^st implementation of the HVCC makes access to quality AVMS critical for all originators.

Credit Technologies provides online access to the AVM reports used by top mortgage lenders, appraisers, Realtors^®and attorneys nationwide including Freddie Mac’s Home Value Estimator (HVE), First American CoreLogic HPA, PASS and Fiserv, Inc.’s Case Shiller Weiss CASA AVMs – All delivered in seconds at a fraction of the cost of a traditional appraisal. View a Sample AVM

Click Here to Enable Access to AVMS Though Your Existing Account – There are no setup costs, and you gain instant, online access to the top AVM appraisals used nationwide.

Not a client yet – no problem. Click Here to Setup Your Free Account, or to Order a Single AVM

For more information on Automated Valuation Models, including samples of each, please visit www.EasyAVM.com, contact your sales rep or call 800.445.4922, Option 1.

Both GSEs provide additional information on HVCC at:

FNMA – https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/hvcc.pdf or

FMAC – http://www.freddiemac.com/singlefamily/home_valuation.html

CTNe.ws content includes,

- Credit, FICO and rescoring tools and tactics to help you better qualify applicants
- Product and service updates
- Technology issues including any service outages
- Compliance and regulatory updates
- Any other issues or topics of competitive value to our clients

CTNews has replaced the Mortgage Credit Arsenal. This new format allows us to get you information designed to help you create a competitive advantage, as quickly as possible. We strongly recommend you take a moment and follow us on Twitter. I’ts takes only seconds and is completely free.

To access older, archived posts, please visit http://www.credittechnologies.com/news_center.asp

Credit Technologies is pleased to announce the integration of Credit Technologies Data through the GMAC-RFC/ AssetWise automated underwriting system. This increases the number of approved lenders, including all lenders utilizing FNMA DO/DU and Credit One.

Credit Technologies is a nationally approved Fannie Mae and Freddie Mac CRA. All lenders associated with either FNMA DO/DU or FMAC LP accept CT data.

A complete listing of FNMA lenders is available at  eFannieMae.com

The FMAC LP list is available at LoanProspector.com.

Please note, some lenders, such as Countrywide have deals in place that require brokers to use their CRA (CW owns Landsafe) when ordering credit or submitting deals though their front end (e.g. CLUES – Countrywide’s Loan Underwriting Expert System or CLOUT – Countrywide’s Loan Origination and Underwriting Technology.)

A partial lender and integration partner list is provided below. Please call 800.445. 4922 for questions specific to integration with any lender or platform.

•  Acceleron (formally Novastar)
• Accubank
• American Guardian
• Ameritrust
• ARC Systems / LendTech
• Aurora Loans
• Available Mortgage Funding / Mortgage Broker Vision
• Avista
• Banker Systems / ARTA
• BeanStalk / OpenClose
• Bear Stearns / Bear Direct
• Calyx / Point
• Capital Funding
• CBC Innovis / BytePro
• Channel Inc
• Chase /Zippy
• CitiMortgage
• Closed First
• Commerce Velocity
• Concorde Acceptance Wholesale / Loan Vine
• CR Pacific
• Creative Thinking / Creative Visions
• Criterion Systems / Loan Vision
• CRMNow / MortgageIQ
• DelMar Database / DataTrac
• Delphi Information / Applidocs & Discovery
• Dexma / Prime Alliance
• Direct Mortgage Funding / Direct Express
• Dynatek / MorVision
• Ellie Mae / Contour, Encompass & Genesis
• eMagic
• Encore Credit Corp
• Fairfield Mortgage
• Fannie Mae / Desktop Originator and Desktop Underwriter
• FICS / Loan Producer
• Fidelity National / Eastern Empower
• First Greensboro Home Equity / E-valuator
• First Franklin
• FlagStar
• Franklin Financial / Franklin Direct
• Freddie MAC / Loan Prospector
• GMAC Residential Funding / AssetWise Direct
• Greenlight Financial
• GreenPoint Mortgage / E-Point
• GN Mortgage / GN Select
• Harland / E3, LaserPro & MortgageWare
• Helvetica Group
• HSBC  
• Homecomings Financial / AssetWise Direct
• Home Quest Capital / Approved Point
• Homeland Mortgage / HomeXpress Online  
• Impac Funding / iDaslg2
• IndyMac / eMits
• Insight Lending / PriceMyLoan
• Integra / Destiny
• Kellner Mortgage / Kloser
• LenderFlex
• Liberty American Mortgage
• LoanScore
• LongBeach Mortgage
• Maverick Mortgage
• Mega Loan Officer Officer Machine / MLOM
• MindBox
• Mortgage Builder
• Mortgage Cadence
• Mortgage Funding / Mortgage Broker Vision
• Mortgage Software Solutions
• Mortgage Warehouse / TMW Direct
• MortgageBot / Powersite
• MortagegFlex/ LoanQuest
• MortgageHub / TMO, Diamond, Bridgelink
• National City Mortgage / ARC
• NovaStar
• Nylx
• Ocwen REALTrans®
• Ohio Savings
• Optimum
• Option One / LPS
• Overture                         
• Paragon Home Lending / Paragon Express
• PCLender
• Peoples Choice
• Pinnacle Direct Funding / Flex Express
• Pipeline Solutions
• ProLender Solutions
• Provident Funding
• Quality Home Loans
• Quick Loan Funding
• RAM PowerPak
• RFC AssetWise Direct / RFC AssetWise
• SearchMyLoan
• Sierra Pacific
• Sound Software / WinMort
• SunTrust
• Soluna First / Eclipse
• SouthStar Funding / StarQual
• Stone Creek Financial
• TeraVendo / LoanAce
• Trust One Direct
• United Capital Mortgage Corp / UCMC Options
• VueCentric / Mortgage Dashboard
• Wachovia / Vertice
• Washington Mutual
• Wilmington Finance
• Winter Group
• Wells FargoXetus / XetusOne
• XL Dynamic / MortgageSoft

In addition to accessing the GMAC-RFC/AssetWise system, other system enhancements including ‘

• Access to CreditXpert (Credit Analyzer and What If Simulator) on all files regardless of FNMA status.
• All files are FNMA re-issuable without having to select the FNMA checkbox
• The FNMA re-issue process is simplified – the re-issue number is now the same as the report number.

For more information on any integration issue, please contact us toll-free at 800.455.4922