Peachtree City, GA

As a concerned father of four in Fayette county, it is always distressing to see how our regions real estate woes are effecting our kids education.

I read an article by Ben Nelms at The Citizen...

http://www.thecitizen.com/~citizen0/node/41896

where he reported on the Fayette County Board of Education learning that the 2011 budget cuts could be another $10.3 million less than 2010, which was $12.65 million down from the year before.

With figures like this in our relatively small county, its easy to feel a little demoralized!

These cuts are state level education cuts, and don't yet reflect any new budget cuts as a result of our shrinking tax digest. As the taxable values of the Fayette county real estate have decreased, the county will receive less money. This means less money for our school system. A strong public education system directly effects our home values, as buyers tend to flock to areas with strong public schools.

Regardless of the severity of budget cuts that our schools in Peachtree City, Tyrone and Fayetteville are forced to deal with, we can be very thankful we have not experienced the level of declining values that other regions (South Florida, Las Vegas, parts of California) have suffered.

This post is more about credit in general, than mortgages specifically. The inquiry issue is a real one and does apply to mortgage shoppers.

Too many credit inquiries can injure your credit score. One reason for this is so you will know if you qualify for something without having them pull your credit. Basically, before you apply for credit, ask what the minimum credit score is, what the minimum income requirement is, what the interest rate and payment schedule is.

By doing your research you will know whether you meet basic requirements and if you can afford the payment schedule. If you don't meet the score requirement or find out the payment will be higher than you anticipated than you know not to even bother applying - in other words you have just prevented the injury inquiry.

Too many times people apply for credit without knowing the minimum requirements and specifics of the account they are applying for. Do your research, you should know what you are applying for before you grant a company permission to view your credit. Avoiding numerous inquiries is an excellent strategy to keep your credit score from needlessly dropping.

If additional credit is what you are looking for, you can call your existing credit card company and ask for a credit line increase based on your payment history with them. You want to make it clear that you do not want your credit pulled.

Another thing to keep in mind is that underwriters, especially FHA loan underwriters will ask you to explain recent inquiries.

I often wonder if credit reports are intentionally confusing to the consumer, or if it is just a by-product of way too many laws!

Many of my customer base seeking FHA and USDA mortgage loans often asks...."When will that negative item fall off my report"? A very fair question indeed!

Here are some basics on credit bureau reporting time periods as governed by the Fair Credit Reporting Act.

Understanding Credit Bureau Reporting Time periods

Delinquencies (30 - 180 days): Can remain seven years from the date of the initial missed payment.

Collection accounts: Remain seven years from the date of the initial missed payment that led to the collection (the original delinquency date). When a collection account is paid in full, it will be marked "paid collection" on the credit report.

Charged-off accounts: Remain seven years from the date of the initial missed payment that led to the charge off (the original delinquency date), even if payments are later made on the charged-off account.

Closed accounts: Closed accounts are accounts that are no longer available for further use. Closed accounts may or may not have a zero balance. Closed accounts with delinquencies remain seven years from the date they are reported closed, whether closed by the creditor or by the consumer. Positive closed accounts remain 10 years.

Lost credit card: If there are no delinquencies, credit cards that are reported lost will continue to be listed for two years from the date the card is reported lost. Delinquent payments that occurred before the card was lost are reported for seven years.

Bankruptcy: Chapters 7, 11, and 12 remain for 10 years from the filing date. Chapter 13 remains seven years from the filing date. Accounts included in bankruptcy will remain seven years from the date they were reported as included in the bankruptcy.

Child support judgments: Remain seven years from the date the judgment is filed.

Civil and small claim judgments: Remain seven years from the date the judgment is filed.

City, county, state, and federal tax liens: Unpaid tax liens remain 15 years from the filing date. Paid tax liens remain seven years from the paid date of the lien.

Inquiries: Most inquiries listed on your credit report will remain for two years. All inquiries must remain for a minimum of one year from the date the inquiry was made. Some inquiries, such as employment or pre-approved offers of credit, will show only to you.

Positive open credit information remains indefinitely and paid positive accounts remain 10 years, making your credit report a great benefit for you in obtaining and using financial services. Negative information is purged from your credit report so that if you have credit problems you will have an opportunity to build a good credit history over time.

While a negative item can plague you for 7-10 years, the truth is that if you rebuild your credit and make all of your payments on time, it will begin to damage you less and less each year. FHA loans become very forgiving after 2 years, while conforming loans impose a more daunting 4 year period.

Talk to me about your specific situation, as I can often suggest some action items that you can begin working on now.

Hey Peachtree City & AR! After listening to the President's State of the Union address, I sat down and pondered about the actual state of the nation's housing situation....or at least how I saw things from my porch. Come on folks, is it just me or are there a number of other like-minded individuals that are of the opinion now that if Washington sneezes we are all going to catch a cold? Alright, at least a sniffle. I just did not seem to hear anything specifically related to doing something substantial that would give the housing & mortgage industries some much needed traction.

Okay, you can count the stimulus if you must and it has accounted for an increase in home sales...but has it just helped to keep the economy on life support and what is or will be the real economic impact or repercussion? Hmmm...Only time will tell. Yeah, folks it's easy to get diverted by listening to all the pontification from the press & media about what should be done, who is to blame, all the buffoonery, and out of control deficit spending. Heck...to me there is enough blame to go around on both sides of the floor in DC.

Frankly, I think we all have to step up and not just count on the government to fix our problems and provide all the answers. Besides, with all the intellectual prowess in our country, does it or should it really matter who fixes the problem? I just have seen so many folks from all walks of life that are hurting. In fact, we all have been affected in one way or another. It just seems so surreal! Ironically, all this chicanery seems to essentially have all the elements of a Shakespearean tragedy. Is not home-ownership not a part of the American dream? So tell me why has the "Dream" become a nightmare for so many?

Okay, go ahead and vent if you must! We can blame the banks for greed and the bubble as well as the former administration for taking us from a $20.4 trillion dollar deficit to a $56.4 trillion dollar deficit. We can throw Tim Geithner under the bus for paying off AIG and criticize Ben Bernanke for saving Wall Street and not Main Street. But what about all of us living in the here and now! Hello....is anyone even listening?

First, let's examine the current financial markets. The Fed stated that there would be no rise in short term interest rates. Good news right? Well, maybe....but what signal does this send? Then wham....it hit me just like the V8 commercial. The Feds are not convinced that the economy is recovering or recovered enough. Additionally, if short term rates went up...so accordingly would 10 year rates and concurrently....so would mortgage rates. Of course, an increase in mortgage rates would be the kiss of death to many homeowners just barely making it now.

So what is the state housing in the US? Well it depends on who you ask. As for me, I'm pretty optimistic about 2010 but here are the statistical facts. Nationally, home sales fell another 7.6% in December after falling 11.35% in November. Here is Georgia our housing industry had been down for 13 straight quarters, but the 4^thquarter stats for 2009 may actually reveal a double-digit year-to-tear increase for all single family homes according to Steve Palm at the First Multiple Listing Service (FMLS).

The average close price in Georgia for a single family home attached in November, 2009 was $147,347. This is down 8.5% from November 2008 and the 24^th consecutive year-to-year monthly average decline. However, inventory has dropped and the December numbers will probably find us back to 2005 inventory levels. Yes...this means that for the first time since April 2007 we have dropped below 10 month supply levels. Of course, we still have a ways to go before we reach normal 6.5 to 7.5 month supply levels.

That's positive news for Georgia and disappointing stats nationally! The next 2-3 quarters will be critical for Georgia and the nation especially with the threat of inflation becoming a reality by the end of 2010. The U.S. Commerce Dept. stated that homes sales for December were the lowest ever since stats were kept! What was consistant here in Georgia with the national numbers was the down trend of home prices. In Georgia, the average price of a home slipping 3.6%.

But look at the bright side...homes are becoming truly affordable now. Hopefully we can all continue to get loans!

I just read a very informative article by Lew Sichelman over at Origination News.

Read it in full here

The net of the article is that 3 out of every 10 loan originators - brokers, mortgage bankers and members of state-chartered institutions, have failed the national portion of the licensing exam.

(Federally-chartered banks are exempt from the exam -- talk about a powerful lobby!)

There are no detailed stats over which group is doing better/worse, but expect that to change next year.

A source at the NMLS indicated that "people on the street" are doing much better than those working in call centers. This is obvious, as a former broker, you have to be extremely competitive and knowledgeable to win business in today's market.

As a Federally-chartered bank employee, I'm exempt. I did take the Florida LO exam back in 2004, and while I did very well, many of my colleagues suffered. Just like other similar exams for real estate pros, this one had very little to do with the day to day job of a loan originator.

I'm hoping this exam and the tougher economy will continue to further weed out the mortgage community and leave tru professionals left to work with customers and bring value to each transaction.