Mike Tullio, Blue Skye Lending

For the longest time, I thought the credit scoring model was 2 parts magic, one part fairy dust, and three parts pi times the square root of the sum of the numbers in your social security number. But now I know better; it's all magic.

Black magic for a lot of folks these days. But there are some things we can do to lift the curse of sub-600 scores from our land. Stop killing your credit!

IV - THOU SHALT NOT MURDER THY CREDIT

THE SIN- Ignoring the factors that influence your credit score is like ignoring that pesky rash that keeps coming back. Stop itching and start treating the cause. There are some obvious things that murder your score like foreclosures, bankruptcy, judgments, collections, late payments, maxed out credit cards, and lack of accounts. But some of the silent wolves have snuck their way into the hen house and those are the ones that many of our clients are victims of.

I present to you, Exhibit A. Those evil credit card companies are really sticking it to the consumer these days. Borrower with a 750 FICO score has a $1500 balance and a $12,000 credit limit. No big deal. The fine folks at CITI Cards, switch this fellow's interest rate from 7.9% to a floating rate linked to prime; let's say Prime + 24.99%. Not only that, they lower his available credit from $12,000 to $2500 despite the fact that he's paid on time for the past 6 years. His debt ratio on this particular card goes from nothing to 60%, and in turn, his FICO drops 25 points. I'm sure you've seen this and if anyone has a HELOC, it's either been frozen or the credit limit has been cut to the current balance. Can I get an AMEN?

THE WIN - If your credit score has dropped or it's been low for as long as the Cleveland Browns last played in the Super Bowl, it's time to bring your FICO back to life! For folks in the Bradenton-Sarasota area, I urge you to sit down with me and do some mortgage planning. We can figure out why your score is low, look at the obvious and not-so-obvious contributing factors and scheme how to create a better chance of running your credit through Experian's 10 top-secret algorhythms and coming out on top. If you're reading this on Active Rain, find a professional in your area to be your credit score bodyguard; they can help protect you from outside forces that can assassinate your beacon, and sometimes, they'll even protect you from yourself.

"But I make $60,000 a year!" No, according to your 2008 tax return, you make $12,000 a year and that $250,000 home in Sarasota might be just a bit out of your price range.

It's a bitter pill to swallow but there's a lot of pill-popping going on these days and the self-employed borrowers are feeling a bit sick to their stomachs. If only they would have obeyed Lending Commandment III:

III - THOU SHALT FILE THY TAXES WITH FORESIGHT

THE SIN - What am I talking about? A classic case of poor planning. As a self-employed individual myself, I can completely understand writing everything off on my taxes from my home office to the box of paperclips I bought last week. You want to show as little income as possible so you pay the least amount of tax. But of course, when you want to buy a home, you want to show as much income as possible. It's a painful catch 22, and I'm sure a lot of brokers in mortgageville are feeling your pain as well.

THE WIN - Plan ahead. If you know you are going to buy a home soon, claim more income if you are self-employed. Rental income, second job income, capital gains. Bring it on. True story. Had a borrower this year that was working for his dad's pool company. He wasn't making enough to qualify for the loan he needed, so I suggested he increase his W2 pay and decrease his monthly bonus. He did just that and in 3 months, he quailified for an awesome USDA loan with no problems.

Now, it may take a bit longer for some. Real estate investors need to have two years rental experience for the most part. And mortgage underwriters are looking at the past two years for a lot of types of income. Talk with your CPA as well because they can help you strategize on how to meet your goals. If you plan appropriately, you'll be on your way to saying "10-40 good buddy" in no time!

Shazaam! Kaboom! OK, enough pseudo-expletives. It's time to revisit the Ten Commandments of Lending as I see them from the top of Mount Mortgage. Wow, it's apparent I've had too much coffee this morning. Let thee read on!

II - HONOR THY FICO AND KEEP IT 620

THE SIN: I've pulled hundreds of credit reports and it seems like it's a case of the haves and the have nots these days. Either folks are near 800 with flawless credit, or they are closer to 550 with a report that's riddled with judgments, collections, and late payments. If you don't know what your score is, call a mortgage broker and we'll be glad to run a FREE REPORT. Or you can hit www.annualcreditreport.com once a year to get your free credit report. There are a lot of simple things you can do to get your score up, but it comes down to getting rid of the bad stuff and adding good stuff. Most government loan products require at least a 620 these days, so don't be left behind with a sinful score.

THE WIN: Fix your credit! Mortgage brokers and realtors, can I get an AMEN? There are reputable services out there that can improve your FICO score hundreds of points in a couple of months. True story. I had a client with ONE judgement from our friends at Verizon. It was only $144, but his score was a 696 because of it. Not bad you say? If he had at least a 720 FICO score, his rate would improve by .5%! He called Verizon, settled the matter once and for all, had it removed from his report, and 21 days later, his score was a 790! Amazing! It can make the difference between a RATE and a GREAT. A deal or no deal.

So honor thy FICO and you'll be walking on holy ground!

Last night, I had a vision of a burning bush. OK, maybe it was just heartburn, but in any case, the fiery shrub spoke to me in an authoratative voice and told me that there was a new set of lending laws I must bring to the people. They are wandering around the dry wilderness of delayed closings, suffering through plagues of bad appraisals and frightening underwriting, and they are simply looking for the promised land: The closing table.

In this vision, I was given a cumbersome slab of granite to bring to the borrowers of today. Unfortunately, it was inscribed in Hebrew and I have no idea how to translate. I think you actually read right to left if I'm not mistaken. Enough! It is time to bring to you, The TEN Commandments of Lending, Circa 2009! Each of the ten lending "plagues" can be defeated by honoring and practicing these precepts, so if you are looking for divine intervention, heed these words!

I - HONOR THY DOWNPAYMENT OR GIFT

THE SIN - By now, it's clear there are some amazing deals on homes, but some people still can't scrape up the funds to come to closing with. In the Bradenton/Sarasota, Florida area, there is less than a 6 month supply of homes under $200K which tells me, people are doing what it takes to get a home. And with the government offering first-timers an $8K tax credit, time is running out on what may be the best buying opportunity we'll have in history.

THE WIN - If you haven't heard, Uncle Sam is footing the bill on an $8K tax credit for first-time homebuyers: I've got a countdown on my FREE Sarasota Mortgage Info site. And with mortgage products like FHA, VA, and USDA, there are plenty of low to no money down loans available for folks. Many of these programs allow the downpayment to come from a gift. So think of someone that loves you, and hit them up for money. Or pray for check in the mail from a rich relative!

If mortgage truth can be found in the sprawling vastness of Internet and tucked away in the blurbs of the Bradenton Herald, then surely it can be discovered in the life of my little daughter, Chloe Sky. I suppose the "experts" would tell you that you need to be intimately acquainted with mortgage backed security trading to know which way rates are going to go, you must study the new MDIA and HVCC guidelines to predict turn times, and you have to be familiar with your 19 different lenders to understand whether or not you can write a loan on a manufactured home in the middle of a giant iceberg. But the truth is, all that matters is sleep, milk, and attention.

Follow me for a second. Abraham Maslow, in his 1943 paper entitled, A Theory of Human Motivation, basically ranked our needs as a human. We will always revert back to curing deficiencies in our lives at the most basic level, starting with physiological needs. If the needs of the body aren't met, then we can't pursue more intangible needs like love, truth, security, and self-esteem. My little girl needs food, and if she doesn't get it, the alarm goes off and she responds (usually about 3 AM). Once she gets those needs met, a peaceful bliss settles throughout our household. Smiles galore.

So how do we make our clients smile? Meet their needs. They could care less about the 50-day moving average and how long their appraisal is going to take. They are looking for shelter. 4000 square feet of it in some cases, but shelter none the less. And if we can create a way for them to get this or stay in this home, we are going be successful. We are the ultimate pacifier in how we handle the process and the information we provide our clients. Our words and e-mails are binkies and blankies.

So despite the Taylor, Bean, and Whitaker disaster, slow turn times, narrow-minded underwriters, teaser rates on every Internet pop-up ad, chameleon guidelines, whacked appraisals, and the rest of the chaos we are in the midst of, we can create peace and treat people with respect and attention. I'm drifting off to sleep just thinking about it. Time for some coffee.