Justin Williams - Loan Officer

As many lenders out there are eliminating loan programs for the self-employed customers/derive their income from mostly from commissions, theres still hope.

I still feel like if you maintained good credit these borrowers should still have a chance to get a simple, fast, competitively-priced home financing done.

You’ve built a good credit rating. Now you can reap the rewards with convenient, streamlined refinancing from the Wells Fargo Mortgage Express reduced-paperwork option.

When Credit Counseling customers there are a variety of options that I normally offer my clients. The scenario I want to talk about is when a customer has little or no credit and needs to start building a 6+ month history of satisfactory trade lines. The other scenario for credit counseling of having tons of credit but are late, in collections, and over the limit will not be discussed for this scenario. That's a whole new ball park for that one. One option is building credit through pre-paids. Now you have to be careful when giving this advice, because there are alot of pre-paid cards that may not fit in the credit building category you want your customer in.

The Two options are Pre-Paid Credit Cards and Secured-Credit Cards

Secured Credit Cards

A customer can apply for a credit card by going through a Secured Credit Card. A credit card linked to a savings account. The funds contained in the account may be claimed by the company issuing the card in the event that the holder fails to make the necessary payments. This arrangement allows the issuer to take on riskier credit card applicants. The credit limit is usually between 50%-100% of the secured deposit.

The pros

• Guaranteed approval
• No Credit checks
• No minimum income or bank account required
• Reports to all Three Major Credit Bureaus

The Cons

• Minimum deposits can range from $300-$500
• High Interest Rates ( What do you expect for bad/no credit)
• Fees can be high especially if you are not paying off the balances early and consistently.
• Maximum Deposits can range from $1,000-$5,000

Prepaid Credit Cards

Prepaid Credit Cards are like the Visa Sharecheck Cards you see on commercial a lot. This is where you have to be very careful when recommending this option. 90% of prepaid credit cards out there don't report to the 3 major credit bureaus. They are just mainly there if you don't want to open up a bank account and would still like all the functionality and convenience of a regular charge card.The rush card is a very popular card that is basically like a sharecheck visa card option with the lowest fees I seen around. For those of you who don't know Russell Simmons was in a group called Run DMC, if you remember :) I promote this card because he is an activist for the less fortunate and he donate's his profit to charity's all the time. https://www.rushcard.com/

Reporting to the Credit Bureaus

There are however prepaid credit cards out there who do report to credit bureaus. The account now prepaid credit card does report to a credit bureau but heres the catch they only report to PRBC credit bureau. This is not part of the 3 major credit bureaus out there, although fannie mae has accepted PRBC reports since december of 2006. This shouldn't really matter anyways because a FHA/Fannie Mae approved lender can still qualify you based on Non-Traditional Credit like utility payments and other non-reporting reports that the PRBC qualifies for. So in this case I wouldn't recommend get a prepaid card just because it reports to the PRBC bureau, your better off with a FHA approved lender who will use your non-traditional credit for qualification purposes anyways. As far as other loans like Auto and Credit Card Apps, PRBC is great because most of these lenders won't work up a non-traditional history to qualify you and if you provide them with a PRBC report more than likely they will get the supervisor approval :)

I have only found one prepaid card that reports to the major credit bureaus but heres the catch it's only to 2 major credit bureaus, Transunion and Experian. This however still helps your 2 out of 3 scores. The prepaid card name is Eufora (https://www.eufora.com/creditbuilder.jsp) Now this card is pretty standard when comparing to the other prepaid fees and terms but the key difference here is the reporting to 2 major credit bureaus.

The pros

• Use just like a Credit Card / Accepted almost everywhere
• Fast and Convient
• Fast Access to cash without opening up a bank account
• You control your spending limit
• 100% approval / No credit checks (You are required to give out your SSN due to the laws passed after 9-11)
• Limiting Reporting to the Credit Bureaus (PRBC or 2 out of 3 Credit Bureaus)
• Easy Access to reload funds. Some can even be found at Convenient stores and grocery stores.
  

The cons

• Watch out for the fees might be more than if you go with your current bank
• Only will report to the credit bureaus the amount of your annual membership divided by 12. Not great if your trying to show a high balance increase to creditors.
• FEES, FEES, FEES be VERY careful when comparing
  

Hopefully this brief overview can tackle some of the myths out there and provides a good explanation to some of you out there. Thanks for stopping by!

Just-In-Time Loans

Project Lifeline

Project Lifeline Will Help Prime And Nonprime At-Risk Consumers
Secretary of Treasury Henry Paulson announced Project Lifeline on Feb. 12, an initiative created in partnership with Wells Fargo and our other HOPE members Countrywide, CitiMortgage, Chase Home Finance, Washington Mutual and Bank of America.

Through this program, mortgage servicers will send letters to seriously delinquent homeowners (90+ days late) with an opportunity to seek a “pause” of up to 30 days in their fore- closure, where appropriate, if borrowers call and indicate a desire to keep their homes. Getting consumers to contact their lender remains the single biggest obstacle in providing fore- closure prevention solutions. Project Lifeline focuses on out- reach to both prime and nonprime consumers.

The Options

While no single solution will help all at-risk consumers, the combination of Fast-track solutions (for subprime ARM reset customers); increases to Fannie Mae, Freddie Mac and FHA lending limits; FHA Modernization; the economic stimulus package; and case-by-case solutions that lenders discuss with at-risk consumers are all expected to contribute to a reversal of the current rising foreclosure trend.

Options would include a workout, in which the borrower pays extra each month and catches up on the late payments over time, or a modification, in which the rate or terms of the loan are changed. In rare cases, a modification could even include some debt forgiveness if the borrower owes more than the house is worth.

My Review

Although this is just a small and slight step towards avoiding foreclosure, Project Lifeline is another way that Wells Fargo and HOPE NOW are developing solutions to help homeowners. It is critical that we do everything we can to reach out to these homeowners one more time. Avoiding foreclosures is in the best interest of our customers, our company and our economy.