Can Your $1,400 Relief Money Get Seized By Creditors?

Time Urgent Message!

The government relief deposits have started going out now. The $1,400 funds are being released in batches.

If you owe money to a collection company for an unpaid bill, the collector is allowed to seek a garnishment of your $1,400 Covid Relief check. The previous stimulus checks could not be garnished; but for this round, it is legal. There is no protection this time to prevent a seizure or garnishment.

If you owe your bank overdraft fees, the bank is allowed to automatically collect from your government deposited funds.

If your money is coming by check, then you can protect it from being seized by cashing the check instead of depositing it.

If your money is coming by direct deposit, you should keep a vigilant watch. If you need money to pay rent, a mortgage, your electric or cell phone bill, or to buy food, then you want to withdraw that money and take care of those necessities before a collector grabs it.

If you don’t have collectors or back-owed debt, then you can breathe a sigh of relief. My advice is to use the money for its intended purpose: TAKE CARE OF YOUR BILLS. Pay off credit cards. Pay off your car loan early. Pay whatever account you are being charged high interest on. Fill up your gas tank and get the oil change.

If you have credit card balances, do not be foolish and spend the money on new shoes, clothes, fun toys, and other non-necessities. Don’t blow your money!

Don’t use the money to go into debt! In other words, don’t use it as a down payment on a car or other expensive item that you will end up paying interest on. Don’t give it to a scammer, because they are out thick as thieves right now.

If you have outstanding collections, you can use the money to negotiate a settlement. Make sure you get the offer in writing, make sure the creditor agrees to remove the negative item from your credit file upon the receipt of funds. To learn how to negotiate, including scripts on what to say, read Chapters 15 and 16 in Repair Your Credit Like the Pros: How credit attorneys and certified consultants legally delete bad credit and restore your good name. It is available here.

Please pass this urgent message onto to others who might need this information. Thank you and have a lovely day!

Buying a House With Imperfect Credit

If you’re tired of paying rent when you could just as well be paying for your own home, but you are concerned about imperfect credit, this message is for you.

Be encouraged, perfect credit is not required to become a home owner!

The Federal Housing Administration has a loan program for good people who fell on hard times in the past. Or made mistakes in the past. Or who have a debt ratio a little too high to qualify for a conventional bank loan. Here are the facts.

Seven Quick Facts About the FHA Loan

  1. Down payment required is 3.5% of the purchase price. On a $350,000 home, that would be $12,250. The down payment can be a gift from family, from your own funds, or from a down payment assistance program offered by your state. (Each state has their down DPA protrams.)

2. FHA does not require a certain credit score. Many lenders go down to a 600 score. Some down to 580. Some lower. The best way to find those lenders is to go to a local mortgage broker who can shop 30 lenders for you.

3. You can get a FHA loan 24 months after a Chapter 7 has been discharged. For a Chapter 13, there is no waiting period after the discharge as long as payments were made to the court on time.

4. You can ignore medical collections.

5. Non-medical collections up to a total of $2,000 can be ignored.

6. Open collections or judgments where you have a monthly payment plan, and have been paying on time for six months, is okay for getting an FHA loan.

7. The Seller can pay some or all of your closing costs.

If this all sounds encouraging, but you aren’t quite there yet, don’t be discouraged. Get your copy of the self-help credit repair book that explains how you can Repair Your Credit Like the Pros.

Knowledge is power and power brings success. Get started now, and who knows, you might be opening the door to YOUR OWN HOME (!) before the summer is over.

(Many thanks to a book reader for sending this photo.)

Remember these two rules: (1) Get preapproved for financing before house shopping. (2) Get a professional real estate agent to represent you, as the buyer.

Buying a House with 3% Down

My favorite loan for people who need a minimal down payment is called HomePossible or HomeReady.

It is a 30-year fixed rate conventional loan. HomePossible is backed by Freddie Mac and HomeReady is backed by Fannie Mae. These loans have the identical requirements and identical interest rate, so either one is awesome.

Here’s why I love this loan:

  1. Only 3% down and the seller can pay some or all of your closing costs.
  2. You get the same interest rate as if you were putting 20% down.
  3. You get a reduced monthly mortgage insurance payment.

Requirements:

  • You must show income to cover the total mortgage payment (includes property taxes and insurance) plus your monthly obligations that show on the credit report with a 43% Debt-to-Income ratio. This is very reasonable.
  • If you are a W2 employee, you must show a two-year history of working. It’s okay if you switched jobs.
  • If you are self-employed, you must show 24 months of being self-employed and show sufficient Adjusted Gross Income on your 1040 tax returns.
  • You must have a credit score of 620+ for your middle score of three. The lowest score is thrown out.
  • A former bankruptcy Chapter 7 must be discharged for four years.
  • Your household income cannot be more than 80% of the median income for your area. This is often surprisingly high.
    For example, if the home is in Fairfax, VA, you can make up to $95,920.

To check the income limit for your area, you must input an actual address into the search space. You can check it here.

If your income is too high to qualify, then take the 5% down conventional loan instead.

If your credit score is too low to qualify, take the 3.5% down FHA loan instead.

REMEMBER: Always get preapproved with your mortgage broker before making an offer on a property.

REMEMBER: Get a licensed real estate agent to present your offer and negotiate terms. The Buyer’s agent is free to you (paid by the seller), and everyone needs the advantage of a professional real estate advocate to avoid costly mistakes.

Credit Repair Tip: Is your settled account still showing negative on your credit report?

This is a tip for people who negotiated a settlement on a collection.

If you and the collector agreed on a settlement amount, and then you paid as per your agreement, then you have “paid as agreed.” Simple as that.

Best case is that you got in writing from the collector that they would delete the account from your credit report upon receiving payment in full.

But what if you forgot to get that all-important letter? Or what if you did, but the credit bureaus are still reporting it (and it’s been over 30 days)?

You can write a letter to the credit bureaus that says this:

<Company Name> made an arrangement with me regarding account # 1234. I PAID AS AGREED. This account was not delinquent as shown on my credit report; but was, in fact, paid according to our Agreement. This account is a violation of FACTA, because it is not accurate nor is it fair. Delete this account from my credit file permanently.

The Fair and Accurate Credit Transaction Act is in violation when erroneous and/or unfair information is posted on your credit report. You have the right to request an investigation and correction of anything you believe is in violation.

For detailed information about repairing your credit and restoring your good name, please see Repair Your Credit Like the Pros: How credit attorneys and certified consultants legally delete bad credit and restore your good name

“Does Illness Impact My Ability to Get a Mortgage?”

This is a timely question. A person might be afraid to ask their lender, for fear they might jeopardize their ability to get approved for a home loan. So, I will answer here, publicly, for all.

No, a loan officer may NOT inquire about your health. It is illegal to ask if you have an illness.

Similarly, it is illegal to ask if you are pregnant or plan to get pregnant in the future.

However, if your W-2 income has recently changed, then that might be an issue. Does your income still qualify for the loan at the new, lower rate of pay? If so, then you should have no problem with debt-to-income ratio approval.

If you lose your employment and income, then your approval can and probably will turn into a denial. Even if previously approved. Even if it’s 10 minutes before the loan is to close. The lender has the right to deny the loan at any time if it looks like you cannot make the payment.

If you are a 1099 employee or self-employed, then declining income is a significant issue. Lenders are very concerned right now with ability to pay if your business has taken a hit due to the economy. For approval, “worse case” is used when calculating income for approval. This would be something to address with your loan officer right up front so you don’t waste anyone’s time.

I hope this helps explain that an illness does not directly affect your ability to get a mortgage. Only if your income changes does it become a concern to the lender in order to verify Ability to Pay.

No more Equifax, Experian, TransUnion?!

Are you fed up with the Big Three credit bureaus? Would you like someone to lock them up, shut them down, and throw away the key? It could happen.

In case you aren’t aware, President Biden has proposed closing these private credit bureaus and replacing them with ONE mammoth credit bureau run by the Consumer Finance Protection Bureau (CFPB).

Instead of having three credit scores, you would have only one score. (No more throwing out the lowest score and going by the middle score for a home loan.)

The CFPB’s president is appointed by the president of the United States. Each four years, the bias could change from Democrat to Republican and vice versa. How would this change the rules of scoring?

Would having one government-owned and government-run credit bureau promote fairness and equality, and prevent errors?

Would it make disputing errors more difficult? We all know how slow government agencies run compared to private enterprises.

Let’s keep our eyes on the news to see what happens. Meanwhile, I am interested in YOUR opinion. And since we’re still dealing with the Big Three, if you need help improving your credit, please see here.

Available on Amazon

Beware of Mixed Credit Files

It’s a good thing King Louis XVIII didn’t have a credit file with Equifax, Experian, and TransUnion; because if he did, chances are good that one of the 17 other King Louis’s credit accounts would have been mixed in with his.

If your name is similar to someone else’s name, if you have a common name, if you are a Sr. or Jr. or have numerals after your name, you should check your credit report. Another individual’s unpaid bill, collection, or tax lien might be showing up on your report and dropping your credit score.

If you stroll happily through life without checking, you could be paying too much for auto insurance premiums, homeowner’s insurance, and credit card interest rates.

You should recognize each account as your own.

In addition, your name should be exactly correct.

To order your free annual credit report, send a one-sentence letter that says, “Please send me my free annual credit report.” One letter gets you all three credit bureaus’ reports. With your letter, include a copy of your photo ID (driver’s license or government-issued ID card) and one other piece of ID that confirms your correct name and mailing address.

Send your request by regular U.S. mail to:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

No need to send by certified mail. If you have a freeze on your credit, that does not affect your ability to get your annual report through the mail.

The law allows you one free report per year for a reason: errors on credit reports are all too common.

Do Homeowners Need Title Lock?

I am a homeowner with a lot of precious equity in my property. Here is why I am not buying title lock, even though I have experience with this type of situation.

I purchased title insurance when I bought my house. All lenders require it and all smart cash buyers also purchase title insurance. This protects your title from false liens, judgments, errors, omissions, false heirs, or a criminal who tries to file a false quit claim deed on your property.

That is my legal protection, and it is all I need.

The new “title lock” services are nothing more than monitoring services. They check public records (which you can also do for yourself), and then if they see that you were that extremely rare property owner in which a criminal filed a false quit claim, they alert you. But at that point, the filing is already done. (No, it doesn’t mean they now own your house!)

The title lock service is not clairvoyant to alert you ahead of time that a criminal is planning to file a false claim. Nor do they have any way of stopping it from happening. They can only tell you it happened.

What if it does happen? The title insurance you and I purchased when we bought our homes protects us. The title company is responsible to fix the error and pay whatever costs are involved in doing so. Just like fire insurance, the insurance company pays for damages — but with title insurance there is no deductible, so even better.

A couple of criminals posing as friends tried to steal my father’s house. He owned it free-and-clear. He had Alzheimer’s. They figured they could Quit Claim his property to a so-called charity, one they set up with themselves as the owners and trustees. One that no one ever heard of, because they just set it up for the purpose of stealing his half million dollar home. They filed the Quit Claim with the King County Court Recorder. Anyone can file anything; it doesn’t make it legal.

He had purchased title insurance decades ago with First American Title in Seattle. The title representative looked at the Quit Claim and said it was fraudulent. Which was obvious.

As my father’s legal guardian, I was able to stop that illegal nonsense. In this case, I also saw they stole other things from my father, so I hired a good attorney and we sued.

Back to the title lock services: As far as I can tell from Internet searches, it is unanimous among real estate attorneys and among real estate brokers who have been in business for 30+ years: title lock monitoring is a waste of money and does you no real good. You can always monitor your own public record if you’re nervous about being that rare (and usually it is the elderly who are targeted) victim.

If you’d like to read more about why it’s a waste of money, here is a good article with video by Fox5 Atlanta.

The penalty for filing a false Quit Claim or false lien ranges from one to 20 years in prison.

How Do Politics Affect Interest Rates?

Where are mortgage interest rates headed in 2021, and how do politics affect rates?

Historically, who is elected President does not change interest rates; however, investors are influenced by major historic events, such as political unrest, war, and a pandemic.

An easy-to-understand rule is this:
GOOD economic news = higher interest rates
BAD economic news = lower interest rates

Also: The perception and expectation of investors = what’s good and bad.

Earlier last week and this week, when president-elect Joe Biden was declared the winner and when the Senate and House of Representatives gained Democratic seats to match the party of the incoming president, that was perceived as good economic news, because unity means work can get done. Interest rates took a sudden spike upward. The suddenness and severity of the increase was a bit of an over-reaction and rates inched downward on Thursday.

This morning, Friday 15th, the stock market took a hit, which is bad economic news, and rates went down, but only very slightly. It looks like rates are on the way to recovering from the sudden spike — but probably not 100 percent.

Another rule to know: Rates go up faster than they come down.

The vaccine rolling out is perceived as good economic news, because when more people can get back to work, that helps the national economy.

Where are Mortgage Rates Headed in 2021?

The expectation is that interest rates will remain low, but not as low as they were at the end of 2020. The bottom is behind us. By spring, we expect rates to be higher, but still good. How much higher? Perhaps an increase of .25% higher.

That said, no one knows for sure what will happen. No one predicted the pandemic and further lowering of mortgage rates in 2020. The expectation was for rates to gradually increase, but instead they decreased.

My personal expectation and prayer is for 2021 to be a better year (because the pandemic will lessen), for small business to open again, for people to get closer back to their normal lives, and for more Americans to realize the dream of homeownership.

A New “Hot Topic” Scam

Scam artists look for hot topics and then create scams out of them. For example, here’s a new one I don’t want anyone to fall prey to.

The liar tells you that you can get your name on a “fast track” or “priority list” for the vaccine. They tend to target older people but might contact anyone via online or a phone call.

Sometimes they ask for a fee to get the vaccine sooner. Sometimes they are just collecting your personal information. Either way, THERE IS NO FAST LIST. It’s all a big lie.

Here’s a two-minute video that explains it HERE

Please make sure your family and friends are aware there is no such thing as a pay-for-priority list.

Let’s shut out the scammers and keep our money and information safe.