Plan Before You Buy A Home

Plan before you buy a home.

When purchasing a home plan for the next ten years. Most homeowners only stay seven years, but the older you are the longer you will stay statistics show. 

Two people close to me: my mother and prior business partner Bill Broza both suffered from strokes in the past years. They have similar dilemmas. My mother owns a two story house in  Laguna Niguel with no downstairs bedroom and only a powder room on the first floor. Bill also lives in Laguna Niguel in a Spanish style two story with only a tiny powder room on the first floor.

A house can be adapted. We reviewed adding a stair lift or elevator but both are costly and unsightly. A stair lift is a motorized rail and chair that attaches to existing stairways. I was concerned that my Mom could easily fall off the lift and be stranded on the stairs perhaps for hours. I looked into adapting each house by adding a elevator. Cost to construct this was about thirty thousand dollars, and because it would change the functionality of the homes and elevator might bring the value down.

Other possible remodeling such as enlarging the downstairs bathroom to add a stand up tub can cost between ten and thirty thousand dollars. Adding a funky bath is not going to help her when she does choose to sell her home.

My mom is set on staying in her home. The cost of care layered with remodeling is prohibitive. Temporarily last year she lived with me.

My point is: for example you are a young couple who may have children in the coming years. Look to what future the subject property may need to be changed to fit the lifestyle.

When the downturn occurred many homeowners could not easily sell their home and make changes. They owed on mortgage loans larger than the value of the home. Life always holds surprises ahead. Planning for them makes it easy when they occur.

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Cute bath just outdated

Did FICO Lie to You?

Old school house

Fair Isaac announced in the news this week that they are now offering a kinder gentler credit score the FICO 9. Who is running the schoolhouse?

 What they did not say is:

They were forced to do this by the Consumer Financial Protection Bureau. Richard Cordray is more powerful than President Obama. If Cordray can get William J Lansing to change his business model, imagine the possibilities ahead...

Fair Isaac Corp. creates products and services that help businesses to automate, improve, and connect decisions to enhance business performance. It provides a range of analytical solutions, credit scoring, and credit account management products... They are used in mortgage lending, commercial loans, employment applications, and information gathering. Consider them the inventor of constantly improving and growing software that snoops, measures and predicts.

How did CFPB get FICO to change how they award points?

CFPB saw inequities in credit scoring for the “underserved.” Perhaps CFPB just wanted some of the secret sauce of exactly how the mathematical models make up and individual’s score from day to day. 

So what changes will now inflate FICO scores?

A bad debt later paid off through collections, that bad debt won't affect FICO scores anymore.

Yesterday I dealt with a collection company for a Borrower. Amy sat at my desk while we called the company that four years ago wrote a letter stating they knew this was not her debt, that it belonged to someone else in another state with a similar name. The collection had been cleared from her credit in 2010. This same collection company now reinstated the account against her name.

We called the owner of the collection company, as his name is on the letter.

“Mr. Norman may I fax you the letter you wrote to me in 2010 that states you researched and discovered this tow truck collection is not mine?”

“Hell no I’m not giving you my fax number. Go take it up with the bureaus.”

“I did Sir but they state your company is reporting this again.”

He hangs up.

The frustration of dealing with clearing an erroneous collection is great. It’s difficult to prove information from years in the past. Victims of identity theft have it even harder.

Any debt relating to medical problems will have less impact on scores. In fact, if the only bad debt someone has relates to a medical problem, those people might see an increase of 25 points or more in their FICO numbers.
This one is important because if you ever went to a hospital, even with health insurance, the bills fly in from all directions. It is easy to miss one.
Fair Isaac will evaluate people with little credit history using a new algorithm that will give them a higher grade.

Steve Brown, president of the National Assn. of Realtors, excited about the new score's potential that he predicted it would "make a real difference in the lives of millions of Americans who have been shut out of the housing market or forced to pay higher mortgage interest rates because of flawed credit scores." Perhaps Mr. Brown is just looking for any good news with the fights NAR has with Zillow ahead, but I digress.

What the news media missed (and the CFPB is probably already planning) is this won’t help consumers. It gives the CFPB a second phase step into regulating the software and hardware that every private and public mortgage lender, bank, credit offer(er) uses.

Fannie Mae and Freddie Mac announced they aren’t going to use FICO 9. They respectively have their own software – DU and LP which lenders access nationwide. Fannie and Freddie are not going to add in updates or new software to allow for FICO 9. Think of it this way: I love Netflix but they aren’t going to allow a Film company to tell them they have to use smell-vision. Also all the direct lenders, banks, credit unions and mortgage companies have twenty different platforms they use that would have to be changed or trashed to add in a new score.

Why would thousands of companies change? Can we expect CFPB will make it so?  Tell me what you think. Tell me your story about errors on your credit.

Fair Isaac is a NYSE traded stock as FICO they are based in San Jose California

Cute bedroom with teddy bears on the beds the kind of dream home everyone wants

Glass house guess I shouldn't throw stones

Fair Isaac is a NYSE traded stock as FICO they are based in San Jose California

C G Barbeau

Protect Your Assets and Credit from Hackers

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PROTECT YOUR CREDIT AND ASSETS from HACKERS

Your social security number should be kept private. The easiest way for a criminal to steal a social security number from you is by going through your trash. Mail sometimes has your number, name, address and account numbers.

Reduce the amount of mail that comes to your home. 

Throw away junk mail in your recycle bin, envelopes and items that are not credit card, brokerage, or asset related. All asset related items should be shredded and separated half in the recycle and half somewhere else.

Pay your utility bills by auto pay online.

Opt out of junk mail and soft credit offers.  HERE is link: https://www.optoutprescreen.com/opt_form.cgi  
My eighty two year old mother has been a victim twice. I reviewed her habits and we came up with a plan to change. Mom likes the comfort of receiving stock statements and saves some for ten years. This information is available without keeping all that paper in her garage. I took the statements and scanned them and put on labeled CD's that she keeps in a secure place. Then I shredded the three boxes and discarded a third in the recycle, a third into my office shredder and kept a third to discard the next week. Seven years ago her brokerage accounts had her social and the full account numbers prominently printed on each page. It wasn't quite as easy to convince her to change her habit of paying for gas with a card at the pump. She doesn't like to carry a pile of twenties in her small wallet. She even dangerous used stand alone ATM machines which are often skimmed. Solution was to open a checking account at a bank down the street whereby she could easily walk up (during the daytime) and withdraw a hundred dollars, and the account doesn't have a large balance. Inconvenient, yes, but she hasn't had the problem occur again.

TIPS: 

Don’t close your existing accounts, that can lower your FICO score. 

Look at the monthly bills and mid month look at the charges online. 

I suggest you DO NOT signup for any service that monitors your credit. DO Not pay for any service that runs your credit every month. This is another source of possible fraud.

There are many ways bad guys can get your information.

Superhero Captain Credit Saver at the Turkey Trot in Dana Point

·         Never give out your social security number to any third-party unless you know they need it (e.g. a credit application or mortgage loan). Medical offices should not be using your social as I. D.

·         Before handing over your social security number to any company, ask if it will ever appear on a document they send you in the mail. Also find out how it is securely stored on their servers so it will be protected in case of a hack. All systems can be hacked (Target is an example, and many banks don't publicly report being hacked.)

·         Avoid entering your social security number online unless you are absolutely sure you're on a secure connection and dealing with a company you trust. If you're not, call them to verify or don't do it.

·         Set up activity alerts on your accounts. Most bank and credit card online accounts let you set text or email alerts for activity, such as charges over a certain limit.

·         DO NOT USE BILL GUARD, CREDIT SESAME, FREE CREDIT REPORT.com, Mint, Life lock, TRUSTD ID… none of these services are there to protect you. They hold your information in the cloud, on paper and are just as likely to be hacked as anyone else. Some guy in Kazakhstan and Mongolia will be able to get in with your user name and password tomorrow.

·         DO NOT USE A CREDIT CARD OR DEBIT CARD EVER AGAIN AT SHELL and CHEVRON gas pumps. Perhaps all gas stations are targets of the Armenian Mafia and organized crime in India and elsewhere. CHEVRON and SHELL will tell you a bogus story about how they have identification bar code tape covering the computer box on every pump thus preventing skimmers. This is a joke. The criminals can get your debit code password by a remote camera and the electronic strip on the card is duplicated sometimes thousands of times. Use cash at gas stations. IF you MUST use a card, pay inside. The register inside the store is manned by a person, and assuming they aren’t the gangster at least there is some protection from skimming your card.
    If you use a debit card, NEVER leave a large balance sitting in the debit account. Don’t choose overdraft protection. Transfer small amounts from savings or deposit small checks as needed.

·         CHANGE YOUR PASSWORDS.
    Don't carry your social security card in your wallet

IF you have been compromised:

Notify the police and FTC, and keep the report

Notify your banks, credit card companies, the IRS and social security office IN WRITING and call.

Putting a fraud alert on your credit with Trans Union, CBI and Equifax will slow down a thief but it doesn’t stop the pretty teenager at Bloomingdales from opening a fraudulent $1000 line for the criminal to buying a Chloe purse and then return it for cash.

Identity theft is painful, messy and time consuming. It can crash your FICO score and make it difficult to get a mortgage.
As always I am happy to answer your questions and help you fix your FICO for free.