US Loan Auditors Applauds California Attorney General Jerry Brown’s Crack Down on Phony Loan Audit Scammers

Scam Artists Request Upfront Fees, Property Title Transfers and Escrowed Mortgage Payments

SACRAMENTO – February 25, 2010 – US Loan Auditors announced today that they are endorsing California Attorney General Jerry Brown’s crack down on “phony loan audits” and “loan modification” scam artists by warning California families that scammers are out to steal their hard earned homes and money.

“It is a shame that people would setup a storefront and call themselves a foreclosure relief agency just to steal from local families,” said Shane Barker, one of the founders of US Loan Auditors. “It is absolutely critical that consumers do their research into the company they are working with and extensively check references before assuming a firm has experts. We have never done, and will never do loan modifications. Our audits are specially designed for attorneys to take right into court.”

US Loan Auditors is not a loan modification firm, but instead is specialized in using the science of forensic loan auditing to help victims of predatory lending, and their legal counsel, uncover violations during the loan documentation or loan origination process. Customers can rest assured that the principals of the firm have extensive mortgage industry experience and the company backs up its expertise by offering a free upfront consultation for their forensic audit services.

“Our audits are not performed with a loan modification in mind,” Barker said. “We do the forensic loan audit to help give homeowners the leverage they need in court, not for a loan modification. Beware of companies promising big results after illegally collecting a large upfront fee.”

Along with a large upfront fee, scam artists may request the transfer of the title of the house to the “rescue” firm; making the mortgage payments to the scammer instead of the lender; and even prey on people that sign paperwork without carefully reading the documents or having an attorney review them.

“Unfortunately, some people are becoming victims twice,” Barker said. “Please be aware of the warning signs of a scam artist and take steps to protect yourself, your home and your family from further risk.”

An estimated 80 percent of the homeowners with one or more of the following; adjustable loans, pick a payment or option ARMs, non speaking or limited English speaking, or stated loan transactions, may have been victims of predatory lending.

For more information about US Loan Auditors, visit them online at www.usloanauditors.com.

Most major banks and other financial companies have announced big jumps in bad loans this year. The credit issuers put a lot of trust in their credit scoring models and at the end of the day no one really knew how these loans would perform in a stressed environment. And, depending on whether or not there is another shoe to fall economically, such as in commercial lending, things could get worse.

Credit score models have become an integral part of the financial system and have been used extensively since the 1990s. About 70% of the home loans issued, since then and nearly all of the $2.7 trillion in credit card, auto, and personal loans outstanding were made using a customer’s credit score to determine how much to lend and at what interest rate. Credit scoring is also an important tool for investors who buy pools of these loans, because it allows them to evaluate hundreds of loans in minutes.

The problems have not been restricted to home loans. The problems have now grown to include credit-card loans to customers and not just those with poor credit histories, called sub-prime borrowers. The models underestimated the impact of an economic slowdown on them. Sub-prime borrowers are affected disproportionately by many economic factors. They tend to have the highest debt-to income ratios because they are the last to get hired and the first to get fired, unless they are self-employed and that has dangers as well for income. Regulators are getting worried about credit scoring, especially the way it has been used to pump up lending. With more riding on credit scores than ever before, a new financial services field has opened up to help would-be borrowers improve their ratings to get lower interest rates. Did you know there are few checks on the accuracy of the credit report data? Three credit bureaus, Experian Information Solutions (formally once known as TRW), Equifax (EFX), and Trans Union (TU), each keep account information on approximately 295 million customers and collect about 45 billion pieces of information annually. This information is then sold to third parties, who use it to create credit scores and to lenders who use it to base lending decisions and interest rate quotes.

The information may be and usually is (with a 70% error rate in credit reporting) incomplete because lenders aren’t required to report all of the consumer data to the credit reporting bureaus. Furthermore, the credit reporting bureaus don’t check the credit information before it is listed on the credit report. Unless consumers complain the credit bureaus continue to report the information as if it were true and valid. No one has determined what percentage of credit report data overall may be flawed. All we know is that 70% of the credit reports generated have inconsistent and unverifiable information and that 82% or more of the people who have those credit reporting files now have at least 1 mark of derogatory information showing on their credit report.

We should all be worried and concerned.

Randall W. Britt

There are two methods for paying off your credit cards. One is to go through the Offer in Compromise process, whereas you make settlements one by one as you save for a one-time payment. This requires the most discipline as the money is always on hand for those unexpected “emergencies”

The second is to repay the debt through a structured repayment plan. The question now is:
Highest interest rate first?
Paying off the credit card with highest interest rate will save you money in the long run, especially if the highest interest rate credit card also happens to be the card with the highest balance.

When the highest interest rate card also has the highest balance, it will take the longest to pay off.

Or lowest balance first?
There is immediate benefit to paying off the credit card with the lowest balance first. The balances are easier and quicker to pay off and when you finally pay off a bill, the feeling of accomplishment is motivation to keep you going.

Whichever plan you begin, make sure that you can stay the course!

Not long ago, it is was common to have a wallet or purse filled with perhaps a dozen or more credit cards. As a matter of fact, this great land of opportunity is practically run off of credit. With the cost of housing increasing along with the cost of food and merchandise it is understandable why credit is needed. Borrowing is “in”. People ranging from the young to the retired proudly flashed credit cards such as “Visa”, “MasterCard” and “American Express” at the stores and over the Internet. Not so much today with the tightening of credit and the rising interest rates. Today, many of those same people are left strapped with burdening debt that they cannot manage.

WHY NOT JUST PAY CASH?

Back In the good old days, everybody wanted to live the “American Dream”. This was to start your own business, purchase your own home, and then work towards the day that you could invite all of your friends over for a “burn the mortgage” party upon your final payment. What an event that would be, but the reality is very few people were ever able to throw such a party. In fact the average American can’t pay cash for a car let alone a house without many months or in the case of a house years of saving.

Today most people are willing to pay interest to have their car or television right now rather than wait until they have saved up enough to pay cash. And, with every payment made the borrower is building a relationship with the lender that will report positive history to the credit bureaus.

Cash is no longer considered to be “king”.

BENEFITS OF CREDIT

The basic benefits of credit are obvious. Credit enables you to have just about anything you have been dreaming of, because just when you almost had enough money saved to make the purchase along would come misfortune to take most of your funds if not all of them away. Credit allows us to buy cars that we would otherwise not be able to purchase using cash. Without the benefits of credit most of us would have to rely on a friend or perhaps the area rapid transit authority just to get around town. When cash was king, there were a lot more hitchhikers.

And, if you ever plan to stop renting credit will make it possible for you to own your own home. Aside from a new car or home credit will afford you the luxury and convenience of purchasing goods from a seemingly endless list.

Credit allows for convenience and quick navigation through our busy lives as we move around at a faster pace than ever before.

Any remaining accounts will need the same type of investigation, but towards the balances reflected, to include an audit of any additional fees and interest. These investigations are conducted to ensure that the accounts conform to the established guidelines and statues of the; Federal Fair Billing Act (FBCA1974 revised 2002).

Then after these events, which is the process of credit and debt remediation, can one decide if it is possible to pay your way out of debt and how long it will take.

Bad debt is commonly bought and sold for much less than the original amount owed. If you see that the amount the collection agency is billing you for is more than the amount you owed the creditor, keep in mind that there are fees generally added to the account for processing and interest. It is not uncommon to have multiple collection agencies listed on a credit report all showing information in an effort to collect.

There are many ways to deal with collections. The most important thing to remember is that an un-paid collection is as damaging to a credit report as a paid collection in the credit scoring model. There is strong motivation for the collection agency to collect not only the added fees, but also the full amount of the account.

The collection agency account representatives are generally paid a commission on the amount collected, hence the higher amount that you pay, the higher the amount of commission earned. Negotiation is the only tool for resolution that most favors the consumer. Our years of experience negotiating with collection agencies and affiliated services has proven over and over again that our negotiation program assures you pay the least amount possible and achieve the highest credit score benefit.

It is our mission to first verify the collection account information, secondly, see that clients pay the least amount to settle the collection account and then work to eliminate the collection account information from the credit file.

1. No interest rate increases for the first 12 months of your credit card.
You can enjoy your interest rate for at least the first year after opening your new account with two exceptions.
First, your rate could increase in the first year if the creditor disclosed a rate increase when you opened the account. Second, if you don’t make the minimum payment within 30 days of the due date you’ll be subject to a penalty rate increase.
Other than that, credit card issuers can’t increase interest rates on existing balances except in certain situations.
· A promotional interest rate has expired.
· Credit card issuers must have notified you before the start of the promotional rate how long the promotional rate would last and what the interest rate would be when the promotional rate expired.
· Promotional rates must last at least six months.
· Your credit card has a variable interest rate that the credit card issuer doesn’t control and can be easily viewed by the general public.
· You finished a hardship program or had a hardship program cancelled. The increased interest rate can’t be higher than what it was before you started the program. Additionally, you must have been notified before the start of the program what the interest rate would be if the program was completed or cancelled.
· You were more than 60 days late on your minimum credit card payment. If your interest rate increases because of late payments, you should receive a notice when the interest rate increases letting you know why the rate increased. If you make your minimum payment on time for the next six months, your card issuer is required to lower your interest rate.
If you open a new credit card account, your credit card issuer cannot raise your interest rate within the first 12 months of your account, except in the situations described above. Rate Increases Must Be Reviewed Bi-Annually. After an interest rate has been increased, the credit card issuer must review the account every six months to determine whether the rate can be lowered. If the factors that first triggered the interest rate increase have changed, the card issuer must lower the interest rate.

2. No interest rate increases on pre-existing balances.
If and when your interest rate does increase, the credit card issuer can’t retroactively apply the increased rate to existing balances. Only purchases made after the increase goes into effect will be subject to the new interest rate.

3. Rate increases require a 45-day advanced notice, even if it is a penalty rate increases.
Credit card issuers currently get 15 days to notify you of an interest rate increase and they don’t have to notify you at all for penalty rate increases. The increased time for an advanced notice will give you more time to respond to an interest rate increase. Rules regarding interest rate increases take effect August 20, 2009.

4. No more double billing cycle finance charges from credit card issuers.
The double billing cycle method of calculating finance charges allows credit card issuers to charge interest on balances you’ve already paid. The Federal Reserve has outlawed this expensive practice.

5. Limited fees for subprime credit cards.
Subprime credit card issuers can no longer charge up the cardholder’s credit limit with fees. Now, fees are limited to 50% of the credit limit, but only 25% of those can be charged when the account is opened. The remaining fees must be spread over at least five billing cycles.

6. Billing statements from credit card issuers must be sent 21 days before payment due date.
The current rule requires billing statements to be sent within a reasonable time for the consumer to make payment. The new rule puts a time period on that “reasonable time.”

7. Payments received by the credit card issuers before 5:00 pm on the due date are on time.
The Federal Reserve recognizes that credit card issuers must have a cut-off time for accepting payments and sets that time to 5:00 pm. A specify a time zone was not identified, so sending your payment early is still a good idea.

8. Payments received by the credit card issuers the next business day after a weekend or on a holiday are considered on time. If the due date falls on a weekend or holiday and your credit card issuer doesn’t process payments on that day, your payment is still considered on time if it’s received by the next business day. For example, that means the Monday after a weekend or December 26 during the holidays.

9. Credit card issuers must process payments above the minimum to the highest interest rate balances. The minimum payment would go toward your low-rate balance, while the remainder of your payment must be applied to the balance with the highest interest rate. This reduces your interest cost over the life of the credit card versus the alternative of applying the complete payment to the low rate balance.

10. Credit card issuers billing statements must detail the cost of making the minimum payment. Credit card issuers are required to list the number of months it will take to pay off your balance with minimum payments along with the total interest you will pay.

It also requires creditors to provide a written notice to consumers before they cosign obligations for others about their potential liability if the other person fails to pay. Finally, it prohibits one method of assessing late charges. The Rule applies to consumer credit contracts offered by finance companies, retailers (such as auto dealers and furniture and department stores), and credit unions for any personal purpose except to buy real estate. It does not apply to banks or bank credit cards; to savings and loan associations; or to some non-profit organizations.
The Rule prohibits creditors from including certain provisions in their consumer credit contracts. Specifically, credit contracts no longer can include provisions that:

* Require you to agree in advance, should the creditor sue you for non-payment of a debt, to give up your right to be notified of a court hearing to present your side of the case or to hire an attorney to represent you. (These clauses were often called “confessions of judgment” or “cognovits.”)

* Require you to give up your state-law protections that allow you to keep certain personal belongings even if you do not pay your debt as agreed. (These clauses were called “waivers of exemption.”) State law generally allows you to keep your home, clothing, dishes, and other belongings of a fixed minimum value. However, when the debt incurred is to purchase an item and that item is used as security for the debt, it is permissible under the Rule for a creditor to repossess that item.

* Permit you to agree in advance to wage deductions that would pay the creditor directly if you default on the debt, unless you can cancel that permission at any time. (These clauses were called “wage assignments.”) However, a wage or payroll deduction plan, through which you arrange to repay a loan, is a common payment method and is permissible under the Rule.

* Require you to use as collateral certain household and uniquely personal items that are of significant value to you but are of little economic value to a creditor. Such items include appliances, linens, china, crockery, kitchenware, wedding rings, family photographs, personal papers, the family Bible, and household pets. (These were called “household goods security” clauses.) However, if you borrowed money to buy any of these household or personal items, and use the items as collateral, the creditor can repossess the purchased item if you do not repay the loan.
What notices must be given to cosigners?

When you agree to be a cosigner for someone else’s debt, you are guaranteeing to pay if that person fails to pay the debt. The Rule requires that you be given a notice that explains the responsibility you are undertaking. Under the Rule, the cosigner notice must say:

You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn’t pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.

You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount.

The creditor can collect this debt from you without first trying to collect from the borrower.  The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.

This notice is not the contract that makes you liable for the debt.

* Depending on your state, this may not apply. If state law forbids a creditor from collecting from a cosigner without first trying to collect from the primary debtor, this sentence may be crossed out or omitted on your cosigner notice.

This notice is not required when you receive benefits from the contract, such as when you buy goods, take out a loan, or open a joint credit-card account with another person. In these cases, you would be a co-buyer, co-borrower, or co-applicant (co-cardholder) rather than a cosigner. Therefore, the creditor would not be required to provide the notice.

How can late charges be assessed?

A creditor can charge a late fee if you do not make your loan payment on time. However, it is illegal under the Rule for a creditor to charge you late fees or payments simply because you have not yet paid a late fee you owe. This practice is called “pyramiding late fees.” Under the Rule, this means that if you do not include the late fee you owe with your next regular payment, it is illegal for a creditor to subtract the late fee from your payment and then charge you a second late fee because the current payment is insufficient. For example, your loan contract may state that your monthly payments are $100 and that you will be assessed a $10 late fee if you pay after the grace period. If you make your $100 loan payment after that time and you do not include the $10 late fee with your next $100 payment, a creditor cannot first deduct the missing $10 late fee from the $100 payment, claim you have now paid $90, and then charge you an additional late fee. But, if you skip one month’s payment entirely, the creditor can charge late fees on all subsequent payments until you bring your account up to date.

Sweeping new laws took effect on February 1, 2010 to curb abuses to consumers…… ]]> http://www.creditfixed.com/credit-and-bad-debt/credit-practices-rules/feed/ 0 http://www.creditfixed.com/credit-and-bad-debt/credit-practices-rules/