Loan Officer Consultant

I had come across this when asked by another member of WN. I figured I would share it openly for those who wanted a more clear definition. The link to article and the chart is below.

The statute of limitations (SOL) for a delinquent debt is the time limit for the creditor to file a lawsuit. This period starts when the debtor becomes delinquent. The fact that the SOL has “run” (expired) on a particular debt will not necessarily prevent a lawsuit from being filed (via a Summons And Complaint), but the defendant can have the suit dismissed on this basis.

The Statute Of Limitations only covers lawsuits, and SOL expiration does not affect other types of collection action or reporting of the account to credit bureaus. The creditor or collection agency may theoretically continue with letters and telephone calls forever (although third-party collectors are subject to the “cease and desist” provision of the Fair Debt Collection Practices Act.) However, they will generally put much less effort into collecting “Out-Of-Statute” debts, and may give up easily. Out-Of-Statute debts can still be reported to credit bureaus for the time limits specified in the Fair Credit Reporting Act.

Credit cards are generally considered Open Accounts. Auto loans and other installment agreements are Written Contracts

Off the topic of Direct Marketing I have been thinking of alternate ways for LOs to make money while you grind this thing out. You don’t even have to change much about what you do EXCEPT WORK A LITTLE HARDER for your potential borrowers and TURN DOWNS!!!

Think about this for a second……We are all taking more applications now than we have in the last couple years but for most it’s the qualifying the prospects that is the issue. I talk to so many Loan Officers and Brokers alike that just throw that stuff away…….WHY WOULD YOU DO THAT?

Here is what I would be doing if I was a full time LO….

Do which ever marketing I like best and then really really WORK THE LEADS! Work the potential Refi to the bone until there is absolutely no deal there. On all the turn down leads we have all got to start helping these people. There are other ways that may require any Loan Officer to get out and network to help the homeowners in other financial ways….

I would try building a relationship with a credit repair company….I know most of them pay you a commission for the repair job and then they send you the borrower back for the loan after things are fixed. You not only go the extra mile for your client but you also make a little money on the side form the CR company.

Another example would be to learn loan modification. 4 out of 5 applications taken DO NOT qualify for a loan, so in my mind you should try and modify their loan with their current lender and make a small 1000-1500 commission for HELPING your client. Again this was a turn down before and it could be turned into revenue and maybe even a future deal and more than likely a referral or two for another modification. (you would not believe how much home owners talk about not being able to refinance with each other) If you go the extra mile on either of these two ways or even debt settlement or something like that you will be helping home owners the same way, FINANCIALLY, and still be making money as well as building your client base for future.

Sorry to go off on a rant but i see so many people complain about turn downs but really they should be trying to figure out how to try and help them out. There is a lot of money to be made rehabbing or modifying loans as well as credit repair and settlement. START DIVERSIFYING IF YOU WANT TO LIVE AS WELL AS YOU MIGHT HAVE IN YEARS PAST IN THE INDUSTRY!

I’m in hopes this message gets at least one person motivated again, all the negativity does get overwhelming after a while and there truely is a ton of money to still me made in financial services. Lets get on it!

Personal information

• The top part of your credit report has the identifying information. It includes your name, social security number, date of birth, current and former addresses, any employment history reported to the credit bureau, alerts on file and a consumer statement if you have one.

1. Where the information comes from

• Creditors report consumers’ identifying information along with their account information to the credit bureaus, as do public record collectors with public records. Sometimes when inquiries are made, identifying information that’s typed in also gets reported by creditors.

It’s not a big deal if your employment history has no information listed. Iit doesn’t get updated and your employment history is not an important piece of information as social security numbers and names are. They really don’t care who your employer is as long as you’re paying your bills on time.

Credit summary

This section lists your credit account activity and how many closed accounts you have, how many accounts are in good standing and the number of accounts you have currently past due. It also accumulates the different accounts you have, such as mortgage, revolving or installment.

Account information

This is where you’ll find the detailed information about your accounts. It includes all facts about your account, like the type of account it is and when you opened it and also payment information, such as the highest balance and the amount past due.

Inquiries

The CBR separates inquiries that hurt your credit score from those that do not — AKA - hard and soft inquiries. A hard inquirie occurs when you apply for new credit and give permission for a company to pull your credit report. Consumers and subscribers can see these inquiries. Soft inquiries are displayed only to the consumer and can occur when you request your own report or when one of your existing creditors reviews your account.

Collections

These are accounts that have been sent to collection agencies.

Public records

This section lists any bankruptcies, liens, garnishments and other judgments against you. Public record information comes from the courts at every level - city court, county court, state and federal courts.

What is Factoring? Factoring is loaning money to a company against their accounts receivables. Company’s that are not financially strong or just are in a Cash Crunch. What is reviewed? The borrowers PFS, Equity in company, cash flow, how high leveraged he is, the debt to cash flow ratio, Monthly sells, What type of product do the sell and who to and Amount of receivables outstanding. They are looking at the customer and how strong that money coming in is. If the customer is credit worthy, and is their an income trail of money coming in from the client. In other words do they have some good contracts that pay them consistently. When is factoring the option? A. Many times a company may pick up a new account or increase production to an account. They will need to get cash to pay for the needed inventory, payroll, supplies, etc… Many company’s hurt during payroll time, because they are not paid by their clients for 30days+ Factoring can help the business owner get paid for these contracts before the payment date. B. Business owners turn to their bank turn for credit lines. If these These clients are turned down from the bank due to low net worth or taxes showing a large loss for example. In this case Factoring Is good option. The bank will not look at the current contracts or new contracts made, but Factoring Companies will. C. Maybe the borrower has an existing credit line with the bank can not go high enough. Factoring can pay off that line and add to it. D. Also if the borrower has a credit line with their supplier but they will not increase their line because they have not been in business long enough. *Great idea for the client: Factoring cost 2% and if they client gets a 2% discount for paying early then factoring pays for itself. They would be borrowing money for free. If they negotiate well they can get a 3% discount and make 1% using the factoring company. E. (This is my favorite) If you have a Commercial borrower looking to refi their business to get cash out, and are denied because the property is not able to be refinanced. Factoring becomes an awesome option. *Another plus in factoring is pay out to you. Most factoring Lenders will pay a monthly fee ( like a Maint. fee or Activity fee ) to you as long as the client continues to use their services. Many times a company will continue this service for a long period of time because spending 10% or so is worth getting their money early. At the end of the year they add this to the loss column and write it off. A Good Example of the above.I have a client that is a tile company. They just landed a big contract with a major Nationwide chain that will be selling their tile. The downside is that immediately they need to stock up on all of this tile that that will be for sell. This is a huge order. But when the new contract comes calling they can’t say ok, I’ll order it and expect it in 30 days. Their product needs to be available then and there. So that means to stock up on this they will need to come out of pocket and wait for the Tile to be sold and then they need to wait to be paid. This can put a major hault on cash flow for other projects, jobs, and or daily operation. As you can already tell Factoring was perfect. Once the first order was in my Purchase order contract or Factoring facility was ready to go and in play. Now they will not have to wait for the 30-60 day payment I can supply them with cash now. As this company grows, and their business grows, as does the orders and my check back from the facility I put in place.

Figures reflect national average rates for $165,000, 30-year fixed mortgage.

Credit score– Interest rate–Monthly payment–Savings with higher score*

760-850 —– 6.274% —— $1,019 ———— $0
700-759 —– 6.496% —— $1,042 ———— $8,627
660-699 —– 6.780% —— $1,073 ———— $19,788
620-659 —– 7.590% —— $1,164 ———— $52,336
580-619 —– 8.905% —— $1,316 ———— $107,234
500-579 —– 9.899% —— $1,436 ———— $150,192

* The amount one could save over the life of the loan if credit score was 760 or higher.

Figures reflect national average rates for $22,000, 36-month auto loan.

Credit score– Interest rate–Monthly payment–Savings with higher score*

760-850 —– 7.131% —— $681 ———— $0
700-759 —– 7.974% —— $689 ———— $307
660-699 —– 9.444% —— $704 ———— $847
620-659 —– 10.967% —– $720 ———— $1,414
580-619 —– 14.360% —– $756 ———— $2,705
500-579 —– 14.896% —– $762 ———— $2,912

* The amount one could save over the life of the loan if credit score was 720 or higher.

Disputed items cannot be sold or placed for collection (eff. Dec 1, 2004): Once creditors have been notified of blocked items by the CRA, they cannot sell those items, transfer them, or place them for collection. §1681m(f), FCRA.

As the credit bureaus computerized their processes and greatly expanded their reach and influence in the late 1960s and early 1970s, consumer complaints began to pile up at the FTC and state attorney generals’ offices. The credit reporting agencies quickly became huge bureaucracies second only in size to the federal government. Yet, the credit bureaus expressly served only the needs of their clients, the credit grantors.

Many consumers were negatively effected by the credit bureaus, but they had no way to correct or change their credit information. The American consumer lay completely at the mercy of the credit bureaus. The United States Congress enacted the Fair Credit Reporting Act (FCRA) in 1971 to insure that the credit bureaus investigate the credit items disputed by consumers. This federal law set procedural guidelines which gave the consumer the right to challenge the accuracy, validity, and verifiability of the credit listings appearing in their consumer credit report. It also required that the credit bureau repair any credit listing if it was inaccurate or could not be verified.

In theory, the FCRA charges the credit bureaus with responsibility to the consumer as well as the credit grantor. In reality, the credit bureaus resist, resent, and reject consumer disputes. The credit bureaus would rather be left alone to make a profit. And, each time a consumer challenges his credit, profit is lost.

The credit bureaus first defend their profits by erecting walls of stall tactics, including requests for more information, further clarification, and additional identification. The vast majority of consumers give up before they even receive copies of their credit reports. If a consumer manages to get a credit report, decipher the codified information, write a coherent dispute, and mail it, the bureaus may still find some reason to disregard the challenge. The entire dispute system is designed to frustrate and discourage the consumer.

When we delete a negative credit report listing, the actual debt remains. You still owe the same amount of money that you owed to begin with. If you don’t pay the debt, the creditor or collection agency could always report the item again. So removing the listing without addressing the debt is only a temporary solution. Additionally, our service is designed for individuals that can pay their bills now, but have had problems in the past

Did you know that with a FHA loan you can lend up to 95% of the houses value if you need to go cash out and up to 97.75% rate and term. WOW!!! So here is an example for you to think about. If you have a client 15 months ago with a 580 credit score and no late payments on their mortgage you had a few options to go 95% loan to value cash out. RIGHT? Well, it’s the first part of April 08’ that does not exist anymore and even if there is a few out there what kind of rate are they going to charge? Ouch!! My guess is the rate is going to be ugly and the fees may be worse.

What if you could give your client a 6% and still make some money for yourself and get 5 referrals instead of charging them 8.50% or worse. Last week I had a reader send me an email and ask me if I felt guilty putting someone in a loan that had mortgage insurance and 1.5% up front MI funded in the loan. I laughed for a second and said let me guess you are one of those guys that sells the benefits of a higher rate vs. MI right. The guy said you bet. I said what is the savings to your client with the 8.50% vs. my 6% on a $150,000.00 dollar loan in 12 months, 24, 36, 48 and at 60 months?

Here is the answer because he couldn’t give it to me. The up front MI is $2,250.00 and the monthly MI is about $63.44 per month so let’s break this down. The monthly payment for principle and interest and MI is $976.26 vs. the higher rate of $1153.37 which is a difference of $177.11 which would take you about 12 months to make it up and then to be better off with the FHA loan. Then you are showing a savings of about $2135.32 per year and that is if you don’t invest the difference or reapply it back toward the principle. Then the savings really start to grow!! Now keep this in mind if you were selling in a price sensitive market like we are right now would you rather sell a 8.50% or 6%? Which do you think your client is going to feel more comfortable with? Not to mention it is a 30 year fixed.