Credit scores requirements are rising again – 640 is now the minimum standard for mortgage loans.
As lending institutions continue to raise the minimum score requirements for borrowers to be approved for a mortgage loan it is important to counsel potential clients on what affects their credit scores and if necessary, work with a professional and experienced company who can help improve their scores.
As mortgage professionals we understand some basic strategies to improving a borrowers credit score like paying down credit card outstanding balances to less than 30% of their high credit limit, removing erroneous information from one’s report, don’t pay off collections or charge offs during the mortgage process unless required, limit new inquiries, etc. Some of these items can be done easily and dramatically improve a client’s credit profile, however in some cases working with a company that specializes in credit improvement is the best way to get long-term results.
Credit improvement and credit repair companies come in many forms, abilities, and costs. They all promise the same thing; to improve a person’s credit score, however how they try to accomplish this and what they charge can vary dramatically. Before working with a company, I recommend you make sure they are properly licensed and understand the algorithms behind the credit score models, not simply a company or attorney promising to write letters on a client’s behalf for a fee.
If you are looking for an ethical and proven company I recommend that you check out New Beginnings Financial Services at http://www.nbfscredit.com or call them 877-294-5960. There website has a lot of free information and recommendations to help you and your clients.
Not only will improving a person’s credit score help them get approved for a mortgage at better interest rates, it will help them on other loan applications like car loans, reduce their insurance rates, and receive better terms on credit card offers.
For more information contact, jeff@brokersunited.net
How Will the New Loan Originator Compensation Rule Affect Mortgage Brokers?
Mortgage Companies will want to start planning on how to implement the new rules that are set to go into effect April 1, 2011. The three main issues that companies will need to address are:
1. Originator Compensation: “ For any consumer credit transaction secured by real property on a dwelling, loan originator shall receive from any person and no person shall pay to a loan originator, directly or indirectly, compensation that varies based on the terms of the loan (other than the amount of the principal).”Brokers may not accept compensation from both the consumer and the lender.
- Originator compensation will based on a basis point model, flat fee model, base salary, and/or hourly wage, or combination of these concepts. A clear contract with the loan officer will need to be in place and is going to be subject to regulatory review. Bonuses and commissions based on fee income will not be compliant.
2. Brokers may not accept compensation from both the consumer and the lender.
- Broker compensation is being capped at 3%, however the fees earned can’t be split between the borrower and lender, it must come from only one source.
3. Loans originated must be in the consumer’s best interest.
- While the “Rules” are not to be construed as having an agency or fiduciary relationship between the originator and the consumer, originators do have a “Duty of Care” to their clients. Loan officers must present 3 or more loan options that meet safe harbor criteria, the loan has a net tangible benefit, and the client has the ability to repay the loan. Originators may not “steer” a consumer to a transaction to increase his/her compensation.
For additional information, contact Jeff Flees directly at 877-710-0948 or jeff@brokersunited.net
What is the Biggest Risk to Your Mortgage Business Today?
While making sure the sales revenues exceed operational and marketing expenses along with employee payroll and benefits is critical to your monthly profitability, the following four areas may be the overall biggest threats to your company:
- Repurchase requests and indemnification agreements within your investor agreements.
- Lawsuits from clients or applicants.
- Lawsuits involving employee issues.
- Fines from federal or state regulatory agencies.
Understanding these risks and establishing business policies and procedures to minimize your company’s exposure will significant impact on your long-term success.
For more information or assistance in managing these risks contact Jeff Flees at 877-710-0948 or jeff@brokersunited.net.
Brokers United 