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Vol. 9 No. 10
June 26, 2017
www.csrej.com
New credit reporting rules: A boost for consumers, a concern for lenders On July 1, it’s estimated about 12 million consumers will see their FICO scores By Jon Paukovich Vice President and automatically increase Senior Chief Lending Officer Ent Credit Union anywhere from 10 to — 40 points. That’s when a new credit reporting rule will take effect which determines how credit
reporting agencies can report judgments and tax liens on individual credit reports. As part of a legal settlement, the three major credit reporting agencies — TransUnion, Experian and Equifax — can only report public records if they ver-
Realtors predict highest price hikes in the West ®
REALTORS® believe home prices will continue to escalate, particularly in the western region of the U.S. REALTORS® expect the median price change in 10 western states— led by Washington, Utah, and Colorado—to increase between 5 percent and 7 percent over the next 12 months, according to April's REALTORS® Confidence Index, which is based on survey responses from
more than 3,400 REALTORS®. That area gets the highest prediction in the country. Meanwhile, REALTORS® expect lower price increases in oil-producing states such as Texas: 2 percent to 3 percent over the next 12 months, according to the report. See Price Hikes | Page 2
ify three personal identifiers: name, address and Social Security number and/or date of birth. Because most Social Security numbers are redacted for security reasons from many liens and most judgments, this rule significantly changes how public records — both new and previously existing — can be used by credit reporting agencies. Analysis has shown that up to 96 percent of civil judgements and 50 percent of tax lien data do not meet the new standards, meaning that the consumers involved in those proceedings will not have their credit scores lowered as a result. One exception to this rule is bankruptcy. Consumers involved in bankruptcy may still see a dip in their scores as these types of records typically meet the new personal information standard. A Boost for Consumers
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Jay Gupta's May Housing Stats
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Debbie Havens
Branch Manager (719) 264-1967
Honest & Ethical Service from People You Know. 1730 Chapel Hills Drive Suite 100, Colorado Springs, CO 80920
HELPFUL TIP: Check the license status of your mortgage broker at the Colorado Division of Real Estate’s website. Corp NMLS #3113
NMLS #653845 State Lic #100018256
debbie.havens@academymortgage.com
A Concern for Lenders While these changes can help financially responsible consumers receive a more accurate credit score, it will also make it easier for less creditworthy consumers to maintain favorable scores. While borrowers are typically asked whether there are tax liens or judgments against them, there is no guarantee they will answer honestly. This could result in an underqualified borrower getting further along in the mortgage loan process before they are disqualified or even taking out a loan they cannot actually afford. Regardless of the shift in credit reporting rules, lenders making government backed loans, i.e., VA and FHA mortgages, must still adhere to strict loan qualification guidelines. And it’s why the financial industry is investigating alternative data sources and vendors to assure borrowers meet existing lending standards. After July 1, it will be more important than ever for all of us in the housing industry to collaboratively identify and help credit-worthy borrowers achieve their home ownership dreams, while protecting those who are credit challenged to avoid potentially damaging their financial situation.
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This change is potentially good news for consumers. In addition to providing more accurate consumer reporting, it could also eliminate some credit errors for consumers who have the same name as people with tax liens and civil judgments against them. And it will provide much needed breathing space for consumers with outstanding medical bills. The rule establishes a 180-day waiting period between the time a medical
billing account is created and when it can be reported on a credit report as a collection. The rule’s goal is to give consumers and medical providers adequate time to resolve billing, payment and insurance matters that could otherwise result in damaged credit scores.
Amber Fedders
Joe Drew
(719) 505-4458
(719) 266-6155
Loan Officer Assistant
NMLS #1492476 State Lic #100507484
NMLS #1561851 State Lic #100506142
Loan Officer
NMLS #1550047 State Lic #100506874
Loan Officer
amber.fedders@academymortgage.com joe.drew@academymortgage.com
Amanda Smith
(719) 264-1952
amandas@academymortgage.com MAC517-1445581