n With
important as the data from which harmful. The last thing we want to do the score is calculatis discourage a consumer who is maked. Consumers need ing an effort to keep and maintain a to regularly check clean credit history. their credit report and carefully look The bottom line is, while any at the data to make sure that it is added incentives to increase the reporting all of their payments accunumber of consumers who take rately. A history of on-time payments advantage of the free annual credit accurately reported in the credit hisreport is helpful, the score is not as tory is far more important than what-
ever score model they could obtain. As long as the data is accurate, whatever score model is used will be an accurate forecast of the consumer’s credit risk. Terry W. Clemans is executive director of the National Consumer Reporting Association (NCRA). He may be reached by phone at (630) 539-1525 or e-mail tclemans@ncrainc.org.
FICO REDUCED TO
550 FHA,VA & USDA PROGRAMS
YOUR GO -TO LENDER FOR THE
TOUGHEST
LOANS
www.CarringtonWholesale.com/toughloans
866-453-2400
OUR COMMITMENT TO OUR BROKERS IS UNSURPASSED. WE OFFER:
On-Time Closing Promise for FHA loans – 15 Day Clear to Close on qualifying purchase or refinance loans, or your borrower receives a $500 closing cost credit.* Plus, get a prequalification letter and enjoy our early disclosure service. Submit with no AUS. Restrictions apply. FICO minimums to 550 on government programs and expanded FHA guidelines that include manufactured housing and use of non-traditional credit. Expanded Operations Support. Multiple operations centers offering support across all time zones provides outstanding service and fast turn times.
*Carrington will process any qualifying loan from the time a loan file is submitted to underwriting to the time it funds within 15 business days of appraisal receipt or the company will apply a closing cost credit of $500 to the loan once the loan closes. In order to receive the closing cost credit, any delay that causes the loan to close more than 15 days after appraisal receipt must be due to Carrington’s independent processes. If the delay is due to the broker, borrower’s or third party’s action or inaction or any other circumstances outside of Carrington’s control, the closing cost offer will be void. This offer excludes some loan programs, such as VA loans, USDA loans, 203K Loans Short Sales, New Construction loans, loans requiring property repairs, inspection, or re-inspection prior to closing, loans requiring condo approvals and flips. Offer is subject to revision or cancellation at any time. The appraisal received date is recorded in Pipeline Manager for all qualifying loans. Some loans may require additional information and be returned. Exclusions apply; contact your Account Executive for details. © Copyright 2007-2014 Carrington Mortgage Services, LLC headquartered at 1610 E. Saint Andrew Place, Suite B150, Santa Ana, CA 92705. Toll Free (800)561-4567. NMLS ID 2600. Nationwide Mortgage Licensing System (NMLS) Consumer Access Web Site: www.nmlsconsumeraccess.org. AZ: Mortgage Banker BK-0910745; 2159 McCulloch Blvd 4, Lake Havasu City, AZ 86403. CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, File No. 413 0904. CO: Check the license status of your mortgage loan originator at http://www.dora.state.co.us/real-estate/index.htm. GA: Georgia Residential Mortgage Licensee 22721. IL: Illinois Residential Mortgage Licensee. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law. MO: Residential Mortgage Broker License 09-1746-S. NH: Licensed by the New Hampshire Banking Department. NJ: Licensed by the N.J. Department of Banking and Insurance. NY: Licensed Mortgage Banker—NYS Department of Financial Services. New York Mortgage Banker License B500980/107664. OH: Ohio Mortgage Broker Act Mortgage Banker Exemption MBMB.850208.000 (FHA DE & VA Automatic loans only) OR: Mortgage Lender License ML-4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender, Lender License 20112809LL. VA: Licensed by the Virginia State Corporation Commission MC-5382. WA: Consumer Loan License CL-2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, ME, MD, MI, NM, NC, OK, SC, TN, TX, WV and WI. NOTICE: All loans are subject to credit, underwriting, and property approval guidelines. Offered loan products may vary by state. There is no guarantee that all borrowers will qualify. Restrictions may apply. This is not a commitment to lend. Terms, conditions, and programs are subject to change without notice. This information is for mortgage professionals only and is not intended for distribution to consumers. Carrington Mortgage Services is not acting on behalf of or at the direction of HUD/FHA or any office of the federal government. All rights reserved.
n New York Mortgage Professional Magazine n MAY 2014
Growing your business with the right partner has never been easier. Get started today with Carrington Mortgage Services.
At Carrington Mortgage Services, we are committed to meeting the financing needs of those who are underserved throughout America. We have loan programs specifically tailored to credit-challenged borrowers, so there’s no need to turn away those borrowers with low FICO scores. We are your government lender of choice with loan programs, service, technology and national support to grow your business today, tomorrow and beyond.
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three national credit bureaus), multiple industry specific scores developed by non-FICO/Vantage analytical companies, and then the “FAKO” scores (industry slang for the FICO knock off educational scores), totaling an estimated 70-plus score possibility. Additionally, remember that this total needs to be multiplied by three, as each score is going to vary based on the different data sets in each of the three national credit bureaus. All of this means that there is a very, very slim chance the consumer will even see the actual score model that would be used by the next creditor they apply to for the underwriting of a credit transaction. With that in mind, what is achieved by viewing a score that is likely to be irrelevant? The second element asks the question, once the consumer sees a credit score, do they understand what that score means and what action steps they can take if they don’t agree? Who will explain this to the consumer? This is a concern, as a consumer can look at their credit report and know if accounts belong to them, were paid as being reported, or if there is something on the file that does not belong to them. They can file a dispute on any incorrect information with a federal law and the CFPB complaint hotline to back their rights in the process. Conversely, scoring algorithms are proprietary intellectual property of the model developer and the consumer is powerless in the decision about which model is used and if they agree with the score logic. That’s why it’s so important for consumers to make sure they get the free copy of their credit report at www.annualcreditreport.com and review it annually for accuracy. The third elements asks … what happens when a consumer has had credit problems in the past, has worked hard to pay their bills on time, and then receives a score, finds that it is low, and becomes discouraged about looking into the actual credit information in their file? This, in my opinion, holds the most potential for harm. Perhaps some of their previous credit problems are not being accurately reported. Perhaps they have a mixed credit file with a similar named consumer which is holding their score down. Both of these occurrences are not unusual and can be devastating to a consumer’s credit score. Since the score is a reflection of the data being reported, any impediment to the consumer actually looking into the details of their credit history could be
Scores