Monday, October 31, 2011

Fraud Alert: FTC Charges Credit Repair Operators

The Federal Trade Commission has charged the operators of a credit repair company with making false statements to credit bureaus about information in consumers’ credit reports, and illegally collecting fees from consumers before performing any services.

The FTC’s complaint against RMCN Credit Services Inc. and the married couple who own it (Doug & Julie Parker) alleges that they advertised a six-month program to improve consumers’ credit reports. Supposedly the defendants falsified statements to credit bureaus contesting the accuracy of negative data in consumers’ credit reports. In communications to credit bureaus, which RMCN did not divulge to consumers, the firm routinely disputed all negative information in the reports, regardless of accuracy. RMCN then repeatedly sent these deceptive dispute letters to credit bureaus, even though they received comprehensive billing histories verifying the accuracy of the information, or signed contracts from creditors proving the validity of the accounts.

In the complaint, RMCN allegedly misrepresented to consumers that federal law permits the company to dispute accurate credit report information, and that credit bureaus are required to delete information from credit reports unless they can prove it is accurate. In the company’s words, credit bureaus must “prove it or remove it.” RMCN charged a retainer fee of up to $2,000 before providing any service.
The defendants are charged with violating the Credit Repair Organizations Act by making untrue or misleading statements to credit bureaus about consumers’ credit worthiness, and by charging fees for credit repair services before they were fully performed.

Please be aware as a consumer that by law you cannot be charged up front for credit repair or a loan modification!

Monday, October 3, 2011

What’s the Deal with Shadow Inventory?

The subprime mortgage debacle in ’07- ’08 caused an unparalleled number of foreclosures and disintegration of the housing market. Because of this, lenders were left with significant real estate in their portfolios.

Shadow inventory is a term referring for the most part to properties that are in the process of or have been foreclosed on and haven’t been listed or sold as yet. Many of these homes are not being listed for sale by banks who are waiting for market prices to recover. These lenders are also apprehensive of putting too much inventory on the market as flooding the market would further drive down prices, lowering their projected return on investment.

The good news (for the moment anyway) is that residential shadow inventory as of July 2011 decreased a bit to 1.6 million units, which is a 5 month supply of homes for sale. Before you laugh, it is down from the 1.9 million units (a 6 month supply) reported one year ago. Additionally, there was a decline from April 2011 when shadow inventory was at 1.7 million units.

Will this be a continued pattern? One can only hope… The bottom line right now is that movement or sales of distressed homes is slightly faster than the new delinquencies being taken on by the banks and this is encouraging for the time being.