Tax Liens and Judgements to Come Off Credit Reports

Tax Liens and Judgements to Come Off Credit ReportsTax Liens and Judgements to come off many consumer’s credit report

Effective July 1st, 2017, Transunion, Equifax and Experian will be excluding tax liens and some civil debts/judgements from consumer’s credit reports. The Consumer Data Industry Organization has stated that this initiative is to ensure consumer identifications are accurate and current.

In a move that will boost many consumers credit scores, the three main credit reporting agencies will remove tax liens and civil debts if reports on those particular obligations do not include: names, addresses, and social security numbers and/or date of birth according to the CDIA.

Federal law requires that accurate information is provided to ensure accurate credit reporting. Consumers have complained that paid debts are still appearing on their credit report. The National Consumer Assistance Plan will help consumers with prior challenges to obtain loans they otherwise may have been declined.

This is really good news for the housing market obviously, as this news will have an immediate impact on about 10% of Americans. Couple this information with my prior blog on low down/no down payment mortgages and you end up with great news for many people. With the Dow over 20,000, looser credit guidelines and this recent news on credit reporting; times are looking pretty good.

Summer 2017 Housing Market Prediction

Summer 2017 Housing Market Prediction:  Hot… Very Hot

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2017 home sales came out of the blocks strong in January; growing at its fastest rate since 2007.   According to the National Association of Realtors®, houses were on the market for an average of just 50 days.  In January of 2012, the average turn-around time was 99 days.

Optimism inserts money, primarily investor money, into the marketplace.  When investors are optimistic and the stock market rises and shows stability, banks typically loosen their guidelines.  Low interest rates, more forgiving mortgage guidelines, low and no down payment mortgage options and rent increases have put the housing market in gear, and it’s just starting to get heated.

Inventory remains the only issue as there is currently just a 3.6-month supply of inventory nationwide; which happens to be the lowest in history.  That means if no new houses are listed, by May there would be no existing homes for sale in the market.  I expect builders to be licking their chops and that’s a good thing for the housing market.  When our country is building, it means people are confident in their futures.  Business owners have positive expectations and employees are feeling comfortable with job security which is leading people to look at both new and existing homes.  With rental prices increasing, millennials and other first time home buyers are taking advantage of low down and no down payment mortgages.

What about Sellers?  Is it a good time to sell?

The simple law of supply and demand tells us that when there is more demand than supply, the value of sellers homes should rise right?  Wrong with today’s sellers.  Sellers today seem to think the market has reached its peak and prices will be declining.  They are acting like we are in an economy on the decline, often taking the first reasonable offer and listing their homes for less than they should.    This psychology perhaps is coming from the aftermath of the real estate meltdown as many people are satisfied with “getting out clean” or making very little on their real estate.

If you’re a buyer, you are in POLE POSITION right now; the market favors you.  If you’re a seller, consider choosing a Real Estate Agent that properly educates you on real market trends and factual data; you may find that the sale of your home is more lucrative that you think!

 

Mortgage Guidelines Are loosening

mortgage guidelinesIn the fourth quarter of 2016 we witnessed a great number of mortgage lenders loosen their approval standards.  We also saw a spike in interest rates, but if history is an indicator of where interest rates are going for the remainder of 2017, rates should flatten or even perhaps show a slow decrease.

Recently sworn in Treasure Secretary Steven Mnuchin stated out of the gate that mortgage rates are likely to stay low for some time.  Statements from high ranking officials such as Mr. Mnuchin often keep rates in check.  Add historical data to that, when interest rates spike up quickly (they went up 80 basis points from November 2016 to January 2017…which by the way, is one of the largest spikes we’ve seen in such a short amount of time) history shows a long, slow decline in rates.  Most people are assuming a continual increase in interest rates, but that very well may not be the case.

The housing market rise and surging stock market has created optimism among lenders.  Minimum credit scores have been reduced; documentation for the self-employed has reduced; and maximum loan-to-values have been increased.   Banks have also made concessions with individuals with less than perfect credit and have low and no down payment mortgages (VA, USDA, FHA).  Today, very few banking institutions create their own lending models.  Most will follow the lending guidelines set forth by Fannie Mae and Freddy Mac, in addition to FHA, VA and USDA.  What’s loosening are the investor overlays; meaning, if FHA says a minimum FICO score is 525, a banking institution may insert an overlay, bringing the credit guideline to 580.

To support this trend, mortgage processing software firm Ellie Mae has approved 77% of the almost 4 million mortgages they processed last year.  The end result is cautious optimism in the US Housing Market.

So what does this mean to you?  It means if you’ve been turned down getting a mortgage, you should consider trying again.  If you are self-employed and went through a few struggling years after the mortgage melt down, time has passed and banks seem to be prepared to start lending to you again.   Whether you’re in the market for a new home or an investment property, 2017 could be a very optimal time for you to act.