Friday, July 8, 2011

Consumers to soon get free credit score after loan denial

CHICAGO – July 8, 2011 – Consumers who are denied credit or whose existing loan terms become less favorable soon will be able to get free credit scores under new rules from the Federal Reserve Board and Federal Trade Commission.

On Wednesday, as part of the recently enacted Dodd-Frank Wall Street Reform & Consumer Protection Act, the two regulators issued final rules related to new credit-score disclosures.

Effective July 21, if a credit score is used to set certain credit terms, or to deny or revoke credit or change existing terms, then banks and others will be required to disclose credit scores and related information to consumers.

Besides the consumer’s credit score, the lender also must disclose the range of possible scores under the model used to generate the score; the date on which the score was created; the name of the consumer reporting agency or entity that provided the score; and up to four key factors that hurt the credit score, or up to five factors if the number of inquiries made into that consumer’s credit report is a key factor. Numerous inquiries into a consumer’s credit report can suggest that the consumer has been out shopping for credit and might be financially stressed.

Credit scores are often used by lenders to set or adjust loan terms, such as interest rates charged, and can change over time to reflect changes in a borrower’s financial history.

The Fed has estimated that it would take lenders, on average, two business days to update their systems to comply with the new requirements, although some businesses affected said it could take weeks or longer.

The public comment period to the proposed rule changes closed on April 14.

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2011 Chicago Tribune

Hollywood, FL: There is a good chance your taxes will be raised due the City budget deficit.

Hollywood considers 11 percent increase


Get out your wallets. It’s going to start costing more to live and work in Hollywood as the city grapples to close its $25 million budget gap.

Hollywood residents, it will be up to you to come up with the millions the city needs to cover its budget shortfall.
Here’s how you’ll likely be doing it:
Paying more in taxes.
Paying more for docking your boat or riding in an ambulance.
Paying to attend a city-sponsored event, such as the annual candy-cane drop, or the weekly dancing under the stars nights.
On Thursday, commissioners proposed a tax increase and increase in firefees that amounts to 11 percent.
Commissioner Beam Furr said he “knew it was coming.”
“We’ve cut almost everything we could cut,” he said. “We need extra revenue to fill the pothole.”
In May, the commission was told the city was facing a $10.3 million deficit this fiscal year, and a $25 million gap for the upcoming year.
Since getting the news, the commissioners have declared a financial emergency, laid off 18 general employees, cut salaries 7.5 percent for employees and 12.5 percent for police and fire fighters, and accepted the city manager's resignation.
Instead of more cuts, now the city, the third largest in Broward County, is looking for ways to generate money.
“The focus is to restore financial stability,” said Matthew Lalla, the city’s director of the city’s finance and information technology department, at the commission’s first budget workshop Thursday. “We are left with increasingly difficult budget choices. All of the manageable options have been exhausted.”
Next year’s proposed budget is about $341 million, which is about $11 million less than this year’s. The general fund, which pays for most of the city’s operational expenses including salaries for employees, is about $167 million, which is about $7 million less.
Going into next fiscal year, the city will have about $3.78 million in its reserves, less than half required. That prohibits the city from borrowing any money for any projects, such as road maintenance.
Lalla said by increasing taxes from this year’s rate of $6.71 per $1,000 of assessed property value to $7.4479 per $1,000, the city can begin to rebuild its rainy day fund.
What does this mean for the taxpayer?
Take the average Hollywood homesteaded property valued at $94,062. This year the homeowner paid $643 in taxes; next year it will go up to $701.
Also included in the working proposal: increasing the fire assessment fee — paid by property owners for fire services — $30, to a total of $189.
The commissioners also discussed adding an ambulance fee, that would generate $1.3 million and increasing dockage fees that would generate as much as $47,000.
Another potential money-maker for the city: Adding more billboards. City leaders discussed leasing land Hollywood owns close to Interstate 95 for companies who want to get their message out there.
Commissioners are also considering turning some full-time jobs into part time.
Mayor Peter Bober said that if taxing the city’s residents means that the city will begin to build its rainy day fund, then he is in favor of it.
But he added that the city needs to take the summer to look at more ways to generate revenue.
“Certainly I’d like to avoid that kind of tax increase if at all possible,” he said.
Vice Mayor Patricia Asseff said she was depressed with the news of a potential tax hike.
“The impact of raising taxes right now could be devastating for a lot of our residents,” she said.
Asseff said she hasn’t ruled out other options including selling city owned property, renegotiating franchise fees and cutting back on city events including concerts and holiday celebrations.
“We can’t be giving things away on the backs of our employees,” said Asseff, who said that city may consider charging for some of its events.
Hollywood residents including Charlotte Greenbarg, who is active in the Lake section homeowners association and several other citizens groups, said a tax increase is not the way to rebuild the city’s finances.
“Tax increases only make the economy worse,” she said.
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Thursday, July 7, 2011

Beware of Reverse Mortgages

Three South Florida mortgage loan officers and a Pennsylvania title agent face federal criminal charges in connection with an elaborate $2.5 million reverse mortgage scheme, the first case of its kind to be prosecuted in federal Southern District Court, officials said Wednesday.

State and federal agencies investigated the operation, which regulators said defrauded senior citizens, a major lender and the federal government. Of the 14 seniors named in the court documents, four are from South Florida. Some of the 14 now face foreclosure but are receiving help from their lender, said representatives from the U.S. Attorney's Office in Miami.

Reverse mortgages allow property owners to draw on the equity in their homes to receive monthly payments from lenders. They are promoted as a way to help seniors who need additional income.

According to court filings, Louis Gendason, John Incandela and Marcos Echevarria worked out of 1st Continental Mortgage offices in Boca Raton and Fort Lauderdale, marketing reverse mortgages to modest-income homeowners age 62 and older nationwide. The reverse loans were financed by Genworth Financial Home Equity Access and backed by the Federal Housing Authority.

For more than 18 months, Gendason falsely inflated property values on appraisals, as none of the borrowers had enough equity to qualify, according to the documents. Title agent Kimberly Mackey, of Real Estate One Land Services Inc. in Pittsburgh, falsely closed the reverse loans but did not pay off the existing mortgages, diverting almost $1 million that the three men took for their personal use, officials said.

Mackey prepared fraudulent federal loan settlement documents, and the South Florida loan officers created fictious short sale offers, in attempts to continue the scheme, federal attorneys said.

If convicted of wire fraud, the defendants each face a maximum 30 years in prison and a $1 million fine.

In a separate action, the Federal Trade Commission filed a lawsuit in March that named Incandela and Lower My, a loan modification operation based at 1st Continental's Boca address, in a crackdown on foreclosure rescue and mortgage modification businesses. The FTC said the company falsely promised consumers they would get their mortgage payments reduced or their money would be refunded.

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