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Death Of Free Credit Report Ads - Mortgage By Randy Newsletter - Apr 2010

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Services for Real Estate Pros with Marketing Advisor & Squeeze Mortgage NMLS# 377413
 
Mortgage by Randy
monthly update to our clients, colleagues, family & friends
By: Randy Mitchelson, April 2010
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In Issue 25 We Touch On:
Death Of Free Credit Report Ads
Last Call For Low Mortgage Rates?
Endless Cash For Gold Advertisements

One of my strongest beliefs is that things happen for a reason. As we begin the third year of this newsletter, it has occurred to me that we have been living through one of the most challenging economic environments in generations.  There is massive upheaval in the banking and mortgage industries.  New laws are being passed by both federal and state governments which impact how consumers obtain credit cards, mortgages and credit reports.  These laws also change the rules of engagement for professionals working in these fields or planning to enter them.  Who knew that when this newsletter began that there would be so much to talk about?  Like I said, everything happens for a reason.

The current newsletter and all prior newsletters are archived at the Mortgage by Randy blog. Bookmark it and share with your friends and family.  You can make your own comments and feedback as well.  Time for the news…

Mortgage Market: Last Call For Rock Bottom Mortgage Interest Rates?
Mortgage rates continue to fluctuate within a historically low range, but there are signs that the party may soon be over.  The "two steps forward, one step back" rate behavior is not uncommon at this stage of an economic rebound.  However, there are signs that the range for interest rates is slowly shifting higher as time goes by.  As long as we avoid signs of inflation, the Federal Reserve will be able to keep rates near historical lows.  The one thing to keep an eye on is gas prices.  We have already witnessed a spike toward $3.00/gal this year and this should continue as the summer vacation season approaches.  If other companies raise their prices in response to higher gas, then inflation could rear its ugly head.

Another trend that is ongoing is the number of loans being processed through the FHA.  Since this is practically the only recourse for borrowers with less than perfect credit and lower than standard down payments, as much as 35% of loans are being sent through this channel. Taxpayers have already bailed out Fannie Mae and Freddie Mac who took on too much risky mortgage paper.  Hopefully someone is keeping a close eye on the FHA.

Personal Credit: The Death of Free Credit Report Ads
With little fanfare, the arrival of April 1 introduced a new federal law which was no joke to the credit industry.  Part of the Credit CARD Act of 2009 addressed commercial advertising of free credit reports (can you hear the jingle playing in your head now?). Radio and TV advertising must disclose the interim disclaimer: "Free credit reports are available under federal law at AnnualCreditReport.com”. TV ads must display the disclosure on screen for at least four seconds, and radio ads have to include the statement in "close proximity" to the first mention of "free credit report.

Internet and print ads for “free credit reports” are affected too. Commercial web sites must disclose this statement at the top of each page: "THIS NOTICE IS REQUIRED BY LAW. Read more at FTC.GOV. You have the right to a free credit report from AnnualCreditreport.com or 877-322-8228, the ONLY authorized source under federal law." The web sites must provide a clickable button that reads, "Take me to the authorized source" and working links to AnnualCreditReport.com and FTC.GOV.

All this is good news for consumers, many of whom were confused by the barrage of ads for free credit reports, only to find out that most ads were bait and switch type tactics to get people signed up for credit monitoring services.

BUYER BEWARE!  In their infinite wisdom, our government wrote this law with precision tact and wording. So much so, that the marketers have already launched their counterattack to bypass the wording of the law (but not the spirit).  On April 2, we immediately saw new ads which looked hauntingly familiar to the original, now illegal, ads, but with one slight change.  Instead of advertising “free credit reports”, the ads now use “free credit score” as their hook.  Same principal, but it avoids the spirit of the new law and is still a bait and switch tactic to sell credit monitoring services. Can you say “loophole”?

Economy & Financial Insights: Economic Good News Almost Always Has Bad News Flip Side
This newsletter addresses the spike in oil and gold prices.  Investors are beginning to migrate their money from low yield government securities to these riskier categories.  The rise in the stock market is further evidence of the trend toward more risk.  As a result, the shift of cash away from these super-safe investments (such as U.S. Treasuries) serves to push their yields higher, and this in turn gooses mortgage rates higher. This trend, combined with the Federal Reserve’s decision to begin removing some of the tools it put in place to keep rates artificially low are putting rates on a path to slowly work higher.

In economics there is almost always good news associated with bad news.  Higher stock prices are good for those that have taken on those investments.  The bad news side of this coin is that rates are pressured higher which makes our borrowing costs go up.  As another example, many companies are reporting higher sales figures.  This is a good sign for the economy and for investors that buy stock in those companies.  However, the prudent person will keep things in perspective.  2009 brought some of the worst sales results in decades.  It is not difficult for 2010 results to be better.

Question of the Month: Why Are There So Many Advertisements For Gold?
Most people do not know they are riding a bubble until the bubble bursts.  History provides ample examples of bubbles dating back hundreds of years.  In recent times we have watched the dot com bubble and the real estate bubble.  In both cases, a tell tale sign of the impending burst was when people, with no skill or training in investing would make major financial decisions simply because they believed the hype.  When grandpa starts talking about flipping houses or the waitress invests her life savings into pets.com (remember the infamous sock puppet?) we see examples of a social trend called herding. 

Today, the big fad is gold.  There are full page ads in the newspapers inviting people to go to a nearby hotel (today only!) to cash in their unwanted gold for top dollar.  There are multi-level marketing (MLM) programs to sell gold and silver coins.  Endless ads on television run where you can have a free prepaid postage kit mailed to your home to ship your gold and other jewelry for cold hard cash.  Some people are even hosting gold trade-in parties at their homes! We are at the stage where common people are talking about it and asking questions about it around the water cooler.  In a phrase, gold ain’t cheap.  The rise in price has created an unsustainable hysteria.  What goes up, must come down. Hint: the bubble may be bursting faster than you think.

Giving Back: Supporting Our Communities – Donate To Our PSK Relay For Life Team
I am damn proud of my Phi Sigma Kappa fraternity brothers who are fighting cancer as a team effort.  At the American Cancer Society Relay For Life, the team will camp out overnight and take turns walking to raise money and awareness to help save more lives from cancer. By donating to this team, you will be a part of a life-changing event that gives everyone in the community a chance to celebrate the lives of people who have battled cancer, remember loved ones lost, and fight back against a disease that takes too much. 

Chances are that at some point each year you contribute to a worthy cancer-fighting cause.  Why not support this one to encourage these young men to carry on a lifelong dedication to giving back to their communities?  Please make a donation to the Phi Sigma Kappa team and help create a world where cancer can no longer claim another year of anyone’s life.

Need volunteers? Do you have a fundraising event upcoming?   Do you have a personal web site where you are raising donations for your cause?  Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue.

My recovery from surgery is going well and I am slowly making progress with bringing some of my damaged leg muscles back to life.  Thanks to everyone for their cards, phone calls, Facebook posts and prayers.  This is the first year that my parents tried the snowbird life and it just so happens to be a year when I have needed them nearby to help us through the surgery and immediate aftermath.  I truly believe that things happen for a reason and this is yet another spooky example.

Randy

Mortgage by Randy newsletter, Copyright 2010 Randy Mitchelson.  All Rights Reserved.
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Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson.  Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.
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You have permission to publish this article electronically or in print as long as the following is included:

Randy Mitchelson, of Estero, Florida, is a business professional, entrepreneur and author with over 15 years experience in financial services.  Mitchelson has served in leadership roles for Global & Fortune 500 firms like Bank of America, KeyBank and CIBC. 

As a member of National Association of Mortgage Brokers, Randy has earned the Lending Integrity Seal of Approval.  He educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy as well as the Daily Dollar newsletter. A licensed mortgage professional, Mitchelson also founded Trinity Home Financing, LLC.

He is owner of Estero, Florida based National Web Leads, LLC, an internet lead generation service matching consumers with lenders for auto, cash advance and other financial products.   Through its network of partners, National Web Leads delivers innovative Web 2.0 performance marketing solutions to advertisers and affiliate marketers.

Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY.  He is a founding member and Finance Chairman of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle’s Angels Foundation Inc.  He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.
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Comments (2)

John Pusa
Glendale, CA

Randy - Thank you for sharing an informative and helpful blog.

John

Apr 18, 2010 05:33 PM
Dave Sullivan
Real Estate One - Birmingham, MI
Michigan Realtor with an investor viewpoint

Good info if you would like to watch me order my free credit report and find out how to get your real FICO score for free watch this http://www.thecreditguy.tv/get-your-credit-report-real-fico-score-for-free/

Jan 26, 2012 11:59 PM