Tax season is over and this is the time of year that is perfect for organizing your personal household paperwork. Do you keep statements and receipts and other documents stashed away for years not really sure when it's safe to shred them? The rule of thumb (this is the IRS talking, not me) is if it's over 7 years old, shred it except for your tax return docs. Do a little spring cleaning and throw out old statements. Keep yourself safe by shredding and if you are too lazy to shred, make friends with a local banker or medical office who is required to shred their office documents (and hires a vendor to do so) and ask them if you can dump your docs in their shred bin.
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: More Electronic Closings On The Horizon?
The Consumer Financial Protection Bureau (CFPB) issued a 69 page report (probably shorter than most mortgage closing packages these days) that says more streamlining is needed with mortgage closing documents. The CFPB is concerned that the massive pile of documents will cause borrowers to overlook critical details about their loan. CFPB Director Richard Cordray quoted former Deputy Secretary of the Treasury Neal Wolin on his closing experience, "The documents are literally impenetrable. ...Here I was - former general counsel of the Treasury, former general counsel of a Fortune 100 financial services company - asking my lawyer to help me through 100 pages of incomprehensible, turgid gobbledygook."
However, don't blame the government entirely on this problem. Research revealed that a good chunk of closing docs are from the lender and its need to protect itself in the event of foreclosure.
The solution, the report suggests, is moving toward e-closings, where the borrower reviews documents online and can sign them electronically. E-closings exist today, but only in about 10% of closings. The CFPB has launched a pilot program to test the use of eClosings with lenders to measure if the electronic process reduces errors and increases borrower satisfaction.
Personal Credit: Low Credit Score Borrowers Now Have More Mortgage Options
Little by little, the mortgage marketplace is filling up with mortgage programs for low credit score borrowers. After being shut out for years, mortgage companies are developing products to serve this customer segment. For example, Carrington Mortgage has lowered its minimum credit requirement to a 550 score while Oaktree Funding goes as low as a 500 score.
Programs that allow lower credit scores will have offsetting requirements such as higher interest rates, higher fees, lower debt to income ratios, lower loan to value ratios (meaning higher down payments) and other factors. But there are borrowers out there who are lendable despite having a low credit score. Given a good stable job and income, decent assets and reasonable debt load, a borrower can still get funded.
Sometimes, good borrowers fall victim to circumstances such as separation and divorce which ruins their credit so these low credit score programs fill a niche void. Unfortunately, federal regulation of the mortgage industry has been so intense since 2008 that worthy, qualified borrowers are being turned away. As competition increases, I expect we will see more and more of these low credit programs come to market.
Ask Me Your Credit Score Questions
Have you been given credit score advice that you are not sure about or read an article that has conflicting credit score information from what you believe to be true? I am here to help. Submit your question and I will be happy to respond. For more free and easy to read credit score tips visit the DailyDollar and click on the Credit Score and Credit Monitoring sections. Remember, to get a truly free approximation of your credit score, read my article about Credit Sesame and try them out.
Economy & Financial Insights: What Are People Buying These Days?
Mortgage rates remained stable throughout the month of April. It appears that companies are firing less people but the pace of new hiring is not where it needs to be to put a dent in the unemployment rate. Consumers are still cautious with their spending.
What are people buying? Cars and education. With the skills gap preventing many workers from qualifying for good jobs, perhaps people are investing in their future by going back to school to acquire new skills. Credit card debt, however, has fallen and that is good for household balance sheets but bad for retailers who want to see more sales.
The expected long term trend for interest rates remains up. But various economic forces like inflation, consumer spending, wages and jobs will cause the trend line to bounce up and down. Jobs are the answer to loosening the knots that tie up our country's economic growth. New industries must emerge and grow. We are already seeing manufacturing jobs come back to the states. Ironically, today's youth do not always have the blue collar skills to work in a factory environment. Also, there are unfilled jobs requiring technical skills managing and analyzing data and writing software in healthcare and other sectors. People must acquire the right skills to fit in to the workforce, even if it means going back to school.
Question of the Month: What Should A First Time Homebuyer Expect?
A long time ago I was a first time homebuyer and despite having a college degree and a job at a bank, nothing prepares you for the trials and tribulations of the home buying process, especially if you choose to have a home built.
Recently I had the opportunity to submit a story about my first time homebuying experience as part of a contest hosted by ActiveRain, a real estate marketing website owned by Trulia. I have received a lot of nice comments on "Cows Moo and Other Things I Learned as a First Time Homebuyer" and after reading it for yourself, I'd love to hear your thoughts by leaving a comment.
Luminaries in memory of those we've lost to cancer.
Giving Back: Our Team Raised Over $2,500 - Not Too Late For Your Tax Deductible Donation
Fundraising for the 2014 Golden Gate Relay For Life is ongoing and our team at iPartnerMedia.com walked 18 hours in honor of cancer survivors, warriors and those we've lost. Our team was proud to be the marketing partner for the event and you can see more pictures at our Facebook page. To honor someone in your life affected by cancer, go to my Relay For Life website to make a secure donation.
L to R: Sabrina Arguelles, Albert Arguelles, Randy Mitchelson, Rachel Perez
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 email@example.com by the 5th day of each month and we will do our best to include your information in the next issue.
As we leave Spring Break season in the rear view mirror and look ahead to the summer, the countdown is on for Graduations, and Mother's Day. Please keep my Mom, Dianne, in your thoughts and prayers as she prepares to have intestinal surgery. If you have anyone in your life that could use some prayers, you can request them online at www.michellesangels.com and I promise you something special will happen.
Mortgage by Randy newsletter, Copyright 2008-2014 Randy Mitchelson. All Rights Reserved.
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.
You have permission to publish this article electronically or in print as long as the following is included:
Randy Mitchelson is an entrepreneur, author and community activist with 20 years experience in financial services. Mitchelson has served in leadership roles for Fortune 500 firms Bank of America, KeyBank and CIBC.
As a licensed mortgage professional and member of National Association of Mortgage Brokers, Mitchelson 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.
He is an online marketing expert and Vice President at iPartnerMedia.com. He founded of Estero, Florida based National Web Leads, LLC, (NWL) in 2005 which helped advertisers drive new customer acquisition through email, web display, social media, keyword search strategies, mobile devices and more.
Mitchelson also writes the DailyDollar™ personal finance newsletter. U.S. News and World Report named DailyDollar to its list of 8 Savvy Personal Financial Podcasts.
Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY. He is a founding member of the Southwest Florida Regional Technology Partnership Inc. and the Michelle’s Angels Foundation Inc. He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.