WHAT'S WRONG WITH THIS?
The American consumers are offered an individual "WORK-OUT".
The Wall Street investment giants are offered a group "BAIL-OUT".
No matter what the cause of the American consumer's real estate financing problems, it will probably have a negative effect on their credit report and credit score. Many mortgage banks will not entertain a short sale for a property until the home owner was in arrears on their mortgage payment.
Fact: Foreclosure will be on a credit report for about 10 years.
Fact: Mortgage arrears: 30 days, 60 days, 90 days, 120 days, will be on a credit report for many years.
Fact: Bankruptcy will be on a credit report for 7-10 years.
Fact: The cost of automobile financing will be high. What's the interest rate on a "sub-prime auto loan?"
Fact: The loss of consumer credit will affect the economy and value of stocks, 401Ks, etc.
Fact: Many employers now review credit reports in the hiring process.
All of the above will result in a reduction of credit score.
WALL STREET vs. MAIN STREET. Once negative information is on a credit report, it often takes years, many years, for the negative information to work it's way off, even after the debt is paid.
A late mortgage payment is going to be on a consumer's credit report for years. When a Wall Street executive leaves a company, he gets a severance package of many $Millions of Dollars even if the company has lost $Billions under his leadership.
The consumer pays over and over for credit impairment. The Wall Street executive is PAID for his failure.
CREDIT SCORE 500? WHAT CAN A CONSUMER DO WITH THAT?? WHAT WILL THE CREDIT COST BE FOR THE CONSUMER?? How many years will it last?
LOST CREDIT. A secondary casualty of the mortgage mess. Little has been written about the lost credit and the lost opportunity for many American home owners for years to come.
LOST OPPORTUNITIES. What about the lost credit of so many American consumers?? Many of the "workout" schemes foisted on home owners won't even touch a home owner until they have effectively ruined their credit for many years.
This affects the consumer is so many ways.
- They may not be able to get home owners insurance except in pools.
- They may not be able to get automobile insurance except in pools.
- They may not be able to get consumer credit except at usury rates or secured credit cards.
- They may not be able to use credit to co-sign student loans.
- They may not be able to get a Real Estate Broker license in some states. (MD requires a credit report).
- They may not be able to get checking accounts at some banks. BankOfAmerica pulls credit report.
Most financial transactions in the U.S. require a credit review.
I wonder if Secretary Paulson pulled the credit report for the Wall Street Giants he wants to bail out.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988. Real estate talk.