A Word From The Mortgage Expert, Jason Outhouse

Every day, thousands of people type the words "credit repair" into an Internet search engine.  Thousands more type in phrases like "bad credit" or "bad credit repair."

Figuring out how to repair your credit is on the minds of home buyers, sellers and owners, all of whom have realized that having stellar credit gives you financial options -- options that simply aren't available to those with low credit scores.

Unfortunately, some of the Web sites that come up in a search for "credit repair" can do more harm than good.  Credit repair scams abound in economic times like these: a shaky economy; record levels of foreclosures; and a rising number of bankruptcies, credit card delinquencies and late mortgage payments.

And yet, some people are so desperate, that they'll try anything, even a general search on the Internet.

The typical credit repair scam works in one of a couple of different ways.  There is always the promise that your credit history will be wiped clean, and you'll be asked for a large payment upfront, sometimes as much as $1,000 to $1,500.

In one typical scam, the credit repair organization will tell you that you'll get a brand-new Social Security number.  Since the Social Security number is new, it won't have any blemishes on it and your credit will be perfect.  Unfortunately, the Social Security Administration (SSA) almost never gives out a new Social Security number -- even to people who have legitimately had their number stolen and used over and over again.

Instead, the SSA expects that you will work hard to clean up the fraud, or at least do what you can to live with it.  Only in extremely rare cases, such as when a Social Security number has been stolen and used by dozens of people will the office consider issuing someone a new number.

So what is the credit repair company actually doing?  They are filing for a new number, but it's an EIN, an employer identification number.  This is a nine-digit number (the same as a Social Security number) that is used to identify companies to the IRS or for tax payment purposes only.

If you start using an EIN as your Social Security number and change how your income is reported to the IRS, you'll find yourself in a pickle when it comes to retire and the IRS has no record of your work history.  You might also find yourself accused of conspiring to commit fraud.

Another common credit repair scam is to dispute all of the negative information on your credit history.  Under federal law, a credit reporting bureau must investigate all disputes within 30 days.  If the bureau can confirm the negative information, it stays on your report.  But if it can't confirm it, the information is pulled off of your credit history.

But here's the key: While the information is being disputed, it temporarily disappears from your credit history.  So, your credit history looks perfect, even though it isn't.  At the end of the 30 days, the credit repair company will dispute all of the charges again.

For a big fat fee, credit repair companies promise you the moon.  Unfortunately, usually all you're going to get is trouble -- and a much thinner wallet.

By: Ilyce R. Glink, www.inman.com

Information provided by Ted C. Jones, PhD, Senior Vice
President—Chief Economist, Stewart Title Guaranty Company. --April
2009

Continuing signs that the economy may be ready to turn around kept buyers out of the bond pits, but sellers made their mark.  Over the past five weeks the 10-year note yield, which moves in the opposite direction of price, has risen more than 50 points.

Fed chairman Ben Bernanke told the Joint Economic Committee on Tuesday that the economy is bottoming out and will likely turn up later this year and added that inflation is not a worry at this time.  He cautioned, however, that recovery will be slow to gain momentum and the financial markets/banking system remain fragile.  But he admitted the housing market is showing signs of life.

These comments dampened the need for safe haven buying.  And the relatively decent economic news reinforced this notion.  Even Friday's employment report for April showed a marked improvement.  Although 539,000 jobs were lost last month, it was a big improvement over the revised 699,000 lost in March.  The unemployment rate rose to 8.9%, a 26-year high, and ignited some buying in Treasuries.

On Monday construction spending for March showed a 0.3% gain versus the previous 1% loss.  And pending home sales in March rose 3.2%, up from a 2% increase in February.  On Tuesday the ISM index on the service sector for April also made a healthy gain, rising to 43.7 from 40.8.  However, any number below 50 shows sector contraction.

Thursday's first-time unemployment claims dropped again -- this time by 34,000 to 601,000 for the week ended May 5.  This is the lowest level since January.  And the four-week average also fell to 623,500.  But continued claims, those collecting benefits for more than one week, rose by 56,000 to a new high of 6.35 million, and 27% have been out of work for more than six months.

Also on Thursday, 1^stquarter productivity and costs showed a 0.8% increase in worker production versus the previous 0.6% slide.  Costs -- salaries, wages and benefits -- came in at 3.3%, better than the 4^thquarter 5.7% increase.

Mortgage applications fared better during the week ended May 1.  Purchase apps rose 5.5%, while refis were up 1.2%, according to the Mortgage Bankers Association.

This week starts out slowly but gathers momentum as the reports unfold.  Tuesday we'll get results on the U.S. trade deficit for March.  After several months of decreases, analysts are expecting an increase to $29.2 billion, up from the previous $26 billion gap.

The report on retail sales for April is due Wednesday, but the predictions, if met, shouldn't move the markets.  Sales are expected to fall 0.1%, which would be a huge improvement over the 1.2% decline in March, but negative nevertheless.  When auto sales are excluded, the forecast is 0%.  That also is far better than the previous 1% decline.

Business inventories for March are also expected to edge down -1.1% from the previous -1.3% decline.  Import and export price indexes are never estimated, but April's numbers will be watched.

Of course Thursday means first-time claims for the week ended May 9.  We've seen three straight weeks of declines -- a good sign, but as long as continued claims keep rising the employment picture is of major concern.

We also get April's producer price index (PPI), which looks for inflation at the wholesale level.  Economists don't think they'll find any, as the PPI is expected to rise only 0.1% versus a previous 1.2% decline.  The core rate, which eliminates volatile food and energy costs, is also expected to rise 0.1% versus 0.2% in March.

The consumer price index, which is due Friday, monitors retail price inflation.  Again, no signs are expected.  In fact, economists believe the CPI will rise only 0.1%, while the core rate will come in at 0%.  It might be a different picture in May with oil prices rising daily.

Industrial production/capacity utilization in April is also on the docket.  Production should fall 0.6%, better than the 1.5% decline in March, indicating more woes for manufacturing.  Capacity utilization could also tumble to 68.9% from 69.3%.  The NY Empire State manufacturing index for May could fall to -15 from -14.65.

Finally, the University of Michigan/Reuters' consumer sentiment survey is expected to hold at 65.

Although quarterly reports and economic releases were nothing to get excited about, a great many of them beat analysts' expectations and that's what counts.  Wall Street reacted positively, leaving bonds in the dust.

U.S. Treasury securities were under selling pressure for the better part of last week and by Thursday's close the yield on the benchmark 10-year note, which moves in the opposite direction of price, hit 3.13% -- its highest level since Thanksgiving 2008.

Statements made after the Fed meeting, which tilted toward optimism, also weighed on Treasuries.  The Fed said the economy is getting worse, but the pace of decline has slowed and the outlook is better.  It also noted that the financial markets have improved "modestly" and inflation is expected to remain "subdued."  Another huge supply of government debt heading to the auction block also worried traders, even though demand continues to be strong.

Consumer confidence surged to 39.2 in April from 26.9 in March -- the fourth largest increase in 32 years, according to the Conference Board.  "Future expectations" pushed the index higher.

Wednesday's release of 1^stquarter GDP showed a steeper-than-expected 6.1% decline.  The reasons: a sharp drop in exports and low business inventories.  Low inventories, however, could be interpreted as a good sign, as production may have to be ramped up.

Personal spending in March fell 0.2% after two months of gains, but the savings rate rose 4.2%.  Personal income dipped 0.3%, with wages and salaries falling 0.5%.  The 1^stquarter employment cost index followed suit, showing incomes rising by a weaker-than-expected 0.3% versus a 0.6% increase in the 4^thquarter.

First-time jobless claims for the week ended April 24 dropped by 14,000 to 631,000 and the four-week average, which smoothes volatility, declined to 637,250.  But continued claims, people collecting benefits for more than one week, marched to a new high of 6.27 million.

The Chicago PMI, which looks at April manufacturing conditions, jumped to 40.1 from 31.4 in March.  While still well below the 50 mark that indicates sector contraction, it was a leap in the right direction.

Friday's reports showed the ISM index on April manufacturing conditions rising to 40.1 from 36.3, the best reading since September.  But March factory orders fell 0.9% after a 1.8% increase in February.  The University of Michigan/Reuters' consumer sentiment survey hit 65.1, up from 57.3 in March -- also the highest reading since September.

This mostly positive news ignited another round of selling in the bond markets, with yields moving even higher.

Applications to refinance took a dive during the week ended April 24, falling 21.9%.  Purchase applications, however, dipped only 0.6%, according to the Mortgage Bankers Association.

This week has a couple of important releases, but none more so than April's employment report, due Friday.  Analysts believe another 620,000 will have been pared from non-farm payrolls, which would actually be an improvement over the 663,000 lost in March.  But the unemployment rate is predicted to hit 8.9%, up from 8.5%.

This week begins with construction spending for March.  A 1.4% decline is expected, which would be much steeper than February's 0.9% loss.  On Tuesday the April ISM index on the service sector comes out and analysts are looking for a slight improvement.  They believe it will rise to 42 from the previous 40.8.

Thursday we look at 1^stquarter productivity and costs and somewhat better news is expected.  Productivity should rise 0.9% -- better than the 0.4% 4^thquarter decline.  And costs are expected to show a 2.5% increase, which is a whole lot better than the previous 5.7% increase.  In a perfect world productivity should outpace costs.  But the threat of inflation is not on the radar right now.

First-time jobless claims for the week ended May 2 are also on tap and of course they will be watched -- especially the escalating continued claims.  But initial claims have been too volatile to detect any trend.

After the April employment report on Friday we get the latest on wholesale inventories for March.  Because these data do not enlighten us about personal consumption the report is largely ignored.  However, wholesale inventories are expected to fall only 1% versus a 1.5% decline the previous month.

Top Five Recommendations for Qualified Homeowners, Buyers and Sellers

"There are five distinct strategies that can help homeowners, buyers, and sellers successfully navigate today's turbulent mortgage and housing markets," said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.

Number 1: Understand and utilize the new tax credits

Many home owners are not aware that the latest government stimulus package gives them a special tax credit of up to $1,500 for making certain home improvements.  Also, if you are buying a primary home and you have not owned a primary residence in the last three years, you may qualify for the new $8,000 first-time-homebuyer tax credit.  "Although you cannot use the credit to help with your down payment, the credit can be claimed on your 2008 tax returns if you buy the home in 2009," Nicholas said.  "This means that even if you buy the home after you file your taxes on April 15, you can simply file an amended 2008 tax return and the IRS will send you a refund check for $8,000."

Number 2: Consider paying points for your mortgage transaction

Mortgage "points" are upfront fees that you pay in order to lower your mortgage interest rate.  One point is equal to one percent of the loan amount.  "In the past, it almost never made sense to pay points in most situations where you were refinancing your mortgage," Nicholas said.  "However, enormous changes have taken place in the mortgage securitization process.  Wall Street investors are demanding higher upfront fees for borrowers with credit scores below 740, and mortgage lenders don't have as much flexibility when pricing loans.  This means that the interest rate savings can be very significant when you pay upfront points."

"If you are buying a home, negotiate into your purchase contract for the seller to pay points on your behalf," Nicholas said.  "In addition to the significant interest and payment savings you will enjoy, you could also receive a tax deduction this year for points paid by the seller on your behalf.  If you are selling a home, offer to pay points for potential buyers as part of your marketing efforts.  This will make your home more affordable for potential buyers and help your listing stand out from the glut of available inventory in today's market."

Number 3: Carefully structure your real estate short sale transaction

A real estate short sale is when a home owner sells their property for less than what they owe on the mortgage, and the lender gives their permission to do this by forgiving the difference and/or releasing the mortgage lien on the property.  "Short sales are very common in many markets because of negative home owner equity due to the steep decline in house values," Nicholas said.

"If you are selling your home as part of a short sale transaction, make sure to negotiate for a release and a full satisfaction of the mortgage from your lender.  Depending on the laws of your state and your individual circumstances, lenders may be able to wait a year or two for you to improve your financial situation, and then file a deficiency judgment against you to try and recover the money that you still owe them.  The only way for you to avoid this risk is to have the lender not only release the mortgage lien, but also agree in writing to a full satisfaction of the mortgage."

If you are a buying a home as part of a short sale, Nicholas advises you to take steps to make sure the deal is closeable.  "It is estimated that approximately 30 percent of short sale listings are not closeable deals because the lender simply won't approve it.  In most of these cases that aren't closeable, the first or second mortgage lender is expecting home sellers that have money to contribute something to the deal.  One way to avoid getting caught up in the middle of this is to have your Realtor verify the status of the seller's hardship package with their lender."

Number 4: Utilize the special options available for seniors age 62 or older

"If you are 62 or older, you could use a reverse mortgage to buy a new home without making any monthly mortgage payments," Nicholas said.  "This is a fantastic opportunity if you are contemplating a move but are worried about trying to sell your current home into a down market.  Additionally, reverse mortgages can be used to supplement your retirement income that may be declining due to unfavorable economic or financial market conditions."

Number 5: Carefully interview your mortgage professional

With all the noise, confusion, fear and misinformation in today's market, it is more important than ever for you to consider working with a mortgage specialist who has the training and experience to guide you through the home buying or refinancing process.  The largest financial transaction of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way. 

By: Gibran Nicholas, www.mortgagepress.com

The yield on the benchmark 10-year Treasury note, which moves in the opposite direction of price, fell last Monday as investors headed for the safe haven of bonds, but after that sellers outweighed buyers.  The yield on the 10-year, which guides mortgage rates, remained relatively high for most of the week.

There was plenty of weak economic news that could have brought buyers into the bond market, but good quarterly reports from the financial sector and other key businesses kept Wall Street busy.  Bonds were ignored.

The week began with leading economic indicators for March, which fell 0.3% after making a previous 0.2% gain.  Of the 10 indicators that attempt to look at our economy six to nine months ahead, six were down, three were up and one was unchanged.

The next reports didn't come until Thursday and they weren't encouraging, either.  Existing home sales in March fell 3% to an annual rate of 4.57 million, while the median price continued its slide -- down 12.4% from one year ago.  Inventories also declined 1.6% to 3.74 million homes -- a 9.8-month supply.

First-time unemployment claims for the week ended April 18 rose by 27,000 to 640,000, while the four-week moving average dipped to 646,750.  But continuing claims -- those collecting benefits for more than one week -- continued rising.  They're at 6.14 million.

Orders for durable goods in March wrapped up the week, but they fell for the seventh time in eight months.  Orders for durables, items meant to last three or more years, declined 0.8% after rising 2.1% in February.  But business spending on capital equipment rose 1.5%.  Separately, new home sales in March dipped 0.6% to an annual rate of 356,000 units, down from an upwardly revised 358,000.

Refis continued to lead mortgages applications, according to the Mortgage Bankers Association.  Refis rose 7.7% during the week ended April 17, while purchases declined 4.2%.

This last week of the month features a number of key reports and a statement by the Fed after its Wednesday meeting.  Although no rate change is expected, the markets want to hear the Fed's assessment of economic conditions, its outlook and its plans to buy more Treasuries in order to hold lending rates down.

Consumer confidence for April comes out Tuesday and it should increase for the second straight month.  Analysts believe it will hit 28.8 -- up from 26 in March and February's all-time low of 25.

One of the most important reports -- advance 1^stquarter GDP -- will be released Wednesday, and it's expected to drop 4.9%.  However, two revisions follow and further declines are expected.  Final 4^thquarter GDP fell -6.3%.

Thursday is the busiest day for reports, beginning with first-time jobless claims for the week ended April 25.  They've been up and they've been down but remain too volatile to establish a trend.  Most economists, however, see job losses rising into next year.

We also get personal income and personal spending for March, which should be little changed from February.  Income is expected to fall 0.2%, matching the previous data.  Personal spending, however, could show slight improvement.  It is predicted to decline 0.1% -- a tad better than the previous 0.2% dip.

The 1^stquarter employment cost index (ECI) should make no waves.  This index monitors the cost of wages, salaries and benefits paid by employers.  It is expected to rise 0.5%, just as it did in the 4^thquarter.

Thursday's final report, the Chicago PMI manufacturing index for April, is expected to rise to 34 from 31.4.  This would be the first increase in several months.  The national counterpart of that index, the ISM report on manufacturing nationwide, follows on Friday and it, too, is predicted to rise to 38.0 from 36.3.  If these reports come in on target they would provide a small ray of hope for the hard-hit manufacturing sector.

Unfortunately, factory orders, which rose 1.8% in February, are expected to turn negative in March, falling 0.7%.  Friday's last report, the University of Michigan/Reuters' final consumer sentiment survey for April, should not change much.  Analysts believe it will come in at 61.5, which is a tad below the 61.9 of two weeks ago.

The Fed is meeting April 28th and 29th, and its actions could impact home loan rates! Don't Wait. Call me before the Fed acts so we can review your situation and determine if there's anything you need to do. 

Call: Jason Outhouse, Prodigy MBO, (512) 334-9815