The City Council also will be asked Tuesday to support legislation that would reform “payday loans.”

Payday loans are cash advances for up to $500, secured by a personal check from the borrower.

The loans often carry significant fees and interest rates, and are exempt from state law limits on the amount of interest that may be charged.

The city last year called for legislation that would limit to 45 percent the annual interest rates and other fees that payday loan companies can charge.

Carl Castillo, the city’s policy advisor, said that idea was met with a “significant amount of resistance.”

This year, Castillo said, the new approach will be to ask for limits on how many times a payday loan can be rolled over.

“The city supports legislation to prohibit lenders from making consecutive, repeated payday loans to consumers,” according to the plan. “More restrictive regulation of these companies will lower the risk to low income individuals and families of becoming trapped in the cycle of poverty.”

The City Council is expected to approve its legislative goals later this month, and present them to area lawmakers during a breakfast in October.

The council would then revisit its goals in February next year, as lawmakers begin drafting specific bills.

Have your ducks in a row before you apply for a home loan

FINANCING BY ELLEN JAMES MARTIN
September 19, 2008

By now, many economists had projected that the “credit crunch” would have eased. But prospective home buyers—including those with stable jobs and decent credit—still confront unusually high hurdles to gain approval on their home-loan applications.

“People in the mortgage industry are extremely hungry for business. But they’re also extremely picky who they lend to. The last thing they want are more foreclosures coming back to haunt them,” says Blaine Rickford, president of an independent mortgage firm.

Mortgage officers—those who take loan applications and deal with the public—prepare files on would-be borrowers. Yet no file is ever approved by a bank unless its underwriters give the green light.

“You never get to meet the underwriters—these loan supervisors are off-limits to borrowers. But mortgage officers talk to them directly and can plead your case if they think you’re a good bet,” says Rickford, who’s worked in the mortgage field since 1978.

Develop a positive rapport with you’re mortgage lender and you’re more likely to reach your home-buying goal, says Leo Berard, charter president of the National Association of Exclusive Buyer Agents (naeba.org).

“You don’t want to torpedo your chances of owning a home because of some financing glitch. Those who win in the mortgage process take a businesslike approach,” Berard says.

Here are pointers for home-loan applicants at a time of tight credit:

Educate yourself on the basics of mortgages before you apply. Many buyers, and particularly novices, are in the dark about mortgages and how lending works. Because they feel ignorant on the topic, they hesitate to pose important questions.

But as Berard says, the basic concepts of mortgage lending aren’t so complex that you can’t grasp them in a short period of time. Start with the Internet, taking a look at the “mortgage” entry in Wikipedia (wikipedia.org), the free online encyclopedia, and its related links. You can also go to the U.S. Department of Housing and Urban Development’s Web site at hud.gov.

Also, Berard encourages you to stop by your local library to check out a book or two on the topic, such as “Mortgages for Dummies,” co-authored by Ray Brown and Eric Tyson.

Knowing a bit about mortgages before you apply will help you be more adept at choosing the best possible home-loan product for your situation. You’ll also be less vulnerable to unscrupulous lenders, Berard says.

Arrange a face-to-face meeting with your mortgage lender. Many mortgage officers are happy to entertain applications from would-be borrowers they’ve never met. Technically, there’s no reason you can’t apply for a home loan over the phone.

“But for important business transactions, it’s always to your advantage to meet one-on-one,” says Berard, a veteran real estate broker.

A face-to-face meeting is especially important for those expecting to confront unusual barriers to loan approval, Rickford says. These include people who are self-employed, have credit scores below 720, or have limited assets—such as savings—on which to fall back if they can’t meet their mortgage payments.

“An in-person interview adds to your credibility as a borrower. You’ll be more believable when you attempt to explain your financial issues,” Rickford says.

Also remember to dress the part when you go to the lender’s office. You needn’t wear a business suit but you should look neat.

Have your documents ready when you reach the lender’s office. Mortgage officers are working harder than ever to assemble files that meet the exacting requirements of their underwriters. They’re very appreciative of borrowers who make their jobs easier by showing up well-prepared.

Rickford says ideal loan applicants arrive at their initial appointment with extra copies of the essential documents their lender will need. These include the most recent month’s worth of pay stubs and W-2s for the last two calendar years. You’re also likely to be asked for two years’ worth of tax returns, along with statements showing the present value of your holdings—such as savings accounts, stocks, bonds and retirement funds.

Mortgage officers are also impressed by loan applicants who’ve scrutinized their credit reports in advance of a meeting. Under federal law, you’re entitled each year to one free credit report from each of the three large credit bureaus: Equifax, Experian and TransUnion. Just go to this Web site: annualcreditreport.com.

You’ll also want to access your credit scores. Such scores, which draw on data from the credit bureaus, provide lenders with a quantitative measure of a person’s credit risk. Most lenders use FICO scores, pioneered by the Fair Isaac Corp.

Stay in close touch with your lender until your mortgage is approved. Given the recent turmoil in the mortgage industry, buyers are less likely than before to get early approval for financing on a home they’ve picked out. More questions will probably arise as you go through the application process, and some will require a written response from you.

For instance, suppose your credit reports show that you were late in making a payment on a car loan or credit card. The processing of your mortgage could be held up until you draft a justification for such credit blemishes, such as a temporary lapse in employment when you were between jobs.

Lenders appreciate loan applicants who stay in close touch and are proactive about resolving issues that surface along the way, Berard says.

“Call your lender once or twice a week. Ask politely if you can do anything to help get your mortgage through. Like anyone in a service field, lenders much prefer dealing with folks who are cooperative,” he says.

Universal Press Syndicate
Source: Chicago Tribune

Guampdn.com

By Alicia G. Limtiaco • September 8, 2008

Almost every day, you’re involved in some type of financial transaction that requires an educated decision.

Whether you’re shopping for a mortgage or auto loan, checking the accuracy of your credit report or looking for ways to protect your information, credit is much more than a rating or piece of plastic.

If you are in the market for a loan or credit, you may be tempted by advertisements and Web sites that guarantee loans or credit cards, regardless of your credit history. Fraudsters employ strategies such as these to lure consumers into applying for advance-fee services.

Here are red flags that you should look out for:

A lender that isn’t interested in your credit history. A lender may offer loans or credit cards for many purposes. But one who doesn’t care about your credit record should give your cause for concern. Ads that say “Bad credit? No problem.” or “We don’t care about your past. You deserve a loan.” often indicate a scam.

Fees that are not disclosed clearly or prominently. Scam lenders may say you have been approved for a loan, then call or e-mail demanding a fee before you can get the money. Any up-front fee that the lender wants to collect before granting the loan is a cue to walk away.

A loan that is offered through the telephone. It is illegal for companies doing business in the U.S. to promise you a loan by phone and ask you to pay for it before they deliver.

A lender that uses a copy-cat name. Crooks give their companies names that sound like well-known or respected organizations and create Web sites that look slick. Some scam artists have pretended to be reputable organizations, and some even produce forged paperwork or pay people to pretend to be references.

Remember, just because you’ve received a slick promotion, seen an ad for a loan in a prominent place in your neighborhood or through local media or on the Internet, don’t assume it’s a good deal — or even legitimate. Scam artists like to operate on the premise of legitimacy by association, so it’s really important to do your homework.

Alicia G. Limtiaco is the attorney general of Guam.

My Central Jersey

By MICHAEL DEAK • STAFF WRITER • September 7, 2008

BRANCHBURG —For township resident Nikolaos Renieris, his one-man legal fight against one of the country’s largest banks is a matter of both principle — and interest.

Renieris, who lives in the Neshanic Station section of the township and owns Louka’s Last American Diner on Route 22, recently filed a lawsuit in the Civil Division of Superior Court in Somerville against Bank of America.

Renieris, representing himself in the case, is claiming the bank libeled him by falsely reporting to credit agencies that he was in default on a home loan that he had already paid in full.

Because of those reports, Renieris said his credit score has been damaged and he is assessed 2 to 2.5 percent more in interest on loans and credit cards.

Shirley Norton, a public relations representative of Bank of America, said the bank has no comment on the case because it has not yet been served with the papers.

In June 2000, Bank of America gave Renieris a loan to buy a Toll Brothers home in Stuart, Fla., he said.

The loan was paid in full in December 2003, but Renieris said his problems started the following month when Bank of America began reporting that Renieris was delinquent on the loan and, later, in default and the property was in foreclosure.

Renieris said he decided to file the lawsuit after repeated unsuccessful attempts to have the bank correct the mistakes.

Renieris said he suspects the “bureaucratic” mix-up could be connected to the title company in the property transaction.

“This is just ridiculous,” he said. “It’s absurd.”

Renieris said his lawyer advised a lawsuit may be the only way to get the attention of the bank.

“I just want to get it fixed,” he said.

He decided to represent himself on the advice of his lawyer who said Renieris could file the lawsuit himself and save $2,000 to $4,000 in legal fees.

Though Renieris said he has no money problems, he feels sympathetic toward those in a similar situation who are squeezed for funds because of higher interest rates on credit-card bills, car loans and even auto insurance premiums.

He said that because of the bad credit score, he has been constantly contacted by credit counselors who have offered to help him with his credit.

For Renieris, the lawsuit is about more than just the extra interest he has to pay on credit-card bills, it’s about the principle.

“I don’t know why I’m being penalized,” Renieris said. “Why am I getting screwed?”

Michael Deak can be

reached at 908-707-3134 or

mdeak@mycentraljersey.com.