In a 180 degree turn from practices just a few short years ago, banks are making it extremely difficult to get a loan, especially if that loan is a refinance.

The Obama administration’s program to encourage the refinancing of loans owned or guaranteed by Fannie Mae and Freddie Mac was supposed to benefit up to 5 million homeowners whose loans exceeded their home’s current market value by as much as 5%.

Then, this summer, the program was modified to allow refinance of a mortgage as much as 25% over current value.

But the loans aren’t being made as planned.

The Home Affordable Refinance Program, known as HARP, had helped only 116,677 homeowners as of September 30.

The problem? Lender participation is voluntary, and they don’t want to make the loans.

Some homeowners, feeling the pinch because of job layoffs or salary reductions, are trying to refinance to take advantage of the lowest mortgage interest rates since the 1940’s. Dropping from a 7 or 8% interest rate down to 5% rate would save them hundreds of dollars per month and in many cases, allow them to hang on to their homes.

For others, the dark specter of an ARM about to reset is spurring the need for a refinance. For them, a refinance into a fixed rate will likely mean the different between keeping their homes and losing them.

But the banks, citing a need for tougher standards, don’t want to make the loans. There are, however, those who believe that isn’t the real reason. It simply isn’t in their financial best interest to give homeowners lower interest rates if they can manage to make the payments at their current rate.

And that’s probably the same reason that so few have been able to get loan modifications under the administration’s TARP program. They seem to have an attitude that if the person has been managing to make the payment at 7%, they might as well keep on paying at that rate.

The TARP program made it mandatory for banks who accepted bail-out funds to participate in making loan modifications, but as of Sept. 1, only 1,711 permanent loan modifications had been completed. Only 350,000 trial modifications had begun, and some homeowners report that the 3-month trial has stretched to almost a year, with the lender putting them off and repeatedly asking for the same documentation from month to month.

Sadly, the refusal to grant refinance loans or loan modifications is pushing many homeowners into short sales and foreclosures.

The wisdom of these programs will likely not be known for several years, but one thing is certain right now. The less money consumers give directly to the banks, the more money they will have to spend in the marketplace, or to pay other bills that may have piled up during this recession. If the banks held up their part of the bargain this economy just might begin to recover.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

Job layoffs are a common occurrence these days, and employees are scrambling to find new jobs. But those who have traveled, entertained, or purchased office supplies on a company credit card have one more thing to be concerned about.

If your previous employer doesn’t pay that credit card bill, it just might end up on your personal credit report.

As you know if you’ve added a child to your own credit card account as an authorized user, your good credit can help them build their credit scores. But if you default on your credit card, you’ll be harming their credit rating as well.

Thus, the manner in which you were authorized by your employer to use a corporate card will play into whether your credit can be damaged by his or her failure to pay. One loophole that employers can use to shift the blame and the credit harm to an employee or former employee is to claim that the employee didn’t file expense reports on time.

As you might expect, filing expense reports might become difficult if an employee has been laid off – but if this has happened to you, you need to call and find out how to do it. Then document the fact that it has been done.

Another is to claim that the former employee used the corporate card for personal expenses. Thus, it is in your best interests to keep copies of every charge made on a corporate card – along with notations about the reason for the charge. If the card shows charges at a restaurant – document the reason why you were entertaining along with the names of the guests.

Any employee using a corporate credit card should check his or her own credit report to see if that card is shown. If not, then they probably don’t need to be concerned. However, since the economy is in a state of flux and confusion, and since not every company is operating within ethical standards, continuing to check after a layoff is important.

Should that former employer decide not to pay charges incurred by the employee, responsibility for those charges could transfer to the employee. The only safe route is to check your credit report monthly, and to read it carefully.

In the event that charges made on a corporate account do show up, it becomes the former employee’s responsibility to contact the credit bureaus and dispute the account. That’s when the employee’s careful record keeping will pay off.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

I found this video on the web and this goes to tell you why our country is in trouble, Wow…….!

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Q:

I am retired veteran trying to purchase a house as a first time home buyer my credit scores are in the 590 and have had three garnishments that have been satisfied as of April 09, also had two lates with Bally’s total fitness in May and April  of 09 which the membership has been cancelled but the lates are still reflecting on my credit report, I also have have a 2007 vechicle financed which have made on time payments, what can I do immediately to increase my scores have a deadline to meet by Jan/Feb 2010?

A:

Hello,

It sounds like the recent late payments caused your credit score to drop. It is really hard to determine what needs to be done without looking at your credit report. I will give some tips on what will increase your credit scores quickly. Here is an article I wrote a while back that will give these tips. Also remember late payments will be on your credit report for 7 years. Credit Repair tips here.

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Job layoffs, reductions in work hours, and the real estate crisis have put many Americans into a financial bind in which bankruptcy has become unavoidable. It’s a scary situation, especially when you want and need to get on with your life and you know you may want or need to use credit again in the future.

You already know that a bankruptcy will remain on your credit report  for ten long years. That’s not good, but there is a small “up side” to the situation.

One factor that many don’t consider is that after bankruptcy you may be seen as a better credit risk than before the bankruptcy. This is because you are no longer buried in debt, and because the law prevents you from filing again for 8 years.

This means probably won’t be entirely without credit for those ten years – especially not if you take steps to repair your credit as quickly as possible. You will, however, be subjected to higher interest rates and lower credit lines – especially during the first years.

So what can you do to rebuild your financial life and get back to some kind of normalcy?

The bankruptcy wiped the slate clean, so your task becomes one of building a new and better credit file – so get started right away.

Begin by controlling your spending and saving money in small ways that, taken together, can create a large impact.  Doing so will enable you to stay current with your obligations going forward. This first step is all-important.

Next, begin rebuilding a good credit history. Search for a “bad credit credit card” or apply for a secured card – first making sure the one you choose reports to the credit bureaus. Then use the card sparingly. Charge no more than 30% of your limit and pay the balance in full each month.

If you have a parent or sibling with good credit, ask to be added as a user on a credit card that they use sparingly. Don’t actually use the card to get back into debt. That won’t do you or them any good.

Be sure that all utility payments are made on time – because while they may not report your account in good standing, they will report  if it’s in default.

Begin building a reserve in your checking account, so you’re never in danger of an overdraft, and open a savings account.

Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.