TheCreditGuyTV Podcast

Young people go to college and they take out all this debt at a young age they don't realize, the choices that they're making. More importantly, and what it is like to live with it. If you become a doctor you could wind up with two hundred thousand or a quarter-million dollars in debt.

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This week I talk with Kevin Elsenheimer, the executive director of Michigan State Housing Development Authority.

http://www.michigan.gov/ownmihome

Dave: Kevin thank you for being here I wanted to let people know a little bit about MSHDA and what is MSHDA. What function is it serving here in Michigan?

Kevin: MSHDA is the state's housing bank basically we are part of state government but we're a little bit different because we can provide loans to individuals. The Constitution says the state of Michigan can't do that. We have a particular charter that allows us to act as the state's bank and we do several different things for example; we do multifamily development and lending for low-income housing projects around the state but we also have a very robust single-family loan program where we'll go out and buy mortgages from banks credit unions around the state that we have clients that will be interested in our products.

Big Changes are coming to Rural Development October 1st 2016. Mike Archer and I get together to talk about them in this interview.

Dave: I wanted to talk about the changes coming up next week with the Rural Development loans, can you tell us a little bit about RT loans?

Mike: Absolutely! A Rural Development loan is one of our favorite products here in Jackson. We are rural community and RD is designed for people purchasing homes this type of community. It is a fantastic product. It's a 0% down; interest rates are fantastic. They do charge funding fees which were going to talk about in a minute. They do not have Private Mortgage Insurance but they do have a monthly guarantee fee, but no PMI.

Dave: So zero down?

Mike: Zero down.

Dave: A lot of people think that it has to do with farms.

Mike: Actually we cannot do farms on this product. With RD loans anything income producing does not qualify. It's designed for people purchasing a home, a single-family residence within a rural area.

Dave: It's really based on where the home falls on the map that USDA designates?

Mike: Exactly there's a map, that will be linked below, so just plug in your property address and it tells you if you're eligible, it very simple.

Dave: Mortgage 1 is one of the largest providers of that type of loan in Michigan?

Mike: We are a market leader in the RT lending which were all very proud of.

Dave: Mike could you talk a little bit about the changes that are coming up for October.

Mike: October first we have huge changes in the RD funding fee. Rural Development charges an upfront funding fee very similar to a VA loan for people that know what a VA loan is like. RD charges a funding fee of 2.75 percent which is financed into the loan. That fee is dropping from 2.75 to one percent.

Dave: That's a huge savings.

Mike: On $150,000 loan that's a savings of about $2,600 dollars.

Dave: That's a lot of money!

Mike: Also, the monthly guarantee fee is dropping from .50 Percent to .35 which is a savings of about ninety dollars a month.

Dave: On that hundred fifty thousand loan?

Mike: Right

Dave: That's not a lot, but it's something and Mortgage Rates are so low right now.

Mike: Rates are fantastic right now, again near historic lows, and who know where rates are going. It's a tremendous time to take advantage of this product especially.

Dave: We have branches all over Michigan but if they want to reach you directly here in Jackson, how would they go about doing that?

Mike: In Jackson we have an awesome website its www.mortgage1jackson.com or our phone number here 517-315-4626.

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp

Dave: …with Airbnb proprietor Sharon, I am actually staying with Sharon here in North Muskegon. A lot of people try to repair their credit and what they struggle with is raising money. I think Airbnb is a great way for consumers to raise money and then pay off some of their bills to improve their credit score. Sharon what was it like starting to become an Airbnb provider?

Remove Collections using the National Consumer Assistance Plan.

In March of 2015 the New York Attorney General entered into an agreement with the three major repositories. They agreed that changes would be made regarding how some debts would show up on consumers credit reports.

One of those things was how a debt was showing up without the consumer actually signing for that debt. Meaning that if a consumer received a parking ticket those things were showing up on consumers credit reports. That's not really a debtor agreement that a consumer entered into. The consumer did not agree to pay back that debt.

Trended Credit Data unintended consequences.

Fannie Mae has postponed(until further notice) the new automated underwriting system DU 10, including introducing Trended Credit Data.

Fannie Mae was expecting all three of the repositories to be ready with their trended credit data. Unfortunately, Experian® is not ready with their account history. Fannie initially considered moving forward using the old FICO®5 scoring model with Trended, but that is now on hold.

Trended credit data is an important improvement to the FICO® scoring model. FICO® scores were designed to predict the likelihood of repayment based on a consumers past payment behavior.

What consumer below do you think is more likely to pay their bills in the future?

• The consumer that keeps their balances low and pays more than the minimum amount over the course of two years?

• The consumer that keeps their balances maxed out during the same time period and makes the minimum payments. Then that consumer pays off their credit cards in the current month?

Fannie Mae is making more announcements on how they're going to handle trended credit data. Trended Credit Data live June 25th, The repositories TransUnion and Equifax have introduced the trended credit data on all credit reports, Experian has not. I believe that's why Fannie is delaying the roll-out of the credit scores that include this information; FICO® 9 scores and Vantage 4.0

http://thecreditguy.tv/trended-credit-data-live/

I was invited on a Lansing radio show last week. This was the interview…

Michael Patrick Shields: What if your credit score was 1000? If I had a credit score like that could you get anything you wanted?

The Credit Guy: Well the scoring model does not go up that high, anything above 760 you can have whatever you want and you get the best rate available.

Michael Patrick Shields: You can imagine why people are disturbed by this credit number because when you and I were younger there was no such thing as credit scores.

The Credit Guy: True, Yes.

Michael Patrick Shields: Now we're judged immediately by the Credit Score Number, this mysterious number that comes from, we don't know where…

The Credit Guy: Right

Michael Patrick Shields: …and they're different credit reporting agencies and this number controls your life.

http://thecreditguy.tv/what-if-your-credit-score-was-1000/

I really do love it here in the tiny house. This week I will show you the bathroom and the bedroom today in episode number four.

I had a question come through on facebook about a borrower that a mortgage lender was working with, and the borrower had no revolvingaccounts except for one that had gone dormant.

The loan officer’s question was, “If the borrower reactivated an old account, would the borrower see a boost in their credit score?” and of course it will. Especially, if the borrower only has one revolving account. Revolving accounts are very important to a credit score, If the borrower has one revolving account reactivated and it has seven years of good payment history, the borrowers credit score will improve because of the benefit from all of that good history on the account.