TheCreditGuyTV Podcast

Hi everybody Dave Sullivan here for the Credit Guy TV with special guest...

Charles Green of the Small Business Finances Institute

Dave: Charles thanks for reaching out to me on LinkedIn, I have really enjoyed our relationship. You have found a niche, something that the commercial banking industry needs. Tell me a little bit more about that.

Charles: Dave, I have been a career banker since the late seventies, when I joined the industry, I was given about eight weeks of training in my first two years of employment. I was really not worth much to the company that hired me, but after the S&L crisis internal training programs for most banks sort of went away and it's never really come back, although there have been some really good times since.

I started a training operation to create content to train commercial lenders the fundamental skills needed to evaluate, fund and close commercial loans across all different product types.  We plan to deliver this through streaming video across the nation.

Dave: Training is so important and has been overlooked in the commercial space. The mortgage lender has really been trained to death today and commercial lending is ignored completely.  There is a real need for this don't you agree?

Charles: I do, mortgage brokers are licensed and that gives them particularly standards that they have to adhere to.  They can be evaluated in a simpler way against those standards.  In commercial lending, you have a diversity of product lines you've got regulated banks and non-regulated finance companies that provide different financing products.  It can be a big sea of people floating around with different kinds of experience with products to offer, that just sort of gets lost to them in the fray and customers suffer consequences, because commercial customers don't always know who can help them and the person that they find might not know where to send them if they can't deal with the situation.

Dave: Many times commercial loan officers are really thrust into that position with little or no training. I think this product is very important and I flew down to Atlanta to meet with you to record a session on business credit.  I was very impresses with the professionalism of the organization you have down there, talk a little bit about the teachers that you found for the program as well as your background.

Charles: I have been away from active banking for almost five years, so I had adopted the job title of "Recovering Banker". I still retained quite a bit of this knowledge from my thirty five year career. I have also have recruited a lot of other leaders who have different perspective and experience in particular credit lines like:

In addition, we're putting together a group of professionals who haven't been lending the money but they've been supporting the lending industry through providing their professional services for the due diligence. You're joining us was one such instance where you're an expert on credit data, credit histories and how the FICO(r) score stacks up.  How credit scores can be accurate or sometimes not so accurate for business owners. Explaining these kinds of lessons, giving commercial lenders more context around the job that they have to do.  Similarly we have been working with a real estate appraiser and an environmental engineer that is going to help teach bankers how to evaluate property in terms of the environmental risk.  We have an attorney creating content about the different closing functions, the different contracts banks use, the different issues that can arise with the property title and so forth.

Dave: I think that is all key information and to have it all in a concise video format. I don't think it has been done before for the commercial lender and I'm very excited to be a part of it. Charles how can people find the products or take a look at what you have to offer?

Charles: Our website SBFI.ORG that stands for Small Business Finance Institute SBFI.ORG and there's a tab there that says “lender training” just follow the navigation from there to see everything we offer.

Dave: Thank you so much for being on the blog today, do you want to give out your email address so people can contact you directly?

Charles: Certainly [email protected] thank you so much Dave.

If you want to see more videos about credit and credit scoring check these out at www.thecreditguy.tv. If  you are a mortgage lender please share this on your Facebook or LinkedIn page.   If you have any questions, leave them down below I'd be happy to answer them.

90% of Top Lenders Use FICO® Scores

The first time that a borrower was late that resulted in that becoming a charge off or sold to a collection company. The date of first delinquency is the starting point. Seven years from the date of first delinquency is when that account will fall off. It’s not based on when the creditor wrote the account off or anything like that. It is the delinquency that caused the account to go bad. Seven years from that date, all bankruptcies also come off seven years except for chapter seven, which will stay on credit reports for ten years from the discharge date is when chapter 10 will be removed.

Unpaid tax liens will stay on forever, you can’t beat Uncle Sam. Good accounts will actually stay for ten years after they are closed. Most other accounts come off in seven years except for chapter 7 bankruptcy which goes ten years.

I was in front of the CFPB a while ago in Detroit. We were talking about credit and one gentleman stood up and he said collection companies are selling his debt over and over again, collection companies were selling his debt to other collection companies and the collection companies just keep reporting the same account over and over again....more

In the mortgage industry we are required to use FICO®5 and that is dictated by Fannie and Freddie. The version that we use to underwrite a mortgage in 2015 is FICO®5 with that version of the FICO® score if a borrower pays a collection that has a two year old reporting date and you make a payment, it changes the reporting date on that collection to today. Bringing the reporting date current will decrease your credit score every time (except one specific situation that we will talk about shortly) FICO®5 looks at the collection Like it just occurred.

In some of the newer versions of the FICO® scoring model(8&9) When collections are paid if will not count toward your credit score at all. I think that is a important improvement but we’re not quite there yet.

As of 2015, when old collections are paid, (even when the reporting date is current) a consumer’s credit score will go down initially for a month or two. Then it will start to improve slowly, PROVIDED nothing else is paid late and the revolving balances on other accounts are paid down.

The most important thing to remember is paying a collection will cause short-term pain for long-term gain except for one specific situation.

I found that if the collection is being reported recently (current month) and the balance is being reported as currently past due. If a consumer has that specific situation and they pay off the collection, then the next month their score will increase.

There are two caveats;

This is a very specific example, in every other situation paying off a collection is going to hurt your score initially. As time goes by consumers scores will increase if they have good credit habits.

If you’re looking for other ways to improve your credit score please go toGetLoanReady.com you can get free videos and worksheets to increase your credit score from a more holistic perspective. Never Pay Collections

Never Pay A Collection

If you want to see more videos about credit and credit scoring check these out atwww.thecreditguy.tv. If you are a mortgage lender please share this on yourFacebook or LinkedIn page. If you have any questions, leave them down below I’d be happy to answer them.

7 secrets of a perfect credit score

90% of Top Lenders Use FICO® Scores

http://thecreditguy.tv/holiday-credit-card-offers-their-effect-on-your-fico/

Warning the 10 % off may be on more than the merchandise. Big box stores credit card offers can hit your credit score in a big way make sure the discount is worth it. how many points will you lose? watch now and find out.

I was a guest on one of my friends first video blogs, Kelly Ross!!! She did great!!!

My friends at Ross Mortgage recently invited me to guest blog on their At Any Rate blog to talk about the dos and don'ts of using credit cards during the holiday season. It was Kelley's first time doing a video blog, and she did great! Here's a sneak peak of what we discussed:

Don't be tempted to open new credit cards (no matter how good the deal is)In the spirit of Black Friday and the holiday shopping season, credit card companies and merchants alike will be offering "special deals," such as cash-back bonuses, reward points and exclusive discounts for opening new credit cards. Don't let these offers tempt you to open new lines of credit, especially if you plan on purchasing a home in the near future.Do spread your credit card debt over multiple credit cardsSpreading your purchases across three to five credit cards, as opposed to putting every purchase on one card, will help keep your balance for each card below 50% and minimize the impact on your credit score.

To get more tips on using credit wisely during the holidays, read the full blog post on Ross Mortgage's At Any Rate blog.

In this video we talk about credit and credit scoring to follow the YouTube channel free click here= http://www.youtube.com/subscription_center?add_user=sullythecreditguy

Credit Scores Explained, Credit Explained, Scores Explained

This time I want to explain what a credit score is and what it’s really indicating. There are many different versions of credit scores available and there are many different companies that provide credit scores. FICO® for example has 49 different scores available to lenders that they pick from, depending on their specific needs.

VantageScore® is the new company on the block, that has come along and created a scoring models similar to FICO®’s and Vantage is on their third version of credit score. A credit score is not judge of your good or bad credit behavior. It is simply trying to predict the likelihood that a borrower is going to have problems paying in the future based in past payment behavior. Credit scores only look at your past payment history, it does not look at your age, race, where you live, it doesn’t look at your income it doesn’t look at ethnic background credit scores don’t look at anything like that.

It simply looks at how someone paid in the past and predicts how they will pay in the future. That is all that is included when you create a credit score.

If a borrower has a 600 credit score, every other loan is probably going to be a collection problem. If you look at loans provided to borrowers at 680 credit score you have one bad loan for every twenty one good loans.

A bad loan is not predicting that the borrower will default, but that there will be a collection problem. It may default, but there is a wide variety of things it indicate a bad loan. Someone who pays late all the time, somebody who misses some payments, that’s what they’re predicting.

Credit scores predict the likelihood that you’ll pay your bills on time in the future based on how you paid in the past. I can tell you very recently FICO® has entered into an agreement with a company to do some research on Facebook activity and how that could impacts credit scores so there looking at more sources of data than ever before.

Fannie Mae made an announcement last week regarding their desktop underwriting system. In 2016 they are going to start using trended credit data. You may not have heard this term before but trended credit data is really looking at your utilization ratio and they’re looking further back in credit history than they have in the past. This is primarily because Fannie believes trended credit data is a better predictor of someone’s ability to repay a debt.

What is trended credit data really looking at? Like I said it’s really looking at how consumers are paying down balances every month, are they transferring balances between credit cards, are they someone who leaves the balance high and just pays the minimum. What Fannie is trying to predict is will a borrower pay this mortgage back and how consumers carry balances on their credit cards is a very good indicator of whether or not they are ultimately going to repay a mortgage loan in addition to credit cards How will this change impact mortgage industry?

A recent publication from the CFPB stated concerns about credit invisibility. According to the CFPB 19.4 million Americans, representing 8.3 percent of the adult population do not have enough credit to generate a credit score.

hidden-consumers

Remember that with FICO® you need a six-month credit history with at least one open credit card before you can get a FICO® score. I think the CFPB is talking about people who are just starting out with credit or people who don’t use credit very much.

Maybe those people don’t want a credit score and that’s fine for them. They should consider that credit scores are used for auto insurance, homeowners and other insurance policies. Consumers should keep their credit profile open and active to avoid credit invisibility. One great way to do that is to have a utility bill or cable bill automatically paid with a credit card. If a consumer wanted to keep a low credit profile they could use just one credit card and then every month pay their credit card in full. That way you keep at least one account open and active so you avoid credit invisibility. That is a quick tip on credit invisibility.

credit-invisible-by-age

Be sure to check out my www.getloanready.com website it is free, there are worksheets and videos to help you take six steps to a better credit score. They can really help anyone and I hope you take advantage of it.

Credit Invisibility

If you are a mortgage lender please share this on your Facebook or LinkedIn page. If you have any questions, leave them down below I’d be happy to answer them.

How to improve your credit score after bankruptcy. I've seen people go through bankruptcy and then suffer for five or six years because they don't actively engage in their credit history after the Bankruptcy. Consumer’s think they have ruined their credit and give up. It is the wrong time to do that.

The day after the consumer’s bankruptcy settlement date, they should go through their credit report and make sure that every account that should have been included in the bankruptcy is showing that way on their report. Be sure to check all three repository files; TransUnion, Experian, and Equifax.

The second thing to look for is an account that was not included in the bankruptcy but has a pretty good history. One or two accounts that maybe were not used in a while. See if you can keep them active. Let’s say a Lowe's or a Home Depot. Something that was not included in bankruptcy that can be pulled through the bankruptcy. That will give you a long history. A long credit history is very important for a good credit score. So pull as many accounts through bankruptcy as you can. Accounts that have never been late are the best, that's a great way to rebound credit scores quickly.

Dave: Hello everyone Dave Sullivan here for the MMLA membership committee with…

Mitch: Mitch Kider with The WBK law firm located in Washington D.C.

Dave: Thank you for coming out to northern Michigan. This is a beautiful part of the state. We certainly like to have you out here. The October third TRID implementation date is coming up, what kind of things can we anticipate whenTRID comes to fruition?

Mitch: TRID comes to fruition October third, lenders need to be ready for it. I think that it will take some time to get used to it, quite frankly but I think the regulators atThe CFPB as long as the lender is acting in good faith, and making good faith effort, I think they will be fine. I think it will be quite some time before the CFPB begins to really scrutinize it and audit for it.

Dave: What advice would you give mortgage lenders to survive this craziness that is going on with the CFPB?

Mitch: There is a lot of craziness going on with the CFPB. They certainly have a bent that leans away from lenders they think that mortgage servicers for example are not fully doing their job and originators have some origination problems as well. To survive in today’s environment you have to have an excellent compliance management system and you need to make compliance your number one priority.

Dave: It really comes back to how much of an effort, how much time and resources lenders are dedicating to their compliance effort.

Mitch: That’s absolutely right, it is the effort, the resources. It is making sure that everyone in the company is a part of that as well.

Dave: I think many times as lenders go through their day they forget that everyone in the organization needs to know what the compliance policies are.

Mitch: That’s absolutely right, but believe me when the CFPB does a supervisory examination, they talk to everyone from the top to the bottom. They need to be sure everyone understand their role in compliance.

Dave: One of the things we talked about today was the RESPA interpretation by the CFPB and their interpretation the 40 year old RESPA laws. What should lenders be concerned about?

Mitch: It comes down to this, for a period of 40 years RESPA section 8 has been interpreted the same way. That is 8c especially 8c2 is an exemption to 8a, as long as you are paying someone that is referring business to you. If you are paying them for the value of other goods or facilities or if you are paying them for bonafide compensation for services they provide, then you are ok. The CFPB says no. If in fact you are getting referrals the CFPB says that you cannot be in a business relationship with that party. One has to tread very lightly over here, and recognize that the CFPB believes that any payments you make, even if they are legitimate payments, for other services rendered that they are being made to parties that are referring business to you, it violates section 8 of RESPA.

Dave: Thank you for coming out Mitch, how can people reach out to you or follow you?

Mitch: I would love for people to follow me, you can go to my websitewww.thewbkfirm.com or email at [email protected]

Dave: Are you on Twitter?

Mitch: I am on twitter, my handle is @mitchkider

Dave: Thank you.