Articles Posted in Credit and Bankruptcy

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In February of this year, the nation’s five largest mortgage servicers agreed to a landmark $25 billion settlement with a coalition of state attorneys general and federal agencies. The settlement addresses past mortgage loan servicing and foreclosure abuses and fraud, provides substantial financial relief to borrowers harmed by bank fraud, and establishes significant new homeowner protections for the future. The settlement involves country’s five largest loan servicers: ALLY/GMAC, BANK OF AMERICA, CITI, JP MORGAN CHASE AND WELLS FARGO. Arizona is included in the settlement.

The National Association of Attorneys Generals provides an excellent summary of the Settlement on their website at naag.org. Some highlights of the web site summary are:

Servicers commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction. Servicers will likely provide up to an estimated $32 billion in direct homeowner relief.

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Can you really “repair” your credit score? Sure…but… if you are considering this option and are going to hire someone to help you do it, be aware of the following:

1. If the credit repair company guarantees the removal of all negative marks on the credit report even if they are true, they are selling the proverbial “bridge”. Credit reporting agencies aren’t required to remove correct information. They are required to remove correct and negative information after a 7-10 year period. (Credit 7 years, Bankruptcy 10 years). Often, the process used to “remove” correct info will cause the credit reporting agency to remove it temporarily, but once the creditor realizes that it is gone, they will simply update the account, if they hadn’t already.

2. If the credit repair company asks you to create a new identity and thereby a new credit history…run away. This is illegal, but it also doesn’t work. You will still owe the debt and can be sued.