The other day, some journalists blamed the sub prime problems on the credit repair industry!

But really, consumers wanting incorrect and libelous information taken from their credit scores isn’t all of the problem or even most of the problem. In fact, the mortgage industry itself and Wall Street bears much of the blame because they found a way to offload potential foreclosures on suckers - i.e. “investors” who looked to Wall Street for “Good Deals” Ha!

Chuck Colson weighed in on the economy’s sub prime woes yesterday in his commentary called Sub Prime Folly

Lenders knew, or should have known, that many of these sub-prime loans were foreclosures waiting to happen. But they couldn’t care less, because they could offload these mortgages to the new secondary mortgage market on Wall Street.

And a lot of people who previously could not afford a home were taken in by offers of low interest rates for the first two years. Many figured that if interest rates rose sharply and they could not pay the mortgage, they could simply sell their house, because by then the value of the house would have appreciated dramatically. But folks forgot that if something seems too good to be true, it probably is.

It was like a gigantic game of musical chairs. Everything worked fine so long as the music kept playing. But once house prices started falling, the bubble burst. The market for sub-prime securities collapsed. Overnight, credit tightened around the world, and stock markets went into a tailspin.

Despite all the obvious risks, lenders lent, unqualified borrowers borrowed, and Wall Street and mortgage brokers made money. Now in the last year, nearly 150 mortgage companies have gone belly up.

Caught in this sub prime folly? Perhaps we can help in some small way…

This is basically humorous.

On May 10th, 2007 the Boston Globe actually said that the credit repair industry is responsible for the sub prime mortgage problem sweeping the nation.

Why?

Supposedly the credit repair industry did such a good job, too many people were able to get mortgages.

I suppose this is a “back handed complement” of sorts that proves that to get a fair shake at a reasonable mortgage rate these days, ordinary consumers need professional credit repair help!

In reality the issue was not the credit score alone but the fact that the lenders did not document the customers’ ability to repay based on verifiable income.

FICO scores should be seen as a guide to the consumers propensity to repay and do not either verify or indicate the consumer’s income.

And - by the way - part of the issue has been the mortgages issued with no down payment whatsoever and therefore no potential loss to the borrower… it’s no worse in some ways emotionally to walk away from a rental property than a 100% mortgage because there’s no 10% or 20% downpayment to be lost.

But since we’re looking for scapegoats, why not blame the credit repair industry?

Malware is software that invades your computer without your knowledge, steals passwords and personal information and then sends the information to the malware creator so they can steal your identity.

Once the identity theft has taken place, they use the information to either steal directly or take your personal information to open completely new accounts that can be used to finance their lifestyles while ruining your credit so that it requires professional attention to restore.

To protect yourself fully,

1. Any computer you operate should have completely installed antivirus software like Norton. It should be updated frequently and your computer should be regularly scanned to identify and neutralize malware threats.

2. You should have a personal identity theft protection plan in place that offers ongoing monitoring and up to $1 million in liability protections for you.

3. You should begin a process of credit report repair now to identify and repair any identity theft damage that may have occurred without your knowledge.

As home owners fall behind on their mortgages, see their monthly payments sky rocket, and are helpless to stop their credit rating from being destroyed thanks to situations beyond their control, the federal government is stepping in it seems.

Fox news reports the following (link below):

Offering federal aid for strapped mortgage holders, the White House outlined proposals Friday to help borrowers hard hit by credit problems and the housing slump.

The initiatives, to be formally unveiled by President Bush, were intended to help homeowners with risky mortgages keep their homes. Bush also was to discuss efforts to prevent these kinds of problems from arising in the future.

It was the administration’s first efforts to deal with an expected wave of mortgage defaults fueled by the subprime-mortgage crisis.

The FHA is one of the agencies stepping to refinance some loans other news outlets report.

While this bail out of the mortgage industry will help people keep their homes, it will likely leave thousands with permanent scars on their credit report unless steps are taken by the individuals to delete information that is generated by this crisis but is beyond their control.

Read Bush Proposes Subprime Mortgage Reforms

Part of the network identity thieves use to profit from the theft of your personal data is a network of “Money Mules” - unsuspecting people who respond to adds promising that they can “work at home” a few hours per week, use their home to receive and send packages and use their bank account to cash checks for people who for some unexplained reason want to use some stranger in the US to cash a check because a bank won’t?

These people cash the check, keep a 10% processing fee, send the balance to another address and think they’re making fast, easy money.

Then the check bounces and they’ve lost not only their “fee” but the whole amount.

They will end up needing credit repair themselves, but in the mean time they are facilitating the enterprise of Identity Theft.

More posts on Identity Theft.

Read the article that inspired this post at “Money Mules” A Cog In Cybercrime Underground and Identity Theft

The Christian Science Monitor reported today that Sub Prime Loans Face Big Rate Hikes. Those with less than stellar credit ratings are expected to take huge hits as their adjustable rate mortgage interest is being increased. Sadly, mortgage lenders are bailing themselves out on the backs of their customers who were already being charged significantly higher interest.

Get help now...

Millions of homeowners around the nation are now getting the news in the mail: The interest rate on their home loans is going up, possibly to double-digit levels.

The hardest hit are expected to be people who have less-than-stellar credit and cannot afford to make the new payments. An increase of several hundred dollars a month will force them either to get relief or to default.

Read the whole article at Christian Science Monitory

In a previous post I noted that there were complaints about a credit repair firm in North Carolina. Another article has noted the names in case you run into these characters!

They neither write grants nor do credit repair, despite their claims!

From the Hickory Daily Record

Ken Yang and Pao Yang own the companies. The BBB linked them and other Yang family members to two additional credit service companies in Hickory - National Credit Solutions of Hickory and Carolina Credit Repair of Hickory.

During the past three years, the Better Business Bureau has received 18 complaints against those companies.

“Most consumers pay the upfront fees because they have a contract that includes a money-back guarantee,” said Tom Bartholomy, president and chief executive officer of The Better Business Bureau of Southern Piedmont. “When Accu Credit/ Grantwriting Plus and other companies operating in a similar manner fail to fulfill these contractual obligations, consumers become victims with little or no recourse for recouping the money they have paid.”

Read it all at the Hickory Daily Record

Please check our home page for important Credit Repair information to help you avoid such swindles!

According to the Charlotte Obsever

The Better Business Bureau warned consumers Monday that it had received complaints that a Hickory-based grant-writing and credit-repair company was taking customers’ money without providing any services.

The company, Accucredit Inc., guaranteed customers that it would fix bad and poor credit ratings if they paid fees of up to $1,000 in advance, said Janet Hart, a spokeswoman for the Southern Piedmont BBB.

Accucredit has also done business as Grant Writing Plus Inc., promising customers thousands of dollars in governmental grants in exchange for initial fees as high as $4,000, Hart said.

Accucredit’s Web site was not working Monday morning, and the company’s phone had been disconnected.

Read the rest of the article at the Charlotte Obsever