CREDIT SCORES....TAKE NO PRISONERS.......EAT THE WOUNDED..... WHY?

By
Real Estate Broker Owner with People first then business! Ran Right Realty Riverside, Ca BRE LIC #00636943

As we TRUDGE through this economy accepting the failure of Real Estate, the dispossessing of tens of millions of people from their homes, from historic job losses, failed stock market ventures, record bankruptcies, and Acts of God such as earthquakes, oil spills and hurricanes, IF THAT IS NOT ENOUGH.......Our systems have finally and I believe fatally been turned on US......or our fellow man...his family, wife & children.

We have successfully blemished and black-marked everyone who has defaulted on their line of credit. Oh, not just a slap on the wrist mind you, but when we punish, we do it right....all the way...

For about tens of millions of Americans....their MISTAKE or MISSTEP whatever you want to call it... will haunt them for the next 7-10 years hurting their ability to get competitive financing or any financing at all....

More than 40 million consumers have credit scores of 599 or lower which will effectively keep them not only out of the Real Estate market, but out of the Retail, car and luxury purchasing market for some time to come....

Millions have joined this latest statistic in just the last 2-3 years and there is plenty more expected.......

While it is true that FHA will forgive in 3-4 years so that you may re-purchase a home, between now and then remains a problem. Keep in mind that the ranks of people falling into this will keep FHA forgiving for many years to come. What do we do between now and then to help these people?

The walking credit wounded, the unemployed....where do they go and what do they do....? I am aware that unemployment will be harsh in my neck of the woods for 2-3 years. That means unstable Real Estate values, low or no growth and small businesses put at risk..

I am thinking that if we shorten the FICO scoring and record keeping periods to say.....4 years, then a man and his family who fell into today's recession can then effectively plan to come back within a reachable, hopeful time period. This can and should line up with the FHA policies as well.

I believe that 7-10 years is TOO MUCH to put on anyone. To have explain and be reminded of this for this length of time is counter-productive, time consuming, and doesn't encouraging or support solutions.

I believe that this is a supportive step to help correct and jump start not only the economy, but the Psyche of the buying public by tracking someones economic FALL for no longer than 4 years. That is sufficient time to tell the story of someone who failed at credit.

So, here is how it would work....during the 4 years, it is understood that no credit or expensive credit may or may not be available.  If you are in let's say your 3rd year, lenders and retailers would encourage you to keep clean for the next year and then apply to them for tiered financing or privileges. Getting started offers like competitive rates  (not punitive rates) and for those that maintain good habits....eventually can graduate to premium rates.

If you have ever made a mistake (whether public or private) where you wished for a second chance, this suggestion is based on those feelings. People with families and children desperately need another chance to make good. America should be that place and should encourage that thinking even more......

The results from this are very predictable....people will work hard to get back into the game. They will have goals to purchase homes, cars, and luxury items as well as plan educational and recreational futures. Heck, this could even discourage people from a life of crime giving them hope and to do the right thing and prosper.

I submit it for your consideration..............

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  1. Tish Lloyd 07/28/2010 06:51 PM
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Topic:
ActiveRain Community
Location:
California
Tags:
fico scores
fha
credit reports
unemployment
foreclosure solutions
second chance
economy
consumers

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Rainmaker
1,111,109
Richie Alan Naggar Author PEARLS SERIES of books
on LIFE and LOVE plus Real Estate too!
People first then business! Ran Right Realty Riverside, Ca

Liz...is.....wow...you brought a very interesting point....the system is flawed and not keyed for fairness or justice.....but to support the financial system......which we all knew going in. It is just so harsh when you get your reality lesson......it is a bitter pill. Thank you for some other things to ponder and wonder.....

Michael...is so right.....all debts to society should be paid, but not documented like a criminal rap sheet......it is too punitive. Michael, something I learned later in life that has allowed me to journey well.......and it is this....ALWAYS give people a way back......do not force them into corners or lead them into temptations....leave the door open...... for you may be on the other side of that door one day......life is that way my dear boy.......thanks for stopping in..

July 28, 2010 09:51 PM
Rainmaker
939,764
Kathy Clulow
CNE - ASP - SRES .... Uxbridge Ontario Real Estate
RE/MAX All-Stars Realty Inc. Brokerage

Richie - there is not enough hand ups for the little guy and too many hand outs for the big guy.

July 29, 2010 12:33 AM
Rainmaker
1,111,109
Richie Alan Naggar Author PEARLS SERIES of books
on LIFE and LOVE plus Real Estate too!
People first then business! Ran Right Realty Riverside, Ca

Kathy......thats pretty good.....I am going to use that one.......

July 29, 2010 12:46 AM
Rainmaker
368,078
Eric Kodner
CRS, Madeline Island Realty, LaPointe, WI 54850 -
Madeline Island Realty

Liz is right..the credit scoring system needs a complete overhaul.  I have clients with zero net worth and no hope of buying who point to their "perfect" credit scores that are meaningless.  I see people with damaged scores who have been occasionally late but always paid, while others who completely default and boast about it suffer relatively little in comparison.

July 29, 2010 05:56 AM
Rainmaker
1,111,109
Richie Alan Naggar Author PEARLS SERIES of books
on LIFE and LOVE plus Real Estate too!
People first then business! Ran Right Realty Riverside, Ca

Eric....I agree with you both...it appears that the system was designed in favor of the lenders and does not cater to the individual or even care.....It is a brutal reminder of how the worlds business is conducted and you can either play or stay where you are.....You will not find the love of Jesus at work here..........

July 29, 2010 09:22 AM
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Rainmaker
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Richie Alan Naggar Author PEARLS SERIES of books

on LIFE and LOVE plus Real Estate too!
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