Approved Advisor

Don’t chase rates — find the right mortgage too

A look at the various scenarios and what might work best for you

(AP) NEW YORK — For those who can qualify, it’s one of the best times to get a mortgage.

Last week, rates for 30-year fixed-rate loans dropped to 4.57 percent, the lowest level on records dating back to 1971, Freddie Mac said.

And for some who missed out on the government’s homebuying tax credit, the rates may more than make up for that lost $8,000.

“A tax credit is immediate gratification,” said Leonard Baron, a professor of finance at San Diego State University, “but long-term, with rates this low, you can get much more value.”

But which loan is right for you? The mortgage game has changed since the housing bust and more rules have been and are being added. One factor is for sure now: Your credit score should be at least 620 or you’ll have a hard time finding a loan. What varies is how much you have for a downpayment.

Buyer No. 1: You have a 20-percent downpayment and expect to retire in the house.

Take out a 30-year fixed-rate loan, the most popular type of mortgage. The interest rate stays the same over the life of the loan and right now, that rate is at historical lows.

“This loan is for someone interested in stability and security,” said John Stearns, mortgage banker at American Fidelity Mortgage Services Inc. in Mequon, Wisc.

Buyer No. 2: You have a 20-percent downpayment, but plan to move into another home down the road.

Consider a five-, seven- or 10-year adjustable-rate loan, which has a fixed rate for a set period and then adjusts higher after that time. These loans carry a lower initial interest rate than the 30-year fixed-rate, so you save money over the fixed-rate period. After the fixed-rate period ends, borrowers typically refinance into another loan to avoid the adjustable rate.

Rates on five-year adjustable-rate mortgages averaged 3.75 percent this week. That was the lowest on Freddie Mac’s records, which date back to January 2005.

ARMs got a bad rap during the housing bust because most people who took out two- or three-year ARMs got caught with an unaffordable payment when their rates reset. They couldn’t refinance into a fixed-rate loan because home prices had tanked and credit tightened up.

That risk still exists, but starting in September, lenders will have to evaluate whether borrowers can make payments after the rate reset on adjustable-rate loans backed by Fannie Mae.

Buyer No. 3: You have at least a 20-percent downpayment for a house worth more than $729,500.

You need a so-called jumbo loan which is not backed by Fannie Mae and Freddie Mac. That means any lender who makes a mortgage above that amount will have to keep the loan on its books.

To compensate for that risk, lenders charge higher interest rates than a conventional mortgage. The average rate for a 30-year fixed-rate jumbo loan fell to 5.48 percent this week, the lowest level ever in Bankrate.com’s survey.

Buyer No. 4: You have more than a 20-percent downpayment.

Depending on how much you’re putting down, you might consider a 20-year fixed-rate mortgage. Rates are sometimes, but not always, lower than a 30-year fixed-rate by about a quarter-point. However, because the loan term is shorter on the 20-year loan, the monthly payment will be higher than a 30-year mortgage.

For example, the monthly payment for a 20-year fixed-rate loan for $300,000 is $1,898. It’s only $1,565 a month if the loan is 30 years. But over the life of the loan, you’ll save about $108,000 in interest.

“Most people are interested in a lower monthly payment,” Stearns said.

Buyer No. 5: You have less than a 20-percent downpayment.

Consider a mortgage insured by the Federal Housing Administration, or FHA. A borrower needs to put down only 3.5 percent of the purchase price.

After the housing market slumped, the FHA became the major source of funding for first-time homebuyers. It insured about 24 percent of new loans in the first quarter, according to Inside Mortgage Finance, a trade publication.

Or, consider a mortgage loan that isn’t backed by the FHA, which only requires 5 percent down. However, you will pay mortgage insurance each month, which can add an extra $25 to $50 to your monthly payment depending on your credit score. Private mortgage insurance protects a lender against losses when a borrower defaults. If you have very good credit, this option may be cheaper.

Buyer No. 6: You have a gift downpayment.

While one in five first-time homebuyers used a gift from a relative or friend for a downpayment last year, there are some rules to navigate.

Gift money can be used for a downpayment on a conventional loan only after the borrowers use their own money to make the 5-percent minimum. Gift money can pay for closing costs or prepaid expenses like property taxes and insurance that are put into an escrow account. Banks typically check two months’ worth of bank statements for unusually odd deposits that could be considered gifts. However, if the gift was deposited six months before, a bank might not notice.

However, FHA mortgages allow borrowers to use a gift to make the 3.5-percent minimum downpayment. The gift must be documented in writing and the lender may ask for proof of deposit.

Buyer No. 7: You don’t have a downpayment.

Your options are limited.

If you are a veteran or the surviving spouse of one, consider a mortgage backed by the Department of Veteran Affairs. These loans offer 100 percent financing without private mortgage insurance at competitive mortgage rates.

If the home you’re buying is in a rural area as defined by the U.S. Department of Agriculture, you may qualify for a USDA home loan, which offers 100 percent financing without adding on private mortgage insurance. The USDA aims to help lower-income households get home loans at reasonable rates.

Source: Associated Press

Post: Shmuel Shayowitz, Approved Funding

Borrowers face new set of credit checkups

Initiative targets last-minute changes in finances

Mortgage giant Fannie Mae rolled out its Loan Quality Initiative (LQI) June 1, thereby forcing homebuyers to obtain mortgages based on “refreshed” credit reports or risk their closing being canceled and, in some states, their deposits forfeited.

In other words, the buyer is not officially approved for the mortgage until the results of second credit report are approved. There may be other last-minute verifications of undisclosed liabilities, such as job status, that may be “refreshed” as well.

Example:

Buyer A listed his three credit cards on his loan application. The lender approved Buyer A’s credit and approves the mortgage loan request, partially based on this information. Buyer A goes to Home Depot, applies for yet a fourth credit card.

The day before the closing, while Buyer A’s excitement is peaking, the lender refreshes his credit to make sure his credit score is still as good as it was when it was pulled the first time.

The lender discovers that Buyer A’s credit score has been lowered because Buyer A applied for a fourth credit card. It’s called finding an “undisclosed liability,” and it is not going to end well for the buyer.

Under the LQI, the lender could delay the closing, increase the interest rate, ask for a larger downpayment, or cancel the closing. In some states, Buyer A could lose his deposit.

“The impact on closings is too early to measure,” according to Gail Stanley, an Orlando mortgage lender, “but my guess is that homebuyers will be well coached.

“What lender, mortgage broker or real estate broker isn’t going to use every communications tool available to make sure the buyer does not even think about using available credit, much less apply for more during the ‘refreshing’ period?” Stanley asked.

“The mortgage lending business as we have known it is over,” according to Boston’s MetLife Home Loans’ senior mortgage consultant, Brian Cavanaugh. “Quality loan service and counseling will replace rate shopping because mortgage pricing is so competitive.

“Homebuyers need to work with loan officers who clearly understand the new guidelines and can help the buyer understand the importance of complying with them. Mortgage financing is incredibly important in personal financing now and it needs to be understood and protected,” Cavanaugh said. Stanley said that pulling the second credit report is not new, and that the LQI will be a welcome new tool for lenders who practice responsible lending.

“We all realize that buyer qualifications need to be tightened and that the lender needs to be protected. Consumer education is the challenge,” Stanley said. “Realtors need to encourage their buyers to be as complete as possible in the original application and to be careful not to do anything that will negatively impact their credit score before the escrow closes.”

Depending on the state and the standard purchase and sale agreement used, borrowers could lose their deposits, according to Boston attorney Richard D. Vetstein. He recommends that real estate attorneys review standard purchase agreements.

Vetstein posted some advice about Fannie Mae’s LQI on his Massachusetts Law Blog. “If you’ve taken out new loans that are sizable enough to affect the debt-to-income-ratio calculations used in your original mortgage approval, the deal could fall through. The added debt load could render you ineligible for the mortgage because you suddenly appear unable to handle the payments without a strain on your household budget,” he notes.

Also, “Many lenders already pull second credit reports right before the closing, but the Fannie Mae mandate will likely result in a markedly increased number of lenders pulling second credit reports and performing other last-minute verifications.” And Vetstein states that a surge in new use of existing credit sources could also impact consumers’ ability to secure a home loan.

But holding the buyer accountable pales in comparison to the stringent accountability now in place to prevent lenders from submitting contract products for sale to Fannie Mae with “undisclosed” liabilities. (See www.efanniemae.com, keyword: Loan Quality.)

Just as lenders are calling for refreshed truth from buyers, Fannie Mae is not asking — it is forcing lenders to upgrade the quality of their underwriting and to get used to the new system and embedded, stringent accountability tools for meeting clear, detailed and tougher underwriting standards.

Fannie Mae’s ultimate goal is not to punish the lender or homebuyer. It is to be repaid. Not only will profits start flowing again, but investors will return. And when that happens, loans will become easier to obtain.

There will no doubt be faults found with Fannie Mae’s Loan Quality Initiative, but “lack of accountability” will not be one of them. It is a welcomed and refreshing thought.

http://www.inman.com/news/2010/06/23/borrowers-face-new-set-credit-checkups

By Dave Fletcher/Inman News, Wednesday, June 23, 2010

Improving Your Credit Score – 5 Tips from the Fed

#1 Get copies of your credit report–then make sure information is correct.

Go to www.annualcreditreport.com. This is the only authorized online source for a free credit report. Under federal law, you can get a free report from each of the three national credit reporting companies every twelve months.

You can also call 877-322-8228 or complete the Annual Credit Report Request Form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

#2 Pay your bills on time.

One of the most important things you can do to improve your credit score is pay your bills by the due date. You can set up automatic payments from your bank account to help you pay on time, but be sure you have enough money in your account to avoid overdraft fees.

#3 Understand how your credit score is determined.

Your credit score is usually based on the answers to these questions:

Do you pay your bills on time? The answer to this question is very important. If you have paid bills late, have had an account referred to a collection agency, or have ever declared bankruptcy, this history will show up in your credit report.

What is your outstanding debt? Many scoring models compare the amount of debt you have and your credit limits. If the amount you owe is close to your credit limit, it is likely to have a negative effect on your score.

How long is your credit history? A short credit history may have a negative effect on your score, but a short history can be offset by other factors, such as timely payments and low balances.

Have you applied for new credit recently? If you have applied for too many new accounts recently, that may negatively affect your score. However, if you request a copy of your own credit report, or if creditors are monitoring your account or looking at credit reports to make prescreened credit offers, these inquiries about your credit history are not counted as applications for credit.

How many and what types of credit accounts do you have? Many credit-scoring models consider the number and type of credit accounts you have. A mix of installment loans and credit cards may improve your score. However, too many finance company accounts or credit cards might hurt your score.

To learn more about credit scoring, see the Federal Trade Commission’s website, Facts for Consumers.

#4 Learn the legal steps to take to improve your credit report.

The Federal Trade Commission’s “Building a Better Credit Report” has information on correcting errors in your report, tips on dealing with debt and avoiding scams–and more.

#5 Beware of credit-repair scams.

Sometimes doing it yourself is the best way to repair your credit. The Federal Trade Commission’s “Credit Repair: How to Help Yourself” explains how you can improve your creditworthiness and lists legitimate resources for low-cost or no-cost help.

http://www.federalreserve.gov/consumerinfo/fivetips_creditscore.htm

Note from Shmuel Shayowitz of Approved Funding: As always, have a mortgage professional review your credit report with you line by line to see if there are any surprises or things you are not aware of.

“My Personal Home Buying Experience”  by Shmuel Shayowitz, President – Approved Funding

Movers, packers, planners, utilities, school, work, relocation, etc the list can go on and on.

There is nothing more important that an estimated “Closing Date”. There are so many different moving parts in a Purchase transaction that more often than not, something is bound to fall out of place. Typically, the home buyer (borrower) has been the person who has juggled all of the various deadlines, requirements, and terms. Approved Funding has changed that inefficient and ineffective model.

In 1999, the time had come and my wife and I started to look for our first home.

We finally found something with the help of some Realtors that I had a long standing relationship with. At that time I was in the mortgage business for almost 5 years. I spent a lot of time as a processor, and progressed to loan originator. I must have worked with hundreds, if not thousands of clients.

When we finally signed the contract it hit me! I had no clue as to what I was doing, or what the next step was. I broke my teeth getting everything done in a timely manner and thankfully we closed within the “rush” two weeks that our contract called for.
From that day on I decided to REALLY help my clients. Going forward I realized that I was the person that needed to be in the middle to coordinate all the necessary items. It is extremely overwhelming, and often confusing to have a buyer (often a First Time Buyer) spin their wheels to get everything done.

From that day forward I truly began to service my clients! The result – no last minute blunders, no past deadlines, no postponing moving truck!

My clients do the packing, but I do all the heavy lifting!

What to look for in a Home Equity Lines of Credit (HELOC)

By: Shmuel Shayowitz, President, Approved Funding

Here is a quick list so that you can better “shop” and compare different Home Equity offers.

Here’s what to look for:

• What is the Rate?   Is it fixed or ‘variable’? Assuming it is variable most likely it will be tied to the Prime Rate. (Click here for a link to current Prime Rates) Also – Is there a “Teaser Rate”? (That’s a temporary period where they give you discount below the rate it would normally be)
  

  
  

• Closing Costs: Do you pay? They pay? Appraisal Fee? Anything out of pocket from you whatsoever?
  

• Annual fee: Is there an annual fee? Many banks don’t charge year #1, but they charge every year thereafter.
  

• Initial draw requirement? Do you HAVE TO draw on the line in order to get that deal they are offering? Do you have to maintain any outstanding balance before they hit you with a penalty?
  

• Term: How long is the draw period? How does the loan get paid back? Many have a 10year draw, and then it converts to a 20year loan. That payment can be very costly.
  

• Termination Fee. Some banks charge if the line is CLOSED within year 1, or 2, or 3. Find out for sure.
  

• Convertible Option. Can a “variable” rate be “converted” to a fixed rate? How does it work?
  

   

• Do they make you open an account with their bank? Do they force you to automatically deduct the payment out of your account?
  

   

Other, and more specific questions might arise as you compare one HELOC offer to another. If we can be of further assistance as you narrow the list down, please do not hesitate to contact us!

(Wall Street Journal) A recently discovered data breach at a New Jersey credit-card processor could rank among the biggest ever reported.

Heartland Payment Systems Inc. disclosed Tuesday that cyber criminals compromised its internal computer network, gaining access to customer information associated with the 100 million card transactions it handles each month.

The company said it couldn’t estimate how many customer records may have been improperly accessed but that the compromised data includes credit card numbers, card expiration dates and some internal bank codes. Heartland, which is based in Princeton, N.J., processes transactions for more than 250,000 businesses nationwide.

Avivah Litan, an analyst at research company Gartner, estimated that as many as 100 million consumers could have had their credit-card data stolen, based on her conversations with industry executives. Previously, the largest known breach occurred when around 45 million credit- and debit-card numbers were stolen from retail company TJX Companies Inc.

“I would call this the largest breach ever,” Ms. Litan said.

But Robert Baldwin, Heartland’s president and chief financial officer, called her estimate a “totally fictional number.” The company added that, since it’s too early to say how many records were accessed, calling it the largest-ever breach would be “speculative.”

Software ‘Light-Years More Sophisticated’

Representatives from Visa Inc. and MasterCard Inc. alerted Heartland to a pattern of fraudulent transactions on accounts that the processor handled some time in the fall, Mr. Baldwin said. But an internal investigation and subsequent audits failed to detect a security breach.

Last week, however, a forensic investigator discovered evidence of the breach. Mr. Baldwin said that the criminal targeted Heartland with a piece of malicious software that was “light-years more sophisticated” than the viruses commonly downloaded off the Internet. He declined to say if the software was on the company’s network before the fall or how many records were accessed, adding “in all likelihood we will never know.”

The retail and payment-card industries have spent around $2 billion in recent years to improve data security, Ms. Litan said. In December, another payment processor, RBS WorldPay, a division of Royal Bank of Scotland Group, announced that its systems were breached. That criminals could break into a payment processor shows that “much more radical steps are needed” to protect payment information, she said.

Unauthorized Data Access on the Rise

More than forty states now have laws that require businesses to disclose when sensitive information may have been accessed by an unauthorized party. In 2008, 656 such incidents were publicly reported, according to the Identity Theft Resource Center, a non-profit organization dedicated to helping victims of identity theft. That’s up from 446 in 2007.

Heartland said it has isolated the affected computers and removed the malware. It hasn’t made any new investments in security technology yet, but “everything is on the table” Mr. Baldwin said.

The company is working with the U.S. Secret Service to investigate the incident, Mr. Baldwin said. It has been “working feverishly to assemble all the evidence we could” about the extent of the breach and who caused it, he said.

Source: Boston Globe – Several Internet complaint boards are filled with comments from credit card customers from coast to coast who have noticed a mysterious charge for about 25 cents on their statements.

The charge shows up on statements as coming from “Adele Services” in Melville, N.Y. There is no business by that name listed in Melville, or registered to any business anywhere in New York, for that matter.

Two theories of what is going on have advanced on message boards and among consumer advocates: Someone is trying to find out whether an illegally obtained credit card number will work before making a bigger charge, or they’re trying to rip off tiny amounts from tons of people.

The latter theory has more credibility at the moment. The Better Business Bureau in Louisville reports that, at least so far, those who have been hit with the small charge have yet to get slammed with a bigger charge. The bureau speculates that the number of possible victims could be in the millions.

It’s not clear how the numbers got in the hands of the people making the charge, but consumer advocates say it is most likely through either a data theft or someone using a computer to generate numbers.

Former Massachusetts assistant attorney general Edgar Dworsky, who runs ConsumerWorld.org, said the scam reminded him of an old adage: “It’s easier to steal $1 from a million people than $1 million from one person,” he said.

Most people, Dworsky said, are likely to overlook or ignore the small charge. “Isn’t that the perfect scam, when the victim doesn’t even know something has been taken?” he said.

Take a look at your credit card statements, and if the charge is there, don’t let it slide. It’s what the thieves want you to do. Instead, file a dispute with your credit card company, and lodge complaints with the Federal Trade Commission (www.ftc.gov) and the Internet Crime Complaint Center (www.ic3.gov) – which is run by the FBI, the National White Collar Crime Center, and the Bureau of Justice Assistance. Federal law enforcement officials tend to react when the complaints reach a certain volume.

(Reuters) – The U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.

The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.

“In other words, we expect available consumer liquidity in the form of credit-card lines to decline by 45 percent.”

Bank of America Corp, Citigroup Inc, and JPMorgan Chase & Co represent over half of the estimated U.S. card outstandings as of September 30, and each company has discussed reducing card exposure or slowing growth, Whitney said.

Closing millions of accounts, cutting credit lines and raising interest rates are just some of the moves credit card issuers are using to try to inoculate themselves from a tsunami of expected consumer defaults.

A consolidated U.S. lending market that is pulling back on credit is also posing a risk to the overall consumer liquidity, Whitney said.

Mortgages and credit cards are now dominated by five players who are all pulling back liquidity, making reductions in consumer liquidity seem unavoidable, she said.

“We are now beginning to see evidence of broad-based declines in overall consumer liquidity.”

“Already, we have witnessed the entire mortgage market hit a wall, and we believe it will, for the first time ever, show actual shrinkage over the next few months,” she wrote.

The credit card market will be 18 months behind the mortgage market and will begin to shrink by mid-2010, Whitney said.

Whitney also expects home prices to continue falling another 20 percent hurt by lower liquidity. They are down 23 percent from their peak, she said.

“In a country that offers hundreds of cereal and soda pop choices, the banking industry has become one that offers very few choices,” Whitney wrote in a note dated November 30.

She also said credit lines to consumers through home equity and credit cards had been cut back from the second-quarter levels.

“Pulling credit when job losses are increasing by over 50 percent year-over-year in most key states is a dangerous and unprecedented combination, in our view,” the analyst said.

Most of the solutions to the situation involve government intervention, and all of them require more dilutive capital to existing lenders, she said.

“Accordingly, we continue to be cautious on our outlook on US banks.”

SUGGESTIONS

In a column in the Financial Times, Whitney suggested four adoptable changes to make a difference.

The first would be to re-regionalize lending, which has gone from “knowing your customer” or local lending, to relying on what have proven to be unreliable FICO credit scores and centralized underwriting, due to the nationwide consolidation since the early 1990s, she wrote in the column.

Expanding the Federal Deposit Insurance Corp’s guarantee for bank debt will also help as the banks need to know they can access reasonably priced credit for an extended period to continue to extend new credit lines, she wrote in the column.

Whitney also advised delaying the introduction of new accounting rules, which would bring off-balance-sheet assets back on balance sheet, until 2011 or 2012, as the primary assets that will come back are credit card loans.

Whitney suggested amending the proposal on Unfair and Deceptive Lending Practices that is set to be adopted in 2010, saying restricting lenders’ ability to reprice an unsecured loan will cause them to stop lending or to lend less.

We’ve all seen them – the never-ending television ads and radio commercials with the catchy jingle for free credit reports and scores.

Nowadays a number of similar companies are offering free credit reports and scores. With all of these ads for freebies, it’s no wonder that so many consumers believe that all credit scores are created equally.

First, a little history on credit scores:

A company called the Fair Isaac Corporation created the first credit score. It was made available to lenders in the very late 80s and soon thereafter began to pick up momentum and popularity in the lending world. The FICO score became the gold standard in the mortgage lending world when Fannie Mae and Freddie Mac endorsed its use for evaluating mortgage loan applications in the mid 90s.

For years the FICO score was a mystery to consumers and was only known by the lending industry. Credit scores have only recently been made available to the public in the last few years. In 2001, California passed a law that required credit scores to be made available to California residents.

This pretty much opened the floodgates for the rest of us.

It also turned into a cash cow for the bureaus. However, for two of the three, instead of selling the actual FICO score, where they had to pay royalties to the Fair Isaac Corporation – they created their own scores to sell to consumers.

That’s where the confusion started.

Now that the bureaus all sell scores targeted at the consumer market, many unknowing consumers assume that these scores are the same scores a lender would see. Unfortunately, this is just not the case and it often causes a lot of confusion for those that are looking to refinance a mortgage or trying to qualify for a new car loan.

Take Steven and Veronica Blanco for example. To get a better understanding of where they stood credit wise, they went online and paid for all six of his and his wife’s credit scores – one for each of them from each of the three major credit bureaus.

Between the two of them, their scores ranged from a high of 732 to a low of 705. Knowing that mortgage lenders typically go with the middle scores, Steven assumed that they would be fine in qualifying for a new home loan at a decent rate.

But when the couple applied for a mortgage loan through their credit union, they were shocked to find out that the credit scores their lender pulled were significantly lower, ranging from 645 to 672. After talking with their lender at length they learned that even though they had purchased their scores from one of the three major credit bureaus, the scores they purchased were not the same scores that lenders use.

So what score is the right score and where can I find it online?

Here’s the deal…the industry standard for credit scores is still the FICO score. The FICO score is the score that most lenders use when determining your eligibility and terms for a loan. While the FICO score is not the only credit score that lenders use, it is the most widely used with more than 90% of lenders using it to make their lending decisions.

The easiest and most convenient site to order your FICO credit scores is through Fair Isaac’s consumer website: www.myFICO.com.

This is the only site where consumers can order all three of their FICO credit scores from all three credit bureaus. You can also order scores from the credit bureau websites directly but you should be aware that you’re not necessarily going to get a score that lenders use.

While these scores are pretty much worthless in the lending environment, they are a constant source of revenue for the bureaus at the consumer level. Let’s take a look at what each of the three major credit bureaus offer to consumers:

Equifax

Equifax is the only bureau website that you can order your FICO score from directly – without having to search for an obscure alternate web address. The score is marketed as Score Power.

When you visit their website you’ll notice that they explain that the score that you’re purchasing is in fact a FICO score. The problem is that you’re only able to get the Equifax FICO score from this site and we all have three FICO scores – one from each of the three major credit reporting agencies.

Experian

Experian markets and sells the PLUS Score on their website. They also have a half dozen other websites marketed under different brands that also sell their Plus Score. Be very careful when watching commercials about free credit reports; that’s one of their marketing tactics.

If you’ve purchased a score from Experian or one of their consumer sites, you didn’t get your FICO score.

TransUnion

TransUnion sells the TransRisk score under their ‘TrueCredit’ brand. Their TransRisk score is also available for sale to lenders but it just isn’t commonly used.

TransUnion does sell the legitimate FICO credit score to consumers, but it’s only marketed at their TransUnion Consumer Services website at www.transunioncs.com.

As you can see, this site is almost impossible to find unless you know the exact website address. Just try Googling the consumer services division and you’ll see what I mean.

While these are only the websites of the major players, there are tons of other sites out there that offer credit reports and scores. The easiest way to be sure that you’re ordering a FICO score is to read the fine print. If it’s a FICO score, it’ll say so.

Buyer beware! (Source: CreditCCRM)

Did you ever click on a banner ad advertising low mortgage rates? Did you ever submit an online mortgage inquiry?

[Tuesday, April 22 on MSNBC.COM] – LendingTree has told its customers that former employees helped unauthorized mortgage lenders hack into its systems and steal customer information from 2006 to 2008.

The incident reveals just how aggressive the mortgage loan business was during the height of the housing boom, and also raises fears for consumers who share their information with companies that help them shop around for the best deal. And it highlights what experts say is an often overlooked source of data theft — the inside job.

According to a letter sent to customers recently, former LendingTree LLC employees shared “confidential passwords” with lenders, who in turn used the login information to “access LendingTree’s customer loan request forms.”

The forms contained critical personal data, including names, addresses, Social Security numbers, income and employment information. The company said the lenders did not use the information to commit identity theft or fraud, but simply to “market their own mortgage loans to … customers.”

In connection with the incident, LendingTree, based in Charlotte, N.C., has filed lawsuits against three small California-based home loan companies.

A LendingTree spokeswoman said the company was not granting interviews to discuss the data theft. She would not say how many customers were affected nor how much data was stolen, but instead supplied a copy of the customer letter sent by the firm.

While LendingTree says in the letter it has no reason to suspect its consumers are at heightened risk for identity theft, it did suggest consumers obtain a free credit report and file a fraud alert with the nation’s credit bureaus.

Upon learning of the security breach, LendingTree says, it “promptly enhanced the security of our system.”

Given that data was accessed from 2006 to early 2008, it can be inferred that passwords used by former employees remained operational for months or even years after their employment was terminated, generally considered poor security practice, said identity theft expert Rob Douglas, editor of InsideIDTheft.info.

“This plays into everybody’s fear that this happens all the time,” Douglas said. “When consumers share their information with companies, they assume it ends up in other companies’ hands.”

One victim who received the LendingTree letter — but who requested anonymity — was annoyed that LendingTree offered no compensation for the trouble.

“Rather than offer a free credit report they suggest that I use my annual free credit report,” the consumer said, referring to the once-per-year free peek that consumers get at their report by visiting AnnualCreditReport.com.

In its letter, LendingTree includes a pamphlet called “Guide to Protecting Your Credit and Identity.” Consumers who obtain their credit report and see anything suspicious are told to “contact the credit bureau.”

Consumers who visit LendingTree expect their personal information to be shared with other companies. They are hoping LendingTree will help them find a mortgage firm with the best rate, and expect several companies to “bid” for the right to supply their home loan.

But in this incident, loan applications were viewed by unauthorized lenders, who used the information to market their own loan products, LendingTree said.

“We suggest that you remain vigilant by reviewing account statements and monitoring your credit reports for the next 24 months,” the letter says.