Shopping And Paying Bills Online? Here are Methods To Protect Your Online Financial Identity

In May 2010, Retail Sales at non-store retailers topped $29 billion, up 16 percent from May 2009. Clearly, Americans are doing an increasing amount of shopping online.  And we're paying our bills online, too.
But how well are we protecting our identities?
In this 5-minute piece from NBC's The Today Show, you'll learn the basics of online fraud and methods to minimize the likelihood of identity theft.  Furthermore, the tips go beyond the basic "choose a challenging password".  For example, you'll hear about:

• Why you shouldn't pay bills from a coffee shop
• Who might be hiding behind an unprotected public wifi network
• The dangers of storing credit card numbers with an online retailer

And, although, at one point, the interviewee goes over the top with respect to spyware and anti-phishing prevention, the point being made is a good one -- you can't be too careful with your online financials and common sense goes a long way.

Part 2: The New and Improved GFE? How to Protect Yourself

In my last post, I began to tell you a little about my adventure with the "Good Faith Estimate" or GFE for my home loan.  Here, as they say, is the rest of the story:


So I called my friendly Chase consultant AxA.  Knowing that this was not the final GFE, I also knew that it could still be changed and we were not locked in to these fees.  I left a message and sent an email.  Shockingly, I got no response.


Here is where it gets interesting.  Life happens to us all, and time passed with me assuming that it would be taken care of.  After all, I DID send an email.  


The "final" GFE arrived in the mail.  I opened it with curiosity, fully assuming that everything would be correct.  


Bottom line?  "Total Estimated Settlement Charges:  $4,015.47.


What. In. The. FLYING HELL?
(Actually, at this point I might have used stronger language, but this is a family show.)


When I called my good friend AxA, he said "Oh.  Yeah.  That's wrong, but it's no big deal.  It'll be correct at closing.  Just sign the paperwork you get and we'll schedule it."  
No, I said, Nothing will be signed until we have corrected paperwork.  Re-do this and send out a correct GFE and we will review it and schedule closing when it is correct.


Here's where he challenged me. First, a BIG, annoyed sigh.  Then: "What's not correct?"  Was this arrogance?  Ignorance?  I suspect a combination of both.  So, I went-line by line- down the page to tell him what was not kosher.
1.  In our initial phone conversation, he said there would be no points.  Lo and behold- there's an 1/8 of a point charge.
2. In our initial conversation he had claimed no origination fee.  Guess what?
3. Hazard insurance:  $1400.  First of all, we already spoke of this and he knew that insurance was not escrowed on our loan.  Secondly, $1400??!!!  Even if we didn't already have (less expensive) insurance, I might want to shop around for a better rate.
4. Title Insurance: $894.95.  Not!   This is a reissue of title insurance, first of all, so the rate should be greatly discounted.  Secondly, you can check rate cards that are publicly available from any title insurance company, and for the amount of our loan, the highest rate I found was about $500.


He challenged me as much as he could until I said: "Listen.  I happen to be a Realtor, so I know how to read a GFE, and this one is WRONG.  This is not acceptable."


THEN- and this might be my favorite quote- he told me: "Don't worry about it.  You won't have to bring this to closing, it'll just get rolled into the loan."


This got me thinking.  Not too many people are aware that they have options when it comes to these things.  This is part of the reason that the mortgage industry is such a mess.  Many people would be so relieved to get out of their ARM and into a fixed rate that they might just accept what he said as the way things are.


But, think about this:  if I didn't question him, we would be paying interest over 30 years on over $2000  worth of charges that shouldn't even be there.  


You do not have to be "in the business" to shop your rates for title insurance.  But how many people know this?  And title insurance is just one example of the services that the consumer may choose.  Interestingly, after this conversation, my husband got a call to schedule our closing time.  "We're all set to close!" said the chipper voice from the title company.  
Well, believe it or not, my husband and I communicate regularly (!).  AxA was planning on just going around me to close out our file rather than do his job and fix the problem.


A few tips if you are going to Refinance or shop for a new loan: 

• Take copious notes.  Write down names, dates, time called, details discussed.  Do not be afraid to ask the person who answers the phone to spell their name for you or to repeat what was said so that you can write it down.  This was good info for me to have when I spoke with AxA.  When I told him I took notes, he backed down and took off the points charged.
• Follow up with email.  Better still, if you can follow up phone conversations with email, then do it.  Just a simple "Per our conversation today at 2pm..." and then what you have in your notes.  It's also a good idea to set your email to have a "return receipt" so that you know it was received and opened.  KEEP all emails that go back and forth.
• Don't be afraid to ask questions and challenge the answers!  So many of us are reluctant to question the bank because we assume they know what they are talking about and are telling us the truth.  But, as in my situation, paying for a couple thousand dollars over 30 years (plus interest) that should not even be charged is ridiculous.  Suggesting "rolling it into the loan" is just stupid when it doesn't even belong there in the first place.
• Do NOT sign anything until you are satisfied that your loan paperwork is correct.  If I had just waffled and signed the loan docs stamped "sign and return", then we would have been locked into all of those erroneous charges.  

Bottom line:  my friends, if you need assistance understanding your GFE, Call me!  Or call any licensed realtor to help you understand what you are reading.  You have the right to know what you are signing and agreeing to, and what charges you do and do not have to pay!

The New and Improved GFE?

A “Simplified” GFE?

Making the Good Faith Estimate More Transparent May Make it More Difficult to Close

I have been living in the same home for almost 8 years now.  It is cozy and has enough room for my family.  We have designed it to suit our needs and updated or upgraded paint, bathrooms, basement.  

When we bought our home, we got a great deal on it (for the time!), and we were able to put down a pretty decent downpayment after selling our previous property.

So, our loan isn’t big.  It was originally with ABN-Amro and along the line it was purchased by WaMu.  We had no problems with that, and in fact, when  we were sent a mailer about doing a re-fi several years ago for a flat fee of $495, we decided to go for it.  We were smart- we got an adjustable rate (not the smart part...) mortgage, took a little cash out, and went on with our happy lives.  

We are thankfully nowhere near being upside down on the house (that’s the smart part), but one of these days it IS going to adjust.  Mind you, this won’t happen for at least another year.  With interest rates being low, we decided now would be a good time to lock in our rate.  If we could do that now, we would drop the interest rate down over a point, without changing our payment.  Score!

Enter Chase Bank

In the meantime, Chase acquired WaMu.  (Cue the music: Duh-duh-DUHHHNNNN!)  People have many different stories to tell about their experience with Chase Home Loans.  This is mine:

It started with a call to the 800 number on my loan statement to try and get the right department.  This was an adventure in its own right and might even be worth another blog.

Once I got through to the correct department, I spoke with a very nice man whom I’ll call AxA.  AxA was very informative.  Per the notes I took during this first call, he told me that it would be no problem, we might even be able to lock in a rate without an appraisal!  Because we are already Chase customers, there is no origination fee!  There won’t be any points!  We have great credit!  He! was! very! Enthusiastic!!!  In double time, with me furiously taking notes, he said that there would be a processing fee of $750, but we would get some of this back at closing.  It turns out that we would need a full appraisal, but that was to be expected in this market.

The Good Faith Estimate Arrives

Per the new regulations and Truth in Lending, a Good Faith Estimate is sent when you originate a home loan, and then a final one is sent just before closing.  There are certain fees that a consumer is able to “shop”- among them title insurance, home inspection and a couple of others.  Because we are not purchasing a different home, inspection is not necessary.

I tore into the paperwork to see what lay inside.  This document is dated January 15- the new Truth in Lending went into effect January 1, so this would be my first glimpse.

I glanced down the page.  At the bottom, “Summary of Charges:  $2560.47”

What.  The.  Hell?

Origination charges 1510.59.  “All other Settlement Services” 1049.88.  I don’t think so.  

Next:  RealtorJenn gets to the bottom of it...

Tips for Avoiding Identity Theft

Here's a final takeaway from what I learned at my Credit Scores class.  Look for a consumer class coming soon!

Avoid Identity Theft!

• Monitor your credit report annually  Whether you sign up to monitor your credit with the company that has those catchy ads, or do it yourself, make sure you do it!  Remember that they have to pay for those ads and do so by charging a credit monitoring fee after your first report.  To monitor your own credit completely FREE, go to http://www.annualcreditreport.com/
• Secure Your Mail  It might be a good idea to have it delivered to your office or post office.  Outgoing mail should be posted at the post office or a secured mail box.
• Electronic keypad signatures  One of the most common points of theft.  Add the date after the signature so it cannot be reused.
• Never list your social security number  And never carry your card with you!
• Destroy all statements and solicitations  It's not enough to just tear them in half and throw them away.  Shred!
• Don't leave paper trails  Take ALL ATM and gas receipts with you.  These are other very common points of origination for identity theft.
• Always review your statements  Make sure all of the charges are yours.  If you don't recognize a store or vendor, call your credit card company and ask. 
• Know who you are dealing with  Don't give out personal information over the phone or internet.  If someone calls claiming to be your bank or credit card company, call them back using the number on your statement, not the number the caller gives you.
• Know your delivery dates  If the bill isn't there when expected, call.
• Remove bar code from magazines and shred them!  There is a world of information about you contained in those little lines.
• Keep your medical insurance card safe  Medical ID theft is the newest form of identity theft.
• If you pay your bills by check  Put your work phone and address on your checks.
• Have different passwords online  and change them every so often.

Hopefully this has been helpful information.  I know I learned a lot and wanted to share it.  There is nothing that feels quite so helpless as when someone is using your information- protect yourselves!

Tipping the Credit Score Scales in Your Favor

You might be wondering what you can do to improve your credit score.  Here are some good tips from the Credit Scores class I took last week:

• Pay ALL of your bills on time or early.  Even a 30 day late on a small credit card can have a significant negative impact on your credit score.  Sign up to have the minimum payment automatically deducted on the due date to ensure that no matter when your "real" payment gets there, you have at least paid your minimum on time every month.
• Don't co-sign loans!  Remember that their late payment becomes your late payment.  No exceptions, no do-overs.
• Don't open new accounts unless absolutely necessary.  Inquiries may or may not affect your score depending on the rest of your credit history.  There are two types of inquiries: hard or soft.  A "hard" inquiry is when your full credit file is pulled, as when you try to open a new credit card.  A "soft" inquiry is when you pull your own credit score.  Fortunately, multiple credit inquiries from mortgage companies or auto loans within a 14 day period will not hurt your score, so you can shop around.  Just be careful where you do this- online mortgage companies are reportedly not the way to go.
• In related news... Department Store Credit Cards hurt your credit!  It can be so tempting to "save 10% all day today".  However, the credit is only good in that particular store, so it isn't good for your overall rating.
• Report Fraud Immediately!  If you are a victim of fraud, contact the credit bureaus, your credit card companies, banks and the FTC at http://www.ftc.gov/
• Monitor your credit.  Order a FREE copy of your credit report once a year at http://www.annualcreditreport.com/  This site will not require you to sign up for paid service.
• If you are planning on refinancing or buying a home, do not make any purchases or runup the balances on your cards.  Wait until you move in to buy that furniture, carpet, appliances, etc.

What Goes into Your Credit Score?

It seems like some kind of mystery.  How DO they figure out your credit score anyway?  Until recently, the calculations were fairly well guarded.  Yesterday, I took a class that gave an estimate of how it is figured. 
Being the mommy of a 9 year old, and a former teacher, I like to advocate SHARING!  So, here it is:

Payment History= 35%

• Pay your accounts ON TIME, even if it is only the minimum.  You can usually sign up to pay the minimum automatically online.  This ensures that a payment is recorded on time every month, even if you still mail paper payments of any amount.  Most of us have experienced going out of town and forgetting to mail your bills...  this takes care of those "oops" moments.
• Length of Positive Credit History. The longer you have your credit and pay it on time, the better
• Severity and Quantity of Delinquencies. 

Amount Owed= 30%

• Quantity of Credit Accounts.  Too many credit cards with balances can lower your score.

Length of Credit History= 15%

• The longer the better
• How long have your credit accounts been established?  It can take 6 months to a year to establish a payment history on a new credit card.  Until that time, it is a negative against your credit history because it is unestablished.
• How long has it been since you've used your accounts?  If you have many cards that you never use, this can count against you.  Unfortunately, suddenly closing a bunch of accounts is not a good idea either.  Ultimately, you should have 3 cards that you use, and pay, regularly.

New Credit= 10%

• Opening several credit accounts in a short period of time is a greater risk- especially if you have not established a credit history.

Types of Credit in Use/Having a Healthy Mix= 10%

• 2 Intallment Loans (eg. Car payments)
• 3 revolving Credit Accounts with balances
• Balances on revolving debt below 30% of the high credit (credit limit)
• No collection accounts
• No public records
• No foreclosures
• No late payments

Coming Next:  Tipping the Scales in YOUR Favor