NMP - October 2016 - 97

to credit repair or lose the deal continued from page 57 procedures and standards are an integral part of our sales training manual. Clearly defined culture, processes and compliance, provides consistent results and limits the potential for issues. through the process and how do they inform the referral partner of the client's progress? l What education, action plan and coaching is provided to the client? Payment Advanced Fee Payment is prohibited by CROA, as well as many state laws. It is important to understand the billing process of a CRO as it's a key factor why the CFPB initiates investigations. Below are a few cursory questions you can ask: l Do they accept any monies prior to their disclosures being completed and promised work has been completed? l Is there cost structure clearly disclosed within their agreements and their Web site? There should no ambiguity in regards to what the services will cost the consumer. l How do they classify their payments? Do they charge for clearly defined monthly services or do they offer a pay for performance service? A well-developed program can translate into the difference between funding more clients and managing complaints. Be sure that the process your vendor has is one you would utilize if you had credit challenges. The only exemptions for advance fee payment are credit unions, however there are few if any CROs operating under the umbrella of that status. Here is an important point to consider on this topic. Individual loan officers refer applicants to CROs every day. Some act in accord to compliance and others may not. Would it not be in the best interests of the lender to have vetted CRO's that are referred to consistently and compliantly? Payment defaults and buybacks Last, I want to address the potential for buying back defaulted loans for consumers that repair their credit via a CRO. Buyback for any reason are a very real concern for all lenders. What follows will hopefully reassure those that find this a risk a concern. Since the meltdown in 2007, credit scoring models have been modified to levels that have never been seen previously. A 30-day mortgage late in 2006 may have cost the borrower approximately five to 10 points to their score. Today, a 30-day late on our home could cost up to 130 points, according to FICO data released in 2011. Moreover, without the responsible use of credit over time by the borrower, all the credit repair in the world will not give the consumer mortgage ready profile and scores. Lastly, with DU and LP recognizing when items are in dispute, it's virtually impossible to deceptively manipulate a credit score and profile. I would like to note that in our history, we have never had knowledge of a scenario where a client we serviced resulted in a loan buyback. In fact, we have actually helped a number of clients repair errors on their borrower's credit in order for the loan to be saleable to the servicer. Cases where errors hit the credit report post-closing do happen. This alone can be a strong enough case to look closer and having a credit service provider as a vendor. In closing, the world of lending and credit are fluid and rapidly changing. There are risks in every facet of the process and without risk there is no reward. I hope that after I have laid out the realities of the credit repair conundrum, you have enough data to make an informed decision on using a CRO as a vendor. Chad Kusner is president of Credit Repair Resources LLC. Chad is an accredited by the State of Ohio Department of Commerce and Ohio Supreme Court as a credit educator. Chad is also an executive director of NACSO, the National Association of Credit Services Organizations. He may be reached by phone at (216) 591-1000 or e-mail Chad@crr760.com. Join the new Facebook group by searching for "OrigiNation." This public and open group features information that will be featured in the "OrigiNation" column in National Mortgage Professional Magazine, with your consent of course, by Andy W. Harris. People want to hear from you, the mortgage originator, from the good stories to the bad, from the funny to the serious ... take this opportunity to connect and share. Search today on Facebook and join the group! Are you an originator? Send your stories! To have topics considered in future editions, please e-mail me with "OrigiNation" in the Subject Line at AHarris@VantageMortgageGroup.com. These can be confidential or your name and company can be referenced if you wish. n National Mortgage Professional Magazine n OCTOBER 2016 Facebook for OrigiNators 97 NationalMortgageProfessional.com Processing files: AKA the deliverable There is no proprietary method for repairing credit. On a high level, a CRO disputes potentially inaccurate and outdated information on behalf of its clients. As analogy, it is very similar to making the statement an accountant makes when doing your taxes. There are many levels of expertise, services and follow up accounting firms offer. A CRO should have a detailed protocol that they follow that is implemented consistently with every client. Here are key data points that should be clear and consistent: l What is the dispute methodology? How do they create their initial disputes and what is their vetting method that fully verifies the challenged information? l What are reasons they would NOT challenge or dispute an account? l Who does the investigating? Does the sales agent manage the full process? If so what are their qualifications as an expert? l What is the follow-up protocol? How do they move the client A few more things to consider Now that we have discussed what to look forward within a CRO, I want to address a few additional talking points pertinent to this topic. The credit reporting agencies and credit resellers have strict guidelines about credit repair. Additionally, I have often been approached about the potential for loan buybacks from credit repair clients who default on their loans. I would be remiss if I did not address these all important topics. Credit reporting resellers have an agreement with the credit reporting agencies that prohibits them from allowing lenders to furnish any information obtained from a credit report to a multitude of third parties. One of these third parties are credit repair companies. With that being said, following the steps limits the potential of mistakes being made and jeopardizing your relationship with your reseller. l Do not aggregate credit reports to a credit repair company. Some agreements allow you to furnish a consumer disclosure to the applicant. If that is the case, leave it up to that consumer if they want to forward it to a CRO. l Do not supply specific credit data derived from the credit report to the credit repair company. Let the consumer provide information about their credit challenges. l Do provide the CRO with basic contact information of the applicant that was derived from the initial lead source and not the credit report. http://www.NationalMortgageProfessional.com

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NMP - October 2016 - 1
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