Credit easing up? Or credit score improving?

Image by oschene via Flickr

Just this week I've noticed I've started to get credit offers in the mail again--for credit cards and refinancing the mortgage.

Now one of two things is happening. Either 1) my credit is improving, or b) credit is easing up out there.  The credit card offer I got yesterday actually included a 0% balance transfer offer.  Haven't seen one of those in a long time. (And of course, given my past experience with balance transfers, such a thing sends me running for the hills.)

And mortgage rates are pretty durn low. If my credit score wasn't so bad, I'd be thinking about a refinance myself.

I should probably mention that I have put myself on the do-not-mail list for credit card offers. (You can do that too at https://www.optoutprescreen.com.) But some offers always seem to sneak through. 

Now mind you, I'm not going to be taking out any new credit. I've been there, done that, got the T-shirt (which is now old and smelly).

According to the the recent quarterly survey of banks by the Federal Reserve, credit hasn't loosened up yet. (Reported by Market Watch).

So maybe this is a sign of spring in the winter of our discontented finances.

Have you noticed any changes in the availability of credit?

Clergy and Town Officials Help Homeowners at Risk

This post has been included in this week's Carnival of Personal Finance #185 Cheesehead Edition hosted by The Fraud Files Blog and was also given a special mention at the Festival of Frugality #158 hosted by The Well Run Dry. After you poke around here a bit, and subscribe to my RSS feed if you like what you see, please visit these sites for more great posts.

Photo by KitAy

A town in Massachusetts held an innovative event to help homeowners in financial distress earlier this month.

The program, called "Neighbors Helping Neighbors," aimed to provide resources to homeowners having trouble meeting mortgage payments. And while the turnout for the event was small, the organizers, who included clergy from seven local churches plus local officials, are planning to build on the event. The rise in foreclosures of 68 percent in their community this year literally hit home.

The problem is one of stigma--In a middle-class suburb, it isn't OK to tell people that you may lose your house. I understand it perfectly; it is why I write under a pseudonym.

Mortgage lenders, tax officials, and representatives from local food pantries all participated to let people know that help was available for them. I found it particularly interesting that many municipalities have tax relieve programs available that may help homeowners temporarily if they can't make their total payments.

Religious communities, of course, have long provided charitable support for those in need. What I find fabulous about this program is that it trains the resources of people from multiple faiths to address a common problem. The program isn't expensive--it just provides information and outreach about resources that already exist.

And while I'm sensitive to the issue of inappropriate merging of church and state, I think this kind of cooperative effort is to be lauded, but even better, to be duplicated. Communities can take care of their own if they know that there are problems.

Gotta love a program where compassion rather than blame is the order of the day.

Bankruptcy and Foreclosures

The really smart people at Credit Slips made a good point the other day about homeowners in bankruptcy. Mortgages are the only loans that bankruptcy cannot modify! So it is possible to discharge or modify all your other debts, but if you can't make your mortgage payment, you're still outta there. I did not know that.

So pay your mortgage first, folks. And talk to the mortgage company when you first get into trouble, because if you get to bankruptcy, it may not help.

Did Fannie and Freddie's Demise Help Me?

Welcome Carnival Goers.

This post has been included in The Carnival of Debt Reduction and in Political Calculations On the Moneyed Midways, best posts from the past week's business and money-related blog carnivals.

I find myself wondering if my loan is owned by Fannie Mae or Freddie Mac. Apparently there's a 50-50 chance that it is. It is notoriously difficult to discover who owns your loan, according to ABC News's Betsy Stark, due in part to the complex mortgage-backed securities that have brought the economy crashing down around us.

I find the timing curious. After months of relentless collection calls (like a couple a day) from our mortgage company, and their inability to acknowledge our third-party request for a loan modification , all of a sudden, with no warning, we got a loan mod out of the blue. And it was after the federal goverment took over the mortgage giants. The company didn't ask us to verify our income or anything. Curiouser and curiouser.

Mortgage News Daily speculated after the takeover that since the government doesn't want to own thousands of homes, homeowners already in danger of foreclosure may actually fare better under the bailout. It's probably too soon to tell.

This thing is huge, isn't it? And I have to say that it actually makes me feel better to know that we are not alone in this, that we aren't just irresponsible, that there's something larger at work here. Or so I tell myself. Sometimes.

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• Freddie, Fannie and you

Prioritizing the Bills--Pay Your Mortgage First

I wish I had come across this list of Top Tips to forestall foreclosure from Laura T. Coffey at MSNBC a few months ago.

Here's her list, with my comments.

1. Face the problem head-on.
No more piling up the bills and refusing to read them.

2. Contact your lender and explain your situation.
The best outcome is that you'll get a loan modification, like we did. The trick is that your mortgage servicer is unlikely to grant a loan modification if you can't show sufficient income to carry the new terms of the loan. So it may not work if you request it, say, if you're still unemployed. But, hey, it couldn't hoit. And if you're talking to them, they know you haven't abandoned the property for a South American hideout.

3. Understand your mortgage rights.
In other words, read your loan.

4. Consider selling your home.

5. Explore the “short sale” or “deed in lieu of foreclosure” options.

These last too are horrible to contemplate, but if you can't afford the house and have no prospects of being able to afford it, they may be your only choices. (I know. I KNOW. This is where it gets tough.) Read the article for how these sales work.

(By the way, this is EVERYWHERE. My daughter's teacher is buying a house closer to the school from a buyer through short sale.)

6. Don’t give your money away to the wrong people.
No matter how little money you have, there are always unscruplous low-lifes willing to help you part with it.

7. Seek out legitimate help.
Find a legitimate debt counselor, perhaps one affiliated with the National Association of Credit Counselors.

8. Set financial priorities that fit your current circumstances.
In other words, pay your mortgage first. The other bills can wait.

9. Consider filing for personal bankruptcy protection.
This is not something we considered. I mean, we borrowed the money, didn't we? We bought the stuff, or paid the taxes, or whatever with the money, right? For some people it may be the only way out, and you may be able to keep your home to boot.

10. Maintain your self-esteem.
Now that's easier said than done, isn't it?

Another suggestion is to pay mortgage payments sporadically, even if you can't afford them monthly. It's when you go 60, 90, 120, or 150 days with no payment or communication that the mortgage company starts to get a little antsy.

Further Reading:
Forestalling Foreclosure by Gerry Willis at CNNmoney.com
suggests trying all the tactics above before raiding the retirement account.