We like the idea of consumers having the opportunity to review their credit histories for free at each of the following main credit repositories.  These are in no particular order Trans Union, Experian, Innovis and Equifax.

A recent amendment to the Fair Credit Reporting Act (“FCRA”) allows each consumer to randomly obtain their report from each of the previously named bureaus once each year.  There are strategies we recommend in lieu of pulling all three at one time such as requesting a report from a different bureau every four months.  This will allow you to get continuous monitoring of your credit profile.

Of course, there were other occasions when you are entitled to obtain a free copy of your credit report and those free credit report provisions are described here.

The reason I write this today is that I mistakenly clicked on a Yahoo page and the free credit report offer came up with the guy who’s sometimes dressed as a pirate playing the guitar.  You may have seen this fellow on tv.  I have and others like him quite a bit lately.

There are two main reasons that the credit bureaus are pursuing you and your desire to review your credit.  First, they want to sell you protection and it’s not cheap.  Many offer you a free credit report through a free trial membership such as the “Triple Advantage^SM Credit Monitoring”.  Forget to cancel and you will be billed $14.95 PER MONTH.  That’s expensive protection.

Secondly and perhaps more important to them, they sell your data as a consumer that’s in play.  Until we asked the credit bureaus and data warehouses to stop, our firm would get countless calls trying to sell us trigger leads.  A trigger lead is a consumer who has just had their credit “pulled”.  The belief is that this consumer is somewhere in the process of buying something and therefore a target for marketing.

As of January 1, 2009, the new conforming loan limit in high-cost areas is being reduced to $625,500 for the loans FHA will insure and the conventional loans Fannie Mae or Freddie Mac will purchase.  That's much less than the existing, higher, temporary limit of $729,750.

You may recall that earlier this year in March the U.S. Department of Housing and Urban Development (HUD) temporarily raised the loan limit on loans insured by the Federal Housing Administration (FHA).  The increase to $729,750 was more than double the previous limit of $362,790.

At the time the conventional, base conforming maximum loan limit for high cost areas was $417,000.  Shortly thereafter, both Fannie Mae and Freddie Mac raised the maximum conforming loan limit they would purchase to complement the FHA max of $729,750.

To make the issue more challenging, some of our most competitive lenders have already instituted this change.  They don't want to be caught with a loan they can't sell.  And if you or someone you know needs a loan above the new lower limit, you don't want to get caught without one.

One more thing to keep in mind: yesterday, CNBC quoted Mortgage Point Monitor that it was the largest one-day drop in mortgage rates ever.  A sign of things to come or a one day flash-in-the-pan?

Each time I heard someone lay the blame for the current credit crisis at the feet of Fannie Mae or Freddie Mac I squirmed just a little knowing that we regularly used their automated underwriting systems to obtain approvals and close loans.  One candidate and his party did it relentlessly and I knew then that the situation was not well understood or there was some ulterior motive.

Michael Lewis, author of Liar's Poker returns to the scene of the crime to find out what happened this time.  In an article entitled The End, he chronicles the demise of the synthetic collateral debt obligation (“CDO”) through the eyes of Steve Eisman, a hedge fund manager who “exposed various important people as either liars or idiots”.

Once again, it is pointed out that it really wasn't a bad mortgage that created havoc but the leverage and stupidity of those using unregulated derivatives to bet the world.

Having used the Desktop Underwriter (“DU”) system (or the Desktop Originator (“DO”)) extensively and the Loan Prospector (“LP”) system more often recently I can say that neither were doing what we would then call sub-prime loans.