FAQ
Credit Card Fraud
As you read this, a thief anywhere in the world could be using a counterfeit credit card with your name and account number on it.
Here's how he got it:
Someone, somewhere made an extra swipe of your credit card. It could be a waiter or a store clerk or anyone you've handed your credit card to for payment.
Instead of just charging your card, the thief made an extra swipe of your credit card into a small hand-held device known as a skimmer.
"Think of a skimmer as a net. It takes information right off the card itself," says Brian Marr, a spokesman for the U.S. Secret Service.
The skimmer pulls the data from your card, giving the thief all the information needed to make a counterfeit card. A skimmer can hold card data from hundreds of different credit cards.
"Once this information has been downloaded into a skimmer it can be downloaded into a computer and e-mailed anywhere in the world," Marr says.
Credit card skimming has become a worldwide problem. Card losses due to skimming exceed $1 billion a year.
"You're seeing this anywhere credit cards are put into a point-of-sale database," Marr says. "With technology, there's really no boundary."
Skimming and counterfeit credit card scams are widespread in Europe, Asia and Latin America. They're growing problems in the United States.
"A Far East factory will do as many as 5,000 cards a night, and the next day those cards are in a suitcase on the way to Europe," says George Wallner, chairman and chief strategist at Hypercom Inc., a leading provider of point-of-sale card payment terminals.
Smaller-scale skimming operations are common as well. Consider this scam ring in Florida, in which seven people were indicted in April.
Two waitresses skimmed a large number of credit cards from an Orlando restaurant. The waitresses then sold the credit data to a middleman who sold the information to a group making counterfeit credit cards in Miami.
"Technology giveth and technology taketh away, and we're seeing the dark side of some of that," says Robert Finkbeiner, an assistant statewide prosecutor in Orlando, Fla. "It's a pretty insidious thing."
Skimmer technology improves
Ten years ago, skimming was much less common. Skimmers were too bulky to carry around and had to be hidden under counters.
Smaller skimmers, roughly the size of a pager, hit the scene two or three years ago. These skimmers are easy to carry, easy to hide and easy to buy.
"A few years ago you had to make a skimmer yourself. Now you can go out on the Internet and buy one," says Lou Struett, executive vice president of Magtek, a manufacturer of magnetic stripe card readers.
Everything needed to pull off this crime is available on the Internet. A skimmer costs about $300, and the equipment to make a counterfeit credit card costs about $5,000 to $10,000.
If all this weren't bad enough, there's another kind of skimming going on as well. A thief slips a small, skimming bug into an older credit card terminal. The bug pulls credit card data from the terminal. A few days later the thief removes the bug.
"The bad guy comes and take out the bugs and no one's the wiser," Wallner says.
What's happening to fight skimming? For one thing, newer credit card terminals can't be bugged. And portable terminals, which would enable a waiter to swipe a credit card at a customer's table, are available, although not widespread.
The U.S. Secret Service is working with the credit card industry to track down skimming rings by assembling a database of locations where scams have occurred.
As with any kind of credit card fraud, a consumer victim is not on the hook for the bill. Someone living in San Diego won't have to pay for a thief's $5,000 shopping spree in Hong Kong with a counterfeit credit card.
Know your rights
The Truth in Lending Act limits consumer liability to $50 if a credit card is lost or stolen. And most issuers waive the $50 fee.
The hardest part for a fraud victim is straightening out their credit report after a thief piles up charges in their name. It can take months to sort out.
And that's why it's so important to monitor credit card bills carefully and report any suspicious activity immediately.
"Look at credit card bills line by line," Finkbeiner says. "If something looks suspicious, you can catch it before it gets out of control."
It's also important to guard your credit card number. Be sure to shred old receipts and credit card bills.
"The number is the thing," Finkbeiner says. "You want to take whatever steps you can take to keep your numbers from getting out."
Keep a close eye on your credit card when paying in a store, restaurant or gas station. Finkbeiner knows of a skimming victim who won't let his credit card out of his sight. He'll even follow a waiter back to the payment terminal in a restaurant.
"It's awkward and silly and makes people uncomfortable, but it's what he feels he needs to do," Finkbeiner says.
What to do if you become a victim
What should you do if you've been a victim of skimming or any kind of credit card fraud? Clear your good name as quickly as possible. This guide will show you how:
•Contact the three major credit bureaus. Equifax: (800) 525-6285; Experian: (888) 397-3742; and Trans Union: (800) 680-7289.
• Ask them to place a fraud alert on your credit report. Include a statement that asks creditors to call you for permission before any new accounts are opened in your name.
• Contact creditors for any accounts that have been tampered with or opened without your knowledge. Be sure to put complaints in writing.
• Contact the FTC: (877) 438-4338. While federal investigators only tend to pursue larger, more sophisticated fraud cases, they do monitor identity theft crimes of all levels with the hope of discovering patterns and breaking up larger rings. Fill out the ID Theft Affidavit at the FTC's Web site, make copies and send to creditors. The agency also has an online complaint form.
• Alert the police that your wallet is stolen. Fill out a police report, and consider signing a written affidavit verifying that unauthorized transactions on your account are fraudulent. Send copies to creditors and credit bureaus as proof of the crime.
• Report the fraud to the Office of the Inspector General's fraud hotline.
If you suspect someone of committing fraud, submit a report via our online fraud reporting form or contact us by mail, fax, or phone.
U.S. Mail:
Social Security Fraud Hotline
P.O. Box 17785
Baltimore, Maryland 21235
FAX: 410-597-0118
Telephone: 1-800-269-0271 from 10:00 a.m. to 4:00 p.m. Eastern Standard Time
TTY: 1-866-501-2101 for the deaf or hard of hearing.
Credit repair
Credit scores affect many of today's lending decisions. Apartment rentals, insurance rates and even employment can hinge on your credit rating. Creditworthiness determines whether you'll qualify for competitive interest rates or get stuck with high rates.
As credit scores become more important, consumers are taking more notice of their three-digit numbers and want to know how they can improve their credit.
Bankrate's experts Dr. Don and the Dollar Diva offer advice for some of the frequently asked questions regarding problem credit.
Does consumer credit counseling pay off the balances?
A consumer credit counseling service will help you get out from under credit card debt, but it's your money, not their money, that gets the job done.
A credit counseling service will negotiate with your creditors to arrange a repayment schedule and may be able to lower the interest rate on your credit cards. Using a credit counseling service can affect your credit rating because your creditors will note that your bills are not being paid according to the original credit terms.
That said, there is less stigma attached to credit counseling than there would be to a bankruptcy showing up on your credit report. Consider credit counseling if you can't figure a way out from under your current debt load.
Remember that even though most credit counseling services are nonprofit organizations, that doesn't mean that they won't charge a fee for their services. Most agencies get at least part of their compensation in payments from your creditors.
If you're considering using a credit-counseling firm, you should interview at least two different firms, and review their written contracts before signing any agreements to enroll with a service. This FTC site gives advice on the questions to ask in the interview.
The National Foundation for Credit Counseling can help you find agencies in your area, or even counsel you online. There is also a professional certification process that turns out Certified Consumer Credit Counselors.
Ask the firms that you interview about whether their counselors have this certification, and if you can be assigned to a certified counselor.
Can I raise my credit score by closing out inactive credit account?
Lenders look at your credit report to see if you are able to manage credit responsibly, but they also get a credit score from one of the credit reporting agencies. These scores are known generically as FICO scores. That's because the credit reporting agencies use Fair, Isaac & Company to create their proprietary credit scoring models.
A credit scoring model estimates your creditworthiness based on the information in your credit report. Outstanding credit lines aren't bad, but they can reduce the amount of money that a mortgage lender is willing to loan you. That's because the lender can't stop you from using those lines, and if you overextend yourself you're less likely to be able to make the mortgage payment.
According to the Fair Isaac Web site, closing accounts as a short-term strategy to raise your credit score is not recommended. Here are some suggestions from that site for improving your credit score:
- Pay your bills on time. Delinquent payments and collections can have a major negative impact on a score.
- Keep balances low on credit cards and other "revolving credit." High outstanding debt can affect a score.
- Apply for and open new credit accounts only as needed. Don't open accounts just to have a better credit mix -- it probably won't raise your score.
- Pay off debt rather than moving it around. Also don't close unused cards as a short-term strategy to raise your score. Owing the same amount but having fewer open accounts may lower your score.
- Make sure the information in your credit report is correct. It won't affect your score to request and check your own credit report. If you find errors, contact the credit reporting agency and your lender.
They're looking at the total picture and you should, too. One account isn't going to make or break your credit score and limit your ability to get a mortgage. Look at all your outstanding credit relationships.
Credit reports are notorious for their errors; it's a good idea to review them at least once a year so you can nip any problems in the bud. The three credit reports that matter are:
Equifax: (800) 685-1111
Experian: (888) 397-3742
TransUnion: (800) 916-8800
FICO score
Your FICO score is a credit rating produced by Fair, Isaac and Co. It's used by most lenders to help them decide whether you're a good credit risk. Fair, Isaac crunches the numbers from your credit report, and spits out a score somewhere between 300 and 850. A low score says you're a bad credit risk, a score of 750 or higher puts you in the catbird seat.
Here are the factors considered when calculating your FICO score and an estimate of how heavily each factor might be weighted.
•Past payment history (35 percent): bankruptcies, late payments, past due accounts and wage attachments
•Amount of credit owing (30 percent): amount owed on accounts, proportion of balances to total credit limits
•Length of time credit established (15 percent): time since accounts opened, time since account activity
•Search for and acquisition of new credit (10 percent): number of recent credit inquiries, number of recently opened accounts
•Types of credit established (10 percent): number of various types of accounts (credit cards, retail accounts, mortgage)
Visit the Fair Isaac Web site for more information on what helps and hinders your credit score.
How can I work with my creditors to get the bills paid off?
I don't know what kind of creditors you are dealing with, but the steps to dig yourself out of debt should apply to most of them:• Make getting your financial house in order a high priority, and understand it's going to take time, energy and organization.
- • Make a file folder for each creditor containing the following:
The bills - A record of the dates and amounts paid on the bills.
- A log of every contact you make or attempt to make regarding the debt, including date and time; name and title of person contacted; nature of contact (whether you talked on the phone or left a message on a machine); summary of conversation.
•Set up a master list of everyone you owe money to. Include the name of the lender, the amount, the interest rate and the minimum monthly payment.
•Determine how much after-tax income you will have from your job and what your bare-bones living expenses are, not counting the debt. Include amounts you need to put aside each month to make quarterly or annual payments, such as insurance and taxes, and a little cushion for any expense you may have forgotten to write down. The difference between what's coming in and what's going out is what you have to pay your debts.
•Estimate what you can pay to each lender.
•Contact each lender, explain your situation, apologize for the late payments and state how much you can afford to pay each month. Put all agreements, negotiations and offers in writing.
If most of your debt is with credit cards and departments stores and so is unsecured, and you're batting zero in your attempts to deal with those lenders, a visit to your local Consumer Credit Counseling Services might help. There's no charge for an initial consultation, so it doesn't hurt to talk to them.
CCCS is funded by credit card companies. In spite of that, a counselor can help by getting the collection agencies off your back, and negotiating repayment schedules that you can afford. It will show up on your credit report if you enroll in a CCCS debt consolidation program. However, if your credit rating has taken a beating then it wouldn't really matter.
If you find yourself in a position where you will never be able to clean up your bills, the last resort is bankruptcy. For an overview of Chapter 7 and Chapter 11 bankruptcy
Anyone without an emergency fund should set one up now. Without a fund, the financial chaos can be devastating.
Can I get lenders to remove charge-offs from my credit report?
When a lender gives up on collecting a debt, calling it a charge-off, it stays on your credit report for seven years from the date of last activity. Normally you can't get the lender to remove the charge-off, however, there's no harm in asking. What you really want to concentrate on is having the charge-off reported as being paid in full, even if you negotiate a settlement.
If the account is with a collection agency should I negotiate with them or the lender?
Negotiating with the collection agency is probably better since the torch has been passed to it. If the collectors have stopped calling you, it means they're not optimistic about getting paid, and you're in a better position to negotiate a win-win deal.Here are some negotiating hints:
•Negotiate face-to-face rather than over the phone, if possible.
•Make the appointment early in the morning.
•Set a goal -- closure before lunchtime.
•Talk to the person who can make the settlement decision.
•Be polite and accommodating, but don't offer any information on where you work or bank.
•Know what you can afford to pay, and don't agree to more.
•Offer whatever you can, 40 cents or 50 cents on the dollar. When the collector turns it down, ask what it's going to take. Don't agree to an amount that is more than you can afford.
•Be prepared to hand deliver -- or send by overnight mail -- a money order or a cashier's check as soon as the settlement is reached
•Get everything you've agreed upon in writing before you pay. If you're doing this via phone, have a fax number ready, so they can send you a statement of what you've agreed upon before you deliver the cashier's check or money order.
Loan Modification 10 most often asked questions
- Just what is a loan modification? This is when your lender agrees to make a permanent change to your existing home loan that results in an affordable payment so you can avoid foreclosure and stay in your home. The loan modification may involve a lower interest rate, a longer term or a reduction in the principle balance.
- Can my late charges and fees be included in the loan modification or do I have to pay those first? Per HUD, the accrued late charges should be waived by your lender at the time of the loan modification-this ruling varies depending on your type of loan. ALWAYS ask for a complete accounting and breakdown of all fees and penalties from your lender-this is your legal right-some fees and penalties are prohibited
- Can my bank require an interior inspection of my home? Yes, your lender can conduct a physical review of your property to ascertain it's current condition
- How do I find out if I qualify for a loan modification? The #1 criteria your lender will look for is proof of your ability to afford the new modified loan payment now and in the future. You need to supply your lender with proof of your income, along with a complete and accurate financial statement that details your income, expenses and assets.
- What if I am not currently late on my payments-can I still ask for a loan modification? Yes, most lenders will now accept loan modification applications from borrowers who foresee a problem continuing to make their monthly mortgage payments. It is recommended to that you contact your lender as soon as possible to start the loan modification process.
- What is an acceptable Hardship situation? While each homeowner's situation is unique, generally the lenders consider divorce/separation, death of spouse or co borrower, illness, job relocation, military service, medical bills to be acceptable reasons to consider a loan modification. A compelling hardship letter included in your loan modification application package is very important to explain to your lender the circumstances that caused your delinquency and how you plan to rectify the situation.
- Does a loan modification STOP FORECLOSURE? Yes, that is the goal of a loan modification. When you work with your lender to find a loan workout solution, your loan is brought current and the foreclosure process is halted.
- What about my missed payments-can they be added back into my loan? Yes, generally your missed payments can be added to the new loan balance and then spread out over the term so you can then afford the new loan payment.
- Can I do my own loan modification or should I hire a company? You can certainly do it yourself, as long as you have some upfront knowledge and preparation. Once you understand what your lender needs to see, you can prepare your application properly. If, however, you do not feel comfortable dealing with your bank, you can pay a third party company to represent you. Be sure to do your research first, there have been reports of homeowners paying large upfront fees with no results at all.
- So, how do I get started with the loan modification? IMPORTANT-Before contacting your bank of a loan modification company, do your homework-learn as much as you can about the loan modification process so you can make informed decisions. It's not rocket science, but you do need to have a general understanding of what it takes to get a loan modification application approved. Saving your home is worth the effort.
What is a mortgage?
A Mortgage (also called a home loan) is a legal contract made between a lender and a borrower that uses property as collateral to secure the loan. The lender can take possession of the property if the borrower fails to pay the prearranged home loan payments.
What is a mortgage refinance?
A homeowner acquires a new loan to pay off an existing loan. Reasons homeowners refinance is to lower their interest rates and/or access cash from their home equity.
What is a home loan?
It is a loan by a lender to the homeowner secured by a "lien" on the real estate.
What is a home equity loan?
It is a closed-end home loan secured by the borrower's residential asset. The reasons to usually get a home equity loan are to pay off debt or to make home improvements.
What is a home equity line of credit or HELOC?
A HELOC is simply an open-end loan set up as a line of revolving credit for some maximum draw, instead of a fixed loan amount in which your home is collateral. This is an open-end loan that permits the borrower to repay and re-borrow the funds available. HELOCs can be used to pay for several important items such as college education tuition, private school education, high interest debt, home improvements, home renovation, and major medical bills.
What is a second mortgage?
Mortgage loan taken out after the first mortgage and secured against the same asset as the first mortgage loan. Mortgage loan is based on the amount of equity or ownership interest you have in your home.
What is a reverse mortgage?
This loan program is for the benefit of seniors giving them the ability to supplement their income. It is a contract between the lender and the homeowner in which the lender makes regular payments to a homeowner for a specific period of time. The monthly payment received by the homeowner is based on the amount of equity the homeowner has in the home. The monthly payment is a non-recourse loan hence; the payment is tax free to the homeowner. The homeowner is allowed to reside in the home until they relocate or till death of homeowner. At that period, the lender sells the home and recovers his loan.
What is a mortgage lender?
A mortgage Lender is a financial institution that provides prospective homeowners with the funds over a long-term period to pay off their home loan mortgage. Borrowers are required to pay monthly installments to their lender which includes principle, interest, and additional lender fees. Examples, mortgage bankers and mortgage brokers.
What is the difference between a mortgage broker and a mortgage banker?
A mortgage broker is the middleman who helps match borrowers with lenders based on corresponding needs and standards. Mortgage brokers arrange more than 80% of all transactions between borrowers and lenders, yet mortgage bankers actually finance and distribute the largest portion of home loans compared to all other lenders.
What is a mortgage principle?
The mortgage principle is the amount of loan money that a homeowner borrows excluding interest.
What does APR mean?
Annual Percentage Rate ( APR ) is the percentage used to figure out the total cost of your cash advance loan by taking into account all fees charged by your lender in addition to your loan principle and interest.
What does the word “naviscreen” mean?
Naviscreening is the concept of directly connecting (mortgage) buyers with regionally specific, prescreened, and competent lenders through the simple completion of a universal and secure form.
What is a fixed rate mortgage?
A fixed rate mortgage is a home loan with steady mortgage interest rates and monthly payments that do not change throughout the life of the loan.
What is the adjustable rate mortgage?
An adjustable rate mortgage is a mortgage loan whose interest rate is episodically adjusted based on an index. The monthly payments made by you may change during the term of your mortgage loan with the changing interest rate. The fluctuating rates pass on part of the interest rate risk from the mortgage lender to you.
What is an interest-only mortgage?
Interest-only mortgages are loans that require the borrower to pay only interest on the principle in monthly installments for a fixed period. You can use one of our mortgage calculators to calculate exact payments.
What is an amortized mortgage?
Amortized Mortgages refers to loans that are paid in installments comprised of both principle and interest, and which is paid off (or amortized) over a fixed period of time.
How do you calculate LTV or loan-to-value ratio?
The loan-to-value (LTV) ratio of your home is calculated by dividing the fair market value of your home by the amount of your home loan.What are lender fees?
These fees usually range anywhere from 2 to 5 percent and may include, but are not limited to, things such as appraisal costs, document preparation, and application costs.
What is the Truth in Lending Act?
The Truth in Lending Act is a federal law that was enacted as part of the Consumer Protection Act. This law requires lenders to reveal all information to the borrower and detail all costs associated with the transaction.
FAQs Real estate who is a Listing Agent?
A listing agent works on behalf of the seller to market the property so as to attract potential buyers. Also, the listing agent is referred to as a seller’s agent.
Who is a Selling Agent?
A selling agent has an agreement with buyer to work for their best interest in a real estate transaction. Also, the selling agent is referred to as a buyer’s agent.
Who is a Dual Agent?
A dual agent represents the buyer and seller in the same transaction. The dual real estate agent must disclose to both parties the agent’s duel agency status before the process begins. The buyer and seller must agree in writing to the duel agency agreement before any business is transacted. Also, the agent cannot disclose either party’s personal information with the other.
Who is a Full-Service Real Estate Agent?
Full-service agents provide comprehensive services that are most apt for sellers. These real estate agents typically have higher commission rates than discount real estate agents and seldom, charge any additional fees. The comprehensive services include detailed marketing activities such as promotion, direct mail, advertising, and listing the home on the Multiple Listing Service (MLS). Sometimes full-service agents utilize customized marketing plans designed to attain maximum exposure for the property. Also, referred to as full-service brokers.
Who is a Discount Real Estate Agent?
Discount agents offer lower commission than full-serve agents. The lower commission doesn’t necessarily connote a compromise in customer service. It does connote less depth and breadth in marketing of the property compared to a comprehensive marketing model of full-serve agents. The marketing effort is mainly directed toward attracting prospects to a magazine, main web site, or other marketing areas where multiple home listings by that agent are featured. Also, commonly referred to as discount brokers.
Who is a Fee-For-Service Real Estate Agent?
Fee-for-service real estate agent services are not precisely in the same category as a discount broker. Fee-for-services offer consumers a menu of services to choose from; herein, they pay for only the services procured.
What is the Multiple Listing Service?
It is a comprehensive database of all the available homes for sale, except those being sold by the owner.
What is a Listing Agreement?
It is a legal agreement between the listing agent and the seller. The terms of the agreement include list price, description of property, conditions for the sale, length of the agreement, compensation of agent, and services rendered.
What is an Open Listing Agreement?
An open listing agreement is a non-exclusive agreement that permits the owner to sell the home by themselves. The owner can have listings with various real estate agents and pay only the agent who aligns him with a buyer whose offer the owner accepts. However, an owner can have an open listing indicated typically by a "For Sale by Owner" sign. An open listing doesn’t require an agreement. The open listing maintains the owner’s right to sell the home themselves and not pay commissions to anyone.
What is an Exclusive Agency Listing Agreement?
A listing agreement in which the owner contracts with a real estate professional as the one exclusive agent for a certain period of time to sell the property. The terms of the agreement include the compensation arrangements and any owner terms. Still, the owner has the right to sell the property without compensation to a prospect not introduced or claimed by the real estate agent.
What is an Exclusive Right-to-Sell Listing Agreement?
A listing agreement between the owner and the real estate agent which compensates the agent even if the property is sold by someone else, including the owner during the term of the agreement.
What is a Safety Clause?
The exclusive right-to-sell listing agreement includes a clause that entitles the real estate agent to compensation even after the listing is canceled or has expired. The clause is activated only in the incident a buyer who was introduced to the home by the listing agent purchases the home after the listing has been canceled or expired. It is also known as the protection clause because it "protects" the agent from collusion between the buyer and seller.
What is a Residential Purchase Agreement?
Also known as Contract to Purchase Real Estate, it is a binding agreement (among two or more parties) to purchase real estate. It binds the buyer to buy at a set price and the seller to sell to the buyer, all of which is to be transacted within a specified time.
