How Long Does A Foreclosure Remain On My Credit Report?

Foreclosure auction signs (Photo credit: niallkennedy)
Foreclosures are one of the worst things any family can go through. They not only turn your life upside down, they damage your credit for years to come. But as the years pass and by following the guidelines from the FHA, Fannie Mae, and Freddie Mac, you can become a homeowner again.

All the major government entities that have influence over the foreclosure rules in the U.S. wield a lot of power over banks. Though they are not direct lenders what they say is what the banks and credit lenders must do.

Many people don't even realize that the guidelines used in making their mortgage have been set down by the FHA, Fannie Mae, and Freddie Mac.

Here are the guidelines for your ability to apply for a new mortgage after foreclosure:

FHA Guidelines

Foreclosure.

• 3-year wait. 
• Reduced wait if borrower has re-established good credit and can show extenuating circumstances.

Short Sale

• No wait if not in default. 
• 3-year wait if in default at closing of short sale.
• Reduced wait if borrower has re-established good credit and can show extenuating circumstances.
• Deed in lieu of foreclosure
• Same as FHA’s foreclosure policy.

Bankruptcy

Chapter 7 (liquidation):

• 2-year wait from the discharge date of the bankruptcy.
• 1-2 year wait if borrower can show extenuating circumstances.

Chapter 13 (repayment plan):

• 1-year wait from the discharge date of the bankruptcy.Fannie Mae

Fannie Mae Guidelines

Foreclosure

• 7-year wait from the completed foreclosure sale date.
• 3-year wait if borrower can show extenuating circumstances (additional underwriting requirements apply for 4 years after 3-year waiting period).
• 7-year wait for a second home, investment opportunity, or cash-out refinancing.

Short Sale

• 2-year wait if the borrower puts 20% or more down.
• 4-year wait if the borrower puts 10-20% down.
• 7-year wait if the borrower puts less than 10% down.
• 2-year wait time if borrower can show extenuating circumstances and puts 10% or more down.

Deed in lieu of foreclosure

• Same as Fannie’s short sale policy.

Bankruptcy

Chapter 7 or Chapter 11 (reorganization, usually involving corporations or partnerships):

• 4-year wait from the discharge or dismissal date of the bankruptcy.
• 2-year wait from the discharge or dismissal date may be accepted if borrower can show extenuating circumstances.

Chapter 13:

• 2-year wait from the discharge date or 4-year wait from the dismissal date.
• 2-year wait for a dismissal if borrower can show extenuating circumstances.

Multiple bankruptcies:

• 5-year wait if the borrower has filed more than one bankruptcy petition in the past 7 years.
• 3-year wait if borrower can show extenuating circumstances.

Freddie Mac

Foreclosure

• 5-year wait from the completed foreclosure sale date.
• 3-year wait if borrower can show extenuating circumstances.

Short Sale

• 4-year wait.
• 2-year wait if borrower can show extenuating circumstances.

Deed in lieu of foreclosure

• Same as Freddie’s short sale policy.

Bankruptcy

Chapter 7 or Chapter 11:

• Same as Fannie’s bankruptcy policy.

Chapter 13:

• 2-year wait from the discharge date of the bankruptcy.
• 2-year wait from the discharge or dismissal date of the bankruptcy if borrower can show extenuating circumstances.

Multiple bankruptcies:

• Same as Fannie Mae’s policy for multiple bankruptcies.

Source: FHA Handbook, Fannie Mae Selling Guide, Freddie Mac Selling Guide

Before taking any steps to rebuild your credit make the decision to seek out professional assistance. Look to professionals, such as a bankruptcy lawyer and a CPA specializing in bankruptcy provisions, before making major financial decisions.  

For HUD-approved counselors, go to: http://www.hud.gov/offices/hsg/sfh/hcc/fc/index.cfm. 

You can also call 1-888-995-HOPE for help from the Homeownership Preservation Foundation.

How to Amend Your IRS Tax Return

It's great to do your taxes early. All the stress and aggravation is long passed and your enjoying that nice fat refund check. But in the mail today came an additional W-2 income form. You completely forgot about it, what are you going to do now? The I.R.S. has just the solution to your problem. It's called form 1040X. With this form you can amend your incorrect tax return and satisfy your obligation to Uncle Sam.

Here are a few tips to help you with your 1040X:

1. When to amend a return You should file an amended return if your filing status, your dependents, your total income or your deductions or credits were reported incorrectly.
2. When NOT to amend a return In some cases, you do not need to amend your tax return. The IRS usually corrects math errors or requests missing forms – such as W-2s or schedules – when processing an original return. In these instances, do not amend your return.
3. Form to use Use Form 1040X, Amended U.S. Individual Income Tax Return, to amend a previously filed Form 1040, 1040A or 1040EZ. Make sure you check the box for the year of the return you are amending on the Form 1040X. Amended tax returns cannot be filed electronically.
4. Multiple amended returns If you are amending more than one year’s tax return, prepare a 1040X for each return and mail them in separate envelopes to the appropriate IRS processing center.
5. Form 1040X The Form 1040X has three columns. Column A shows original figures from the original return (if however, the return was previously amended or adjusted by IRS, use the adjusted figures). Column C shows the corrected figures. The difference between Column A and C is shown in Column B. There is an area on the back of the form to explain the specific changes and the reason for the change.
6. Other forms or schedules If the changes involve other schedules or forms, attach them to the Form 1040X.
7. Additional refund If you are filing to claim an additional refund, wait until you have received your original refund before filing Form 1040X. You may cash that check while waiting for any additional refund.
8. Additional tax If you owe additional tax, you should file Form 1040X and pay the tax as soon as possible to limit interest and penalty charges.
9. When to file Generally, to claim a refund, you must file Form 1040X within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later.
10. Processing time Normal processing time for amended returns is 8 to 12 weeks.

Links:

Form 1040X, Amended U.S. Individual Income Tax Return
Instructions for Form 1040X

Grants for Adults Returning to College

NRC Chairman Klein Presents Grant Money to University of Illinois (Photo credit: NRCgov)

For 2016 an up-to-date list of current active scholarships and grant programs at the end of this post.

Many adults have never finished their college degrees or even started them. Through the many twists and turns of life we just don't do it. Either family needs take precedent or we just don't have the money. Today many adults are returning to college to start or finish a degree. 

They now have the time or have changed jobs forcing the question of returning to school to the forefront. They never have realized that there are many grants available, specifically for adults returning to school.

A grant is money given to a student that does not need to be paid back when they complete their degree. Some grants are one time events, while others are renewed yearly, as you progress through school. Usually grants are given based on your financial needs or provided when you chose a specific path of study.

Even though you are working full time, this doesn't keep you from obtaining money for college tuition. For adult students you don't have to sign up as a full-time student to receive grant money. Adult grants understand that you still have work and family obligations to juggle while going to school.

Federal Education Grants.

The largest government grant option is called Pell Grants. This money is given to you and does not have to be paid back. For the 2010-2011 school year, the value of the federal Pell grant was $5,550. In order to qualify annually for a Pell grant, you must be working toward a degree.

To apply for Pell Grants you must complete the Free Application for Federal Student Aid (FAFSA) forms. The FAFSA forms must be completed annually to continue to receive government grants. Income information is necessary for completing FAFSA forms, so it is helpful to submit your tax forms early and have your most recent tax return documentation available when you complete the forms.

You must apply before June 30th, but if you submit in early February you will get a quicker response and more grant money than those that wait till June. There is a limited amount of money and the sooner you apply the better. FAFSA forms and information can be found here: Fafsa.Gov.

Federal Supplemental Education Opportunity Grant (FSEOG).

This other federal grant is offered by the government for people with a greater financial need. Also there are grants offered based on gender, race, nationality, and other specific groups. To find other government grants, visit Students.Gov

State School Grants.

Even some states offer grants to students who attend their state college or choose a specific career path. Some states are in need of teachers so they offer specific grants for that vocation. Check your states government website, education and grants section, for more information.

College Grant Providers.

Colleges themselves often have grant monies available for students. Some colleges have separate programs for adult students, and corresponding grant programs to assist the students with tuition costs. Whether the college has a separate program for adults or not, the financial aid officers at the college should be able to direct adult students to specific grant and scholarship programs that can assist them.

Employer Grants.

Many larger companies offer grants or tuition reimbursement programs for employees that want to continue their education. Check your companies human resources department for more information.

Community Grants.

Many cities have organizations that offer grants and scholarships to adults students going back to school. Many scholarships are available by a variety of clubs, organizations, civic groups, and religious organizations. The only problem is there is no one source to track down these services. You will have to use the phone and Internet and search for these organizations one by one.

Though many grants and scholarships are generous in the amount of money they offer, remember they will not cover the totality of your education costs. You still need to have some money saved for uncovered expenses. You could fill in your need for money by taking loans, but it may be better to pay for education when you have the cash available.

Update for 2016. Here is an up-to-date list of current active scholarships. 

• Visine Students with Vision Scholarship Program
• National Hispanic Health Foundation Scholarship Program
• College Scholarships and Grants Available for Veterans
• American Psychological Association Scholarships, Grants and Awards
• State Farm Grants and Scholarships
• The Rover College Scholarship
• NSHSS Foundation STEM Scholarships
• Scholarships and Fellowships | UNCF Merck Science Initiative
• Green Home Improvement Scholarship
• Microsoft College Scholarships

List courtesy of educatorlabs.org

A few more Scholarships to update the current list.

• Global Scholarships (globalscholarship.com), a scholarship search engine
• Awareness of Smoking Essay Contest Scholarship
• Verne LaMarr Lyons Memorial Social Work Graduate Student Scholarship
• Veterans Make Great Technology and Engineering/STEM Teachers Scholarship
• The Mary Blake Single Parent Nursing Scholarship
• Kosciuszko Foundation Tuition Scholarships for Polish-American Students
• James & Patricia Sood Education Studies Scholarship
• Boom & Bucket is offering a scholarship of $1,000 to be awarded each year to a student pursuing a heavy machinery-themed program
• Student Financial Aid Search Engine: Find & Apply for Financial Aid to Pay for College
• Geneseo Migrant Center Scholarships for Migrant Students
• Print and Graphics Scholarship Foundation Scholarships
• Society of Women Engineers Scholarship Program
• ENTELEC’s Wayne V. Black Scholarship
• VFW Auxiliary’s Young American Patriotic Art Contest
• NOAA’s Ernest F. Hollings Undergraduate Scholarship
• Jeannette Rankin Women’s Scholarship Fund
• Diabetes Scholars Foundation
• Common Knowledge Scholarship Competition

List courtesy of outsidescholarships.org

How To Find The Best Mortgage Rates

If you own a home your biggest expense is your mortgage. Over the years I have lived in many homes, in many different places and finding the top mortgage deals is so important to an affordable house payment. One of the problems of my home building business is finding the lowest mortgage rates for my buyers.

When selling real estate you usually have to guide the buyers to a mortgage broker you work closely with so they will have the greatest chance of qualifying for a mortgage. But your best effort will amount to nothing if the buyers credit is bad.

If your planning to purchase a home someday it would pay to plan ahead and check your credit score long before you make any decisions. It's of ultimate importance to have a good credit score so you will be able to qualify for the lowest interest rates. You may think you have a great credit score because you always paid your bills on time. But there are occasions when an error, through no fault of your own, appears on your credit report. Many errors on credit reports are caused by you being blamed for a bad debt by someone, with the same name as yours. Human error and mistaken information can cause your credit report to be 100 points lower than it should be. It pays to check beforehand.

Finding the best mortgage rates.

1. Online. 

There are many sources available to you to find and apply for a mortgage. There are many online sources that can show what's available. Those websites can let you search for nationwide interest rates through several companies. You can narrow your search by length of loan, interest rate, points, or type of mortgage.

2. Mortgage Brokers. 

If you like the personal touch, a local mortgage broker may be what you need. I like to work with mortgage brokers because of the time saving advantage. If time is at a premium, walking into a mortgage brokers office may shorten the time of the entire process. 

You can apply and possibly be approved all within the same visit. Mortgage brokers work on commission and this puts the pressure on the broker to make sure you get approved. I have seen how a good mortgage broker can work out solutions, to tough and complicated transaction better than their online counterparts. 

This flexibility is important because local mortgage brokers have multiple sources of money available for lending much more than boiler plate online sources.

Of course, compare and compare again, do not be in a hurry. No matter who you chose to write your mortgage, there will be sales pressure. Don't let that shake your plan of taking it slow. Also be aware of new home sellers that say you must use their mortgage source. This is not set in stone and you are able to bring in your own mortgage source. But if your cornered into using a specific company then use the leverage you have to get some freebies thrown in to sweeten the deal, for using their broker.

Words of wisdom. 

At the closing be sure read your mortgage papers thoroughly before signing. Maybe even spend a few bucks and let your lawyer check it out. I have seen mortgage documents with errors in them, it doesn't happen often so read thoroughly.

The Child Tax Credit Explained

Tax (Photo credit: 401K)A very important tax money saver for families is the Child Tax Credit. It's one the most beneficial components on a tax return because it gives an actual credit of $1000 for every child you have under 17. But to be eligible for the credit your child must qualify and there is income restrictions. According to Publication 972 there are 11 things you must consider.

1. Amount. With the Child Tax Credit, you may be able to reduce your federal income tax by up to $1,000 for each qualifying child under age 17.
2. Qualification. A qualifying child for this credit is someone who meets the qualifying criteria of seven tests: age, relationship, support, dependent, joint return, citizenship and residence.
3. Age test. To qualify, a child must have been under age 17 – age 16 or younger – at the end of 2011.
4. Relationship test. To claim a child for purposes of the Child Tax Credit, the child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.
5. Support test. In order to claim a child for this credit, the child must not have provided more than half of his/her own support.
6. Dependent test. You must claim the child as a dependent on your federal tax return.
7. Joint return test. The qualifying child can not file a joint return for the year (or files it only as a claim for refund).
8. Citizenship test. To meet the citizenship test, the child must be a U.S. citizen, U.S. national or U.S. resident alien.
9. Residence test. The child must have lived with you for more than half of 2011. There are some exceptions to the residence test, found in IRS Publication 972, Child Tax Credit.
10. Limitations. The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies by filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing a separate return, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. In addition, the Child Tax Credit is generally limited by the amount of the income tax and any alternative minimum tax you owe.
11. Additional Child Tax Credit. If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit.

For more information go here for a .PDF of Publication 972, Child Tax Credit.

How To Effectively Complain Online

Image via WikipediaBefore the option of the Internet the only way to complain to big companies was to write letters, go to the Better Business Bureau, or just tell everyone you know. You may have gotten really mad and wrote your state agency or even Washington.

Good news, those haphazard days of complaining are over, we now have the Internet to do our work. Consumer Reports, the consumer review magazine, says "Whether it's a slap happy review of your new flat-screen TV on Amazon or a scathing critique of a car dealer on Yelp or Facebook, there are plenty of online outlets where you can post your opinions. And companies are paying attention."

Today most websites have sections where customers can leave reviews of their products or services. Companies are hoping you will share your wonderful experience with them, but many people are writing about their dissatisfaction. Companies closely monitor these feedback pages and usually contact the dissatisfied customer to try to make things right. If you ever bought something on Ebay.com or Amazon.com and noticed the ever so important feedback comments, you can see how an online reputation is more important than a real world one.

Use Good Practices.

When complaining online whether it be a companies website or a consumers rights forum, the key to success is to be business like and not emotional. If you want to get results you should state your issue in a clear and succinct way. Using profanity and slurs to ridicule a company will not gain you any constructive attention. Convey your problem in a way where the company sees you as a valuable customer with a reasonable complaint. Companies don't want to look bad in front of other companies or potential customers. These companies know that your complaint is becoming part of the Internet record and will be available by anyone that does a search of the company in question.

When you post your complaint on the Internet and the business sees the unfavorable comments, it is possible for them to file lawsuits against the complaining parties. Even Consumer Reports has been sued for unfavorable reviews from company Sharper Image. Sharper Image lost the law suit. Consumer Reports said, " The suit was in response to a critical review of the company's Ionic Breeze Quadra air cleaner that appeared in the magazine. Sharper Image was required to pay $525,000 to cover Consumers Union's legal costs."

In many states, there are laws banning such lawsuits to protect the rights of the complaining parties. Mark Goldowitz, founder and president of the Public Participation Project and a lawyer who defends clients against SLAPP suits in California says, "No matter what the laws are in your state, consider the potential repercussions before you post critical or embarrassing comments."

Bottom line, get it right when complaining online. Remember whatever you post online will probably always be online.

Best Places to Get Started with Online Complaining

1. Try the biggest sites first to get the most exposure. Social media websites like Facebook or Twitter are good places to start. Most companies have a web presence and that's where you should start you effort. Mention the companies name and a brief comment about the problem.

2. Companies websites. Most all companies have a customer service or consumer section specifically for customer complaints. There you will find a place, either a comment section or a forum, where you're able to enter a description of your problem. Be polite, business like, and respectful when leaving comments. There is no faster way to get deleted than when a slur or profanity is present. Remember you are trying to get help, not make it worse.

3. Forums and Consumer Help Websites. Search online for your specific complaint. You may find many others have the same problem as you do. As you search you will find specific websites that deal with your special complaint. Try searching for terms like "-company- problems", "-company- lawsuits", or " -company- complaints".

Many places are available to start your online complaints.

• AirlineComplaints.org - Airline-related complaints or suggestions for improvement. Includes airline contacts.
• Amazon.com - Reviews and ratings of products and Amazon merchants.
• Angie's List - Reviews and ratings of local services and health professionals. Pay site, though nonmembers can submit reports free.
• ApartmentRatings.com - More than 1 million apartment reviews and ratings.
• Avvo.com - Reviews and ratings of lawyers and doctors. Includes library of legal and medical topics.
• Charity Navigator - Charity watchdog organization with user reviews and ratings of nonprofit organizations. Includes tips and donor resources.
• CNET.com - Discussions of electronic products, services, and companies.
• Complaints.com - Complaints about products, services, companies, and professionals.
• ComplaintsBoard.com - Complaints about products, services, companies, and professionals. Includes news and resources.
• ConsumerAffairs.com - Reviews of products, services, companies, and professionals. Includes news and resources.
• The Consumerist - Reviews and complaints about products, services, and companies. Includes news and consumer tips. Site owned by Consumers Union, publisher of Consumer Reports.
• Edmunds.com - Reviews and discussions of cars and car-related products and services. Includes dozens of subject-specific message boards.
• Epinions.com - Ratings and reviews of products and services.
• MeasuredUp.com - Reviews of companies and professionals. Includes tips and contacts.
• My3cents.com - Reviews and complaints about products, services, and companies. Includes consumer tips.
• PissedConsumer.com - Reviews and complaints about products, services, companies, and professionals. Includes consumer tips.
• RateMDs.com - Reviews and ratings of doctors and dentists. Includes access to medical-board records and top 10 lists.
• RipoffReport.com - Complaints about services, companies, and professionals. Includes consumer tips.
• TripAdvisor.com - More than 45 million reviews and ratings of hotels, restaurants, attractions, vacation rentals, cities and towns, and more.
• TrustLink.org - A Better Business Bureau site with reviews and ratings of companies and professionals. Includes scam alerts.
• Yelp.com - Reviews and ratings of local companies and professionals.

Remember your trying to accomplish something with your complaining, don't use the resources of the Internet to just blow off steam. If the business responds to your efforts and contacts you, be sure to reply. The company would not reply if it did not care about the customer. If things are worked out in a amicable way be sure to got back online and use the same effort you used in complaining to note that your issues have been addressed and are now satisfied.