| Individuals in Credit Crisis Turning to Credit Piggybacking to Avoid ...
SAN DIEGO, Oct. 24 /PRNewswire/ -- Individuals with adjustable mortgages whose payments have escalated beyond their means and whose credit scores are too low to refinance are now finding a creative way to keep from losing their homes to foreclosure. Commonly referred to as credit piggybacking, the method has been used since credit cards were created and has been in practice on a large scale for the past year. According to Ted Stearns, owner of TradeLine Solutions, Inc., a San Diego company offering the service, the practice enables individuals to improve their credit scores approximately 200 points within 30 days. The company offering the service maintains a portfolio of trade lines, or credit accounts that have perfect payment histories. The accounts can never have a late payment for 10 years.
Refinancing lures, isn't easy
Another mortgage-refinancing boom is under way. But this time around, many homeowners will be watching from the sidelines. For the first time since 2005, mortgage rates have slipped well below 6 percent. As rates drop further - and some expect that to happen if the economy continues to weaken - increasing numbers of consumers will find refinancing their existing mortgage worthwhile. But here's the catch, and it's a big one: Many homeowners won't benefit, either because their mortgage is too big or their credit score is too low. In other cases, falling home prices will make it tough for them to refinance. .
Petreaus: "Nobody In Uniform" Has Declared Victory
We should not bail out lenders, real estate speculators or those who made the reckless decision to buy a home they knew they could never afford." While the plan was well-received by the financial markets, it also elicited criticism from lawmakers and media commentators on both sides of the aisle: some accused Bush of not doing enough and others derided the plan for interfering with free markets. The CBS Evening News, for example, calls the plan "an extraordinary step but with limited impact," and shows Democratic Sen. Richard Durbin saying, "Homeowners facing foreclosure are drowning 20 feet offshore and the administration just threw out a 10-foot rope." CBS added, "He's talking about the 2.5 million other homeowners who are late on their payments and ineligible for the program." Meanwhile, the Wall Street Journal notes House Financial Services Chairman Barney Frank "said he is concerned that the plan sends the wrong message by not helping borrowers who have maintained good credit scores." The Washington Post reports "several Democratic presidential candidates blasted Bush after his news conference for doing too little too late to help homeowners." Sen.
Recession uncertain, economy still sick
House-hunters with cash on hand and respectable credit scores will likely be able to take advantage of cheaper prices. Hardware stores and auto parts retailers tend to see sales rise when more cash-conscious people attempt their own home improvements and hang on to cars longer. Foreign investors may find U.S. assets more affordable as prices drop, especially if the dollar continues to weaken.
Overall, however, it is a picture with far more losers than winners.
"All of us are going to feel the pain to a greater or lesser degree," Lichtenberg said.
And the outcome could be gloomier still if the nation's banks and brokerages can't recover quickly from heavy losses incurred in the collapse of the subprime mortgage market, resulting in a prolonged credit squeeze – or if the dollar goes into freefall and global investors lose faith in the U.S.
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