Building a Better Financial FutureCreditSmart® Training for New Instructors

SESSION #3 – Thinking like a lender and Avoiding credit traps

®

MARCH 22, 2017Freddie Mac®

CreditSmart®

• Freddie Mac strongly supports the benefit of credit education and building sound financial literacy skills among consumers.

• Well-informed and well-prepared homebuyers are on the best path to enjoying successful and sustainable homeownership.

• As part of this ongoing commitment, Freddie Mac developed CreditSmartEspañol, a multilingual financial education curriculum and consumer outreach initiative designed to help consumers build and maintain better credit, make sound financial decisions, and understand the steps to sustainable homeownership.

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Your Producer - Carolina Valderrama• Affordable Lending & Housing Outreach Senior.

• Manages the CreditSmart® Program

• Responsible for training and education of Industry professionals

• Educates borrowers about alternatives to foreclosure

• Works with servicers and housing counseling agencies to support affordable and sustainable homeownership

• Graduate of Nicholls State University with a degree in Mass Communication. Holds a Post graduate degree in Paralegal Studies from The George Washington University and an Accredited Mortgage Professional Designation from the Mortgage Bankers Association.

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Certificate of Completion Eligibility• Register and attend all sessions under your registration link, not that

of your colleague.

• You must login via your laptop or desktop. GoToWebinar is not able to track your participation if you’re login via your cell phone.

• Must take and pass a 10 question post-webinar test with a score of 80% or higher.

• Respond to chat and poll questions, we encourage your participation.

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Your Presenter - Cora R. Fulmore• Manager/Owner of the Mortgage & Credit Center, LLC• Creator of The Counselor’s Corner, Inc. an online training center for housing

professionals, with more than 4,000 members• Co-organizer of the first Florida Housing Counselor Network, statewide• More than 35 years of experience in mortgage & credit counseling and training• National Consultant for many organizations, current faculty member of

NeighborWorks since 1994; provide training in the area of:üCertification for ED’s and Program ManagersüHousing Counseling CertificationüForeclosure PreventionüCredit Counseling

• CreditSmart® trainer since 2001

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Disclaimer: I’ve made every effort to provide updated information for this presentation. However, today presentation is not a substitute for you staying abreast of industry changes and updates.

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4-Part Series + Bonus Class

ALL CLASSES ARE ON WEDNESDAYSCERTIFICATE ISSUED ONCE YOU HAVE TAKEN AND PASSED 10 QUESTION EXAM AFTER THE FINAL SESSION

*YOU MUST ATTEND ALL 4 SESSION* BONUS CLASS IS OPTIONAL

• SESSION #1

• SESSION #2

• SESSION #3

• SESSION #4

• BONUS CLASS

CS Introduction and Money Management Basics2:00 PM - 3:30 PM EDT

Building, Maintaining and Restoring Your Credit2:00 PM - 3:30 PM EDT

Thinking like a lender and Avoiding credit traps 2:00 PM - 3:30 PM EDT

Preparing for Homeownership and Avoiding Foreclosure2:00 PM - 3:30 PM EDT

Super Charging your Credit Counseling Program2:00 PM – 3:30 PM EDT

MARCH 8, 2017

MARCH 15, 2017

MARCH 22, 2017

MARCH 29, 2017

APRIL 5, 2017

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Crossword Puzzle Challenge1

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Crossword Puzzle Challenge1

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DOWN1. 4-letter acronym for the

law that gives you theright to know whatinformation is beingdistributed about youby credit reportingagencies

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Crossword Puzzle Challenge1

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DOWN1. 4-letter acronym for the

law that gives you theright to know whatinformation is beingdistributed about youby credit reportingagencies

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Crossword Puzzle Challenge1

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ACROSS4. Do not make promises

you cannot keep. Be_________.

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Crossword Puzzle Challenge1

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ACROSS4. Do not make promises

you cannot keep. Be_________.

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Crossword Puzzle Challenge1

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DOWN2. It could be a warning sign

of credit problems if youare spending more than________ percent of yourmonthly net income topay back credit cards andother loans (excluding amortgage).

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Crossword Puzzle Challenge1

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DOWN2. It could be a warning sign

of credit problems if youare spending more than________ percent of yourmonthly net income topay back credit cards andother loans (excluding amortgage).

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Crossword Puzzle Challenge1

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ACROSS5. Obtaining a __________

credit card may be oneway to begin restoringyour credit if it has beendamaged.

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Crossword Puzzle Challenge1

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ACROSS5. Obtaining a __________

credit card may be oneway to begin restoringyour credit if it has beendamaged.

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Crossword Puzzle Challenge1

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DOWN3. Credit ___________

companies may promiseyou the world and mayfurther damage yourcredit.

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Crossword Puzzle Challenge1

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DOWN3. Credit ___________

companies may promiseyou the world and mayfurther damage yourcredit.

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Crossword Puzzle Challenge1

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ACROSS6. Put yourself on “the

payroll”. Pay yourself__________.

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Crossword Puzzle Challenge1

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ACROSS6. Put yourself on “the

payroll”. Pay yourself__________.

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So Let’s Get Started…

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Homework Assignment • Pull a copy of your credit report for review.

Did you find any errors?• Save all pre-approved offers between now and the final class.

How many have you received?

• What is the median credit score in your state.?

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Homework Assignment • How many Federal Consumer Protection laws are there?

57 Consumer Protection25 Competition Act

https://www.ftc.gov/enforcement/statutes

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Learning ObjectivesAs Trainers:

• See how CreditSmart can be used in introducing participants to how banks operate.

• Gain an awareness of the CreditSmart modules that help prepare consumers for successful homeownership

• Demonstrate new teaching techniques

• Introduction to “Get the Facts”

As Learners:

• Who are the players at the bank.

• Understand how lenders and other financial institutions determine creditworthiness

• Identify ways you can prepare to buy and own your own home

• Utilize the skills you have acquired to remain a successful homeowner and maintain your good credit

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Learner Trainer

Two Hats

40% 60%

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Educational Track Three

• Module 4 – Banking Services: An Important Step• Provides the basics of banking and the importance of establishing a

relationship with a financial institution

• Module 7 – Thinking Like A Lender• Discover how lenders and other financial institutions determine

creditworthiness

• Module 8 – Avoiding Credit Traps• Provides valuable information on how to avoid credit traps, identity theft, and

predatory lending practices

Thinking like a lender and Avoiding credit traps

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4 C’s of Credit• Capacity – Is there sufficient income to repay the loan.

• Capital – Refers to cash reserve, investments and/or assets that could be made liquid.

• Credit – The credit history is reviewed to determine a potential borrower’s willingness to repay a debt.

• Collateral – Looks at the value of the property that will be pledged as security for the loan.

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Housing Ratio• Lenders also looks at affordability• Ratios are used to make this

determination• Housing Ratio = Front End Ratio• Debt to Income Ratio = Back End Ratio

• Products determine the ratio• Common product ratio:

• 28% for Housing Ratio• 36% for Debt to Income Ratio

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Audience Chat

• What’s the average pay scale of the clients that you are counseling?

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Audience Chat

• What’s the average pay scale of the clients that you are counseling?

This addresses CAPACITY

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With a Gross Monthly Income of:$2,400.00

Using a housing ratio of .28%

What is the maximum (PITI) housing payment?

a.$857.14b.$672.00c.$239.97d.$911.97

Polling Question:

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With a Gross Monthly Income of:$2,400.00

Using a housing ratio of .28%

What is the maximum (PITI) housing payment?

a.$857.14b.$672.00c.$239.97d.$911.97

Polling Question:

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• The Department of Veterans Affairs helps servicemembers, veterans, and eligible surviving spouses become homeowners.

• The Servicemen’s Readjustment Act, (GI Bill of Rights), which dramatically transformed the concept of veterans benefits, was signed into law by President Franklin D. Roosevelt on June 22, 1944. Among other things, this benefit provided veterans with federally guaranteed home, farm and business loans with no down payment.

• The Veterans Administration (VA) is not a bank. The VA does not loan the money, fund the loan, or service the loan. VA "stands behind" the loan by guaranteeing a portion of it. If something goes wrong and the borrower can't make the payments anymore, the lending institution can come to the VA to cover any losses they might incur.

VA Financing

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Here are some of the best benefits in comparison to other loan programs:• Reusable – it can be used over and over again

• Flexible – a Veteran can have more than one VA loan at a time

• Versatile – a Veteran can purchase with another Veteran or even a non-Veteran

• Zero down payment required

• No Private Mortgage Insurance (PMI)

• The VA Loan is Assumable

• There is a lower risk due to the government guaranty so lower interest rates

VA Financing

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• Contact a HUD-approved housing counseling agency to prepare for the homebuying process. A list of HUD-approved housing counseling agencies in your area is available at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

• Secure a Real Estate Professional who knows how to work with military servicemembers.

• Find a participating VA lender. • Get a Certificate of Eligibility (COE). • Find a Home and Sign a Purchase Agreement

VA Home Loan Buying Process

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FINANCE $

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_A_ _ _A_

O N E W O R D

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Chat Clue

• This term refers to cash, investments and/or assets that could be made liquid.

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_A_ _ _A_

O N E W O R D

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O N E W O R D

CAPITAL

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Chat Clue

• A method money is electronically transferred into an account

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T W O W O R D S

_ _R_ _ _ _E_O_ _T

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T W O W O R D S

DIRECT DEPOSIT

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Traps & Scams • Credit card fraud is an ever

increasing evil we have to deal with.

• The Internet has made it easy for fraudsters to trick us with traps and scams, the best line of defense is knowledge.

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Complaint categories making up the top 10 list

https://www.ftc.gov/news-events/press-releases/2016/03/ftc-releases-annual-summary-consumer-complaints

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TOP “10” INTERNET SCAMS

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Foreign Lottery ScamYou receive what looks like an official email from a foreign lottery corporation. The subject line offers a congratulatory announcement, and may include the supposed amount of money you’ve “won.”

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Survey Scam

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This common email scam looks innocent enough. You’ve expressed interest in social issues, such as global warming or the war in the Middle East, and you’ve been sent a survey that requests your input. When you click on the link to take the survey, malicious spyware or malware is installed on your computer.

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PayPal or Online Credit Card/Banking Scam

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You will receive an email that appears to be from PayPal or your credit card company or bank with a warning message such as, “Act now, or your account will be deactivated,” or “Security breach on your account.”

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Mystery Shopper Scam

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This common work-from-home scam attempts to suck you in with an email featuring a subject line promising you a large income, simply by working as a mystery shopper. You need no experience or education, and you can make up to $200 to $300 a day doing just what you love: shopping! Sounds too good to be true, right?

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Nigerian Check Scam

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You receive an email from an a royal-sounding person with the name of “Sir Arthur Von-Monsoon,” or “Barrister Frank N. Stein” with a request to help recover large sums of money from an overseas bank. As a reward, you’ll receive a handsome cut of the cash.

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Hijacked Profile ScamYou’re contacted by a Facebook friend that says, “Hey if you have time, give me a call?” When you message them back there’s a response saying “I’ve got a wonderful business opportunity for you.” Followed with a couple of links to click on. DON’T CLICK!

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Quiz Scam

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You see the quiz on your friend’s profile, click on it, and enter your cell phone number as instructed. The quiz pops up, you take it. When next month phone bill rolls around, you’re shocked to learn that a $9.95 fee has been added to your bill for some dubious “monthly service.”

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Suspicious Photo Scam

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One of your friends, whose account has been hacked, posts a link on your page with a message such as, “OMG! There’s an incriminating picture of you on FB?”

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Hidden URL Scam

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Beware of blindly clicking on shortened URLs. You’ll see them everywhere on Twitter, Facebook and in emails, but you never know where you’re clicking through since the URL hides the full location. You could be clicking a link that installs malware on your computer. Make sure you have real-time protection against spyware and viruses.

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Chain Letter Scam

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You’ve probably seen chain letters tweeted or emailed to you about someone donating money to a particular charity if you forward this tweet or email. Spammers use this to get emails for further spams and possible malware attacks that can affect your computer if you click on a link within the email. The best advice is to break the chain by not re-tweeting or forwarding—and don’t click through any links.

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Education Techniques• Maintain an informal atmosphere

• Act as a facilitator - not the expert

• Relate the material to real life situations

• Post the AGENDA and refer to it

• Incorporate a variety of training materials and techniques

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• Build on earlier statements

• Encourage sharing & discovery

• Give participants time to evaluate their learning

• Maintain a setting of trust

• Be yourself and have FUN

Education Techniques

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Bright Ideas• Use “show-and-tell” items or props to make examples more real

and relatableWhat “show-and-tell” props did I use?

• Provide tools to assist in applying new knowledgeWhat tools did I use to reinforce points made?

• Test progress and check for understandingWhat did I use to test your understanding?

• Share a story of hope or inspirationWhat story did I share to give hope and/or inspiration?

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Homework Assignment

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• What is the current rate for 6mth, 1 yr and 5yr CD being offer by a local bank in your area?

• What is the minimum unsecured loan amount offered by your local bank?

• Identify two alternative banking sources in your community.• What is the down payment requirement for a first time

homebuyer in your area? • Identify two down payment assistance (DPA) sources in your

community?

Final Business

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