Credit Repair Opportunities for 2012

December 21, 2011 by  Filed under: Credit 

Moving Forward into the New Year

Recent years have been economically difficult for most Americans. And as the economy has struggled, lenders have continued to tighten credit requirements, making things even harder for credit challenged consumers. But there have also been positive and countermanding forces at work creating real credit repair opportunities for the year ahead, including the newly updated Home Affordable Refinance Program (HARP), and the reworked Income Based Repayment (IBR) program for student loans.

You Will Be Surprised

Both the HARP and IBR programs are direct responses to the economic woes that face consumers and are intended to ease financial burdens. Both are specialized; HARP is for homeowners and IBR for student loan borrowers, so if you are neither, there is no credit repair news here, but if you are a homeowner or a student loan borrower, take heed, because these programs have much to offer. And if you imagine you could never qualify for these programs because of your income or credit history (or even diminished property value in the case of HARP) please read on. You will be surprised.

Relief for Upside Down Borrowers

The Home Affordable Refinance Program, or HARP, is designed to provide relief for borrowers that have been precluded from refinancing down to market interest rates because of diminished property value. The original HARP program was limited to borrowers who owed no more than 125 percent of the value of the home. The new version of HARP, announced October, 12, 2011, lifts all limits. It no longer matters how much you owe relative to the value of your home. But that is not all.

Awesome Credit Reprieve

The new version of HARP also removes all bankruptcy and foreclosure seasoning requirements, making it a wonderful credit repair tool. In fact the only credit requirement is that you have not had any 30 day delinquencies in the recent six months, and no more than one 30 day delinquency in the six months prior. Your home loan must be owned by Fannie Mae or Freddie Mac to qualify. Borrowers do not normally know who owns their loan as it is most often not the same as the servicer they make payments to. Both Fannie Mae and Freddie Mac have online lookup tools that make discovery easy.

A Truly Affordable Student Loan Solution

Income Based Repayment for student loans, or IBR, is designed to make loan repayment universally affordable, and is based on income and family size rather than a traditional ten year repayment calculation. On October 25, 2011 the White House proposed an improved version of IBR reducing the monthly payment even further, and adding an exciting feature forgiving any balance remaining after twenty years of payments. Like HARP, qualification is easy. Your student debt cannot currently be in default, but there are no credit or income requirements.

Ease Your Cash Flow

If your student loan debt is currently in default, you are not necessarily excluded from this credit repair opportunity. You will need to enter a rehabilitation program that will (typically) remove the default status after nine months of on-time payments, at which point you are free to consider IBR. For those experiencing budgetary pressure, IBR can provide dramatic cash flow relief allowing you to redeploy your cash to other important expenses and to insure that your credit rating stays as healthy as possible when you need it.

Wonderful and Dramatic Opportunities

Both of these programs and their recent revisions are federal responses designed to stimulate the economy by providing consumer relief. Further, in the case of HARP, the program is designed to aid the floundering real estate market and stem the number of foreclosures. And in the case of IBR, the program is designed not just to make loan repayment possible, but to encourage education by making repayment less daunting. Although not for everyone, the opportunities are wonderful and dramatic. And for those looking for credit repair help, these programs can provide unprecedented budget relief and a chance to reestablish a solid financial footing. Good luck!

Copyright © 2011 James W. Kemish. All Content. All Rights Reserved.

Jim Kemish is the president and founder of Sky Blue Credit Repair, a leading credit repair service. Sky Blue Credit has been dedicated to providing intelligent customized credit solutions since 1989. Jim is a graduate of New York University and holds a degree in economics.

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