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Security freezes will soon cost you nothing, but they can pose problems for home buyers. 

California Frozen Credit Files Can Delay The Process of Applying for a Mortgage

Nearly a year after the catastrophic Equifax hack exposed 147 million Americans’ personal and financial data to cybercriminals, consumers are about to get a break — something especially useful for home buyers and owners. 

Starting Sept. 21, credit-file “security” freezes will no longer cost you money. For years, you had to pay fees that varied from state to state to enact freezes — which nail down your credit files, rendering them inaccessible not only to crooks but just about everybody else unless you unfreeze them. In the wake of the Equifax debacle, consumers spent an estimated $1.4 billion on freeze fees, according to researchers.

Congressional legislation earlier this year removed that cost barrier and set some new guidelines for the credit bureaus and consumers, thereby opening the door to much wider use of the tool. This should be good news for home buyers and owners since, on average, they tend to have greater assets and larger numbers of credit accounts to protect than others.

But there’s a real estate-related issue here that hasn’t gotten a lot of attention: Heavier use of credit freezes could create more complications and delays when people with frozen files apply for mortgages. Some lenders say dealing with applicants who keep their files in deep freezes — and want to keep them frozen during as much of the mortgage process as possible — can be challenging.

“It’s a big problem” if consumers don’t understand what lenders, loan processors and investors need in terms of access to their credit files from the application stage through closing, says Joe Metzler, senior loan officer for Mortgages Unlimited in West St. Paul, Minnesota. When Metzler tells applicants that he needs them to unfreeze their credit files “at least a couple of times” during the process, sometimes they “freak out about it,” he says. And when they don’t lift their freezes in a timely manner, their loan closings may be postponed. 

John Meussner, executive loan officer for Mason-McDuffie Mortgage Corp. in San Ramon, California, says that when a credit file is frozen, “it does lead to some procedural headaches. Applicants should know that if they have their credit frozen, they will need to act quickly in [contacting] the credit bureaus … and that the failure to act quickly could lead to delays in their loan processing.” The biggest issue, says Andrew Marquis, senior loan officer at Guaranteed Rate in Lexington, Massachusetts: Home buyers freeze their files and then “for whatever reason, they don’t know how to lift it.”

Here’s a quick overview of how the changes coming Sept. 21 might affect mortgage transactions: For consumers, the law spells out how the freeze/unfreeze procedures are supposed to work. To initiate a freeze, you’ll need to contact each of the three national credit bureaus — Equifax, Experian and TransUnion — specifying how long it should stay in effect. If you contact the bureaus by telephone or email, they’ll each have up to one business day to place the freeze. If you make your request by mail, they’ll have three business days to comply.

You’ll be assigned a PIN number for use whenever you want to unfreeze your file or later re-freeze it. Say you apply for a mortgage or pre-qualification letter to buy a home. Your loan officer will need you to unfreeze your files at the three bureaus in order to pull your credit reports and scores. Once that’s done, you can opt to leave the files unfrozen or immediately re-freeze them by contacting each of the credit bureaus.

You’ll need to unfreeze your files at least once more during the process: Within several days of your scheduled closing, your lender will do what’s called an LQI (Loan Quality Initiative) credit pull to make sure there have been no changes in your report, including inquiries, new accounts, balances or alerts.

In some cases, if your loan officer is a broker for a third-party investor, that investor’s underwriters may want to see a fresh credit report at some point during the loan process, necessitating a third request to unfreeze your files, according to Steve Stamets of The Mortgage Link Inc., in Rockville, Maryland. It can all get complicated, especially when there are co-borrowers or married couples seeking the loan, each with their own file freezes.

Bottom line: If you opt for free freezes and plan to get a mortgage, play it smart: Be ready to unfreeze your credit files at least twice during the process, or simply unfreeze for the duration.


Mark Your Calendars 

September 6th - Free Day at The Huntington - The Huntington Library, Art Collections, and Botanical Gardens @ 10:00am - 5:00pm 

September 8th - Family Nature Walk - Eaton Canyon Natural Area Park & Nature Center @ 9:00am - 11:00am

September 8th - Watershed Wise Landscaping Workshop - La Casita Del Arroyo @ 9:00am 

September 9th - RG Canning Flea Market - Rose Bowl Stadium @ 4:00am - 3:30pm

September 9th - Plant Walk - Eaton Canyon Natural Area Park & Nature Center @ 9:00am 

September 10th - Japanesse Teahouse Tours - The Huntington Library, Art Collections, and Botanical Gardens @3:30pm

September 13th - El Portals 20th Annual Tequila Tasting - El Portal Restaurant @ 5:30pm - 8:30am 

September 13th - Taste of Pasadena and SIP-tember Finale at The Rose Bowl - Rose Bowl Stadium @ 6:00pm - 9:00pm   

September 14th - 16th - The Gamble House Semi-Annual Bookstore Sale - The Gamble House Bookstore @ 10:00am - 4:00pm 

September 15th - Saturday Evening Astronomy Talk Telescope Viewing - Mt. Wilson Observatory @ 5:30pm - 11:55pm 

September 16th - 2nd Annual Mount Wilson Observatory 5K Run - Mt. Wilson Observatory @ 7:30am-1:00pm 

September 16th - South Pasadena Tournament of Roses 14th Annual Cruzn for Roses Car Show - From Fair Oaks to Gold Line Mission Station @ 10:00am - 3:00pm 

September 18th - Free Tuesday Descanso Gardens - Descanso Gardens @ 9:00am - 5:00pm 

September 20th - Harvest Moon Festival Third Thursday in The Playhouse District - USC Pacific Asia Museum @ 6:00pm 

September 21st - 23rd - Pasadena Greek Fest - Saint Anthony Greek Orthodox Church @ Friday: 5:00pm - 10:00pm, Saturday & Sunday: 12:00pm - 10:00pm

September 22nd - Moon Festival - Storrier Stearns Japanese Gardens @ 6:00pm - 9:00pm 

September 26th - Old Pasadena Farmer's Market - Holly Street @ 9:00am - 2:00pm  

September 27th - 30th - Mt. Sac Plant Sale - Descanso Gardens @ 10:00am - 4:00pm 

Until September 29th - Rooftop Cinema Club - NeueHouse Hollywood - proceed to the link for specific dates and times 

September 30th - 20th Annual Wiggle Waggle Walk - Brookside Park @ 8:00am - 12:00pm 

September 30th - 10th Annual Harvest Moon Gala - Pasadena @ 6:00pm 


Contract Corner 

What is the Transfer Disclosure Statement?

One of the many disclosures required by sellers of residential property is the Real Estate Transfer Disclosure Statement, typically referred to as the TDS. Since 1987, sellers or other transferors of real property containing one-to-four residential units, and, since 2000, sellers and other transferors of manufactured homes or mobilehomes, have been required to provide prospective buyers or other transferees with a completed TDS (MHTDS for manufactured/mobilehomes) on a specific form prescribed by law - unless exempt. The TDS/MHTDS is a form required by Civil Code § 1102.6 (for real property) and 1102.6d (for personal property manufactured homes and mobilehomes) for the purpose of disclosing material information regarding the property being transferred. The TDS and the MHTDS provide the following: 

  • If the disclosures or any material amendment to the disclosures are made to the buyer after execution of the offer to purchase, the buyer has 3 days after personal delivery of the disclosure form and 5 days if the form is delivered by mail from the time the form is deposited in the mail to terminate the purchase agreement.

Navigating through the labyrinth of details and information of a transaction is exactly why you, savvy buyers and sellers, need an experienced team. The SARKISSIAN + PERERA GROUP is here to help guide you through this process and ensure that you achieve all of your real estate goals! 

© 2018 Berkshire Hathaway HomeServices California Properties (BHHSCP) is a member of the franchise system of BHH Affiliates LLC. Any unauthorized reproduction or use of this material is prohibited. This information is believed to be accurate as of July 2, 2018. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals. BHH Affiliates LLC and BHHSCP do not guarantee accuracy of all data. Information has been obtained from various sources and will not be verified by broker or MLS.


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