HUD Housing Counseling Exam

Civil Rights Act of 1866

Federal law granting citizenship to former slaves; passed over Johnson's veto. (Race and Color)

Fair Housing Act of 1968

banned discrimination in the rental or sale of housing (Race, color, religion, national origin)

Housing and Community Development Act of 1974

added gender (sex) to the protected classes

Fair Housing Amendments Act of 1988

Added Disability and familial status to protected classes.

Real Estate Settlement and procedures Act RESPA

Requires lenders and brokers to ensure that applicants understand the terms and fees of the mortgage transaction that they are considering

Home Mortgage Disclosure Act (HMDA)

Requires financial institutions to maintain and annually disclose date about home purchases, home purchase pre-approvals, home improvements and refinance applications involving 1 to 4 unit and multifamily dwellings

Electronic Communications Privacy Act

Prohibits persons from tampering with computers or accessing certain computerized records without authorizations. The Act also prohibits providers of electronic communications services from disclosing the contents of stored communications.

Community Reinvestment Act CRA

A congressional act that encourages mortgage originators to actively lend in their communities and that requires financial institutions to evaluate the "fairness" of their lending practices.

Restricts the collection and use of information that would result in housing discrimination on the basis of race, sex, religion, national origin and a variety of other factors.

Fair Housing Act

Prohibits discrimination by direct providers of housing, such as landlords and real estate companies as well as other entities, such as municipalities, banks of other lending institutions and homeowners insurance companies whose discriminatory practices make housing unavailable to persons because of: Race or Color, Religion, Sex/Gender, National Origin, Familial Status, Disability..

Fair Housing Statute

Opens up services and employment opportunities to the 43 million Americans with disabilities.

Americans with Disabilities Act ADA

Protects consumers from abusive, unfair, and deceptive practices by third-party debt collectors.

Fair Debt Collection Practices Act FDCPA

Prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because you get public assistance.

Equal Credit Opportunity act ECOA

Restrictions collections of use of information that would result in employment discrimination on the basis of race, sex, religion, national origin and a variety of other characteristics.

Equal Employment Opportunity Act EEOC

Mandates that personal data be collected as much as possible directly from the record subject.

Privacy Act

Requires each of the nationwide consumer reporting companies: Equifax, Experian, and Transunion to provide you with a free copy of your credit report, at your request, one every 12 months

The Fair and Accurate Credit Transactions Act FACTA

Prevents identity theft, improve resolution of consumer disputes, improve the accuracy of consumer records, make improvements in the use of, and consumer access to, credit information, and for other purposes.

The Fair Credit Billing Act FCBA

Applies to "open end" credit accounts, such as credit cards, and revolving charge accounts - such as department store accounts.

Fair Credit Reporting Act FCRA

Prohibits opening of mail without a search warrant or the addressee's consent

Mail Privacy Statute

Amends the Truth in Lending Act (TILA) and establishes requirements for certain loans with high rates and/or high fees

Home Ownership and Equity Protection Act HOEPA

All of the following would help a counselor develop a realistic household budget, except:

- Payment information for a paid-off car

- Amount spent on groceries

- Rent payment information

- Monthly cable bill

Payment information for a paid-off car

The following are good ways to decrease expenses except:

- Cancel car insurance

- Cancel cable service

- Brown bag lunch for work

- Rent videos instead of going to the movies

Cancel car insurance

Steps to create an Action Plan

- State goal

- Identify obstacles

- Agree on livable budget

- Steps with dates to achieve goal

- List who is responsible for steps

- Signature (optional)

- follow up and update

Which of the following is not needed in determining a budget?

- Pay stubs

- Credit report

- Utility bill

- Child support

- Stock dividends

Credit report

Stock dividends

Tran would like to take a vacation and needs $3,000. He has $400 saved already. If he wants to take a trip in 18 months how much will he need to save monthly?

$145

Which section of a credit report contains information about student loans?

- Inquiries

- Public records

- Account Information

- Consumer Rights

-Personal Information

Account information

What makes up a credit score?

35% - Account History

30% - Amounts Owed

15% - Length of Credit History

10% - New Credit

10% - Types of Credit

Fair Credit Reporting Act (FCRA)

- Right to know what is in your file

- Right to dispute incomplete or inaccurate information

- Access to your file is limited

- May seek damages from violators

- May have additional state rights

Fair and Accurate Credit Transactions Act (FACTA)

- Right to a free annual credit report

- Right to place a fraud alert for 90 days

- Credit card numbers must be truncated

Fair Credit Billing Act (FCBA)

- Dispute errors on account (within 60 days)

- Must be billed in timely manner (at least 14 days before payment is due)

Items to include when tracking income

- regular salary

- temporary jobs

- unemployment compensation

- public assistance

How to calculate income if the amounts varies month to month

Average it out over 12 months

Items NOT to include when calculating income

- Pre-tax payroll deductions

- Credit score

Documents to use to calculate income

- paychecks, direct deposit slips

- if self-employed, income and expense sheet

- additional income checks or cash

- Government benefits letters (SSI, unemployment, etc)

Items to include when tracking expenses

- all bills

- all fixed monthly expenses

- all cash expenses

- seasonal or annual expenses (holidays, gifts, vacations)

Documents to use to track expenses

- Utility, insurance and other bills

- Bank statements

- Credit card statements

- Records about car registration, school supplies etc.

All of the following are reasons why it is important for a client to track income and expenses before finalizing a budget, except:

-It helps show clients that they actually spend less on some expenses than they think.

- It helps identify spending habits.

- It helps show clients that their spending and expenses are out of control.

- It helps define realistic and attainable goals and timelines.

It helps show clients that their spending and expenses are out of control.

What are the secondary steps to help clients develop a realistic budget?

- Examine content in the budget worksheet

- Ask client what she has discovered about income and spending habits

- Ask client if she thinks her goals are achievable

- Coach client on strategies for defining needs over wants

- Walk through strategies for adjusting goals and budget

- Develop a client action plan that includes client actions/tasks and time frames

Strategies for increasing income

1. Find a second job

2. Work overtime

3. Negotiate higher salary/wage

4. Sell assets (e.g., car)

5. Hold a yard sale

6. Teach a skill/craft/activity

7. Sell a craft

8. Charge rent (if adult dependents in home)

9. Evaluate tax withholdings

Strategies for decreasing expenses

1. Prioritize needs vs. wants

2. Reduce or eliminate "wants" (e.g., clothes, gym)

3. Cancel or downgrade services (e.g., cable, telephone

4. Limit miscellaneous spending

5. Stick to a shopping list

6. Reduce debt (pay off a loan or credit card)

7. Move to more affordable housing

8. Change insurance coverage for lower premiums, but don't cancel

Which of the following is a "want" and not a "need"?

Health Care Premium

Car Insurance

Gym Membership

Rent

Gym Membership

All of the following are effective ways to decrease expenses, except:

Cancel insurance policy

Cancel cable service

Stick to a shopping list

Conserve energy in the home

Cancel insurance policy

All of the following are effective strategies to increase income, except:

Work over time

Teach yoga

Find a second job

Factor in an anticipated raise

Factor in an anticipated raise

Identify which information is used in determining a budget, and which is not.

Pay Stub

Bank Statements

Utility Bills

Social Security Award Letter

Annual Bonus

Stock Dividends

Employer Reimbursements

Credit Score

Include:

Pay stub

Bank statements

Utility Bills

Social Security Award Letter

Not to include:

Annual Bonus

Stock Dividends

Employer Reimbursements

Credit Score

Ray's commute on the bus takes over an hour, so he wants to buy a car as soon as possible, but he has poor credit and cannot obtain a loan right now. He thinks he can find a reliable car for about $2,000 and has about 20% of the total in the bank from his tax refund. If Ray's goal is to buy a car within 8 months, what is the minimum amount he needs to save each month?

$150

$175

$200

$225

$200

What information is collected by a credit bureau?

1. History of accounts

2. Number of inquiries

3. Number of collections

What personal information is included in a credit report?

1. Name

2. Social security number

3. Addresses

4. Phone numbers

5. Employers

What account/trade information is included in a credit report?

1. Payment history

2. Account dates,

3. Credit limits

4. Balance owed

What public records information is included in a credit report?

1. Bankruptcy

2. Judgments

3. Tax liens

4. Wage garnishments

What inquiries are included in a credit report?

1. Requests initiated by a company or a person for a consumer's credit profile information.

Payment History - Indicators of good and bad credit

Positive - Timely payment history demonstrates reliability

Negative - Late payment history demonstrates higher risk of future delinquency

Capacity used - Positive and Negative

Positive - Low credit utilization demonstrates good financial management

Negative - High credit card balances demonstrate poor financial management

Length of Credit History - Positive and Negative

Positive - Longer credit history provides more information for lenders, which means lower risk

Negative - Shorter credit history provides little or no information for lenders, which means higher risk

Type of Credit Used - Positive and Negative

Positive - Different types of credit show variety. Variety shows lenders that consumers can manage different types of credit

Negative - Fewer types of credit show limited profile information to lenders, which means a higher risk

New Credit - Positive and Negative

Positive - credit applications can lead to new credit accounts or loans, which can establish credit over time.

Negative - Too many inquiries or new credit accounts in a short period of time will raise questions to lenders

Which section of a credit report will contain employer details:

- Consumer Rights

- Account Information

- Personal Information

- Public Records

- Inquiries

Personal Information

Which section of a credit report will contain information about a student loan?

- Personal information

- Public records

- Inquiries

- Consumer rights

- Account information

Account information

Which section of a credit report will contain court information such as bankruptcy?

-Public records

-Inquiries

-Personal information

-Consumer rights

-Account information

Public records

Which section of a credit report will show recent attempts to open a credit card?

- Personal information

- Public records

- Consumer rights

- Inquiries

- Account information

Inquiries

Which section of a credit report will contain information about how to correct inaccuracies?

- Personal information

- Consumer rights

- Public records

- Inquiries

- Account information

Consumer Rights

What is a credit score?

a number assigned to a person that indicates to lenders their capacity to repay a loan. (credit worthiness)

FICO score

Fair Isaac Corporation - scores ranges from 300 - 850

Account History

The payment history of an account over a specific period of time, including the number of times the account was past due or over limit. (35%)

Amounts Owed

ratio of total credit extended to the amount if credit owed (30%)

Length of Credit History

overall length of credit history in the credit report, as well as the average age of accounts (15%)

New Credit

number of recent credit inquiries, as well as new credit accounts (10%)

Types of Credit Used

variety of accounts (e.g. credit card, auto loan, mortgage) (10%)

Easiest way to order a credit report?

www.annualcreditreport.com

What to do if incorrect information on your credit report?

1. Notify credit reporting agencies of inaccuracies

2. Keep records of dispute documentation

What to do if delinquencies/collections/judgement are on your credit report?

1. Get current and pay on time moving forward

2. Set up payment reminders

3. Adjust budget to factor in all monthly payments

What to do if credit card is maxed out/too much debt?

1. Pay down debt and keep balances low

2. Pay more than the minimum

3. Know what the balance is

4. Check statements

What to do if no credit/poor credit/ limited credit?

1. Open a credit card account

Which complies with fair credit laws?

- An employer can check a credit report at any time.

- A vendor can display part of the credit card number on the sales receipt.

- A credit reporting agency can list information about a collection over eight years old.

- A creditor can acknowledge a consumer dispute after two months.

A vendor can display part of the credit card number on the sales receipt

Which federal law protects a consumer's right to dispute a billing error associated with his or her credit card account?

-Fair and Accurate Credit Transactions Act (FACTA)

-Fair Credit Reporting Act (FCRA)

-Fair Credit Billing Act (FCBA)

Fair Credit Billing Act

Four steps of asset building

1. Choose the right bank or credit union account.

2. Build savings for emergencies and large purchase.

3. Invest for retirement.

4. Take advantage of tax credits

Account maintenance/service fee

Fee charged by a financial institution for account maintenance.

Wire transfer fee

Fee charged when a client sends a payment to another account electronically

Check purchasing fee

Fee charged when a client purchases checks.

Money orders and cashiers check fee

fee charged when a client obtains a money order or cashier's check.

Overdraft fee

Fee charged when an account does not have enough money to cover a purchase and the financial institution loans money to complete the payment.

Overdraft protection transfer fee

Fee charged when an account with overdraft protection does not have enough money to cover a purchase and funds are transferred from another linked account to cover it.

Stop payment fee

Fee charged to stop payment on a check before the check is cashed.

Non-sufficient funds/returned item fee

NSF fee is charged if there is not enough money in an account to cover a check payment or other purchase.

ATM transaction limit/check-writing limit fee

Fee charged if a consumer exceeds an allotted number of ATM transactions or writes more than the allotted number of checks in a month

What is a liquid account?

money can be retrieved quickly without taxes or penalties.

What is a limited accessibility account?

interest bearing savings accounts and money market accounts

Examples of accounts that would be ideal for short-term large purchase savings include:

1. High interest savings accounts

2. Money market

3. CD

All of the following arguments will be valuable to share with a client to help them understand the importance of an emergency fund, except:

- Emergency funds can be used to cover living expenses while Jill looks for a new job, If she is laid off.

- Emergency funds placed in a liquid account can be retrieved when needed without taxes or penalties.

- Emergency funds will be available to use to purchase an electronic game for her daughter when Jill finds a great sale.

- It is ultimately cheaper to pay for emergency expenses from an emergency fund rather than on credit.

Emergency funds will be available to use to purchase an electronic game for her daughter when Jill finds a great sale.

Which is the most appropriate use of emergency funds:

- Contributing to a mutual fund

- Upgrading a refrigerator

- Establishing a retirement fund

- Repairing the transmission on a car

Repairing the transmission on a car

To explain the importance of establishing a retirement fund, you can present all of the following arguments, except:

- Her company might "match" a portion of the retirement funds that she contributes.

- She could benefit from certain tax incentives

- She could borrow against the retirement investment if she has an immediate need for cash.

-Her investment could grow more if she begins investing earlier.

She could borrow against the retirement investment if she has an immediate need for cash.

Earned income tax credit

Also known as the EITC, a refundable federal income tax credit for low- to moderate-income working individuals and families, even if they did not earn enough money to be required to file a tax return.

Educational tax credit

person who is post-secondary educational program, or who are supporting children in a post-secondary program

Child and Dependent Care Tax Credit

Helps families reduce their child care costs by allowing them to deduct up to $5,000 of these costs from their federal tax obligation

Common Predatory Lending Practices

1. Limited time offers

2. High-risk loans (balloon payment, pre-payment penalties)

3. Higher loan amounts

4. High fees or costs

5. False or hidden disclosures

6. Loan flipping

Tips to avoid predatory lending

1. Shop for a loan

2. Ask questions

3. Beware of to good to be true

4. Know your financial situation

Identity theft checklist

1. Place a fraud alert

2. Order credit reports

3. Obtain an Identity Theft Affidavit from the FTC

4. File a police report

Chapter 7 Bankruptcy

Liquidation - Process of selling non-exempt assets to repay creditors.

Means Test

A bankruptcy qualification that considers income and equity in assets to determine if a client has the ability too repay part of the debt. (Chapter 7)

Two types of bankruptcy

Chapter 7 and Chapter 13

Chapter 13 bankruptcy

Wage earner's plan - develop a plan to repay all or part of the debt over 3 - 5 years.