Consumer Credit Counseling

Service of Buffalo, Inc.

40 Gardenville Pkwy, Suite 300

West Seneca, NY 14224

(716) 712-2060 [phone]

(800) 926-9685 [toll free]

(716) 712-2079 [fax]

cccs@cccsbuffalo.org

www.ConsumerCreditBuffalo.org

Twitter: @CCCSbuffalo

Community Counseling Centers

Please call

(716) 712-2060

to schedule an appointment

at any of our locations:

CCCS Main Office

Dale Association (Lockport)

Family & Children’s Service

of Niagara (Niagara Falls)

KeyBank (Buffalo)

Veteran’s One-stop Center

(Buffalo & Lockport)

This newsletter is a publication of Consumer

Credit Counseling Service of Buffalo, Inc.,

a not-for-profit agency. It is provided as a

source of information for clients, sponsors,

representatives of the credit industry and the

human service networks supportive of the

mission and vision of CCCS.

In this Issue: Page 1

So-called ‘Debt Relief’

Page 2

Financial Spring Cleaning

Page 3

So-called ‘Debt Relief’—cont.

Page 4-5

The Step-by-Step Home Buying

Process

Page 6

Mark’s 5 Financial Tips

Press release published by:

Jeffrey Freedman, Attorneys at Law

Question: What industry receives the top number of consumer complaints at the Federal Trade Commission (FTC) every year? Answer: Debt relief.

E ach year the FTC goes to bat for debtors by taking companies in the debt relief industry to court. In

2017 alone, the agency mailed thousands of checks to people who paid up front for debt relief and ended up further behind due to the fees and false claims made by debt consolidation, debt settlement, or debt relief companies.

But the checks from the FTC barely made a dent in what the individuals had lost. Scott Laughlin, vice president, Community and Creditor Relations of the nonprofit Consumer Credit Counseling Service of Buffalo, Inc., named the three top local offenders — Freedom Debt Relief, CareOne, and National Debt Relief.

“We’ve had the most clients come to us after trying to correct their situation through these three for-profit companies. Debt relief or consolidation programs (which are almost all for-profit) claim they can save you thousands,” Laughlin said. “In

fact, even if they reduce your debt with your creditors, the fees they charge combined with the interest and late fees that accrue on your debt until it is completely paid off will end up costing you just as much.”

For example, said Christopher J. Grover, attorney, Jeffrey Freedman Attorneys, PLLC, if a debtor owes $15,000 on three credit cards and reaches out to a debt relief company, the company will start taking monthly payments until they are able to negotiate the first debt. In the meantime, none of the debts are being paid and will continue to accrue penalties and increased interest rates commonly above 20 percent. Once the debtor pays enough to the agency to “settle” the first debt, it could be several months down the

So-called ‘DEBT RELIEF’

Turns into Debt Disasters for Many

SPRING 2018

1

...continued on page 3

Financial Spring Cleaning

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By Sonya Goins

-Singletary,

CCCS Counselor

I t is getting

to that time

of the year

when the sun is

shining more and the days are longer.

Spring cleaning is not just about

cleaning out closets and getting rid of

winter dust, it’s also time to think

about your finances. This can seem to

be an overwhelming task to tackle, but

here are some tips to get you started.

Review your household budget

Starting with your monthly budget can

be the easiest way to get back on

track. If you are unsure of accurate

expenses, track them for 30 to 60

days. Determine if there are any areas

that you can decrease, such as

changing providers to decrease your

cell phone, cable or internet expenses.

Next you would want to check your

credit report, see where you are and

determine what you need to do to

improve your score. Keep in mind that

you are entitled to a free credit report

annually from all three major credit

bureaus from annualcreditreport.com

and are able to dispute any inaccurate

information. Knowing where your debt

stands, gives you the ability to put

your best foot forward when trying to

set up a plan to pay off debts. You

want to make sure that you are

making at least minimum monthly

payments while also applying

additional funds to the highest interest

credit cards first.

Savings

Once you have determined what is

required to meet your monthly living

expenses and debt repayment, look at

your saving options. Food for thought;

savings should also be a part of your

monthly living expenses. Paying

yourself first now, will provide for a

more comfortable living situation later.

Retirement may seem like another

lifetime away, but it can sneak up on

you faster than you know. Take a look

at your retirement plan, see if you are

on track and try to make adjustments

according to your current employment

and salary situation. Keep in mind the

sooner you start saving, the more you

will have when the time comes to

retire.

Unfortunately, retirement is not the

only reason to save. A rain day (such as

a loss of employment or illness) can

occur at any time and having an

emergency savings to tap into can be

what you need to save the day. Ideally

you want to have at least 6 months’

worth of your living expenses in the

bank. Ask yourself if there have been

any changes in your life in the last

year, then you should review how

much is going into your emergency

fund. Increasing this savings can assist

with other savings goals you may have

such as paying for education and

vacations, or even starting a new

business. The best way to manage

savings goals are to determine how

much is needed, when you need to

have the funds, and how much can you

afford to put aside. Even when you

believe that you do not have funds for

saving, putting something aside each

month will help, even if it’s only $25.

Declutter paper documents

Finally you want to clean out your

financial closet by clearing up the

unnecessary paper clutter. Sort all

documents by items to keep, and

items to dispose. Items to keep: (Tax

forms for 7 years which includes

supporting documents, warranties and

receipts from major purchases of that

year). Dispose of utility bills, credit

card and bank statements; keeping

only the current month’s statements,

to verify charges. It is also wise to keep

statements that show major purchases

or if you are using for tax records.

Dispose of paystubs once information

is verified on W-2. Shred any

documents that have personal

information on them such as social

security number, name, date of birth,

address, phone number, or bank

account information to reduce the

potential of identity theft. You should

also shred expired credit cards,

passports, and other IDs. Always

change passwords and make sure you

are using a strong password for better

protection (mix of letter, numbers and

special characters) and do not use the

same password for all accounts.

Hopefully these tips will help you on

your road to financial empowerment!

road and the balance could be several hundred dollars more than the original amount. This still leaves the other two balances, which have not been touched, and continued to increase while the first debt was settled. The result is higher settlement amounts and longer time in the plan. This is a process that can work in theory, but rarely works in reality.

Another big problem is that debt settlement companies make promises they can't fulfill. Often times the individual may have several debts, but the debt settlement company can only help settle a few, not all of the accounts. Ultimately, the person is going to be sued by some creditors; however, debtors are never told this by the debt relief company.

“An additional downside,” Laughlin said, “is that the debtor’s credit rating won’t improve because the debt was negotiated down. Whereas, debtors who work with agencies like CCCS get back on track financially are able to improve their credit ratings.”

Once debtors have contracted with these debt relief or debt consolidation

companies, all mail regarding their credit card bills goes directly to the company, so the clients don’t know the true state of their accounts until an account ends up in court. In the case of debt validation companies, Laughlin said, clients pay thousands of dollars to have their accounts disputed, and there’s no guarantee the debt validation company will be able to get results. They can still end up owing the original amount, plus any fees and interest that have accrued over the time of the dispute.

Additionally, the forgiveness of debt through a debt settlement company is considered imputed income. The creditor claiming the capital loss will send the debtor a 1099, and the difference between what was owed and what has been paid will be considered income by the IRS.

“These companies prey on people who are in dire financial straights and don’t know what to do,” Grover said. “Typically, debtors end up coming to our offices and filing bankruptcy in the end. Whether they file Chapter 7 (straight bankruptcy) or Chapter 13 (a plan to repay creditors often a percentage of what is owed) the debt that is discharged is not taxable income to the filer.”

Legitimate nonprofit credit counseling services are highly regulated and frequently audited by the New York State Department of Financial Services, whereas debt relief, consolidation and settlement companies are not.

“They would never pass the scrutiny of a state audit. They strictly exist for their own profit, at the expense of those who fallen upon hard times,” Laughlin said.

continued from page 1...

2

So-called ‘DEBT RELIEF’

‘Once debtors have contracted with these debt

relief companies, all mail regarding their credit

card bills goes directly to the company, so the

clients don’t know the true state of their accounts

until an account ends up in court.‘ Laughlin said.

By Robert Dunn, CCCS Community Outreach Manager

Step 1—Create and set a budget

When considering to become a homeowner for the first time there is no more important moment to create a budget and determine how much you can afford. It is one thing to see what a lender will approve you for, but YOU must first establish what is affordable for you! Track your income and expenses for 30 days to get a good idea of what you can afford on a monthly basis. Do not forget to include monthly savings for periodic expenses such as; car repair and maintenance, gifts, vacation and, of course, unexpected home maintenance and repairs.

Step 2—Check your credit report & score

The first hurdle in accomplishing the goal of obtaining a mortgage and becoming a homeowner is qualifying credit. There are three major credit reporting agencies, Experian, Equifax and TransUnion. The three reports will show your borrowing history and will be a lenders main source of analyzing their risk with you as a potential borrower. A credit score is a number calculated from a formula created by the Fair Isaac COrporation (FICO). The typical credit scoring range is 300-850; a minimum score needed to obtain a mortgage is 620-640. A low credit score, or a report with outstanding accounts in delinquent or default status may hinder the ability for mortgage approval.

Step 3—Pull together your cash

Perhaps the most difficult step in the process is coming up with cash for a down payment and closing costs. While you may have heard that you need 20% of the purchase price for a down payment, this is not true, but you will still need a healthy amount of funds. You will likely need a minimum of a 3% down payment and an additional 3-6% in closing costs. On a $100,000 home purchase this could be anywhere from $6,000 to $9,000 it total, and perhaps even more. Take inventory on the cash that you have available. Keep in mind that if you entirely deplete your savings for the down payment and closing costs, how will you replenish those funds for home maintenance, initial move in

expenses, or furniture and appliances?

Step 4—Look into first-time homebuyer programs

You may be eligible for a first-time homebuyer program or other grants offered for the area you are looking to purchase a home. Many of these programs have income guidelines or other qualifying criteria, but make sure to do your due diligence and investigate so you don’t leave free money on the table. For example in NYS, there is a first-time homebuyer program offered by the Federal Home Loan Bank of New York that offers the First Home Club. The First Home Club is a savings matching grant where for every $1 you save they will match with $4 (up to a maximum of $7500) towards the down payment and closing costs on the purchase of a home. This is a great way for homebuyers to come up with the majority of funds needed for that initial investment.

4

First Time Homebuyers 101 The Step-by-Step Process to Becoming a Homeowner!

It is one thing to see what a

lender will approve you for,

but YOU must first establish

what is affordable for you!

Step 5—Shop around for a mortgage lender and get

pre-approved

Like many things in the home buying process, it is best to shop around and meet with three or more parties. Find a lender that is a good fit and is someone that you feel comfortable with. You will then work on getting pre-approved for the home loan. The lender will review your credit report and score, income and expenses, and current assets (cash) for down payment and closing costs. Make sure to gather your recent paystubs, past 2-3 years of W-2’s and tax returns, and recent bank statements.

Step 6—Find a realtor and start looking for your home

Perhaps the most important person in the home buying process outside of the buyer and the seller is your realtor. Make sure to find a realtor that you are very comfortable with, whom is knowledgeable and experienced, and who will provide timely responses to questions. Make sure you communicate your desires in the home you are looking to purchase (i.e. price range, size of home, location, number of dwellings, and style of home). Pay attention to districts with good schools, market trends or other characteristics that are important to you.

Step 7—Make your offer

Once you find the house you want, act quickly in making your offer. Depending on the current housing market (buyer’s market vs. seller’s market), your offer may take on a different strategy. Offering a bid that is too low may leave a seller in dismay and not lead to negotiation. In a seller’s market, with you as the buyer, you will likely have limited leverage. Offer a fair price and

be creative in ways to satisfy the seller’s needs and demands. Upon reaching a mutually acceptable price, the seller’s agent will draw up an offer to purchase which will include an estimated closing date. It can take typically take anywhere from 45-60 days to finalize a closing.

Step 8—Entering into contract

You can have your real estate attorney or buyer’s agent (realtor) review your contract to make sure the deal is contingent on you obtaining a mortgage, home inspection that shows no major defects, and a guarantee that you may conduct a walkthrough inspection 24 hours before closing. At

this time, you will need to make a good-faith deposit, which is generally between 1-10% of the purchase price that should be deposited into an escrow account. If you change your mind and decide not to purchase the home you likely will not get your deposit back. If the deal falls through for failing any of the contract’s contingency clauses, you will retain your deposit.

Step 9—Securing a mortgage

Now contact your mortgage lender to secure the terms of your loan if you have not done so already. This is when you can decide whether you want to

pay points on your mortgage to buy down your interest rate. At this time, expect to pay $50-$75 for a credit report check, and another $300-$500 for an appraisal of the home. The majority of other costs will be due to at closing. Lastly, look into taking out a home-owner’s insurance policy, as this will likely be required by your lender before they will approve your loan.

Step 10—Get a home inspection

Hire a licensed home inspector. Your real estate agent will gladly make a recommendation, but don’t hesitate to “shop around” for an inspector of your own choosing. The American Society of Home Inspectors website has an search

tool to find an inspector in your area. An inspection can run about $300-$500, and should take anywhere from 1.5 - 3 hours. It’s a mistake to buy a home without an inspection because there could be expensive hidden damage that you wouldn’t spot, but an inspector could.

Step 11—Close on the home

If all checks out, about 3 days before the actual closing, you will receive a closing disclosure in order

to review closing costs such as title insurance that protects you and the lender from any claims someone may make regarding ownership of your property. Your lawyer or real estate agent will brief you on the particulars of the closing process and likely both will be present. At closing you will receive and sign all necessary documents and pay any closing costs and escrow payments. You will then receive your keys and you are an official home owner!

Step 12—MOVE IN!

5

By Mark Twarog, CCCS VP of Information Technology

1 3 months worth of savings

You need to have an emergency fund that will have 3 months’

worth of money in case of a job loss or medical emergency. If you don’t, any unforeseen big expense can put you in a deep financial hole. If you have to use it, make sure you replenish it as quickly as possible.

2 Use a budget spreadsheet I have used a spreadsheet for my income

and expenses for almost 20 years. Visually seeing where your money goes each month helps you plan for other expenses or make adjustments when needed.

3 Avoid interest on credit cards Making sure you only spend what you

make and paying the balance to zero each month helps in two ways; 1) You will save from paying any interest, 2) you can take advantage of the cash back bonuses or incentives built in to many credit cards nowadays. You can end up making money by using your credit cards!

4 Pay extra to your mortgage After all your expenses and savings each

month, taking any extra money you have and apply it to your mortgage. This can help you shorten the duration of your mortgage over time.

5 Keep an updated will Don’t forget about updating the contents

of your will and your beneficiaries annually, or when you have a big change in your assets.

Mark’s 5 Financial Tips

CHIEF EXECUTIVE OFFICER

Paul C. Atkinson

PRESIDENT & CAO

Noelle Carter

BOARD OF DIRECTORS

Mark J. Mendel—Board Chair

Senior Vice President, M&T Bank

Customer Asset Management

Jason Houseman—Vice Chair

Vice President, Corporate Banking

Citizen’s Bank NA

John Eagleton—Treasurer

President, Steuben Trust Company

Nancy Blaschak—Secretary

Blaschak Consulting

Marylou Borowiak

Community Leader & Consultant

Karla Gadley

Community Development Officer—

Senior Vice President, Five Star Bank

Anthony Gutowski

Vice President—Commercial

Relationship Manager, Evans Bank NA

Nancy LaTulip

Vice President, Retail Banking Officer,

Lake Shore Savings Bank (retired)

Kevin McNamara

Chairman, Millington Lockwood

Catherine Roberts

Senior Vice President—Community

Action Organization of WNY

CCCS is a member of the National

Foundation for Credit Counseling (NFCC),

accredited by the Council on Accreditation

of Services for Families & Children (COA),

a member of the Better Business Bureau,

and is a certified HUD housing

counseling agency.

6

"I work at CCCS of Buffalo knowing I can make a difference for people in need of our services. I love working

with every single person here."

CCCS of Buffalo 2018