Hey gang, Just spent yesterday with a friend trying to help his clients qualify for mortgage loans. It occured to us that we could get paid for this. He works for a very large bank and is constantly turning down clients for bad credit. With this resource of Leads, we were thinking of getting into the credit 'consulting' business. has anyone here started a similar business? some of the things we discussed were the reciprocal nature of it: "I help fix credit then send them back to you, you close em." The business is all about refferals and kickbacks. What are your thoughts? Thanks Bugman
There are some very stringent laws (Federal) governing credit repair companies. I would recommend becoming intimately familiar with them before embarking on such a venture. I also know, at least in TX, there are some tough laws on who mortgage companies can pay "commissions" to...kickbacks and referrals may be a poor choice of words LOL, or could also get you into some serious trouble, check your state's RE laws, you might have to be real careful on how you structure the back and forth.
great point. i just started reading the Federal Law. It is extensive. However. I was thinking of just being a "consultant". I will not dispute for anyone, etc. I would only offer simple advice. Ill check to see how this concept 'fits' into the federal law. another great point. Ill be researching this as well. It seems to me that in the beginning we just keep this thing very small and hush hush! kickbacks is a poor choice of words. If this thing grows all kickbacks would have to be above board and legit. any other thoughts? thanks bugman
Now you have to be careful about practicing law without a license LOL - what a web I was a RE agent, my license is dormant right now, but something that was always drilled in...it only takes one disgruntled consumer and the hush hush would be shouted from the rooftops. any other thoughts? thanks bugman [/B][/QUOTE]
im no lawyer, just a measly consultant, LOL (point taken) In the beginning, i would make house visits and/or find a meeting place. It would be a 1-time consultation- a little advice and done. i hear that. if this thing grew everything would have to be 100% legit and a corporation established to CMA(cover my arse)
Was just breezing thru the "Credit Repair Organizations Act" and found this: seems that if you provide advice and accept $1 in return you are a Credit Repair Organization and bound by this act. Any thoughts on this? Thanks bugman
In Texas to be a CRO you have to put up a 10k surety bond and register with the Sec of State. Charlie
I agree that it sounds like if you take even $1, you are subject to the law. That's true in many cases. To elaborate a little on what jlynn said, in many states (maybe most, maybe all, I'm not sure) if I'm a real estate agent, you refer a friend to me, and I buy you a bottle of wine, I have just broken the law. I have compensated (in any manner) a non-licensed person. As a matter of fact, when I was licensed in one state, I couldn't even refer my client to someone in another state and get a referral fee unless I was licensed in the second state. Sure, people do it. But every month (or quarter, I forget) when we got a newsletter from the licensing board, there was always a list of disciplinary actions. Almost all of them involved compensating an unlicensed person.
thanks for ALL of your responses! please give your take on this State Law pertaining to CRO's(Credit Repair Organizations): the way i see it is that NO bond needed so long as U don't accept payment prior to providing service. so if i was to charge a small fee for an introduction" into this world and not guarantee anything but the ability FOR YOU TO HELP YOURSELF" type concept. would i comply? without a bond? of course i would not accept monies until after My 1 hR of services were rendered. (this is my states laws) feel free to be CRITICAL!
Can you link the entire section of your state law? I wouldn't want to mistake something accidently out of context.
Re: Thinking of starting credit biz I read one of those blog thingys that said that states only have the power to license those activities that deal with public health, public safety or public morals.
ok, great- here's the link- http://www.banking.state.pa.us/banking/LIB/banking/resource/acts/csact.pdf let me know what you think thanks bugman also, i was considering setting an appointment with my local SBA branch to help me. anyone have experience with these guys?
Re: Re: Thinking of starting credit biz! I can't figure out how to copy and paste PDF files - so Look at Sec. 2, (1)(iii). Other thoughts: Prohibited Activities - Number 3 is pretty ambiguous, and pretty common in the other CRO statutes I've read - but a slippery slope if you have an unhappy customer that chooses to push the envelope. Burden of Proof - Its on you to prove you are exempt from any of the sections.
Hi I just posted asking for help with my credit. If you have a good reputation here on the board I would be willing to hire you to help me with my credit. Thanks, Ioan
Does anyone else find it amazing that there are so many laws about helping others "fix" their credit??? Looks to me that the CRA and CA have done really well with lobbying in D.C. I really don't think all this legal mumbo jumbo is to protect the citizens (because there are still plenty of Credit Repair ripoffs practicing legally??). Just a thought....
I don't think they're practicing legally, I would bet that the CRO's are like CRA's and CAs. Consumers don't understand their rights, so they run all over them.
Re: Re: Thinking of starting credit biz! www.CreditRewind.com is operating out of his apartment, he hasn't put up no surety bond! He's making a killin'
Re: Re: Thinking of starting credit biz! Im going to agree with JLynn on this one. After reading the State and Federal Laws, it seems the CRO's have strong laws against them. However being that there is no one other than the consumer(generally speaking) to enforce them they may well push the ignorant consumer around. If creditrewind truly is not bonded i would say it wouldn't be long until they are put out of business. My understanding of the reason for the bond is to satisfy any judgements against the CRO - another protection for the consumer. Im still digesting this whole concept and appreciate all responses. Thanks, Bugman
Re: Re: Thinking of starting credit biz! jlynn pointed out this in the state act and i referred to the federal act that is along the same lines. conclusion: if you give advice and accept payment (of any amount) and/or "valuable consideration" (a bottle of wine(hedwig)) you are a CRO and bound by both acts. so far as kickbacks - in the state law i linked - section 3(2) says generally - CRO shall not charge or receive money solely for referral of the "buyer" to a seller of credit. conclusion: kickbacks to CRO from loan officer are illegal. anyone have a different interpretation of this (is there a way for a CRO to legally receive a fee from a loan officer for a referral): Thanks Bugman
Re: Re: Thinking of starting credit biz! I agree, it is totally ambiguous. This is a big risk for any CRO company. This is is (3) what the hell is 'reasonable care', we could debate that till the cows come home! the act says: In this context, what does definition mean? Am i stretching or could they be referring to section 2 Definitions? Thanks Bugman
