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Open House

Credit Score Piggy-Backing a Good Idea?; Landscaping Tips; Raising Kids in the NASCAR Fast Lane

Aired June 16, 2007 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

BETTY NGUYEN, CNN ANCHOR: Well, here's another live look at the ethics hearing that is under way right now. Closing arguments in this hearing to determine if Nifong will be disbarred. The district attorney there in Durham County dealing with the Duke lacrosse case, in which all the players there -- the players involved, the three who were named, those allegations against them, that they assaulted a hired dancer, well, those all have been dropped.
And now Nifong is under the gun, and they are deciding today whether he will be disbarred. We have been listening to the prosecutor in this case, in these closing arguments, and as soon as we hear from Nifong's defense, of course, we will bring that to you live.

RICK SANCHEZ, CNN ANCHOR: Well, other news that we're following on this day, a 5-year-old girl who had been feared dead found alive after an ordeal that she survived all alone, by the way. Searchers in Illinois were stunned when the missing child came walking out of the woods yesterday. They were afraid that she had drowned along with her grandfather during a boating trip, and they simply hadn't found her body. Instead, his body had been pulled from the river, but the girl, dehydrated and hungry, was otherwise found OK. Emergency workers say it's a miracle that she was able to survive two days alone in the woods.

NGUYEN: Really, what a story that is. Well, we have much more coming up, but first, OPEN HOUSE with Gerri Willis is already in progress. We're going to take you to that now.

GERRI WILLIS, HOST: Good morning. I'm Gerri Willis, and this is OPEN HOUSE, the show that saves you money. Coming up, what you should do right now that will add major value to your home and not cost you an arm and a leg.

And one new idea that could protect your money.

But first, what if you could buy a better credit score? Well, the answer is you can. It's called piggy-backing. People with really great credit are granting access to their good numbers for a price. Is it too good to be true? Listen to this.

(BEGIN VIDEOTAPE)

WILLIS (voice-over): Alipio Estruch works as a mortgage broker and he wanted to become a real estate investor, buying homes in this Florida neighborhood where he lives. But his credit wasn't good enough. ALIPIO ESTRUCH, CREDIT CLIENT: I had a couple of things I was dealing with that were bringing my scores down.

WILLIS: Estruch claims identity theft and too many credit inquiries made him unable to get the mortgage he wanted. A friend told him about a company that might be able to help. Instant credit builders. It's one of a number of new companies who offer a unique and controversial way to improve your credit. The company's Web site promises to raise your credit score in 90 days or less.

JOHN COATES, INSTANT CREDIT BUILDERS: Our goal is to help them get their lives back on track. Help them get their lives into a position where they can afford to pay for their homes, send their kids to college, save money for themselves.

WILLIS: Here's how it works. A client with poor credit contacts Instant Credit Builders and pays them a fee, starting at $900 for their services. ICB gives part of the money, an average of $150, to a cooperating person who has good credit, a credit card or a line of credit that has been open for a long time with a history of on-time payment. The person with good credit adds the person with poor credit as an authorized user on the account.

Now the solid payment history of the credit card becomes part of the credit record of the person with poor credit and automatically boosts their score. ICB says the credit score can go up by an average of 30 to 45 points for each card the client is added to, which can be the difference between approval and denial of an application for new credit.

(on camera): Instant Credit Builders says it has found a loophole in the credit scoring formula that helps clients get a fresh start. But the lending industry says, it's not a loophole, it's illegal.

GINNY FERGUSON, NATIONAL ASSOCIATION OF MORTGAGE BROKRES: The biggest problem is, it's fraud. It's putting people into credit grades that they do not deserve, often giving people access to mortgage credit who would not have access at all.

WILLIS: (voice-over): And while the Federal Trade Commission would not comment on ICB in particular, it indicated the company engaging in this business could be violating the Federal Credit Repair Organizations Act. ICB says it's not breaking any laws.

Fair Isaac, the company that developed the FICO credit score, says it will stop letting such users get a boost from the main user's credit cards. ICB says it will continue to find ways around the credit scoring rules so it can help its clients. And Alipio Estruch is so happy with the company, he hopes to someday work for them.

(END VIDEOTAPE)

WILLIS: Joining us now are John Coates of Instant Credit Builders. And Bob Moulton of Americana Mortgage. Welcome to you both. Now before we get started. I just have to show you some numbers we came up with. So you can see why people would want to do this. For example, let's take somebody who had an original credit score of 580. Not a good score. OK. Let's say they wanted to have maybe 180 extra points, a new credit score of 760, that they're willing to pay $3,000 to get to a firm like Instant Credit Builders.

Now, if they were getting a $300,000 mortgage, each and every month they would save $541 on that mortgage because of their better credit score. That means that this would pay for itself in approximately six months.

Now, John, I want you to tell me what's wrong with this picture? This sounds too good to be true.

COATES: Well, it sounds too good to be true because we're finally able to throw the American people a rope to help them climb out of the hole, basically the hole that they were thrown into, you know, through terrible practices like subprime lending, predatory lending practices.

You know, when we look at the facts, there's 250,000 homes that are in pre-foreclosure right now in our country. This is literally a disaster on the scale of Katrina...

(CROSSTALK)

WILLIS: All right. John, so you're saying that your program will actually help people out, will help them get the credit that they need and deserve. Boy, Bob, I bet you've got some objections.

BOB MOULTON, AMERICANA MORTGAGE GROUP: Yes. I see a couple of problems here, Gerri. The first problem I see is that these people are buying credit scores. And historically, we always underwrite files based on that person's ability to make payments on car loans, student loans, mortgages, and credit cards.

If they're buying a credit score, how are we really to know that they have the ability to make their mortgage payment? Secondly...

WILLIS: Well, wait a minute, let's take these one at a time. John, jump in here. So what's a -- you know, come on. I mean, the bankers don't know what they're dealing with. It's a black box for them. People are buying scores. They don't know if they're good risks or poor risks.

COATES: But see, this is nothing new. It has been under the umbrella of creative financing for decades now. Now that we're...

WILLIS: What do you mean?

COATES: Well, people have been adding people as authorized users, mainly it was head mortgage lending professionals that would help clients get into their homes. This is something that's...

(CROSSTALK)

WILLIS: Or, John, mom and dad did it for the kids. So what do you say to that, Bob? That, you know, come on, this kind of practice has been going on for a while.

MOULTON: Well, mom and dad helping the kids or a spouse helping a significant other is one story in itself. These are people who are buying other people's credit card history, and they may not even know that borrower. They have no relationship with that particular person. That person is doing it for the money. And the person who was trying to help his credit score is trying to help something that he hasn't paid on time.

And if credit isn't paid because of medical, marital, or job loss, that's one thing that we understand. But going out and buying a credit score and having underwriters look at that credit score that is not theirs, I think is a potential problem, increasing the problem that we've already seen in subprime.

WILLIS: All right. OK. So, John, you've got to tell me here, is there any risk that somebody's going to steal my identity whether I'm the person buying the credit score or the one selling it?

COATES: Well, the person that buys the credit enhancement to their file, they never get a credit card, and they don't know the person who is basically invested to help them raise their credit. So there is -- we are the person that's in the middle there, and as I had mentioned earlier, there are definitely contractual agreements between us, the card holders, and everyone involved.

And everyone is on the same page there, and it's a business. And just like you would use your credit card at any business...

(CROSSTALK)

WILLIS: Is there a risk to the person who's buying the credit?

COATES: You know, absolutely not. Our system is very solid.

WILLIS: OK.

COATES: And we think we protect people very well. Everyone involved.

WILLIS: Well, John, I want to thank you for joining me. Bob, thanks for joining us as well. Great conversation, guys. Thanks a bunch.

COATES: You're welcome.

WILLIS: Coming up on OPEN HOUSE, we'll tell you about one proposal to keep a close eye on the people who handle your money.

Then, why getting top for your home, well, it all starts at the curb.

And we hit the racetrack at full speed with one a NASCAR star.

But, first, keeping your team safe behind the wheel in your "Tip of the Day."

(BEGIN VIDEOTAPE)

WILLIS (voice-over): Convertible, SUV, sports car. Before you know it, your child will be driving, and safety should be priority number one. Read up on crash test ratings and other safety features on aaa.com.

ROBERT SINCLAIR, AAA: Newer vehicles tend to have superior safety equipment, antilock brakes, crumple zones with electronic stability control.

WILLIS: Don't forget to get an independent mechanic to inspect a used car for reliability before you buy. And check to see if the warranty is still in place. And if not, look into purchasing one.

And shop around for car insurance. Rates can be as high as 5,000 for new drivers. But many companies offer discounts such as good grade rewards if they maintain a certain average.

I'm Gerri Willis, and that's your "Tip of the Day."

(END VIDEOTAPE)

(COMMERCIAL BREAK)

WILLIS: Check out last week's mortgage numbers. Rates jumped to their highest levels in nearly a year. Now the Mortgage Bankers Association said the average 30-year fixed rate loan climbed to 6.61 percent, and that is the highest level since July of last year.

Keep in mind here, just four years ago, rates were at 5 percent. I spoke to Doug Duncan, the chief economist for the Mortgage Bankers Association. The good news here, he told me he expects mortgage rates to remain steady through the end of the year between 6.55 and 6.75 percent. That's the good news.

This week we heard about a new idea, though, to protect your money. Elizabeth Warren is a Harvard Law professor and a longtime consumer advocate. She is calling for a financial product safety commission that will protect you from unsafe financial products just like the Consumer Products Safety Commission protects you from unsafe toasters and toys.

Welcome, Elizabeth. Good to see you.

ELIZABETH WARREN, PROF., HARVARD LAW SCHOOL: Good to see you.

WILLIS: Now, you know, I thought about this for the last couple of days, the idea of a whole new regulatory body, and we've certainly covered all of these toxic loans out there that people have taken out the last few years. Well, what have we got? We've got the SEC, the FDIC, maybe five federal regulatory bodies, state regulators. Shouldn't these guys be doing their job instead of creating a whole new regulatory regime?

WARREN: Well, you know, that's part of the problem. We have too many regulators, but none of them have as their principal focus safety for the consumer. We have overlapping and multiple regulations, but they are aimed toward profitability for the banks, protecting the banks. We need somebody on the consumer's side here.

WILLIS: Well, is there any guarantee that any kind of commission is actually going to get that job done? I think you've got to ask yourself, so many regulators out there already, how are these guys getting away with the kind of stuff they've been pulling?

WARREN: Well, the current statutes tell the regulators to watch out, to make sure that the banks remain safe. What we need is a set of regulators who are told to watch out for the consumers, the way we have a regulatory commission that watches out for the consumers to make sure we don't have exploding toasters and collapsing car seats.

It's really a question of what Congress tells the regulators to do. Right now we don't have regulators who are out there looking out for the consumers, and I think our recent experience in the mortgage market and the credit card markets and the payday loan markets make that pretty clear.

WILLIS: Elizabeth, I've talked to some of these folks in the industry, and they say they're doing the best job they can to come up with new products to help people out there. And even some of the toxic loans that we talk about are decent products for some people. So how do you keep the innovation coming and yet still regulate the industry?

WARREN: Well, once again, go back to look at what has happened with ordinary physical products. We've had lots of innovation in toasters, lots of innovation in car seats, lots of innovation in cars and other kinds of products. But the innovations have been things that helped consumers, not things that landed consumers in lots more trouble. What safety regulation does is it builds in floors, and that helps markets be more competitive.

It means that people who issue mortgages don't have to worry that their profitability is being undercut by someone who's willing to put out a product that has, let's say, a 1 in 5 chance of landing a family in foreclosure.

WILLIS: Elizabeth, interesting idea. We'll be following up on it. And thanks so much for being with us to explain it today.

Coming up next on OPEN HOUSE, get out that pen and paper. Learn how to boost the value of your home without spending big bucks.

And the inside track on life on the road for one NASCAR dad.

(COMMERCIAL BREAK) WILLIS: First impressions count, especially when you're looking to buy that dream home. But whether you're buying or you're selling, your home's curb appeal can sometimes make or break the deal. We took a ride recently to Tennafly (ph), New Jersey, with landscaping guru Jason Cameron to check out one good-looking home.

(BEGIN VIDEOTAPE)

WILLIS: So, Jason.

JASON CAMERON, DIY'S "DESPERATE LANDSCAPES: Yes.

WILLIS: This is the view. This the view that you would see on the Internet if this house was on the market. This is the view that you would see coming to the open house. This is a money shot right here. So what do you think?

CAMERON: It is a money shot. And for a possible buyer looking at this house, the first thing that I look at is how well maintained the landscape is. And obviously this is very well-maintained. And the thing about landscapes you want to keep in mind is, you don't want to overdo it. And you don't want to take away from what it is that you're looking to buy, which is the home.

So as the person that owns the house, it's all about the house. And you want the landscape not to overpower it, but to enrich it.

WILLIS: But to point to it, right?

CAMERON: Point to it.

WILLIS: Point to it. I can just tell you, though, look at this driveway, because I think the driveway is awesome.

CAMERON: Yes, it is. Very nice.

WILLIS: You know, this can be a real distraction from the house itself. But they've done a nice job with this, right?

CAMERON: They've done a beautiful job. I mean, this not only looks great, but it adds a ton of value to your house. But a job like this for a do-it-yourselfer is a little much. But a smaller job you can do it. You've got to remember too, with pavers, is that it's very -- it's $10 to $15 a square foot to have it installed. It's very expensive. And 90 percent of that is labor.

WILLIS: You know, one other thing, I like the way these bushes frame the doorway. They're bringing you right to the front door.

CAMERON: We're on the same page, you and I.

WILLIS: I think so. Maybe.

CAMERON: Because that caught my eye as well. And when you have a prominent space like this, I mean, this is your focal point. This is what people are going to look at as the front door to the entrance. They did a really good job framing it in with these two evergreens on each side.

So it's a very prominent area. So you want to -- basically anchoring the front door.

WILLIS: So, Jason, let's check out the backyard.

CAMERON: Yes, let's do.

WILLIS: Wow, the grass is gorgeous. They've really worked hard on it.

CAMERON: It's a beautiful grass.

WILLIS: But I have to ask you this question, there's a lot going on back here. There's a lot of tschotkes.

CAMERON: Yes. There's a lot to like...

WILLIS: What do you think of that?

CAMERON: Yes, there's a lot to like about this. But that would be one of my criticisms is that there's a little bit too much going on. I mean, there's a lot for the eye to take in. There's a lot of different types of containers...

WILLIS: Urns and pots.

CAMERON: Urns and -- but it really is a matter of preference. Now obviously, the homeowner really likes this stuff. And, again, it's their backyard. But for resale purpose, you might want to simplify things and not have so much going on.

WILLIS: What about the hostas? I love these hostas. They're huge.

CAMERON: Again, it's another texture element. So the hostas, the hydrangeas, bushes are great, like boxwoods, and rhododendrons like you like, those are flowering bushes, and the evergreens are the -- you know the evergreen bushes. So a lot of different elements going on. But they're all low maintenance, and that's really important, because you don't want to spend a lot of time maintaining a landscape.

WILLIS: OK. So short list, action plan.

CAMERON: Action plan.

WILLIS: Tip number one, look at your house as if for the first time.

CAMERON: Right.

WILLIS: Second, don't be afraid to do it yourself.

CAMERON: Right.

WILLIS: And, three, don't overbuy.

CAMERON: Don't overbuy. Don't overdo it. Don't overwhelm your house. Keep it simple. Again, planting like plants together, layering, getting some color and some year-round color. So you want short-term color, which is annuals and perennials, and you want year- round color, which is bushes, evergreens, and hydrangeas.

WILLIS: OK. I think I've got it.

CAMERON: You got it?

(END VIDEOTAPE)

WILLIS: Our thanks to Jason Cameron for helping you us out. As always, if you have an idea for a "Weekend Project," send us an e-mail to openhouse@cnn.com. And for more information on home improvement projects, along with tips and a quiz, log on to cnn.com/spring.

Up next, gentlemen, start your engines. Life on the road with one NASCAR dad. But first, your "Local Lowdown."

(BEGIN VIDEOTAPE)

WILLIS (voice-over): OKC is a sprawling city situated right in the heart of Tornado Alley. Some 500,000 people live there. Median family income sits at about $50,000, slightly below the national average of $56,000. But the median home sales price is only about $100,000, less than two-thirds the national average, and you can thank Oklahoma City for the world's first parking meter, installed July 16th, 1935.

That's your "Local Lowdown."

(END VIDEOTAPE)

(COMMERCIAL BREAK)

GRAPHIC: "There are 66.3 (ph) million fathers in the United States."

WILLIS: And that is a whole lot of kids. Ladies and gentlemen, fasten your seat belts. We're taking you on to the racetrack and into the fast family life of one NASCAE star.

(BEGIN VIDEOTAPE)

WILLIS (voice-over): Meet the Nemecheks (ph), a team on and off the racetrack. With 38 races a year, this NASCAR family is living life in the fast lane.

JOE NEMECHEK, NASCAR DRIVER: Life on the road is there's never a dull moment. We're gone away quite a bit. I'm very fortunate to be able to have my family with me most of the time.

WILLIS: The family, that's Andrea.

ANDREA NEMECHEK, NASCAR MOM: Say hold on. Let's go.

WILLIS: Blair (ph), Kennedy (ph), and John Hunter (ph). Oh, and the family puppy, of course. And then there's Joe's other family, his crew.

J. NEMECHEK: How's your mom doing, buddy?

When you spend that much time with them, they are, they're just like family. My crew chief, Ryan Pemberton, and his family, we spend a lot of time together on the road, along with the other crews, the crew members. Everybody's like a family.

WILLIS: It's a close knit community, literally. Motor homes parked side by side become homes away from home. Competitors on race day, neighbors after hours.

So just out of curiosity, we asked Joe who he would turn to for that proverbial cup of sugar.

J. NEMECHEK: it doesn't matter. It doesn't matter at all.

WILLIS: We asked Jeff Gordon if he'd help out.

JEFF GORDON, NASCAR DRIVER: Sure, why not? I feel like a pretty giving person. So if somebody needed something, I'd be willing to help them out.

WILLIS: Willing to help out are the sport's chaperone too, like the MRO, making sure that even the smallest members of the race car family enjoy their time on the track.

A. NEMECHEK: They have an area for the kids to play. They serve food. They have a wonderful playground, you know. They just -- they make you feel like you're at home. And they make it so you don't have to go off the premises to do anything if you don't want to.

WILLIS: As far as the son's career track, this 9-year-old is following suit, strategizing with the team, tracking lap times. He's just another member of the crew, only smaller.

But the season is long, and the family can't always go on the road, which can be tough. But there's one -- well, three things that keep him going.

J. NEMECHEK: What gets me through it? I guess these little guys right here. You got to look back at what's important in life, and family. Family is the number one thing in life, and you got to take care of your kids. You know, my goals, I want to run well, and I want my family to be healthy. That's the two main things.

WILLIS: With two well-oiled teams supporting him, Joe Nemechek has no plans to slow down any time soon.

(END VIDEOTAPE)

WILLIS: What a great family. Well, father may know best most of the time. But for all those dads out there who are still in need of financial advice once in a while, we have you covered.

Now, we all know how expensive college is, but you don't want to go raiding your nest egg to pay for junior's college. You're going to lose out on all that compound interest. And you'll have to pay penalties if you withdraw money from your 401(k) or IRA if you're not yet 59 1/2 years old.

Remember, you -- your kid can always borrow money to pay for college, but you can't borrow money to retire. And if you finally want to stop being your child's personal ATM machine, here are some Web sites to note so that, well, junior can start earning his own money. There's snagajob.com, and teens4hire.com.

As always, we thank you for spending part of your Saturday with us. OPEN HOUSE will be back next week right here on CNN. And you can catch us on HEADLINE NEWS every Saturday and Sunday at 5:30 p.m. Eastern time.

Don't go anywhere. Your top stories are next in the CNN "NEWSROOM." Have a great weekend.

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