When it comes to borrowing money, credit unions are my favorite place to go because of the quality personal service I receive. In the current credit industry, where the 10th bank this year recently closed, credit unions are faring well and even bragging about it.

BankRate.com looked into how credit unions are prospering while conventional banks are taking hits across the board. It found that the success was linked to credit unions being quicker to share best practices even with those in the same market, and due to the fact that the credit unions faced lower write-offs and delinquencies than traditional banks.

Not only are credit unions doing well in avoiding write-offs, but many of them are boasting increased membership. Further adding to the health of credit unions in a tumultuous environment is that for the first quarter of 2008, as a whole, they issued more loans than they have historically. Analysts place this rise on the willingness of credit unions to utilize their local knowledge and sit down with individuals in order to provide smart lending.

This throwback to the old-fashioned, highly human-involved method of banking may be one part of what protected the credit unions from the current fallout, not to mention a good way for individuals to continue to get loans to get the economy back on track, at least on a small scale.

It seems like we're going to see a lot more headlines like the one yesterday on one of the homes fixed up on Extreme Makeover ending up at a foreclosure auction (dramatically on the steps of the local courthouse in Georgia). Maybe it's only logical, given the mission of the show to fix up houses for those who can't afford to do so on their own. Many of these people are going to end up in further trouble, unable to afford their up-sized dreams.

Free Money Finance is hot on the trial of two more houses featured on the show that may be in trouble: one in Maryland and one in Oregon. In both cases, the families just had too much house to maintain and couldn't keep up. Being on the show may have actually exacerbated their problems. But isn't that the whole gist of the mortgage crisis right now? Banks extended pie-in-the-sky loans to people they know couldn't afford them, then jacked up the rates after they sucked the people into buying houses.

Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

I got a couple of emails this past week from potential clients who had different situations they were needing help with but they both made frequent use of "quotation marks." It's not that quotation marks are some odd punctuation, it's not, but it's always the "use" of quotation marks in an email that can give me pause.

The first email was from a real estate agent who was moving to Austin from California and she was referred to me as someone who might help in her "situation." She was in real estate but also taught piano on the side.

She wrote, "David, I'm in real estate and moving to Austin. I do well in real estate and have actually been involved in a few Austin deals this past year. I do know however, that I will require a "stated" income loan." When she put quotation marks around the word "stated" I had a hunch what was up.

Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

With the current low interest rates, is now a good time to refinance a mortgage? If I have a refinance in the works, can I negotiate a new rate if they are cut again?

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Click here to ask Ken and Daria your question.

File this one away under stuff that sounds like bad news but is actually good news. Mortgages are really hard to get, unless you have great credit (a FICO score of over 700, and considerably higher if you want an interest-only loan) and crazy stuff like, oh, proof of income.

That's right: if you've wracked up credit card debt and missed payments, you'll be stuck renting. Here's why that's good news. First, more stringent standards lead to fewer foreclosures and fewer financial lives ruined. Second, clamping down on stupid lending practices that give money to people who can never pay it back helps keep prices down. To understand how this works, imagine heading off to an auction where you had to use real money but half the audience got to bid with Monopoly money. It isn't fair, but that's exactly what happened to responsible first-time home buyers who had saved up a down payment and wanted to buy a home the right way. They had to compete for real estate with people who were driving leased Lexus' and had no down payment cash back at closing loans that they never intended to repay.

And if the tighter lending standards mean you can't buy a home now, relax. Move into the least expensive but tolerable rental you can find, stop eating out, drive an old car, and save up a down payment while your credit score improves. Believe it or not, people used to take pride in the sacrifices they made in the pursuit of the American Dream.

Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Credit reporting involves a massive database. A credit repository is a library full of information about the payment histories of consumers nationwide. Each time someone makes a charge on a credit card or makes a payment each month, that individual act is recorded and sent to the database for other businesses to research credit histories of potential customers to determine their creditworthiness, or lack thereof. There are three main repositories that store such consumer information; Equifax, Experian and Trans Union. It's the job of these three organizations to store credit data sent to them by merchants who in turn use those same three to research credit histories of other potential credit customers. As you might imagine, keeping this database current and accurate is a challenge. And there are plenty of mistakes going around.

Is your name Joe Smith? Then you might imagine you're not the only Joe Smith who lives in Detroit. It's possible that at some point another "Joe Smith's" credit data could be accidentally "dumped" into your credit profile without your knowing about it. When you applied for credit, did you apply as "Joseph" instead of "Joe?" Or later in life did you drop the "Joseph" altogether and just went straight for the "Joe" moniker? "Smitty" maybe? Or perhaps your name was misspelled at some point by someone else and your name appears incorrectly at the credit bureau.

Did you pay that collection account but the credit report says you didn't? That bankruptcy is not yours? Who is that other Joe Smith, anyway?!?

Back in October, The Federal Reserve released a startling -- and widely ignored -- study showing that a large chunk of recent home buyers know almost nothing about their mortgages. Here are some findings from the Fed's survey:

• 25% could not identify the APR on their mortgages.
• 25% didn't know how much they spent on settlement charges.
  
• 50% didn't even know much the loan was for.
  
• Two-thirds were unaware of any prepayment penalties.
  
• 75% did not recognize that the loans included charges for optional credit insurance.

Major, major props to Forbes' Josh Zumbrun for digging this up. Zumbrun adds that "It's a point you don't hear much about. Yes, lenders maliciously tricked borrowers, and yes, frenzied speculators bought houses they knew they could not afford. But it's just as true that a lot of well-intentioned people simply signed mortgages they did not understand."

Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Q: What are your thoughts on the feds likelihood of dropping the interests rates again. I'd like to buy a home during this period of lower home prices, and relatively low interest rates. Trying to judge the housing market and interest rates to get them at there best levels is tricky. When do you think it will be the best time to jump in to get the most for my money. Thanks in advance, Steve

A: Steve- Fixed mortgage rates anticipate Fed moves and don't react to them. When the Fed makes a cut, mortgage rates view that move as an indicator of the future of the economy. When the Fed slashed the Fed Funds rate over a series of cuts, mortgage lenders saw that the Fed interpreted our economy as in dire, dire straits. Rates moved downward as a result. Wall Street is in general agreement that the next Fed cut will be a less draconian 1/4%.

Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

This is bugging me. I hear it over and over again from talking heads on t.v., "You've got to have 20% down and perfect credit in order to get a mortgage," or a host asking "But you know, who's lending money these days anyway?" and other such drivel. I'm not going to name names but this was a show on Fox with a famous show host asking their famous business analyst and both talking stupid and keeping potential home buyers on the sidelines.

"Well, hon, I guess we can't buy a house after all. Our credit scores are only 700 and we just have 10% down."

Let me repeat this here: You DO NOT have to have an 800 credit score and 20% down to get a mortgage! To save ink, please re-read the previous sentence for emphasis. And lenders ARE making mortgage loans...every single day. It's just that they're not making the goofy loans they used to make the put so many lenders out of business.

Conventional loans via Fannie Mae do require a minimum credit score of 680 if you have less than 5% to put down. FHA doesn't have a minimum credit score although most lenders won't issue an FHA loan with a credit score below 500 regardless of any automated approval. And hey, last time I looked VA still has the best deal on the block with zero down, relaxed credit and loan limits up to $417,000.

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Q: David: I have two mortgages (both 30 years...about three years in on each...5.75% and 5.825%)...($165,000 and $270,000). I also have a $150,00 balance due on a HELOC -- prime minus one -- the HELOC is paid about $1000 a month but the interest is only about $600/month...I pay the extra...Question:...is this a good move or could the extra cash be better invested elsewhere/some other way....other suggestions?

A: You've got some really great rates right now, especially the HELOC which will continue to move lower alongside future Fed cuts. I get asked this question on occasion, should you pay down your mortgage or should you invest instead? I'm not a financial adviser but your question has other variables, specifically how old you are, how long you plan to keep the property (will you retire in it?) and how much current equity you now have.

In a story released today by the Associated Press, RealtyTrac, an online foreclosure reporting firm, reported that year over year foreclosure rates jumped 57% when compared to March 2007. It seems foreclosures just won't stop and it's the fault of all those subprime and alternative mortgages that are resetting to higher rates and people simply can't afford them. Oh really? In another slant on the very same data, CNBC reported that yes, foreclosures are still up nationally, but they actually are FALLING in other states such as Texas, New Mexico, New Jersey, Hawaii and Delaware. This little tidbit, oddly enough, was stuck in the very last paragraph of the article. But wait a minute...if all these loans that are adjusting at higher rates are causing more and more people to be foreclosed upon then why are these other states immune from the very same problem? Hmmmmm?

Could it be that it's not the loan type that's been the problem? After all, subprime loans have been around for twenty years and so have their hybrid brethren so why has this foreclosure "crisis" being blamed upon subprime loans and the brokers that pushed them?

With all the housing mess making the news it seems that most anything that can be said has already been said. The problem is that the Federal Government keeps making the news with their take on how Big Brother can fix things so more in fact keeps getting written.

But here's my take. I say it took the Government too long to step in: they shoulda stopped all this nonsense years ago. How's that? They let home prices get too high. That's right: too high.

Both the Senate and the House have versions whereby you and me pitch in to buy foreclosed houses that aren't selling, paint them or whatever and then magically sell them to the public. I guess Big Brother has a better Listing Agent. What our elected officials are attempting to do is stop home prices from falling further by buying them from troubled lenders who want some of their money back. Let's swoop in with $400 billion and buy all these homes to prop up the prices. Artificially, of course, but propped up nonetheless. But the cows left the barn a few years ago. Big Brother shoulda stopped housing prices from going up so high in the first place, that way they wouldn't have fallen so far. Doesn't that make sense?

Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. Leave your questions in the comment section of this post.

Q: I'm either looking at a good opportunity or a potential rip-off, and I'm not sure which it is. Perhaps you could help me sort it out? In January of this year, we attempted to refinance our home to help us pay down some substantial credit card debt. To make a long story short, our house appraised for a lot less than we thought it was worth, so the finance company wouldn't make the deal. And, as it turned out, that was okay, because we've taken a couple of other options, paid our debt down, and are okay, for the moment.

But, suddenly, I'm hearing from another loan officer at the company where we had attempted our refinance. According to the message he left me, he's been reviewing our file and doesn't understand why the previous loan officer didn't offer us some kind of deal that could have been approved. He says he can help us.

Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. Leave your questions in the comment section of this post.

Q: David: I applied for a mortgage and got turned down because I didn't have enough income for the house I wanted. My loan officer suggested that I take out a part-time job to get me over the hump. I did get a part-time job but now the lender says they won't accept the part-time income after all. Who's right? The lender or the loan officer?

A: The lender. Unless you can show a two-year history of part-time employment a lender most likely won't use it. When a lender evaluates your loan application they want some sense of certainty your new part-time income is likely to continue well into the future to help you pay the mortgage. Without a history of part-time income, the lender won't be convinced of your intentions to work two jobs.

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

The FBI says that 2008 is shaping up to be a "record year" for mortgage fraud, with nearly 30,000 "suspicious activity reports" filed in the first half, compared with 46,000 for all of 2007.

According to the New York Times, "the biggest surge in federal law enforcement activity has focused on "fraud for profit" schemes, in which mortgage insiders - appraisers, real estate agents, loan officers, and lawyers - often work in teams. They falsely inflate a home's value, get a huge mortgage to buy it (usually using false identities), split the profits, and then disappear."

And then there are the more plain vanilla, less conspiratorial forms of mortgage fraud, including inflating income on loan applications, a practice that appears to have been encouraged at JPMorgan. The TowerGroup reports that lenders will lose about $2.5 billion to mortgage fraud this year.

As with many forms of crime, the victims of mortgage fraud included pretty much anyone who wasn't participating: banks have to increase fees to cover the cost of losses to fraud, and loans made to people who lied about their finances flushed funny money into the system, inflating property values and pricing many first-time home buyers out of the market. It's like trying to compete with Flinstones Chewables in a league where everyone else is on steroids. The extent to which mortgage fraud played a role in the housing bubble remains to be seen, but it's likely that fraud and lax lending practices were a substantial drivers of soaring home prices.

Another angle on this: because people used mortgage fraud to buy homes they couldn't really afford (If they could really afford them, there would have been no need to lie!), there's a good chance that many of the people who stand to benefit from plans to "help" homeowners facing foreclosures engaged in fraud to acquire their homes.