New Credit Focus on Income
Starting in February 2010, the credit bureaus will begin focusing an increasing amount of attention on our incomes or predicted incomes to help determine credit-worthiness.

As part of the Fed's 2009 Credit Card Act, starting February 2010, credit card companies are required to determine an applicant's ability to handle the debt of any new credit card before issuing the card. In response to this, the credit agencies are looking to methods to predict our incomes.

You'll notice credit card applications beginning to ask about amount of house or rent payments and bank account balances. You also may be asked to sign a Federal Tax form 4506-T which allows the lender to request copies of previous year's tax returns.

What this means to you:
1. Ensure you review your credit reports at least once/year for accuracy
2. Complete the 4506-T accurately if asked to do so (i.e., ensure the correct year or years are filled in)
3. Not only are your credit bills now important for determining your credit but other bills will take on increasing roles such as utility bills

References:
MSN: http://bit.ly/Predicted-Income-Credit-Score
Wikipedia: http://bit.ly/FICO-US

More Mortgage News
As I have written about previously, the feds are planning to cease their purchases of mortgages in March. This is leading to concerns from some that mortgage rates could rise 0.5-1% (*see note below) and cool the recovery of real estate.

The fed currently holds $909B in mortgages. When the fed buys mortgages, this gives the bank a virtually guaranteed willing buyer which removes some risk from the banks. Note that banks are averse to risk so... RISK=INTEREST RATES. The less the risk, the lower the interest rates banks will charge and vica versa.

The fed has indicated it will cap its mortgage purchases at $1.25T in March. If this happens, the banks will have to rely more on private investors of their mortgage-backed security (MBS) products. With the economy improving some, there are other investments that give better returns so these investors will require higher rates-of-return (read interest rates) to convince them to buy these MBS's.

Voila! There you have a simplified view of the concern builders and some others have about the feds halting their purchase of mortgages.

*note: a rise of 1% in mortgage rate on a 30-year mortgage will result in a $125 increase in the monthly principle and interest payment on a $200,000 fixed 30 year mortgage.