1. Sales Comparison Approach: In this approach the appraiser finds three to four comparable properties in the neighborhood which have recently sold. Ideally, these properties are within a one-half mile radius of the subject property and have sold within the last six months. The appraiser compares the sold properties to the subject property. The factors used in the comparison include square footage, number of bedrooms and bathrooms, property age, lot size, view, and property condition.
2. Cost approach: This approach considers the value of the land, assumed vacant, added to the cost to reconstruct the appraised building as new on the date of value, less the accrued depreciation the building suffers in comparison with a new building.
3. Income capitalization approach: In this approach the potential net income of the property is capitalized to arrive at a property value. This approach is suited to income-producing properties and is usually used in conjunction with other valuation methods. The process of converting a future income stream into a present value is known as capitalization.

• Type of appraisal: The most commonly used appraisal is called the Uniform Residential Appraisal Report (URAR). Some lenders may accept an abbreviated appraisal called the "Drive By Appraisal", which costs less than the URAR.
• Type of property: Appraisals for single family homes and condominiums usually cost less than appraisals for multi-unit properties.
• Value of property: Appraisals for higher-priced homes usually cost more than appraisals for lower-priced homes. If your home value is over $500,000, you can expect to pay more for your appraisal.
• Location of property: The cost of an appraisal is affected by geographic location and availability of appraisers. In areas where appraisers are few, or the properties are hard to access, appraisal costs increase.
• Use of property: Appraisals for income producing properties, for example, usually cost more than appraisals for non-income-producing properties.  Rental property appraisals include a rent survey and the property's income statement. Appraisal fees on single-family, owner-occupied homes under $500,000 in densely populated areas vary between $250 and $400. Fees for similarly priced rental properties may vary between $400 and $550.
  

• To dispute your property taxes
• To establish the replacement cost for insurance purposes
• To settle a divorce
• To settle an estate
• To buy out a partner
• To help negotiate a purchase price either as a buyer or as a seller
• To satisfy the IRS
• To settle a lawsuit
• To protect your rights in a condemnation case

Three agencies accumulate data on which to base your credit history. Their names, addresses and phone numbers are shown below. It is normally very difficult to speak to a live person at these agencies; instead you are directed through a voice-mail maze which will give you instructions on how to get a copy of your report, what it may cost, or how to deal with a problem you may have. In any case, it is better to communicate in writing. Use certified mail so you will get a receipt showing that the agency received your letter and when they received it.

• Single Bureau Report: This report provides information from a single bureau.
• Three Bureau Merged Report: This report provides information from all three bureaus and typically costs two to three times as much as a single bureau report.
• Standard Factual Credit Report: This is a more detailed credit report and costs much more.

The Federal Trade Commission (FTC) enforces credit laws that protect your right to obtain, use, and maintain credit. These laws do not guarantee that everyone will receive credit. Instead, the credit laws protect your rights by requiring businesses to give all consumers a fair and equal opportunity to receive credit and to resolve disputes over credit errors. This document explains your rights under these laws and offers practical tips to help you solve credit problems.

Your Credit Report
Your credit payment history is recorded in a file or report. These files or reports are maintained and sold by consumer reporting agencies (CRAs). One type of CRA is commonly known as a credit bureau. You have a credit record on file at a credit bureau if you have ever applied for a credit or charge account, a personal loan, insurance, or a job. Your credit record contains information about your income, debts, and credit payment history. It also indicates whether you have been sued, arrested, or have filed for bankruptcy.

The Fair Credit Reporting Act (FCRA) is designed to help ensure that CRAs furnish correct and complete information to businesses to use when evaluating your application.

Your rights under the Fair Credit Reporting Act:

• You have the right to receive a copy of your credit report. The copy of your report must contain all of the information in your file at the time of your request.
• You have the right to know the name of anyone who received your credit report in the last year for most purposes or in the last two years for employment purposes.
• Any company that denies your application must supply the name and address of the CRA they contacted, provided the denial was based on information given by the CRA.
• You have the right to a free copy of your credit report when your application is denied because of information supplied by the CRA. Your request must be made within 60 days of receiving your denial notice.
• If you contest the completeness or accuracy of information in your report, you should file a dispute with the CRA and with the company that furnished the information to the CRA. Both the CRA and the furnisher of information are legally obligated to investigate your dispute.

You have a right to add a summary explanation to your credit report if your dispute is not resolved to your satisfaction.

Your Credit Application
When creditors evaluate a credit application, they cannot lawfully engage in discriminatory practices.

The Equal Credit Opportunity Act (ECOA) prohibits credit discrimination on the basis of sex, race, marital status, religion, national origin, age, or receipt of public assistance. Creditors may ask for this information (except religion) in certain situations, but may not use it to discriminate when deciding whether to grant you credit.

The ECOA protects consumers who deal with companies that regularly extend credit, including banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. Everyone who participates in the decision to grant credit, including real estate brokers who arrange financing, must follow this law. Businesses applying for credit also are protected by this law.

Your rights under the Equal Credit Opportunity Act:

• You cannot be denied credit based on your race, sex, marital status, religion, age, national origin, or receipt of public assistance.
• You have the right to have reliable public assistance considered in the same manner as other income.
• If you are denied credit, you have a legal right to know why.

Your Credit Billing and Electronic Fund Transfer Statements

• charges or electronic fund transfers that you, or anyone you have authorized to use your account have not made;
• charges or electronic fund transfers that are incorrectly identified or show the wrong amount or date;
• computation or similar errors;
• failure to reflect payments, credits, or electronic fund transfers properly;
• not mailing or delivering credit billing statements to your current address, as long as that address was received by the creditor in writing at least twenty days before the billing period ended;
• charges or electronic fund transfers for which you request an explanation or documentation, due to a possible error.

The FCBA generally applies only to "open end" credit accounts, credit cards, revolving charge accounts (such as department store accounts), and overdraft checking accounts. It does not apply to loans or credit sales that are paid according to a fixed schedule until the entire amount is paid back, such as an automobile loan. The EFTA applies to electronic fund transfers, such as those involving automatic teller machines (ATMs), point-of-sale debit transactions, and other electronic banking transactions.

Your Debts and Debt Collectors

The Fair Debt Collection Practices Act (FDCPA) applies to personal, family, and household debts. This includes money owed for the purchase of a car, for medical care, or for charge accounts. The FDCPA prohibits debt collectors from engaging in unfair, deceptive, or abusive practices while collecting these debts.

Your rights under the Fair Debt Collection Practices Act:

• Debt collectors may contact you only between 8 a.m. and 9 p.m.
• Debt collectors may not contact you at work if they know your employer disapproves.
• Debt collectors may not harass, oppress, or abuse you.
• Debt collectors may not lie when collecting debts, such as falsely implying that you have committed a crime.
• Debt collectors must identify themselves to you on the phone.
• Debt collectors must stop contacting you if you ask them to in writing.

Solving Your Credit Problems

Here are some additional tips for solving credit problems:

• If you want to contest a credit report, bill or credit denial, contact the appropriate company in writing and send it "return receipt requested."
• When you contest a billing error, include your name, account number, the dollar amount in question, and the reason you believe the bill is wrong.
• If in doubt, request written verification of a debt.
• Keep all your original documents, especially receipts, sales slips, and billing statements. You will need them if you dispute a credit bill or report. Send copies only. It may take more than one letter to correct problems.
• Be skeptical of businesses that offer instant solutions to credit problems.
• Be persistent. Resolving credit problems can take time and effort.
• There is nothing a credit repair company can do for you for a fee, that you cannot do for yourself for little or no cost.

If you can't resolve your credit problems yourself or if you need help, you may want to contact a credit counseling service. Nonprofit organizations in every state counsel consumers in debt. Counselors try to arrange repayment plans that are acceptable to you and your creditors. They also can help you set up a realistic budget. These services usually are offered at little or no cost.

Universities, military bases, credit unions, and housing authorities also may offer low- or no-cost credit counseling programs. Check the white pages of your telephone directory for a service near you.

For More Information
You can file a complaint with the FTC by contacting the Consumer Response Center by phone: toll-free 1-877-FTC-HELP (382-4357); TDD: 202-326-2502; by mail: Consumer Response Center, Federal Trade Commission, 600 Pennsylvania Ave, NW, Washington, DC 20580; or through the Internet, using the online complaint form. Although the Commission cannot resolve individual problems for consumers, it can act against a company if it sees a pattern of possible law violations.
This document was written in January 1998 by the FTC.

If you've recently been through a divorce or are contemplating one, you may want to look closely at issues involving credit. Understanding the different kinds of credit accounts opened during a marriage may help illuminate the potential benefits and pitfalls of each.

There are two types of credit accounts: individual and joint. You can permit authorized persons to use the account with either. When you apply for credit, whether a charge card or a mortgage loan, you'll be asked to select one type.

Individual or Joint Account

Individual Account
Your income, assets, and credit history are considered by the creditor. Whether you are married or single, you alone are responsible for paying off the debt. The account will appear on your credit report, and may appear on the credit report of any "authorized" user. However, if you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), you and your spouse may be responsible for debts incurred during the marriage, and the individual debts of one spouse may appear on the credit report of the other.

Joint Account
Your and your spouse's income, financial assets and credit history are considerations for a joint account. No matter who handles the household bills, you and your spouse are responsible for seeing that debts are paid. A creditor who reports the credit history of a joint account to credit bureaus must report it in both names (if the account was opened after June 1, 1977).

Advantages/Disadvantages: An application combining the financial resources of two people may present a stronger case to a creditor who is granting a loan or credit card. When two people apply together for the credit, each is responsible for the debt. This is true even if a divorce decree assigns separate debt obligations to each spouse. Former spouses who run up bills and don't pay them can hurt their ex-partner's credit history on jointly held accounts.

Account "Users"
If you open an individual account, you may authorize another person to use it. If you name your spouse as the authorized user, a creditor who reports the credit history to a credit bureau must report it in your spouse's name as well as yours (if the account was opened after June 1, 1977). A creditor may report the credit history in the name of any other authorized user.

Advantages/Disadvantages: User accounts often are opened for convenience. They benefit people who might not qualify for credit on their own, such as students or homemakers. While these people may use the account, you, not they, are contractually liable for paying the debt.

If You Divorce
If you're considering divorce or separation, pay special attention to the status of your credit accounts. If you maintain joint accounts during this time, it's important to make regular payments so your credit record won't suffer. As long as there's an outstanding balance on a joint account, you and your spouse are responsible for it.

If you divorce, you may want to close joint accounts or accounts in which your former spouse was an authorized user. You may ask the creditor to convert these accounts to individual accounts.

By law, a creditor cannot close a joint account because of a change in marital status, but can do so at the request of either spouse. A creditor, however, does not have to change joint accounts to individual accounts. The creditor can require you to reapply for credit on an individual basis. On that basis, the creditor may extend or deny you credit. In the case of a mortgage or home equity loan, a lender is likely to require refinancing to remove a spouse from the obligation.

For More Information

If you've ever applied for a charge account, personal loan, insurance, or job, there's a file about you. This file contains information about where you work, live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy.

Companies that gather and sell this information are called Consumer Reporting Agencies (CRAs). The most common type of CRA is the credit bureau. The information CRAs sell about you to creditors, employers, insurers, and other businesses is called a consumer report.

The Fair Credit Reporting Act (FCRA), enforced by the Federal Trade Commission, is designed to promote accuracy and ensure the privacy of the information used in consumer reports. Recent amendments to the Act expand your rights and place additional requirements on CRAs. Businesses that supply information about you to CRAs and those that use consumer reports also have new responsibilities under the law.

Here are some answers to questions consumers commonly ask about consumer reports and CRAs. You may have additional rights under state laws. Contact your state Attorney General or local consumer protection agency for more information.

• Equifax, P.O. Box 740241, Atlanta, GA 30374-0241; (800) 685-1111.
• Experian (formerly TRW), P.O. Box 949, Allen, TX 75013; (888) EXPERIAN (397-3742).
• TransUnion, 2 BALDWIN PLACE, P. O. BOX 1000, CHESTER, PA 19022; (800)888-4213.

In addition, anyone who takes action against you in response to a report supplied by a CRA--such as denying your application for credit, insurance, or employment--must give you the name, address, and telephone number of the CRA that provided the report.

First, tell the CRA in writing what information you believe is inaccurate. CRAs must reinvestigate the items in question--usually within 30 days--unless they consider your dispute frivolous. They also must forward all relevant data you provide about the dispute to the information provider. After the information provider receives notice of a dispute from the CRA, it must investigate, review all relevant information provided by the CRA, and report the results to the CRA. If the information provider finds the disputed information to be inaccurate, it must notify all nationwide CRAs so that they can correct this information in your file.

When the reinvestigation is complete, the CRA must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the CRA cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the CRA gives you a written notice that includes the name, address, and phone number of the provider.

Second, tell the creditor or other information provider in writing that you dispute an item. Many providers specify an address for disputes. If the provider then reports the item to any CRA, it must include a notice of your dispute. In addition, if you are correct--that is, if the information is inaccurate--the information provider may not use it again.

If you tell the information provider that you dispute an item, a notice of your dispute must be included anytime the information provider reports the item to a CRA.

Q. Where should I report violations of the law?

For More Information

A FICO score is a generic term for a credit bureau score and specifically refers to the score derived from the FICO statistical model. A credit bureau score measures the relative degree of risk a potential borrower represents to the lender or investor. Each of the three credit bureaus have their own method, or statistical model, for calculating scores. The bureaus rely exclusively on their own data for calculating scores. The credit bureaus and their respective models are:

• Equifax (formally CBI) / Beacon model
• TransUnion / Emperica model
• Experian (formally TRW) / FICO model

• You are being asked to guarantee this debt. Think carefully before you do. If the borrower does not pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.
• You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount.
• The creditor can collect this debt from you without first trying to collect from the borrower.* The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.
• This notice is not the contract that makes you liable for the debt.

* Laws in your state may forbid a creditor from collecting from a cosigner without first trying to collect from the primary debtor.

Cosigners Often Pay

Studies of certain types of lenders show that for cosigned loans that go into default, as many as three out of four cosigners are asked to repay the loan. When you're asked to cosign, you're being asked to take a risk that a professional lender won't take. If the borrower met the criteria, the lender wouldn't require a cosigner.

In most states, if you cosign and your friend or relative misses a payment, the lender can immediately collect from you without first pursuing the borrower. In addition, the amount you owe may be increased by late charges or by attorneys fees if the lender decides to sue to collect. If the lender wins the case, your wages and property may be taken.

If You Do Cosign

Despite the risks, there may be times when you want to cosign. Your child may need a first loan, or a close friend may need help. Before you cosign, consider this information:

• Be sure you can afford to pay the loan. If you're asked to pay and can't, you could be sued or your credit rating could be damaged.

• Even if you're not asked to repay the debt, your liability for the loan may keep you from getting other credit because creditors will consider the cosigned loan as one of your obligations.

• Before you pledge property to secure the loan, such as your car or furniture, make sure you understand the consequences. If the borrower defaults, you could lose these items.

• Ask the lender to calculate the amount of money you might owe. The lender isn't required to do this, but may if asked. You also may be able to negotiate the specific terms of your obligation. For example, you may want to limit your liability to the principal on the loan, and not include late charges, court costs, or attorneys' fees. In this case, ask the lender to include a statement in the contract similar to: "The cosigner will be responsible only for the principal balance on this loan at the time of default."

• Ask the lender to agree, in writing, to notify you if the borrower misses a payment. That will give you time to deal with the problem or make back payments without having to repay the entire amount immediately.

• Make sure you get copies of all important papers, such as the loan contract, the Truth-in-Lending Disclosure Statement, and warranties, if you're cosigning for a purchase. You may need these documents if there's a dispute between the borrower and the seller. The lender is not required to give you these papers; you may have to get copies from the borrower.

• Check your state law for additional cosigner rights.

For More Information

The National Flood Insurance Program (NFIP) defines flooding as "a general and temporary condition during which the surface of normally dry land is partially or completely inundated. Two adjacent properties or 2 or more acres must be affected." According to NFIP's definition, flooding can be caused by any one of the following:

• the overflow of inland or tidal waters
• the unusual and rapid accumulation or runoff of surface waters from any source such as heavy rainfall
• the incidence of mudslides or mudflows caused by flooding which are comparable to a river of liquid and flowing mud;
• or the collapse or destabilization of land along the shore of a lake or other body of water resulting from erosion or the effect of waves or water currents exceeding normal, cyclical levels.

Flood insurance is a special policy backed by the federal government, with cooperation from local communities and private insurance companies. More than eighteen thousand communities have agreed to stricter zoning and building measures to control floods. Residents in these communities are entitled to purchase flood insurance through NFIP. (Those who own property in certain coastal barrier areas are excluded from the federal program.)

About two hundred insurance companies, possibly including the company that already handles your homeowner's or auto insurance, write and service the policies for the government, which finances the program through premiums. The average flood policy premium is about $350 a year; some people in low-risk zones can obtain flood insurance for as little as $106 a year.

Even though flood insurance is relatively inexpensive, most Americans are unprotected against flood loss. According to the Federal Insurance Administration, of the approximately ten million households in so-called Special Flood Hazard Areas - the most vulnerable to flood - no more than a quarter are covered by flood insurance. Yet in these special hazard areas, flooding is twenty-six times more likely to occur than a fire over the course of a typical thirty year mortgage.