A few moments ago I was auditing files of our clients. Basically keeping an eye on things. That's what I do.
Unfortunately, this client is in the process of closing on a house and it would appear they're reporting a current late on their auto...
For educational purposes, this is what happens to the scores when we have a current late payment.
As you can see, we started the file nearly a year ago, and were successful at getting the scores up high enough to qualify for a home. I was in the process of monitoring the file while they closed and making certain no new items appeared that would disrupt the closing of the mortgage.
It happens, we fall behind sometimes. But the ramifications are staggering.
Time to make a few phone calls.
I've written about this before, but with the summer here, and many of our clients going through the mortgage process (yea!!!) I felt it was prudent to write another piece on the Final Step of our Process.
The Removal of Dispute Comments
Basically, when we investigate the accounts that you would like us to, what appears on the credit report are 'Dispute Comments'. It is just a natural part of the process. As Scotty mentions in the consultation, we investigate the accounts, and when we, or you, or another organization works on the credit, those comments are there.
Many lenders have to either have these comments removed, or, they alter the rate/risk model to accommodate those comments. This means you are paying more, because the lenders view you as a higher risk because of them. Here's the formal language:
HUD 4155.1 4.C.2.f Handling of Disputed Accounts The existence of potentially inaccurate information on a borrower’s credit report resulting in a dispute must be reviewed by an underwriter. Accounts that appear as disputed on the borrower’s credit report are not considered in the credit score utilized by TOTAL Mortgage Scorecard in rating the application. Therefore, FHA requires the lender to consider them in the underwriting analysis as described below. With this ML, FHA is revising policy on manual downgrades for applications with disputed accounts to reflect the risk associated with derogatory and non-derogatory disputed accounts for factors such as age and size of outstanding balance.
So, the final step is to request the removal of those comments before a mortgage is closed. This can sometimes take a few rounds, as the bureaus tend not to remove all of them with the first request. Thusly, we always like to be kept in the loop when our clients decide to go for a mortgage. If they do not, we will inevitably get a call stating they are qualified, but need these comments removed.
So, this is the final step. If these are not removed, they will typically remain on the report.
Any questions? Let us know and please, be well!!
It's been a while since I've had time to surface and write you. We've been rather busy, but this one can't wait.
I've written about Collection Triggers before, however, there is a new player in town and I wanted to make you aware of it.
If you don't recall, 'collection triggers' are 'triggers' for collection agencies. Meaning, when you take an action, such as an inquiry, updated address, new account, new employment, pretty much anything, that may provide a 'trigger' to a collection agency, or debt buyer to pursue you.
Lately, we've been getting a lot of calls (two yesterday) from folks needing advice/services because they just went for a mortgage and now they have a collection account on their credit report.
One gentleman called up and spoke to Scotty. He was an 800 credit scores, qualified no problem, and then boom, just before closing, his score dropped, most times, the score drops a lot.
This is not a fear tactic folks, this is education. We really can't do much once the collection is already on the report, because if you start to poke it, we run a high risk of having dispute comments on the tradeline which can also screw up a mortgage, so unfortunately, if the underwriter requires the account be paid, the account gets paid. Hence 'collection trigger'. It is highly effective.
Now, the collection agency is supposed to issue out a letter PRIOR to putting a new collection like that on the credit report. It is called a 'debt validation letter', which I have written about somewhere here. If they do that, it buys us time, usually enough to close. But, with out knowing exactly what they look like, many consumers ignore them if they receive them. Hence the reason why we suggest our clients stick with us just in case so we can act in the last minute. It many times makes the difference between closing and not closing.
Regardless, I wanted to write an updated article on this because we have a new player offering 'Collection Triggers', your friendly mortgage trimerge provider. That's right gang, the same company that provides your lender a credit report to determine if you are approved for a mortgage, also throws you under the bus by notifying collection agencies that you may be in a position to pay them.
I invite you to google it. I am a bit leery of posting the info here, as we do not own that content, but check it out. www.corelogic.com/solutions/collection-triggers.aspx
So... this is simply a heads up to our friends out there, hoping to secure a home for your family. Keep an eye on the mail, oh say two weeks after that mortgage inquiry. If something weird appears from a collection agency regarding a debt you do not recognize, give us a call. We may be able to provide guidance.
And keep your head down.. :)
Many Credit Repair Organizations communicate only with the bureaus. While this can be effective, often times it requires a bit more deliberate and pointed approach to get resolution. In this circumstance, we communicated with the bureaus and found there to be discrepancies between what each bureau was reporting in terms of a late payment on one of our client's tradelines.
In this case, we gathered the responses, thanks to our wonderful client who uploaded them, and issued these responses to the creditor asking for an explanation as to why the information was different.
The client just got this response back.
First off, my apologies for the lack of recent posts. Typically the holidays represent a time when we can catch up on things, as folks have a tendency to take a pause when it comes to their credit.
I don't know if it's the elections, the warm(er) weather, or simply an anomoly in the country, but the haitus we've expected didn't come; and it's been all hands on deck for the last few weeks.
And we are just about to enter into the 'busy season'...
However, all that aside, I piece of news came across today. The much anticipated rate increase. That's right, the feds have increased the key interest rate by 25 basis points. What does this mean?? Well, it means that the economy is improving, or at least our friends at the federal reserve think so. Such may not be the case in your part of the world, and in our part of the world, we are in a bit of a recession due to the oil industry pulling out of a lot of segments due to several factors; most of which is the price of a barrel of oil.
Regardless, I am writing this largely because we receive several phone calls weekly by both clients and folks who just have questions, because they are concerned about the much anticipated rate increase. Typically, I ask them...
'what is the amount of house you are considering buying..?'
Most respond in the neighborhood of $250,000.00.
So, for the purposes of this excersize, let's view the circumstances through that scope.
The current rate according to google is around say.. 3.92%:
So we are currently looking at a payment of $1,182.00 for a 30 year mortgage at a rate of 3.92%
Now, when the new rate of 4.17% takes effect, that payment will change:
Now, please, understand, I am not advocating the idea of passing on a great oppurtunity to save a bit of money and get that mortgage locked in now. No question, considering over the term of the loan, that equals an additional $13,000.00 in interest. However, I do think it's valuable to understand that there really isn't a need to panic. A difference of $36.00 monthly is something that can be compensated for simply by say... going to Starbucks a few less times a month.
The point is; mathmatics is our friend. And I think; I hope, after reading this, you may be comforted by the fact that the increase in lending rates isn't the end of the world. Certainly; higher interest does result in us paying more for stuff, and that's really no fun, but big picture? I think if we were really savvy, we could absorb this, and the next interest rate increase simply by tightening our monthly budget.
Yes, you want to take advantage of low interest rates
Yes, you want to pay less for stuff
A 25 basis point increase, when we are talking about the lowest rates we've seen in several decades? Not a big deal. Truly.
There are other ways to save a dollar a day.
I for one have decided to use cheaper meat from the market for lunches for the office.
Don't tell anyone though.
wanted to share this with you. A clear cut example of a violation of the Statute of Limitations.
By our friends at Experian. It is rare they are this blatant. Typically they will re-age the account. However, in this case, it's pretty straight forward, by their own admission.
In short, we have a response, from them stating the account is slated to be removed in September:
So, pretty clear right? 'This account is scheduled to continue on record until sepr 2016...'
Another 'error' by the bureaus... That's ok folks, we will keep you posted on this one and update you after we've worked on the account.
A little advanced credit reporting 101 here.
We get this question asked a lot:
Can a creditor continue to report a charged off account every month?? And, if so, doesn't this hurt my credit because it looks like it just happened??
Here's the answer, and my apologies if it's a bit complicated.
Basically, a creditor can report 'CO' every month, so long as it is in fact a 'Charged Off' Account. However, what they cannot do, is update the 'Date Major Delinquency 1st Reported', which is in effect the date of the charge off.
If the creditor does not update that date, then the Charge Off does not appear as new, hence the credit will not be more adversely effected, aside from the general fact, that it is a charge off account.
However, if that date is renewed, which happens, then it appears as though the account was more recently charged off, hence the credit scores will in fact be more negatively effected than if the date was not changed.
What does all this mean?? It means, if you are engaged in credit repair, either on your own, or working with a credit repair organization, you need to be reviewing those responses.
The devil is in the details gang, and if you aren't reading those responses, or if the Credit Repair Organization is not reading the responses, you aren't being as effective at reviewing the credit as you can/need to be.
If not, call us.
Ed-Jack Dvorak is National Affiliate Liaison at Credit Dr., a national credit restoration company. He works with clients and creditors to improve credit profiles.