Problems with Mortgage Companies’ Credit Reporting

Mortgage loan companies and mortgage servicing companies do not always accurately report on consumers’ credit history after such events short sales, foreclosures, and payment modification plans. In a short sale a lender allows the home owner to sell for less than the amount owed on the mortgage. Effective July 15, 2011, an owner selling a house or apartment building with four or fewer units in a short sale will not owe the lender a deficiency balance (Civil Code Section 580e). Therefore, after a short sale, the lender should not report the consumer owes any money on the mortgage loan. If...


25% of Americans Have Credit Scores under 600

Yesterday, the Wall Street Journal reported that 25% of Americans now have credit scores less than 600. This compares to 15% before the recession. This means one in four consumers cannot get a mortgage loans unless they qualify for some special program. 650 is the cutoff score for Fannie Mae or Freddie Mac to accept mortgage loans. Persons with such scores will have a tough time getting a car loan at a reasonable rate. Landlords may not rent to them. Employers may not hire them.


Persons with Credit Disputes Can’t Get Mortgages

Fannie Mae and Fannie Mac currently flag any mortgage loan application where the applicant disputes something on a credit report. As reported in the AARP Bulletin, that’s causing denials for applicants, no matter the strength of their qualifications. Loan officers report that many flagged applications get put on hold or simply denied. “Some of these underwriters … won’t process a loan” with the notation “consumer disputes this item,” says Eddie Johansson, president of Credit Security Group,a credit services company in Texas. The law is clear that a consumer has the right to dispute any inaccuracy on his or her credit...



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