Need some help with post BK7 Home Loan - Urgent

[JSD001]

Thanks again for your help.  If I knew then what I know now... I thought a pre-approval was more complete than it was.

[ezdriver]

First of all, a pre-approval includes some level of underwriting so don't get hung up on that. I speak as a former owner of a mortgage company.

Secondly, if the debt is being reported accurately [seems like it is], it should not matter to the lender unless you are using a lousy lender. As long as it is reported as "included in bankruptcy", a creditor can continue to report the debt ... you just don't have to pay it.

Thirdly, if you needed information in your credit report to be updated quickly and you have the supporting documentation, any good mortgage loan office could do that in 24 to 48 hours. I did it for my clients quite frequently.

[JSD001]

Thanks for the feedback. Here is what I was told.

1. All national lenders use the automated underwriting system since 2009.
2. This system rejects my loan based on information in my credit report.
3. My lender provided documentation and paid for expedited correction of the errors.
4. The service was not successful, lender was told that I must dispute with the creditors.


There is a field that the system looks at called last updated or reviewed. If this date is after the discharge, then the system identifies this as another pending bankruptcy. So far the only solution as far as I can tell is to have the creditors change this date to coincide with my discharge date. Some are pushing back because it's their policy to report closed accounts monthly. In the end, it's either the underwriting system that's a problem, or the creditors policy on reporting discharged accounts monthly. One has to give or I will not qualify until the accounts disappear completely.

[notw1031]

It seems as if certain creditors are doing this out of the blue. I had not had this happen since 2 or 3 years after the BK. It has been over 5 years now and they are coming out of the wood work to get me for what has already been discharged. This is the exact issue I am having when I pulled all 3 reports. Experian shows BofA "last activity" 2/2013 from a discharged BK7 8/2008 they were included in. Equifax shows Springfield Financial "last activity" 6/2013. So it looks like I am late on a couple of accounts when in reality they were IIB in 2008. I disputed both on line and am waiting to see what happens. I think that these debts keep getting sold and a new company tries to collect and realizes that this account was IIB and updates it as that date which screws up our scores and our reports. Seems so unfair that it takes them a minute to apply wrong and derogatory info on our reports yet it takes 30-45 days to get it removed and that's only if someone knowledgeable takes care of it.

It is the "last activity" or 'last reported" that is getting us. It's fine that they update every month that they checked our reports but when they change the last activity from 8/2008 to 6/2013 that is what is causing all the problems.  It is ridiculous that when a mortgage company pulls your credit that they will see that it was IIB but that the company just recently re-updated it for some reason. It's sad that the system isn't "smart" enough to know that it has been several years that this account has been IIB yet they allow derogatory updates so that we have to fight to get them removed. I wish you luck and hope your lender throws you a bone. Keep us posted!

[JSD001]

It is very frustrating.

I dont know what to expect... but my gut feeling is that they may try to take the stance that are allowed to update or review closed accounts.  I dont know if this is a legal loophole or not, but since the effect of doing so negatively affects credit in a way that prevents the natural aging of discharged accounts, it seems to contridict bankruptcy law.  A 3 year old discharged account should not have the same impact as a 1 month old discharged account.  Its even worse than that in terms of underwriting, since it indicates a 2nd bankruptcy is forthcoming.  Why should 1 bankruptcy count against me twice for 7-10 years?  The net effect is a constant pending bankruptcy until the account can be removed.

However, explaining this in a letter may not be enough, in which case I guess the next course of action is court?  How long will that take?

[JSD001]

Well, I tried to retain an attorney to assist with this problem.  He said I have no case and they are reporting correctly.  He said I will have to wait the 7 - 10 years to qualify for a home loan.

This is not right.  If that is true, then no one should qualify before 7 to 10 years.  I have an automatic disqualification based on the way 2 creditors are reporting my closed accounts and I dont have any way of making them fix it.

[grassfeeder]

consult with a different attorney.

[shols44]

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@JSD001 wrote:

Well, I tried to retain an attorney to assist with this problem.  He said I have no case and they are reporting correctly.  He said I will have to wait the 7 - 10 years to qualify for a home loan.

This is not right.  If that is true, then no one should qualify before 7 to 10 years.  I have an automatic disqualification based on the way 2 creditors are reporting my closed accounts and I dont have any way of making them fix it.

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Send them a Cease and Decist letter. Then file a complaint with the CFPB. Way cheaper than an lawyer and likely to be effective.

My C&D would state something like

"Dear Financial institution, I am writing regarding your continued account reporting activity on my XXX account to the 3 major CRAs. As you know this account was previously included and discharged in my BK petition on xx/xx. My ability to purchase a home has been unsuccessful soley due to your credit reporting activity. Your continued monthly update of my account status to the CRA is being viewed as negative reporting on a account included in my bankruptcy petition and is a violation of the permanent injuction afforded by my BK. I demand you immediately ammend and remove all associated updates since my discharge on xx/xx. Furthermore, cease and decist all further updates or activity on this account henceforth. Any continued credit reporting activity on this account will regarded as a violation of my permanent injunction and I will have no choice but to seek redress federal court".

[JSD001]

Thank you for your responses.  I have another attorney looking at this.

I like the example of the C&D letter.  I will follow this path once I hear back from the new attorney.

[RoadtoRecovery12]

What was the outcome?