Foreclosure Disappeared from Credit Report

[Anonymous]

Went through a foreclosure (in CA) with final disposition in March 2012. It has been on all three credit bureaus all this time until this month (April 2017). It has completely disappeard from all three bureaus. This was a Freddie Mac mortgage originated by Wells Fargo. The odd thing is that I had a previous mortgage with a different company that I paid off in 2007 and that one is still being reported. I thought all foreclosures stayed on for 7 years. Anyone else experience this?

[RobertEG]

Was the latest foreclosure ultimately charged to profit and loss, and thus subject to exclusion at 7 years plus 180 days from DOFD, while the prior foreclosure was paid back into good-standing, and thus not ultimately subject to exclusion based on the equivalency of a charge to profit and loss?

[Anonymous]

Thank you for your response. The Date of First Delinquency was May of 2010 which would be 7 years but less than 7.5 years. The previous mortgage that is still on my credit report was not a foreclosure. That was paid off in 2007 and shows as paid and closed satisfactorily. Is it possible that Wells Fargo simply stopped reporting prior to the 7 year mark? I assume it doesn't HAVE to stay on the report for that length of time it is just the legal maximum, maybe?

[Anonymous]

Can someone provide some explanation what is meant by being charged to profit or loss?

[RobertEG]

An unpaid debt is carried in an accounting ledger as an "account receivable," and is a part of a company's assets.

Debts that become delinquent for an extended period of time become less likely to be repaid.

Continuing to carry delinquent debt that is not likely to be repaid as a stated asset can misrepresent the "true" value of a company to its stockholders and potential investors.

In order to prevent misrepresentation of true assets, federal regulations require that creditors move delinquent debt from their accounts receivable column of their accounting ledger over to a non-receivable bad debt column once the delinquency reaches the stage where it is considered unlikely to be repaid.  In accounting language, the debt is then said to have become "uncollectible," although the consumer continues to owe and be responsible for repayment of the entire debt.  While federal regs provide various specific criteria for determining when a creditor must treat the debt as uncollectible, general criteria is usually 150 days from first delinquency for an installment loan and 180 days from first delinquency for revolving (credit card) debt.

IRS regs permit creditors to write-off debt that has been charged to profit and loss in their tax returns, thus treating the debt as a non-taxable business loss.

From the consumer's point of view, the owner or their heirs or assigns can continue to pursue collection of the entire debt after charging the debt to profit and loss.

It does not prohibit reporting of continued delinquencies or cancel the debt obligation.

Creditors are also permitted to separately report having charged a debt to profit and loss to the credit file of the consumer, and FICO scores that separate reporting as a major derog.  If the consumer subsequently pays the debt, the reported charge-off is not required to be deleted from their credit file/report.