Motorhome Short Sale

[kascls]

My mother attempted to sell a motorhome after my father passed away a couple of years ago.  She finally got an offer but it was for $20,000 less than what was owed.  She worked with the bank and they agreed to release their lein and they had her sign an agreement to pay the balance - I don't know the details of the agreement but it has a long term and is interest free. 

So the motorhome was sold and my mother has been dutifully paying monthly per the terms of the agreement (deficiency agreement, I guess).  Now she is considering selling her house and buying something different.  When she talked to a lender, they told her she couldn't qualify because of the negative reporting of the motorhome sale on her credit report.  I don't know yet how it is being reported but was suprised that it is a derog at all on her credit report.

I am about to get involved to try to help her straighten this out - any advice on how to proceed?

[HoldingOntoHope]

Well the obvious step one would be to help mom access her credit reports so you can see what and how is reporting from the bank. If she was flat out rejected by the first lender for a mortgage then my guess is it is reporting as a monthly derogatory line. Whether it is possible to get the bank to delete the reporting is going to be another question.

And just because one lender said no doesn't mean all of them will. A mortgage broker may be able to find a lender to commit to a new home loan as long as mom can prove that she is making payments as agreed on the remaining balance. A lot of it will depend on what other items are in her report and how much equity she is getting out of her current home to have available to complete the transactions.

[kascls]

OK, I pulled her credit reports. 

The original loan is reporting as a negative - Status = "Paid in Settlement", Creditor's Statement:
"Account legally paid in full for less than full balance". No late payments listed in the payment history and the tradeline reports the account as closed.

In the same month that the account is closed ithere s a new account with the same lender, the account number is different - they added a 9 infront of original account number.  The account is listed in the "Closed Accounts" section - that doesn't seem to make sense.  The status = "Account charged off. $22,998 written off. $20,698 past due as of May 2013".  Type = "Note Loan" and every month since the note was opened is reporting as CO (Charge Off).

She has made every payment per the agreement.  Doesn't seem to be reporting correctly. 

[kascls]

I guess my basic question is - they had her sign a new agreement to pay off the balance of the original motorhome balance.  Per the terms of that agreement, she has made every payment on time.  The tradeline associated with that agreement is showing up as a negagitive on her credit report.  If she is abiding by the agreement, what right do they have to report it as a negative?