Did I just derail our mortgage application?

[david_r1979]

Hi All --

Longtime lurker first time poster...a little about my predicament - applied for a Mortgage 10/1, application came out of final underwriting this past Thursday.  I was requested to complete a LOX (letter of explanation) around a particular bill payment that was on my bank statement from 3 months ago.  This is where the problem is revealed.

Apparently Bill Me Later does not report to the bureaus...so when my credit was pulled this account was not present.  To make matters worse, I didn't remember the account since it's under a 6 month no payment no interest promo.  The only payment I've made was the first one 3 months ago for a few hundred dollars.  Naturally, they wanted a statement from Bill Me Later and an explanation on why it wasn't in my credit report or application.  

I mentioned in my LOE the following:

"Regarding the Bill Me Later payment posted 7/18, this was an account I have had for years but rarely used.  In this case, the payment for $340.00 was a payment I made to offset the purchase I made for a new computer.  As this account is under a 6 month no payment/no interest promotion (which is why there are no other payments to date reflected in my statements) I simply forgot it existed.  I cannot explain why it's not in my credit reports - with my limited knowledge of the credit reporting process I assumed that all credit accounts are reflected in the report."

The LOX was not accepted, and my status has gone from Conditional Approval to "Suspend" - I'm supposed to hear more information next week and path forward (if there is one).

I'm curious as to any and all advice - is it true this type of acount doesn't report to the bureau's and if so, why not?  Aside from this error, everything was sailing smoothly but that doens't appear to be the case any longer.

Thanks 

D.R.

[Sunshine85]

It's true that Bill Me Later does not report; however, I believe the accounts are being transferred to a new bank, and may start reporting. Try contacting BML to see if they can explain their credit reporting policy in writing, and forward the letter to your processor and LO.  

The file will probably be subject to some more scrutiny, as the UW will want to ensure there are no other outstanding debts that aren't being reported. I think you should be ok as long, provided you can provide support for BML's reporting policy. 

[david_r1979]

Thanks - do you have any recommendations on a better way to re-word the LOE?  Perhaps with that credit policy from Bill Me Later I can help explain - was already told less detail is better in LOEs but dont see how thats possible in this circumstance.

[Sunshine85]

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@david_r1979 wrote:

Hi All --

Longtime lurker first time poster...a little about my predicament - applied for a Mortgage 10/1, application came out of final underwriting this past Thursday.  I was requested to complete a LOX (letter of explanation) around a particular bill payment that was on my bank statement from 3 months ago.  This is where the problem is revealed.

Apparently Bill Me Later does not report to the bureaus...so when my credit was pulled this account was not present.  To make matters worse, I didn't remember the account since it's under a 6 month no payment no interest promo.  The only payment I've made was the first one 3 months ago for a few hundred dollars.  Naturally, they wanted a statement from Bill Me Later and an explanation on why it wasn't in my credit report or application.  

I mentioned in my LOE the following:

"Regarding the Bill Me Later payment posted 7/18, this was an account I have had for years but rarely used.  In this case, the payment for $340.00 was a payment I made to offset the purchase I made for a new computer.  As this account is under a 6 month no payment/no interest promotion (which is why there are no other payments to date reflected in my statements) I simply forgot it existed.  I cannot explain why it's not in my credit reports - with my limited knowledge of the credit reporting process I assumed that all credit accounts are reflected in the report."

The LOX was not accepted, and my status has gone from Conditional Approval to "Suspend" - I'm supposed to hear more information next week and path forward (if there is one).

I'm curious as to any and all advice - is it true this type of acount doesn't report to the bureau's and if so, why not?  Aside from this error, everything was sailing smoothly but that doens't appear to be the case any longer.

Thanks 

D.R.

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Have you been asked to submit a revised letter? Since the loan has gone into "Suspend" status, I would think the UW is looking for something other than a revised letter? If that isn't the case, I would just reword to state, it's an old account, rarely used, and that you don't know why they don't report, and reference your letter from BML explaining their reporting policy. Leave out the part about the computer and deferred financing...the UW doesn't care about that. 

You could also request copies of every statement BML can provide, to support that you hardly ever use the account, and thus forgot about it. Between that, your letter, and BML providing their reporting policy, hopefully, the UW will be satisfied.  

[frugalQ]

BML accounts are very common. I'm sure there are many mortgage applications processed with them. Is the underwriter not educated on how those accounts work?

It's ridiculous that the underwriter/processor/LO cannot guide you by letting you know what's an acceptable form of documentation.

I think I would have to ask them to explain to me why they are not familiar with common types of accounts.