06-08-2012 05:06 PM
Hello. We recently entered into a special 3-month forbearance agreement with our bank for our mortgage because of a possible very temporary decrease in income that we were worried about. It wasn't really necessary, as we had more than enough saved to cover the payments, but we thought it was a safe, acceptable way to make things easier on the budget in the event the income did go down for a couple months, with no real negative consequences - The bank very specifically told me this would not be reported on our credit report and there would be no evidence that we were on a forbearance when we go to apply for anything else in the future. We were current on payments when we entered the agreement. So we went ahead with it, and then made a lump sum payment at the end of it to get caught up. We actually tried to stop the forbearance before that because it wasn't really necessary, but our account was locked from making a payment during the forbearance.
We will be selling this house, or renting it out, in the near future and trying to buy a new home with an FHA mortgage. After getting caught up after the forbearance, we checked our credit and found out all three payments had been reported late for some reason. We called the bank and they said that was an error, and they sent letters to all the reporting agencies requesting the change (and said that change would take 60-90 days). But when I asked what it would appear as, they said it would be changed to "Not Reported" instead of "current." I get that technically, the payments weren't current, but this is not something that was ever mentioned to me and I was told it would appear current. It stated in the agreement that during the forbearance, payments would be on hold and not reported to the credit agencies. I should have noticed it didn't use the word "current" but I had never heard of "not reported" as a choice. The bank is now saying they don't know why anyone told me it would appear current and that it's always reported as "not reported" for a forbearance.
I am disputing that, but in the meantime and if it does not work out with getting them to change it - since they say after all, it was not current so they can't legally change it to current - I am wondering what effect that will have on qualifying for a mortgage? If they see it as Not Reported, will they want to know the details, and if they find out it was a forbearance, what impact will that have? As I said, we had the money to cover the payments, but I'm sure they'll still want to know why we would need to be in that, and I'm not sure an explanation would help?
Any advice?? Thanks very much for any info!
06-08-2012 06:54 PM
Hi, and welcome to the forum.
I have accounts (not mortgages mind you) that sometimes don't report "current' but "not reported" and it never impacted my score. I had an account do this for 3-4 months once, and also my student loan does it sometimes.
I would guess, and I could be wrong, that lenders know what this mean. If they are concerned, they will have you get a statement from your lender that explains what those months of "not reported" means. I think it would be up to your underwriter and the bank you go to if they decide to do this or not. If your scores are really good then maybe they wouldn't....Just don't know.
Maybe someone else can come along with their story about this, but even then, I think it is going to be YMMV - which means around here: Your mileage may vary.
I hope it all works out for you and I'm glad you told this story because maybe it will help someone else. Those customer service reps never know what they are talking about. You might think about filing a BBB complaint or AG complaint since you were told one thing and they did another. What bank is it out of curiousity??
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