Unexpected collection record

[HJ2]

Hi folks,

My wife and I are buying a house. When the mortgage broker pulled our credits, we were surprised to see a $198 unpaid collection on my wife's Experian record. Our other five scores are around 760-790, but thanks to this collection, her Experian score is 698.

The collection was reported in 11/2011, from the "original lender", my wife realized that was an apartment management company whose apartment her younger sister used to live in. It's very likely her sister forgot to pay a bill/fine, and because she went overseas after moving out, the company was unable to reach her. My question is, why this collection ended up on my wife's record? The "original account type" is "joint". Does that mean my wife was a co-signer on the lease? She doesn't feel positive on this. She does have a joint checking account with her sister, but I don't think it's relevant in this case.

What should we do at this point to recover her Experian score, besides paying the collection? The mortgage broker said it shouldn't be a problem for the loan because other my records all look good and $198 isn't an amount to be too worried about. But we still want to do all we can to make things right and smooth.

Thanks for your advice,

-HJ

[phix]

If it's listed as joint then most likely she was a co-signer on the lease; making her liable for the debt. I'd contact the lender directly, verify she was on the lease and take it from there.

[randyrhodes]

Most likely it was a returned check. a joint checking account makes both parties responsible for returned items. even if they didn't sign the check.

[Conswalla]

Hey HJ2.

Based on what you wrote, your wife is responsible for the debt as it is listed as a "joint" account. 

Does this mean she authorized her addition to the account?  No!

Who knows what happened back in 2011 when your wife was obviously helping her sister.  

It's a very small dollar amount in the grand scheme of things.  

My recommendation is to request a PFD or Pay-For-Deletion. 

If the PFD is denied, request a DV or Debt Validation.

If they validate the debt just pay it and move into your new house with this little hiccup out of your memory bank.  ^__^

[RobertEG]

Could you clarify.......

The post states that the original creditor reported their collection.

Was it simply their reporting that they have referred the debt for collection?

An actual collection would be reported by a debt collector.  Only debt collectors are subject to the FDCPA, and thus covered by the DV process.

If a debt collector has reported a collection, your PFD offer for payment in exchange for deletion of their reporting would go to them.

However, if only the OC has reported, any PFD offer would go to them.

If the loan officer has stated that satisfaction of the debt is not a necessary requirement for their approval, you have crossed the first major hurdle.

However, your loan APR may still be pegged to your credit score, and removal of the derogatory reportings prior to final loan settlement may improve your score.

I concur that making a PFD offer for deletion of any negative reporting would be a wise move, but I would get the offer in the mail ASAP.

Hopefully, they will respond prior to your loan settlement date.  As the amount is small, I would offer the full amount in your PFD, as offering less adds an additional possible reason for them to decline or not respond in sufficient time for any deletion to be concluded prior to final loan settlement.

[HJ2]

Thanks for the replies.

I didn't mean the collection was reported by original lender. Both "original lender" and "collection agency" are listed on the report. I actually have no idea who reported this. Sorry for not making it clear. 

Things are getting interesting now. We found that her sister's name is listed in her "former names" and her sister's employer is listed as one of her "employers". Obviously their identities are messed up. Now who should we talk to first? Experian? Or the apartment/collector?

Thanks,

-HJ

[HJ2]

Thanks again for all the replies.

Here are some updates: We got conditional loan approval. The interest rate doesn't seem to be affected by the collection. But one of the conditions is to give explanation about the collection. We haven't made any move yet. If we are to dispute it now, how long will it take to get a result? Or shall we just say this is a incorrect record/will be paid off soon, and dispute later after loan process is complete?

I'll talk to the LO, but I'd like to hear your advice. Thanks a lot!