Credit bureau dispute while applying for mortgage

[chasingfiction]

Hello

I know that it can be an issue to have an account in dispute during the mortgage application but does that only apply to certain accounts such as ones that would affect the DTI ratio? I have an old mortgage account listed that has been transferred to another company in 2021 so it's a closed account. It has 1 late fee in 2019 and I wanted to dispute it. Do you know whether a dispute on a closed account would also affect the application process?

thank you 

[ShanetheMortgageMan]

Assuming you are qualifying for Fannie Mae, Freddie Mac, FHA, USDA or VA financing then it should be fine for the account to remain in dispute if the most recent derogatory mark was in 2019. 

If it's a collection or charge-off, or if there are recent derogatory marks in the past 24 months, along with a balance on the account then that's when an account in dispute will often need to be removed from dispute and credit re-checked.

[chasingfiction]

Does disputing them remove them from credit score calculation or is that only done if they end up being removed? 

[ShanetheMortgageMan]

Supposedly disputing accounts removes them from the credit scoring calculation, however I've seen it go both ways, in one example a client of mine was disputing some older collections with balances and once they were removed we didn't see any change in score... whereas another client had disputed a revolving account with late payments close to the 24 month mark and once the dispute was removed the score decreased over a dozen points.  Countless other examples but they are all anecdotal.  What I've concluded is that it depends on the details of the account being disputed.