Rehabed NELNET loan what happens now?

xdfanatic · ‎04-09-2013

So my wife and I are trying to close on a mortgage and her student loans continue to be a problem even after rehab. I need some advice and possibly someone with experience to chime in here.

My wife's loans went into default about a year and a half ago. There were two loans with NELNET which were handed over to the Department of Education. We received notice from the Department of Ed and immediately took action and began the rehab program. We were told that since we caught the loan before it went to a collection agency that the reporting by NELNET would be removed once the loan was fully rehabed.

Fast forward to now, 10 payments in and the loan is considered rehabbed. We were told that Sallie Mae would be the new loan servicer and they would contact us regarding payment. Sallie Mae has contacted us via email and said that the payment would begin May 1st. We are prepared to make the payments and pay the loan off within a few years.

So on her reports the loans are reported by NELNET as still being in default and show that the time she was paying the rehab that she has been missing payments. The Department of Ed's reporting used to say default and show her payment history. Now that account is closed but still reporting, what will happen to this account?

The Department of Ed says that it will be deleted and show new history with Sallie Mae once they receive the first payment and report.

What will happen to those two tradelines by NELNET, will they be removed or at least show accurate payment info and the account closed? Right now we are 12 points away from qualifying for our mortgage but without help we will lose the house of our dreams.

InvincibleSummer3 · ‎04-09-2013

How long ago did you finish rehab? It can take 30-60 days to get the reporting updated after you finish. If it were me, I'd make that first payment to Sallie Mae early, because it sounds like the DOE rep is saying that once the new tradeline starts reporting that will kick-start the process to update the old tradeline. There doesn't seem to be much point in waiting until May 1 if Sallie Mae is ready to go.

The default notation should come off, for sure, and the payment history should show as current/pays as agreed from the date of default forward. People have gotten different results on the rest - sometimes the old tradelines come off completely. Sometimes the lates leading up to the default remain. YMMV. But at a minimum you should see the default removed and good payment history reported.

xdfanatic · ‎04-09-2013

Thank you so much! That is what I have been reading as well, I just made the first payment to Sallie Mae as I was thinking the same thing. It seems crazy to me how all of this works and that there needs to be a real standard in how all of this reports.

I was told that since we caught the loan before it went to a collection agency that the NELNET tradelines would be deleted. I am hoping someone has some experience with this. We just need to know if these tradelines will go away or just update. I don't think that the Dept of Ed collections coming off will give us a jump large enough to secure our mortgage so this has a huge impact on our future.

InvincibleSummer3 · ‎04-09-2013

You know, I think you might be surprised. The more recent the negative information is, the more it dings the credit score. If the loans defaulted roughly 18 months ago, that is a BIG negative, and very recent. When that comes off, I think you could see a big boost. Although I don't know what the rest of your credit profile looks like, so it's hard to say.

What is exactly reporting? Two Nelnet tradelines and one from DOE? Or multiple tradelines from DOE?

xdfanatic · ‎04-09-2013

There are two trade lines from the Department of Education which show closed since the end of the rehab. They are still reporting all of the late payments and all of the negative information.

There are two other accounts which list Department of Education/NELNET and they are reporting as open collections in default. Also they are reporting late or no payment for the time the loan was being rehabed. This is where the real problem comes in because this is the real score killer right now. If even the payment history for the time the loan was in rehab would report correctly we would be fine with our loan.

I just wish there was something else that could be done other than to wait this out...

InvincibleSummer3 · ‎04-09-2013

@xdfanatic wrote:
There are two trade lines from the Department of Education which show closed since the end of the rehab. They are still reporting all of the late payments and all of the negative information.

There are two other accounts which list Department of Education/NELNET and they are reporting as open collections in default. Also they are reporting late or no payment for the time the loan was being rehabed. This is where the real problem comes in because this is the real score killer right now. If even the payment history for the time the loan was in rehab would report correctly we would be fine with our loan.

I just wish there was something else that could be done other than to wait this out...

With regard to the bolded - the loan is technically still in default through the nine month's worth of payments. So they can't update it, because they have to wait & see if you're going to hold up your end of the bargain and complete the payments.

I know it's difficult. Hang in there.

dlee · ‎04-10-2013

Once a loan rehabilitates after defaulting, the final report at Nelnet can be changed from "Claim Filed/Default" to "Account Transferred." If you have not already, your wife can send a copy of her credit report to Nelnet at fax number 402.458.2298, for this to be completed.

xdfanatic · ‎04-12-2013

Thank you for that info dlee. I am going to try and fax it off today and have them update the status on their end.

Xd