Account disputed by consumer issue

[soccerlove]

Hi all. Quick question here.

 

Now DW will be applying for mortgage by her self since i just got laid off. Slight problem w/ the FHA loan. The LO has been saying all along that the comment "disputed by the consumer" on her CR was not an issue to the UW since the charge off is old and falls off in July 2010. Turns out the UW finds the comments problematic and the lloan app will not pass unless the comment is removed. LO asked DW to send a letter to her (LO) indicating that she is no longer disputing the account since the issue she once disputed had been resolved in the past. I dont know if LO wants to dispute W/ the CRAs herself. They also asked DW to call the creditor and tell them she authorises the creditor to discuss the account with the CRAs. Creditor told DW she didnt need to give authorization. This just didnt smell right to me. Now today LO says they found a bank that will approve regardless of the chargeoff and the comments that say consumer disputes account. LO pulls DWs credit but tells her the bank that willl approve needs her to pay down the balance on two current CCs then after the 2 banks credit the payments for DW to send copy showing the new balances to LO. LO officer claims DW will then meet the new bank's loan standards. DW's mid score is 637 and bank wants it at 640.

 

My question is --- does the above make sense at all? any one deal w/ this kind of situation? I was of the idea that the score wont change until creditor posts to CRAs around end of march. I dont seem to quite get the logic of the LO. By the way cosing date is stilll unchanged and is on the 12th March

[Brian B The Loan Professor]

What you are saying makes sense as far as the disputed account and an UW having an issue

The other bank requiring a 640 etc... it sounds to me like your LO is scrambling very hard but the chances of them meeting a friday close at this point are highly unlikely and they should be advising you to get an extension

the seller needs to be made aware

The disputed accounts has been discussed on here - it is not an FHA guideline however since conventional started using it many underwriters are holding up approvals when they see them - I am not sure what the LO is trying to do with the report - possibly a rapid rescore which will speed things up but not by friday.......

 

Good Luck I hope it all works out

[soccerlove]

Thanks for your response.

I will dig up on the forum regarding the disputed by consumer comments. I read a little about rapid rescore and I think the thats what the LO is trying to do and yes the Friday deadline wont/cant be met. Talking to the LO realltor today about extension. Realtor already informed about the credit issue.

 

I will update

[monsterbaby]

I've just encountered a simliar issue. We are good to go on our closing (March 24th), but there are two accounts listed as "in dispute" on DH's credit report. UW advised us to call the creditor to get them to issue a letter or to remove the dispute status. These two accounts are no longer in dispute, disputed in late 2009 - so it's been about 60-90 days since originally disputed. I understand that the UW has to have these notations removed before moving forward. Does anyone have any advice as to how to get these items out of dispute status quickly? Any tricks out there? Is it possible that they will refuse to remove it? I just want closing to happen and this is the only thing stopping us right now! Help!

[vintagespeed]

... rapid rescore and I think the thats what the LO is trying to do and yes the Friday deadline wont/cant be met....

 

how can they re-score if the creditors haven't posted the new balance data to the CRAs yet?

[vintagespeed]

...Does anyone have any advice as to how to get these items out of dispute status quickly?..

 

call the CRAs, explain that this notation is from an old dispute and you would like the notation removed and you DO NOT dispute the account.

[mommyof2monkeys]

Oh Thank you for this post! I knew this but forgot to check dh's report. He is two collection on one report that say this. One is a very old come off next year. One was the agency did not mark the account as in BK so I disputed to mark the account as BK and it was changed but it still says dispute by consumer.

 

Thankfuly it is just one report. Do you think dh could just call?

 

Tammy

[NeverQuietHere]

I'd try calling.

 

P.S. Then post your results here as I may run into the same issue.

[soccerlove]

... rapid rescore and I think the thats what the LO is trying to do and yes the Friday deadline wont/cant be met....

 

how can they re-score if the creditors haven't posted the new balance data to the CRAs yet?

 

Honestly dont quite understand either, but from what they say, they will call the CRA our case only TU and ask them to rescore. The 2 CCs we paid down the balances on now show the new balances. We printed out the balances from the CCs website then faxed that info to the LO. Guess they will work their magic. we will see!!!!

[t-bear]

I can't comprehend how this practice is legal. The result of this policy is that nobody can dispute information that is legitimately wrong or not permitted to report. There is no guranatee that a legitimate dispute will resolve an issue, or that the CRAs will respond to your disputes correctly and promptly, and there is no "consumer court" to take the CRAs to have a third party address the issue.

 

What if you have a legitimate dispute with documentation, but the account has still not been corrected? Is that not acceptable to a mortgage lender? If it isn't, I predict this practice will not last much longer before it is challenged in federal court, because it undermines consumer rights and protections that are set forth in various laws like FCRA.

Edited March 11, 2010 by t-bear

[monsterbaby]

I can't comprehend how this practice is legal. The result of this policy is that nobody can dispute information that is legitimately wrong or not permitted to report. There is no guranatee that a legitimate dispute will resolve an issue, or that the CRAs will respond to your disputes correctly and promptly, and there is no "consumer court" to take the CRAs to have a third party address the issue.

 

What if you have a legitimate dispute with documentation, but the account has still not been corrected? Is that not acceptable to a mortgage lender? If it isn't, I predict this practice will not last much longer before it is challenged in federal court, because it undermines consumer rights and protections that are set forth in various laws like FCRA.

 

I completely agree. I don't understand it. As consumers, we have a legal righto dispute inaccurate information. In my case, the UW says they HAVE to get in writing that this one account is no longer in dispute. After speaking to the creditor, they say they will not put anything in writing, but they will remove the notation. So, my question is...will my UW deny our loan because they won't get anything in writing?? This is getting pretty ridiculous. If I knew this would be the only thing standing between me and buying a house, I would have never disputed anything!!

[Brian B The Loan Professor]

Not trying to argue this - it has been discussed here in the past - but rather to explain my understanding of the thought process of why this rule was put into place.

The banks want a true snap shot of the borrowers credit. Over the past and still it has been a very common practice to try and fix credit before applying. Many did this by disputing everything. The banks have no way of knowing what is a legitimate dispute and what is an attempt at artificially raising ones credit score. They are not stupid and knew this was happening. They recently (last year) put this rule into place that they do not want disputes. If you are disputing you must complete the dispute before applying. If you do not get resolution with the dispute you as a consumer are forced to decide. Is it worth pursuing this or do I let it go and apply for a loan. People thought I was crazy when I said this was trickling into FHA underwriting as it is NOT an FHA guideline. It is a fannie mae guideline for conventional loans. But it did and more often than not an FHA loan with a dispute will stall in underwriting and given the condition of the dispute must be resolved/removed.

You as a consumer do have the legal right to dispute a tradeline however you cannot at this time get a loan until it is resolved. Until someone takes it to a higher level and gets this changed it is what we have to work with

[t-bear]

I can't comprehend how this practice is legal. The result of this policy is that nobody can dispute information that is legitimately wrong or not permitted to report. There is no guranatee that a legitimate dispute will resolve an issue, or that the CRAs will respond to your disputes correctly and promptly, and there is no "consumer court" to take the CRAs to have a third party address the issue.

 

What if you have a legitimate dispute with documentation, but the account has still not been corrected? Is that not acceptable to a mortgage lender? If it isn't, I predict this practice will not last much longer before it is challenged in federal court, because it undermines consumer rights and protections that are set forth in various laws like FCRA.

 

I completely agree. I don't understand it. As consumers, we have a legal righto dispute inaccurate information. In my case, the UW says they HAVE to get in writing that this one account is no longer in dispute. After speaking to the creditor, they say they will not put anything in writing, but they will remove the notation. So, my question is...will my UW deny our loan because they won't get anything in writing?? This is getting pretty ridiculous. If I knew this would be the only thing standing between me and buying a house, I would have never disputed anything!!

 

That must be a lie. UW might have a "policy" that they won't accept applications with disputes that they put in place as an salamanderic, reactionary, illegal response to the real estate market collapse, but I would be shocked if there were actually a federal regulatory board that "made" them have this policy. Maybe you should just tell them this account was legitimately disputed, that you did not work with a credit repair agency, and you meet credit requirements for the loan, and you can submit documentation to these facts. If they still refuse, I don't know. I would look for a lawyer.

 

Look at the bizarre, abusive trap the credit system has people in. You had a dispute. The creditor responded how? Did they resolve the dispute? Did they respond to your information? If they did, then all you need to do is give these people a letter to the CRA stating those facts and stating the dispute is rescinded. The CRA is responsible for updating those comments. What kind of liars they are to say that it's between you and the creditor. You should be held hostage to the creditor, huh? No. Your certified letter to the CRA stating you recsind the dispute should be all that bank needs to meet the requirements of their reactionary "policies".

[t-bear]

You as a consumer do have the legal right to dispute a tradeline however you cannot at this time get a loan until it is resolved. Until someone takes it to a higher level and gets this changed it is what we have to work with

 

Ok, Brian, but you know that the CRAs DO NOT have to respond correctly or promptly to your disputes, and they can refuse to remove disputes. That is a trap, and it has the effect of preventing people from exercising a federal consumer right.

 

It's illegal. It's a matter of time. It will be challenged in federal court.

[Brian B The Loan Professor]

You as a consumer do have the legal right to dispute a tradeline however you cannot at this time get a loan until it is resolved. Until someone takes it to a higher level and gets this changed it is what we have to work with

 

Ok, Brian, but you know that the CRAs DO NOT have to respond correctly or promptly to your disputes, and they can refuse to remove disputes. That is a trap, and it has the effect of preventing people from exercising a federal consumer right.

 

It's illegal. It's a matter of time. It will be challenged in federal court.

Possibly - however until someone spends the money on court costs (or at least risks them) it is what it is

It is the banks money, they make the rules, if you want their money you have to follow the rules. It isn't hard to understand that part.

Telling them that you think what they are doing is illegal and they should do it your way does not help your cause - in fact you are more likely to tick off an underwriter. - At least the people that visit here have been warned that this is happening and can take the steps before applying.

[t-bear]

You as a consumer do have the legal right to dispute a tradeline however you cannot at this time get a loan until it is resolved. Until someone takes it to a higher level and gets this changed it is what we have to work with

 

Ok, Brian, but you know that the CRAs DO NOT have to respond correctly or promptly to your disputes, and they can refuse to remove disputes. That is a trap, and it has the effect of preventing people from exercising a federal consumer right.

 

It's illegal. It's a matter of time. It will be challenged in federal court.

Possibly - however until someone spends the money on court costs (or at least risks them) it is what it is

It is the banks money, they make the rules, if you want their money you have to follow the rules. It isn't hard to understand that part.

Telling them that you think what they are doing is illegal and they should do it your way does not help your cause - in fact you are more likely to tick off an underwriter. - At least the people that visit here have been warned that this is happening and can take the steps before applying.

 

Monsterbaby, I did some further research on this issue and it turns out that banks are lying when they tell you they "can't" process your loan because of Fannie Mae guidelines. Fannie Mae has no such guideline. They simply kick back the loans for manual underwriting and validation of the disputes. Your letter to a CRA rescinding the dispute is enough information to satisfy Fannie Mae.

 

Quote:

 

“Our policy requires the lender to determine and document whether or not the disputed information is accurate and underwrite the borrower’s credit accordingly,†says Fannie Mae spokeswoman Amy Bonitatibus. “We are reviewing the policy to ensure that borrowers with legitimate disputes are not adversely affected by our underwriting criteria.â€

 

So, given Brian B's arrogant disregard for consumer protection laws, and false belief that we are part of a fiefdom and that banks are Lords and Kings, I'd begin documenting what's happening to you.

 

First, I'd send a letter stating the facts.

 

Fact 1: There is no such underwriting prohibition on mortgage loans with the notation "consumer disputes account". There is the requirement to resolve the dispute.

 

Fact 2: The account in question was disputed on Day X for Reason X. The creditor's response was X. I have contacted the creditor and stated the dispute is rescinded on Date X. There was response X. The notation was still not removed. However, this letter documents that there is dispute.

 

Fact 3: Consumer protection laws prevent arbitrary and capricious denials of financing.

[Brian B The Loan Professor]

T-Bear - I stated from the top that I was NOT arguing this point rather stating the banks point of view

Now you have turned it into a personal attack and this will not be tolerated

 

Banks have ALWAYS had the right to overlay their own guidelines to all programs

While I will not argue that there may be a problem with what they are doing I will stand by my belief that until a higher court tells them they must change it is unlikely to happen

Feel free to post your opinion - but keep it civil

[vintagespeed]

...That is a trap, and it has the effect of preventing people from exercising a federal consumer right. ...

 

if your rights are being violated then sue.

 

the bank wants to see stability in your banking account as well as in your credit profile. is it illegal as well for them to "discriminate" because you cannot document the source of your income?

 

credit disputes can influence credit scoring and when your approval is score-based, wouldn't you want the most accurate score possible?

 

edit:

 

i'd also like to say that brian has helped countless people in this forum, including myself. if you dont like the answers, dont ask silly questions.

Edited March 11, 2010 by vintagespeed

[jop3]

You as a consumer do have the legal right to dispute a tradeline however you cannot at this time get a loan until it is resolved. Until someone takes it to a higher level and gets this changed it is what we have to work with

 

Ok, Brian, but you know that the CRAs DO NOT have to respond correctly or promptly to your disputes, and they can refuse to remove disputes. That is a trap, and it has the effect of preventing people from exercising a federal consumer right.

 

It's illegal. It's a matter of time. It will be challenged in federal court.

Possibly - however until someone spends the money on court costs (or at least risks them) it is what it is

It is the banks money, they make the rules, if you want their money you have to follow the rules. It isn't hard to understand that part.

Telling them that you think what they are doing is illegal and they should do it your way does not help your cause - in fact you are more likely to tick off an underwriter. - At least the people that visit here have been warned that this is happening and can take the steps before applying.

 

Monsterbaby, I did some further research on this issue and it turns out that banks are lying when they tell you they "can't" process your loan because of Fannie Mae guidelines. Fannie Mae has no such guideline. They simply kick back the loans for manual underwriting and validation of the disputes. Your letter to a CRA rescinding the dispute is enough information to satisfy Fannie Mae.

 

Quote:

 

“Our policy requires the lender to determine and document whether or not the disputed information is accurate and underwrite the borrower’s credit accordingly,†says Fannie Mae spokeswoman Amy Bonitatibus. “We are reviewing the policy to ensure that borrowers with legitimate disputes are not adversely affected by our underwriting criteria.â€

 

So, given Brian B's arrogant disregard for consumer protection laws, and false belief that we are part of a fiefdom and that banks are Lords and Kings, I'd begin documenting what's happening to you.

 

First, I'd send a letter stating the facts.

 

Fact 1: There is no such underwriting prohibition on mortgage loans with the notation "consumer disputes account". There is the requirement to resolve the dispute.

 

Fact 2: The account in question was disputed on Day X for Reason X. The creditor's response was X. I have contacted the creditor and stated the dispute is rescinded on Date X. There was response X. The notation was still not removed. However, this letter documents that there is dispute.

 

Fact 3: Consumer protection laws prevent arbitrary and capricious denials of financing.

 

 

Agree with vintage, Brian has helped countless people and I've never seen an arrogant post from him.

 

Here's the thing, Fannie can say that they don't require it. But, kicking back to manual underwriting is the same thing. Manual underwriting is the kiss of death. I can't even think of a lender that processes manually underwritten conventional loans.

 

Now, I'm not saying that I agree with this policy - in fact, I don't. But, Brian is right, these are the current guidelines, and unless you have the time/money to fight it in court, it's the rules you'll have to follow as well.

[insomniac81]

I don't think it's a silly question at all. Now I am worried that this is going to hold up my FHA loan - unnecessarily, in my opinion.

 

I have two old out-of-statute COs (owned by JDBs) on my reports that my mortgage banker thinks will not cause me a problem. My FICOs are still well above 700, no public records, no lates, etc. My reports clearly demonstrate a responsible use of credit over the last 5 years. However, I have disputed these JDB notations for various reasons, including the fact that they are reporting "balances" that are WAY out of line with reality. I have disputed them for years - not just recently.

 

So I may be expected to lie to the CRAs and say "I no longer dispute"? I thought that lying to get a mortgage is what got us here in the first place.

 

I understand if these are truly the rules, but I vehemently disagree with them.

Edited March 11, 2010 by insomniac81

[t-bear]

...That is a trap, and it has the effect of preventing people from exercising a federal consumer right. ...

 

if your rights are being violated then sue.

 

the bank wants to see stability in your banking account as well as in your credit profile. is it illegal as well for them to "discriminate" because you cannot document the source of your income?

 

credit disputes can influence credit scoring and when your approval is score-based, wouldn't you want the most accurate score possible?

 

edit:

 

i'd also like to say that brian has helped countless people in this forum, including myself. if you dont like the answers, dont ask silly questions.

 

You seem to have pretty poor comprehension of legal matters.

 

The policy PREVENTS A PERSON FROM EXERCISING THEIR RIGHTS ESTABLISHED BY FEDERAL LAW.

 

You CANNOT DO THAT.

[jop3]

...That is a trap, and it has the effect of preventing people from exercising a federal consumer right. ...

 

if your rights are being violated then sue.

 

the bank wants to see stability in your banking account as well as in your credit profile. is it illegal as well for them to "discriminate" because you cannot document the source of your income?

 

credit disputes can influence credit scoring and when your approval is score-based, wouldn't you want the most accurate score possible?

 

edit:

 

i'd also like to say that brian has helped countless people in this forum, including myself. if you dont like the answers, dont ask silly questions.

 

You seem to have pretty poor comprehension of legal matters.

 

The policy PREVENTS A PERSON FROM EXERCISING THEIR RIGHTS ESTABLISHED BY FEDERAL LAW.

 

You CANNOT DO THAT.

 

 

I hate the fact that I'm going to sound like I'm arguing for this guideline, because I don't' agree with it, but....

 

 

Nothing in this guideline prevents a consumer from exercising their rights. You have every right to dispute anything on your credit report. Before a lender is willing to provide a loan, though, that dispute must be resolved.

 

To go back to vintage's income example - If you were self employed, you'd have every right to take advantage of available tax write-offs, but if it brought you below a certain income level, you wouldn't be approved for a loan.

 

No one is denying those rights, you just have to meet the minimum standards of the entity providing the loan.

[t-bear]

And let me add for others who don't get it at all, and are thoroughly confused about this.

 

I'm not saying, "DUH, I'm a Redneck, DUH, you're violating my rights, DUH, discrimination, DUH".

 

In very simple terms, this policy is not legal. It would not stand up in federal court. You cannot establish a policy that penalizes and financially damages a person for exercising a consumer protection right.

[jop3]

But no one is being penalized merely for exercising that right. People that do credit disputes get loans approved all the time. The guideline is simply stating that if you choose to exercise that right, you must complete that process first.

[t-bear]

...That is a trap, and it has the effect of preventing people from exercising a federal consumer right. ...

 

if your rights are being violated then sue.

 

the bank wants to see stability in your banking account as well as in your credit profile. is it illegal as well for them to "discriminate" because you cannot document the source of your income?

 

credit disputes can influence credit scoring and when your approval is score-based, wouldn't you want the most accurate score possible?

 

edit:

 

i'd also like to say that brian has helped countless people in this forum, including myself. if you dont like the answers, dont ask silly questions.

 

You seem to have pretty poor comprehension of legal matters.

 

The policy PREVENTS A PERSON FROM EXERCISING THEIR RIGHTS ESTABLISHED BY FEDERAL LAW.

 

You CANNOT DO THAT.

 

 

I hate the fact that I'm going to sound like I'm arguing for this guideline, because I don't' agree with it, but....

 

 

Nothing in this guideline prevents a consumer from exercising their rights. You have every right to dispute anything on your credit report. Before a lender is willing to provide a loan, though, that dispute must be resolved.

To go back to vintage's income example - If you were self employed, you'd have every right to take advantage of available tax write-offs, but if it brought you below a certain income level, you wouldn't be approved for a loan.

 

No one is denying those rights, you just have to meet the minimum standards of the entity providing the loan.

 

You are absolutely wrong.

 

CRAs have no obligation to resolve a dispute in response to your request.

 

Therefore, the effect of the policy is that a consumer cannot dispute. And if a consumer cannot dispute without incurring financial damages, they are being affirmatively prohibited from protections afforded under FCRA