Bank of America Destroyed My Credit: Cracking the Code Behind the Damage

[swingline]

My credit scores were above 800, and I haven't missed any payments on anything for years. However, Bank of America recently attacked many long-term customers and sold off their mortgage to the subprime, predatory lender, Mr. Cooper. 

 

I've been a BOA customer for 20+ years with multiple accounts. I don't want to minimize how crappy it is that they chose to sell my mortgage to a subprime company. Mr. Cooper is known for foreclosing on people who were current on their mortgages, charging customers 10x their monthly payments (and draining their accounts), pretending not to receive payments, and much more. They are possibly the worst mortgage company in the world.

But the purpose of this post is to talk about what I've learned about the impact and mitigating the damage they've done to me. 

The impact of BOA's attack was 60+ points across all of my scores. A part of the damage to my scores is (probably) due to no longer having a mortgage account and how that affects my credit mix. Mr. Cooper is known for doing whatever they can to hurt customers, so I'm not holding my breath on how long it'll take them to report that I have a new mortgage account. I'll update when that happens and how the new report impacts my scores.
Credit Karma and articles about credit age don't make it completely clear that credit age is based on active credit. But it is. So my mortgage account of 20+ years is gone, which, combined with a few recent new credit accounts in the last few years, put my credit age into the danger zone.  From Credit Karma:

Credit age ratings
Needs work: 0-4 yrs
Fair: 5-6 yrs
Good: 7-8 yrs
Excellent: 9+ yrs

 

Since active credit age is broken into four groups and that it is worth about 15% of an 850 score, I am guessing that the point totals for each group are approximately:

 

Needs work: 34
Fair: 68
Good: 102
Excellent: 127

I am also estimating that moving from a "needs work" to "fair" would be worth about 34 points to me (all other things staying constant). To mitigate the damage BOA has done to me, I've closed several accounts opened in the last couple of years. This might not be possible for some people, as it could tank their usage (which you want to keep under 10% or at least 30%). Fortunately, I have enough credit that I was able to do this. But given that the impact on my scores is so severe, I realize that the banks may smell blood in the water and take away all of my credit. At that point, I'll have cascading damage.

I also expect that when Mr. Cooper gets around to reporting my mortgage, I'll see some benefit from having a mortgage again, but I'll also see a hit from another 0 averaged into my average age of active credit. I have calculated that with the accounts I've now closed, I should survive that new 0 without falling back into the "needs work" range unless other banks clamp down on me. 

I'm interested in hearing what others have to say about the accuracy of the assumptions I've made. Am I missing anything in my understanding? Do you have any experience with this? I am also hopeful that this information might be helpful to others who are suffering the same situation.
 

[hegemony]

I have no open mortgage reporting and scores over 800. Are you looking at real scores or relying on fake karma scores?

 

what else is going on?

[centex]

Selling a portfolio or part of a portfolio of mortgages is NOT an 'attack' of customers. 

 

Further, if you don't like the new servicer, then re-fi away from them...

 

Oh, and NO, as Hege notes, a mortgage is NOT required to have a score in excess of 800 on the various Fair Isaac models.  I was at an 850 on the 850 scale and 882 on the 900 scale with no mortgage ever even having reported. 

[hdporter]

I really hate to "pile on", but your efforts to decode the FICO formula aren't going to pan out to anything constructive whatsoever ... especially if the source of some of your assumptions is CreditKarma, which is Vantage Score based.

 

If I take your post at face value and your formerly 800+ scores have been reduced by 60 points as a consequence of your no longer having an open mortgage account, then presumably your scores are now 740+ ... a score that will still qualify you for among the strongest credit terms on any debt vehicle.  That can hardly be deemed to have "Destroyed My Credit", in any sense of the phrase.

 

Here's what I'll emphasize:  Spit happens.  I wouldn't be thrilled in your shoes had the mortgage transfer happened to me.  But the best thing you can do is deal with it constructively.

 

BA is presumably fully within their rights.  End of that story.  Since rates are rock bottom right now, circumstances could be such that you might consider yourself fortunate that they gave you a kick in the pants to refi.

 

I'll assert that the hand wringing in which you've engaged has weakened your posture in resolving this situation to your best advantage.  (Please don't misunderstand ... I'm not calling you a "whiner".  It's just that the your specific focus in response to this event is a major distraction from the optimal actions which will put you in the best position going forward.)

 

I genuinely and wholeheartedly wish you the best in grappling with this situation!

[swingline]

My remaining mortgage is < $100k, so refinancing is not a viable option.

 

I don't see how anyone could think that a bank that you've had a good relationship with for 20 years selling off your mortgage to a predatory, subprime lender isn't an attack. Yes, it is legal, but maybe it has to happen to you for you to appreciate why I might be upset. 

 

https://www.bloomberg.com/news/articles/2020-12-07/nationstar-mortgage-accused-by-states-of-harming-homeowners

https://www.latimes.com/business/story/2020-12-07/nationstar-mortgage-refund-73-million-to-borrowers

 

https://www.washingtonpost.com/business/2020/12/08/nationstar-mortgage-mr-cooper-91-million-settlement/

 

https://www.housingwire.com/articles/cfpb-looking-at-mr-cooper-after-withdrawal-errors/

 

Decoding what is happening to me is the only chance I have to fix it. I expect that I've helped by closing recently opened accounts. And to anyone in the same boat as I am, this information is going to be more helpful than telling them that they deserve it or are delusional/confused about what happened. 

Edited December 1, 2021 by swingline

[hegemony]

are you looking at FICO scores or fake scores?

 

why can't you refi a small mortgage balance? 😕

[credithoarder]

I would hate to think one has to owe a mortgage in order for their credit profile to demonstrate that they are a responsible credit borrower.

 

I did recently pick up a car loan in order to pad my credit mix for my new business. However, that was primarily to get a quick credit score boost because I have a short credit history with no debt.

 

That being said, if you are able to achieve an 800 credit score and no longer have a loan debt, I imagine all you need to do is to continue paying your bills on time and keep your credit UT low. I hope that's the case, because as a current home owner who paid cash for my house, I can't imagine ever having to take on a mortgage to keep my scores afloat. 

Edited December 1, 2021 by credithoarder

[hdporter]

2 hours ago, swingline said:

My remaining mortgage is < $100k, so refinancing is not a viable option.

 

I don't see how anyone could think that a bank that you've had a good relationship with for 20 years selling off your mortgage to a predatory, subprime lender isn't an attack. Yes, it is legal, but maybe it has to happen to you for you to appreciate why I might be upset. 

 

Decoding what is happening to me is the only chance I have to fix it. I expect that I've helped by closing recently opened accounts. And to anyone in the same boat as I am, this information is going to be more helpful than telling them that they deserve it or are delusional/confused about what happened. 

 

I'm going to assume that it's not the relatively low mortgage balance that makes a refi impractical, but that the remaining repayment term is low (say, 5 years or less ... or perhaps < 10 years).  I get that.

 

One thing should be clarified:   BA tends to hold only a limited number of the mortgages it originates.  Most are sold to guarantee agencies, but BA continues to service the mortgage for a fee.  Most likely, what's been sold to Nationstar/Mr.Cooper is the servicing contract, not the mortgage.  Mind you, it's the mortgage servicing that is at the root of your concern, so this isn't to diminish or disparage that concern; simply help you understand what's transpired.

 

You write about this transaction as if somehow you mortgage, specifically, was singled out for transfer to Nationstar.  Nothing could be further from the truth.  Mortgage servicing can be a rather profitable business, especially if it opens up the opportunity to sell other products and services to the mortgage customers.  Nationstar may see greater marketing opportunity potential in a given BA portfolio and offer up a premium price that BA, in turn, chose to accept.  Specifics about your mortgage account had very little to do with the inclusion in this sale.

 

As far as your effort to "reverse engineer" the impact of this transaction on your mortgage score, I'll simply state that you just don't have sufficient data at hand from which to derive any significant conclusions.  There's no real harm in the exercise, but I definitely view it as a non-productive  distraction.

 

I can only stress the value to your own well being in dealing with this in a rational and constructive fashion.  Quite frankly, you're running a tad afield of that objective.

 

Edited December 1, 2021 by hdporter

[hdporter]

2 hours ago, swingline said:

more helpful than telling them that they deserve it or are delusional/confused about what happened. 

 

If I've used phrasing that suggests I intended to convey anything of this sort, I apologize.  However, I don't believe anything I wrote translates to such a sentiment (nor any other reply to you, for that matter).

[swingline]

As I wrote in my OP, my purpose was to get some helpful feedback and to help with others who may experience a similar situation. 

 

Being lectured on how moral or usual it is for a BOA to sell my mortgage after 20 years, that I'm confused and my mortgage wasn't actually sold, that it was sold because of the length of time left versus the amount -- all have absolutely no value to me and are aggravating responses. It also isn't helpful to me to tell me to not try to mitigate the damage. It has trashed the thread for someone else who might have found useful information to help them navigate out of a similar situation. 

 

And that BOA sold my mortgage to a predatory subprime company with a lengthy history of abusing customers is horrific. I've been severely impacted due to nothing I've done. Even without the damage to my credit history, I'm now very worried about what Mr. Cooper has in store for me. They've already called me half a dozen times to try to sell me a "better" mortgage.  

 

https://www.bloomberg.com/news/articles/2020-12-07/nationstar-mortgage-accused-by-states-of-harming-homeowners

https://www.latimes.com/business/story/2020-12-07/nationstar-mortgage-refund-73-million-to-borrowers

 

https://www.washingtonpost.com/business/2020/12/08/nationstar-mortgage-mr-cooper-91-million-settlement/

 

https://www.housingwire.com/articles/cfpb-looking-at-mr-cooper-after-withdrawal-errors/

That said, I'm pretty sure I've guessed correctly about my assumptions of the value my 20 year mortgage had in my credit mix, and also the damage to my average age of open credit due to the loss. I'm hopeful that cancelling a few cards opened within the last three years is going to help. In the meantime, I'm crossing my fingers that my other credit associations don't smell the blood in the water and crash down on me. 

 

If anyone else in the same boat is reading, I'll update the thread in a few weeks when I see the results of the steps I've taken.

[hdporter]

It's clear that you haven't found the feedback from myself and others in this thread to be helpful.  In earnestness, I suggest you might cross post to the myFICO credit forum (if you haven't already).  I expect that you'll receive feedback that is better suited to what you're looking for.

 

You stated intent for this thread is worthy (to assist others in a similar situation).  Don't take anything I've observed to impugn that intent.

[Burgerwars]

I lost a small amount of points when mortgage got paid off. It wasn't much, so I wasn't concerned. I did get those points back when I opened an installment loan (a car lease), but it wasn't immediate.

I'm talking about 10 FICO points or so, not 60.

[A Credit Ed]

 

 

9 hours ago, swingline said:

and also the damage to my average age of open credit due to the loss

It has always been my understanding that Average Age of Accounts is based on all credit, open and closed.  That being said, paying off a mortgage should not reduce AAoA until ten years have passed because it is still on your credit report.

 

9 hours ago, swingline said:

I'm hopeful that cancelling a few cards opened within the last three years is going to help.

If my statement above is correct, then I think cancelling these cards will have no effect right now, but when they drop off your report in ten years it will then lower your AAoA.

 

17 hours ago, swingline said:

I'll update when that happens and how the new report impacts my scores.

Looking forward to hearing back in 30 or 60 days.

 

[get.randy]

I don't understand how closing your newer accounts helps.

 

[centex]

15 hours ago, swingline said:

My remaining mortgage is < $100k, so refinancing is not a viable option.

 

I don't see how anyone could think that a bank that you've had a good relationship with for 20 years selling off your mortgage to a predatory, subprime lender isn't an attack. Yes, it is legal, but maybe it has to happen to you for you to appreciate why I might be upset. 

 

 

OK, yeah...you are right...they went through each individual loan in the portfolio and decided to screw Swingline, relationships be damned.

 

More likely is that they set some arbitrary number to remove from the books via portfolio sale and your small mortgage happened to be in that criterion.  The terms of your note haven't changed.  The only thing that changed is who you auto-transfer to or mail a check to each month. 

 

And since you don't want to refi, then the other solution is simply to pay more each month, ensuring that the overage goes to principle.  At less than $100K, you should be able to knock that puppy out inside of six years...less than $1600 a month should get you there, assuming you still have an over-priced rate in the 4% range.  That still leaves you paying ~$12K in interest though if my back of the napkin math is right (somewhat based on my early payoff on the F-Type)...

 

 

[centex]

11 hours ago, swingline said:

I'm now very worried about what Mr. Cooper has in store for me. They've already called me half a dozen times to try to sell me a "better" mortgage.  

 

https://www.bloomberg.com/news/articles/2020-12-07/nationstar-mortgage-accused-by-states-of-harming-homeowners

https://www.latimes.com/business/story/2020-12-07/nationstar-mortgage-refund-73-million-to-borrowers

 

https://www.washingtonpost.com/business/2020/12/08/nationstar-mortgage-mr-cooper-91-million-settlement/

 

https://www.housingwire.com/articles/cfpb-looking-at-mr-cooper-after-withdrawal-errors/

 

For the sake of others who find this thread at a later date, errors happen.  They suck, but they occur.  Additionally, OP is citing events from five-plus years ago when Cooper was operated under a different name.  Presumptions based on long-ago events do NOBODY any good, especially when three of the links are for the same essential story, just from different national rags. 

 

It IS just business.  Period.  If you don't like the change, you go pay the note off, either in a lump-sum (yes, some people CAN do that) or you finance it away to another entity.  But NEVER believe the tripe that a major financial entity handpicked an account to be sold off. 

[hdporter]

1 hour ago, centex said:

But NEVER believe the tripe that a major financial entity handpicked an account to be sold off. 

 

I'm pleased that people don't tag threads here with "tl dr" summaries.  ("too long; didn't read", for the uninitiated.)  They seldom do justice. 

 

That said, were I to post a "tl dr" for this thread, @centex nailed it. 

[swingline]

Wow, the personal attacks and misinformation in these responses are horrible. I made a mistake, hoping to get some help from people who think they’re experts but just enjoy being nasty!

 

First, none of us know all of the secret, complex, and changing credit score calculations. Anyone who claims they know them is lying. I’m trying to figure out what happened to me and the steps that might help.

 

The average age of accounts seems heavily weighted towards open accounts. All things staying constant, closing more recent accounts should help me. For some people who have smaller overall credit lines or higher debt, closing accounts would hurt them as their debt to credit ratio would go up. In my case, I have over $100k in unused credit and no nearly no debt except the mortgage. (I enjoy some 0% float.)

 

I never claimed that BOA took any care in specifically choosing to attack me. I think they applied an algorithm across all customers and didn’t care who they would hurt. That doesn’t change the fact that they attacked and damaged a great customer.

 

For the “sake of others,” which read as poorly as centex, you will see that the links I included show a pattern of predatory behavior that includes very recent events. And the links I provided are just the tip of the iceberg. Mr. Cooper is a predatory, subprime lender with a long and continuing history of abusive and illegal behavior.

 

Again, it is not practical to refinance a < $100k mortgage. Yes, it can be done, but you face much higher fees and interest for this type of refinance. It is not a good strategy,

 

Congrats, with the personal attacks and misinformation, you’ve all done a fantastic job of taking what could have been a helpful thread and making it a tldr. You didn’t help me, and you’ve made it hard for the thread to help someone in the future. But it seems clear that wasn’t your intention anyway.

 

I think I’ve guessed correctly about what I’m doing, and barring further action from my existing accounts, I’m hoping for good results. Either way, I’ll post them, and someone in a similar situation can determine if it is worthwhile to read it.

Edited December 1, 2021 by swingline

[hdporter]

Just to enlighten:

 

Example of a personal attack: " You're an idiot for thinking that ..."

Example of reasonable criticism:  "Based upon my experience, what you believe isn't accurate."

 

There have been no personal attacks, and your suggestion that they have been gives cause to wonder what else you've read in a manner that is other than intended.

 

To the best of my knowledge, no one here holds themself out as an "expert".  But those who contribute their insights here do have an awesome amount of experience.

 

Speaking for myself, I have a very highly qualified educational backing in Economics and Finance, and 30+ years of employment in Corporate Finance (ending in an upper middle management position with a Fortune 100 company).  I've been keenly interested in personal finance for 40 years now, and successfully recovered from a period of personal economic distress a little over 20 years ago without resorting to bankruptcy.  My current financial profile is a testament to strong resource management and skilled financial cultivation.

 

But that's no reason to take anything I spout as gospel.  I will suggest that it is good reason to carefully consider what I offer before dismissing it in whole, or in part.  The same can be said of most other aggressive contributors to this forum.

 

I'll suggest you've received some strong guidance in this thread.  It's your business, and only yours, as to what you take up or leave on the table.  (And, again, I've recommended an alternate forum that you may find more to your taste.)

 

 

 

 

[centex]

Swingline, nobody attacked you.  Period. 

 

BofA did not take actions designed to 'harm' ANYONE.  They made a BUSINESS DECISION to sell a portfolio.  You are correct that they applied an algorithm and it may not even have been complex.  This happens in the credit and mortgage fields ALL THE TIME.  It is not at all uncommon for someone to quickly see a mortgage flipped to another servicer.  Others might see it a decade or two in on the note.  Long gone are the days of people actually dealing with their small local bank and them holding the note for 30 years (for those that insist on dragging things out). 

 

Closing accounts did you no favors either.  While utilization might not be something you suffered a hit on, you have now managed to change the ratios of cards to cards with a balance, which is ANOTHER element of utilization and is why we see the two-dollar references as a necessity once subscribed to the AZEO processes.  FFS, I even detailed the impact of letting nothing but an AXP charge card report a balance...I lost a few points that month but confirmed that the Plat was not factored for cards with balance ratio.  There was also a new account that reported and the following month, the net difference was about ten points.  Allowing more than one card to report a balance, even with overall utilization still in the low single-digits sees a few more points lost. 

 

It all comes back to the reality, however, that a seasoned report need not have a mortgage in order to be over 800 or even to be at 850.  Sadly, some want to wallow and blame a bank as if it were some personal attack by the bank.  The typical bank does not even KNOW their customers in the sense that we saw with banks of yore...

 

As to the final claim...yeah, some of us ARE pretty clear where the score impacts are and we have detailed the experiences of toying with reports in certain months.  There are MANY threads on this site that have addressed those issues across many different Fair Isaac models. 

[hegemony]

28 minutes ago, swingline said:

Wow, the personal attacks and misinformation in these responses are horrible. I made a mistake, hoping to get some help from people who think they’re experts but just enjoy being nasty!

 

 

 

At this point in the thread nobody has attacked you. Several people commented on FICO's treatment of AAoA and installment versus revolving. Other suggest your fears are misplaced until something bad actually occurs. Moreover, someone asks what scores you are concerned out about. If you are not looking at current version of FICO you are really wasting time. Also, you seem to have missed the point that you don't need an open installment loan for good FICO scores.

 

I'm curious, what is your APR on a mortgage that originated in 2001? Are you sure there isn't value in a refi?

 

 

 

This is a personal attack:

[hegemony]

the way back machine suggests aprs were 7 to 8% 20 years ago.

ETA: I read another post where you state your APY is 5.8%.

 

 

also...I'd really like to read what @PotOhas to say about this thread.

Edited December 1, 2021 by hegemony

[hegemony]

Did you ever get your target limit back?

 

 

Did this get fixed?

 

 

I hope you took advantage of the ROTH IRA

 

 

 

 

[hdporter]

19 minutes ago, hegemony said:

 ...

 

hege ... I'm going to ask god to extend his blessings on you in my prayers tonight ... 

[swingline]

My two purposes for the thread are officially trashed. I’m not going to get any help. And now that the thread is a trainwreck, it may not even last until I get the results of my efforts to post them to help others.

But OK, I’ll play along.

 

Regarding the BOA attack: I never claimed it was “personal.” I see that Centex has a habit of conflating things. (Four links, including a couple of older ones: they’re all old. Attack by BOA and personal attacks in the thread: they’re all personal attacks, etc.) Just because BOA didn’t care or set out to harm me doesn’t mean it wasn’t an attack. It was. I don’t care what “design” BOA had when they decided to attack customers.

 

Just to enlighten: misinterpreting everything I’ve said, suggesting I can’t tell the difference between a servicer versus a mortgage owner,  pulling up all of my posts from the last ten years, etc., are personal attacks.  

 

For about the sixth time, it is not economical to refinance a mortgage < $100k.

 

I know engaging me about every post I’ve made is intended to be a trap, but let’s do it anyway!

• My mortgage is 3.5% - I bought points at the time. I already pay it ahead for an effective interest of about 2.5%.
• Target raised the limit again to about $1500 and then cut it a couple of years later back to $500, where it sits now. I’ve kept it because I’ve had the card for about a decade, and occasionally use the 5%/free shipping.
• I did resolve the medical billing.
• I still believe tax-free ROTH IRA participants will be screwed when they want to get the money later and the government makes a cash grab.

(Again, for anyone impacted by my original issue, I will update on that at the end of this thread if it is still open, and the bullies haven't baited me sufficiently into having to post a response that gets me suspended.)