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Question By
wjl106

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Need Advice , Credit Report Question
Last year I sold my house and paid the mortgage in full. No short sale and I was not served with any forclosure notices. (Although they tried serving AFTER the sale of the house) Recently the mortgage company started showing the account with a $0 Balance , and Pay Status "120 Days past due date" But in fact, I was more like 180 days late . It does not show anywhere as PAID IN FULL. Do the "comments" affect my credit score or is it the "Pay status". I do not want to dispute it if it will show I was later , but would like to have it state that the Account was Paid in Full. Anyone have any advice ? Is this the correct way a creditor is to show this account in my postion ? Thank You.

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Given that they tried to serve you with foreclosure papers post-sale, I think it is very likely that the mortagage owner and/or the mortgage servicer crossed wires when processing both the past-due information and the sale.  These are two very different entities and when there is a distressed owner/sale, it is very easy for the two to not communicate accurately the status of the loan.   The mortgage servicer is responsible for collecting the payment, disbursing funds to the loan holder and your escrow account and all the other fun paperwork that goes along with the mortgage, but may only report the information from the loan/account status that is fed to it from the loan owner.

When you paid off your loan, you should have received a letter indicating that it was paid in full from the original lender, but not necessarily the mortgage servicer.  I would try to backtrack to whomever happened to be holding the loan and to whom the check was disbursed; they clearly reported that the loan was paid (the zero balance) but not necessarily that it was closed/paid in full, particularly since you were behind at the time.  If you have the letter from them, I would then atttempt to contact the mortgage servicer to accurately update and close the loan on their side so that they no longer show the zero balance and that the loan is paid in full.

My guess is that they were in the process of setting up a foreclosure proceeding, and you successfully sold the house prior to being served notice, which rendered their action moot.  However, because paying off the loan and being behind in payments likely involved two separate departments in two separate companies, and it all happened at roughly the same time, I'm not surprised there was erroneous reporting on your loan.

Once it is closed, it shouldn't matter much on your credit score and it should show as paid in full.  

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wjl106

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Thank You for your response,  I seem to left out that in the remark section on my  credit report the mortgage company stated "FORCLUSURE INITIATED  , CLOSED" ...  The Mortgage company probably did start this process since i was that late, but given the facts that the house was sold before any court appearences, or papers actually served to me, should the mortgage company have posted those remarks. I feel since i avoided any forclosure proceedings and sold the house without further incident , it shouldnt state anywhere on my credit report  "FORCLOSURE INITIATED".  In your opinion Does the Mortgage company have the right to state those remarks in this case?

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Rerecros

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I was thinking about your question regarding the comments and it made me wonder too, so I asked a residential underwriter about this and he indicated that while they look over past accounts, the remarks are not as big of a deal as some people might think.  He says that they are often filled with garbage information and the key thing they look at on past accounts are missed payments.   From his viewpoint, they are trying to get a snapshot of how a person manages their money and if there is a scattering of missed payments across multiple accounts, it might be more problematic than a one time issue where there was a cash crunch for the consumer and they were late on multiple accounts at the same time (death in the family, job loss, etc.).

As far as the mortgage company's comments go, it depends on the date of the initiation of the process versus your closing date on the sale.  Often, proceedings are initiated weeks before they actually "appear" on the report.  It is very possible they started the foreclosure paperwork, but in fact didn't pursue it until after you had intiated the sale; 5-6 years ago the backlog was so great for some banks that they had foreclosures that were in process 1-2 years before they actually could do anything with them, but they were still in process (I had a neighbor that was in "pre-foreclosure" status for 2 years; in that time he was able to change jobs and actually get caught up on his payments such that it was easier for the bank to resume the mortgage than to either foreclose or modify his loan).   

It couldn't hurt to ask them to change the information.  That being said, they may have the right to leave it as is, particularly since you noted that you were close to 180 days behind rather than 120.  Its kind of a toss up; but the comments do not directly impact your credit score, per se, so that is at least a good thing and it sounds like it isn't listed as a derogatory account, which is also a good thing.   Might it affect your underwriting should you make another large purchase?  Maybe, but as it ages, it will have a much smaller impact and the underwriters will be much more impressed by current debt/income ratios, current payment history and free cash flow available to service the loan you are seeking.

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Great info , thanks again  . Two out of the three agencies reported it was paid . One has it marked as derogatory . Besides this issue , which happened because of a divorce , my credit is actually good . And my score averages around 700 . No Other deragatory marks . All my accounts are paid on time as far as the credit reports show . And I barely have any debt .  I'm not  planning to purchase anything anytime soon  . I just didn't like the comments in case i applied to something and a creditor was able to read those comments . Especially if I applied to rent a residence down the line . I thought a landlord might see those comments as a risk. Think I'll leave it alone for now . I guess I can always explain if needed . Thanks again . 

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