Recently, I had offered to help a family friend on a Pre-Approval Loan Application. I know the rule; don’t mix family and business; however, I was compelled to help my family member because of a case of false credit reporting.
The story goes, my borrower has married a woman who was previously married. Together, they had excellent Job, Income and credit history and were well qualified for a new purchase home loan. However, this is where the story begins…
Like all Full-Documentation loans, my client provided a divorce decree as part of the disclosure process needed to complete the file. The decree disclosed all the relevant items needed to update the clients credit report. Sometimes, there is an occasional item that still appears on the report that has already been settled; like real estate loans .
In this case, the divorce had awarded the real estate to the husband and the wife, (my clinet) was quit claimed off the title of the home. This is where the problem lies…
When the divorce was settled, the physical ownership, called the Title was given to the husband and the wife signed a Quit Claim. However, the “Paper” ownership belongs to the Lender of record who holds the Note. The Note is the financial responsibility of the home. My client was never taken off this loan and obligated on this mortgage. What made matters worse was the following scenario:
The Ex-Husband negotiates a Loan Modification and refinances with the existing lender, GMAC Mortgage. GMAC agrees to the refinance and settles with the ex-husband and processes the loan with a reduced principal balance. This is basically a Short Sale, Loan Modification Refinance, ( If you can understand all of that Mortgage jargon). There is a specific document that is sent to the Ex-Husband, which is a 1099 Tax Form that documents the Ex-Husband’s Social Security number and GMAC Tax Payer identification Number. This form acknowledges the “Loss of Debt” between the two parties.
As a result of this type of refinance, a person’s credit report would show the GMAC mortgage as a “Closed Account, Paid less than full amount”. Also, this type of information on a credit report may also show the term, “Pre-Foreclosure” status on a persons report. This is not good. Current Mortgage Industry guidelines require a person with this information to wait a minimum of three years before applying for a new home loan.
Why do I know this? My client, (the ex-wife) had this information on her credit report.She had no idea that her ex-spouse had filed a Loan Modification during his refinance process. Furthermore, there was no 1099 Tax Form, Loss of Debt sent to my client informing her of this action. It appears that GMAC has filed false information on my client’s credit report. We are in the process of a dispute and the story continues.
How Do You file a Complaint?
The False Credit Reporting Act protects borrower’s like my client from lenders who report false information on credit reports. In California, there are many resources and places where you can report lenders who report false credit information on your credit report. Here are a few links to keep in mind:
You Must have GMAC License # on all complaints you file. They use the Unique Identifier number, also known as the NMLS #Link: http://www.gmacmortgage.com/legal-licensing.htmlAgencies you have to file a complaint:http://homeguides.sfgate.com/can-complaints-filed-against-mortgage-companies-2918.htmlFTC: Fair Credit Reporting Acthttp://www.ftc.gov/os/statutes/fcrajump.shtm
Dept of Corporations, Commissioner Office Complaint Contact:http://www.corp.ca.gov/Forms/Complaint.asp
How TO Make a GMAC Complaint:http://www.mademan.com/mm/how-make-gmac-mortgage-complaints.html
Dispute Credit Report credit report:http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm GMAC Complaints:http://www.consumeraffairs.com/finance/gmac_mortgage.html