I have just been informed (after coming within 1 week of my lock), my third mortgage lien loan that doesn't report to CRA's but responded to a verification of mortgage (VOM) by saying I was late 3 times! Of course, I was not and this is just an independent guy who gains by trying to keep me from refinancing. I took this loan out a year ago when I needed some quick cash (40K). This was 3 years after my 1st/2nd initial loan. Unbelievable! I know this was the sole reason for the denial. Ideas for next steps, anyone? I wondered if I payed this off myself, would it still be an issue with a new lender.
If you have proof of timely payments, and if it's just a private party lender, he would likely respond quickly to a letter from your attorney.
If you are refiing your 1st, wouldn't you have to, and want to, pay off your 3rd (and any 2nd) as part of the package?
If the end financial state is the same (all current loans paid off, new 1st replacing them), it doesn't matter how you get there as long as the terms you get are as good. The effect of the erroneous late reported by the private lender on your loan terms may be a question for whatever loan officer or mortgage broker you are dealing with. They probably only checked with that lender due to the recorded 3rd mortgage lien, or due to your disclosure of the existing debt on your balance sheet. Since it is not showing on your credit reports, it may not even figure into the scores they use, unless they manually rescore. If you remove that issue from the table (pay off the loan, so there is no requirement to verify since there is no longer a lien) and can substantiate that all payments were on time (you have all cancelled checks) it may have no effect. If it still does matter, you are then free to pull no punches. The private lender also has nothing to gain, in any way, by holding you up.
The lenders always check the scores AND the payment history on all liens. The loan programs are always contingent on both pieces of information meeting the program guidelines. One way out, if all else fails would be to do whatever crappy loan (make sure it has no pre-pay!!) you've got to do to get that guy gone from your life. Then as soon as it's gone, you refi again. He still may be able to cause you problems though, as the lender will most likely still want a payment history... I think the earlier advice re legal counsel is well advised.
It might take no more than a letter from an attorney to shake him loose. If, after that, he costs you, he can pay for the privilege. FCRA supplanted libel law in reporting to CRAs, providing limits on the liability of the DF and CRA when "errors" occurred. Check with your attorney, but communications between private parties with no CRA in the picture are a whole different matter. In addition, unlike large lenders with compliance departments, it may be harder for him to claim a "bona fide" error was made, or that his normal policies and procedures are in place to prevent such errors. On receiving notice from your potential lender that he had reported the three 30 day lates, did you dispute this with the 3rd mortgage holder?
Good question - I'm not sure what constitutes "dispute" in this case but I certainly informed him via e-mail that I didn't agree with the lates. However, I've since found the documentation but I am trying to decide how to present it. I requested which payments were showing late and he sent me what looked to be a typed summary (no official statement format). This is how I verified they were not late. Reading up on FCBA etc. now. Thanks.
I just noticed the e-mail sent to me showed more than 3 lates and of course, the VOM listed only 3. Hmmm, this shows a lack of a quality system that's producing this information.
This is a weird twist to this whole mess... this 3rd lender also has and continues to threaten me that he will send my account to "collections" aka file for foreclosure if I don't pay my 1st or 2nd before the due date. Even if MY loan with them is current! This seems really odd! They even seem to know if I haven't paid on time (I paid after the 15th a few times, but always prior to the 30th). Not sure how they could know this and what authority they could obtain it with. BTW... what is considered "30 days?" Is it the end of any calendar month or literally 30 days from the 1st? One of the erroneous lates shows received on the 31st. My check was mailed on the 22nd... hmmm
