Monday, October 31, 2011 - Article by: SUZIBOYLE - Amerifirst Financial, Inc. -
The improper re-aging of debt can significantly-and negatively impact borrwers' ability to secure a mortgage.
When a consumer defaults on a debt and is reported to a credit-reporting agency, the default generally remains on the consumer's credit file for seven years & 180 days as permitted by the Fair Credit reporting Act. The FTC mandates that the date of original delinquency be the date the first payment was missed. The practice of determining the commencement date is known as aging. When the commencement date is changed, it's considered to be re-aged. Playing by the rules set in the FCRA, creditors that intend to file a tradeline which is a record of a borrower's credit history, including account status and activity, with a credit reporting agency must do so within 90 days of a default. Following a borrower's default, creditors often transfer the loan from their accounts-receivable ledger. This is called a chrage-off. The process, however, doesn't keep the creditor or someone acting in their stead from attempting to collect the owed amount.
When unpaid accounts are charged off however, the act of removing the account from the creditor's books often leads to a new tradeline being filed on the consumer's credit report. Many times the collection agencies re-age the information illegally and cause the commencement date of default to appear more recent. The most common perpetrators of such abuse are collection agencies, also known as debt-buying companies. Another practice where the consumer can be severely damaged is when the collection agency learns about the borrower attempting to get approved for a mortgage loan( from purhcased lists of people they get from the agencies).These unscrupulous debt-buyers oftem place what amounts to illegal tradelines in an effort to force the debtors to pay as many times the mortgage lenders will require the previous debt to be paid in full in order to qualify for the new mortageg loan.
To make matters worse, the new negative trade line also will result in a lowered FICO score for the prosepctive homebuyer, which afffects the mortgage rate they will be able to obtain. If a consumer discovers improper re-aging, they should prove the date of the original delinquency and request the removal of any tradelines related to the debt after that point. Help your clients fight illegal re-aging....
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