FICO Scoring -- A mortgage broker's nightmare

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: Repost from 30 Jan 1997 17:05:53 : I am a Licensed Mortgage Broker and have a client, whom I helped 1 year ago purchase their new home in Tacoma WA. They were short of cash for the down payment and closing costs. The home they were purchasing was in foreclosure because the current owners hadn't been paying their mortgages. : Because my clients were cash poor, I arranged for the holder of the 2nd to allow my clients to assume the second (with a short-payment-adjusting the balance from approx. $19,000 to $13,000). Everything went fine until my clients wished to refinance their home to secure lower payments. Previously their FICO Scoring was less than 500. So, the new first, one year ago was a stated income 12.25% with 6 MO prepayment penalty. : I told my clients to completely pay off the second (which they did in November 1996.) In December, we started the loan. FICO Scores were 681 and 636 respectively, showing 1 60-day late on the 2nd mortgage and 5 90 day lates. Lates which accrued to the previous owners of the 2nd (lates were August 1995 to January 1996) and my clients purchased the home in December 1995, with their first payment due February 1, 1996. Clearly, the lates were not mortgage credit problems belonging to my clients. : I pursued these problems with the 2nd mortgage holder (now paid in full) who agreed to the mistakes; but, would not write a letter, although he would provide verbal verification to any lender or to the RMCR company, and said he would submit corrections to the 3 bureaus. : Gullibly, I didn't realize this egregious mistake by the 2nd mortgage holder, would cause my client's new loan to be dead in the water. I even talked many times with the potential lender about this problem, and no one said I had a dead loan on my hands and would continue to have a dead loan on my hands until the mistake by the 2nd mortgage holder is completely removed from TRW, Equifax, and TransUnion. : I got together all the proof, and submitted the loan to a conforming lender, only to have the loan declined. Why? The conforming lenders in our area no longer (so I find out) will even look at an RMCR. Why have clients pay for this service, I have to wonder? And, the service my company uses, is excellent at verifying accuracy of information, provides "easy-to-read" reports, with dates, etc. and who ultimately, did issue a clean RMCR-they are above reproach. : To no avail. Local lenders look at the individual in-file credit reports where these delinquencies, multiple listings of the same "ding" etc. multiple listings of accounts, etc. all exist. In this particular situation, I believe 1 60-day mortgage late and 5 90-day mortgage lates significantly reduced my clients' FICO Scorings, besides the multiplicity of duplicate records! : Now, because my clients are English speaking, but read English slowly, and write English with great difficulty, they have pleaded with me to help them clean of these problems on their credit reports. I must first get the 3 bureaus to clean up these insults to their credit, before I can secure a no-income verifier conforming loan for them. : This situation a nightmare for my clients. They do not understand why they cannot get a loan, although so many, many companies now are mailing them advertisements saying they are qualified to borrow "x" or "y" or "z" based upon their credit, yet they were declined today? And, these mortgage lates and other deficiencies seem to be sticking to their credit reports like glue which resulted in a mortgage declination today. It is also a nightmare for myself. I only get paid if the work I do results in a loan. I feel my fiduciary responsibilities towards my clients very strongly, and always try to do what is in their best interest; but, now, IF I am able to secure a new loan for them at significantly less interest, I must first help them clean their credit! : Thanks for letting me write this letter to you. If you have any further information on how the FICO, Imperica, or Beacon Scores are developed, I would surely appreciate the input. : Sincerely, : CHRISTINE GIBSON : hcgibson@nwlink.com : Licensed Mortgage Broker : Apple Mortgage Located in Redmond, on the eastside of Lake Washington, : with Seattle being on the westside of Lake Washington.

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