If you are planning to finance or re-finance a home, it is essential that you closely review your credit report before you apply for your loan. If you had a prior short sale, your report may incorrectly list it as a foreclosure. Not only is this error damaging to your credit score, it can impact your ability to obtain a new mortgage or to qualify for more beneficial contract terms.
One of the primary benefits of the short sale is that it allows the homeowner to avoid foreclosure, which is often viewed as the most damaging event to your credit-worthiness. You lender is required by law to accurately report the circumstances surrounding your delinquency. A short sale is often reported as the debt being “settled for less than the full balance.” This is accurate. However, if the lender adds the code for a foreclosure to the entry, you have a problem. If you are not sure what the codes on your report mean, contact the credit reporting agency and request and explanation.
What can you do if you see this type of code on your credit report? If you are in the process of obtaining a new mortgage, put the process on hold until you can get the error corrected. A foreclosure entry can prohibit you from obtaining a mortgage for three years, and up to seven years before you qualify for a conventional loan after the foreclosure. However, a short sale entry typically only deters your ability to obtain a conventional loan for two years. As a result, it is imperative that an incorrect entry of a foreclosure or a foreclosure code on your credit report be fixed as quickly as possible.
A consumer can challenge the incorrect foreclosure notation by submitting a written objection and supporting documentation of the short sale to the creditor that made the report. The creditor should provide you with a letter confirming the report has been updated within 60 days. If the creditor fails to make the necessary corrections, the legal team at DeLadurantey Law Office can file a lawsuit under the Fair Credit Reporting Act (FCRA) to get it resolved.
For your consumer protection, bankruptcy, foreclosure, and debtor’s rights matters, contact DeLadurantey Law Office, LLC at (414) 377-0518. We serve the counties of Milwaukee, Waukesha, Kenosha, and Racine, including such areas as Milwaukee, Merton, Delafield City, Waukesha City, and Kenosha. Visit our web site and like us on Facebook.