Homeowners looking to boost credit score tackle unfair practices

Ilyce R. Glink
Inman News

Q: My husband and I are big fans of yours. My question for you today is our mortgage company is not reporting our payments to the three credit-reporting bureaus.

About six months after our mortgage was sold to them, my husband checked our credit report and discovered our on-time payments were not being reported. We contacted the company, and the representative advised us that this information will be reported.

It’s now a year later, and the company has reported only six months’ worth of data. Each time we contact their credit department, we’re told that it will be done. But it’s not.

Do you have any advice on what we can do to get this company to report our on-time payments? And, by not reporting the information, can that have a negative impact on our credit?

A: Creditors that do not report payment data are trying to keep other lenders from cherry-picking their customers. They want you, and the interest you’re paying, all to themselves.

It’s a lousy, anti-consumer practice with the end result that your on-time mortgage payments will do nothing to increase your credit score. You can be certain, however, that your mortgage lender will immediately report any delinquencies.

Lenders that promise to report credit data and fail to do it get a big black “X” in my book. Go back to your lender and insist that they report your on-time payments each month, as promised. (Hopefully, you have it in writing.) If they do not, you can report them to the attorney general’s office, the department or commission in your state that regulates lenders, the Better Business Bureau and the Federal Trade Commission.

Since the federal government is looking hard at unfair consumer practices in the mortgage industry, you might also write a letter to your state senators and congressional representatives.

If that doesn’t light a fire, you may have to refinance with a lender that has higher levels of customer service (check out JDPower.com for the company’s top-rated mortgage companies based on levels of service provided). Your current lender clearly doesn’t care about you as much as it cares about its own bottom line — which is insanely short-sighted, particularly in the current economic and political climate.

Q: My ex-wife and I own property in Florida. She is the sole person on the mortgage, but I am also on the title. She is struggling with paying the mortgage each month. What are my options? Please, help me with this one.

A: Why are you still on the title if she is the sole person on the mortgage? Was she unable to afford to give you your share of the property when you divorced?

If the property was paid off or nearly paid off when you two were together, you might have been better off taking back the mortgage yourself and allowing her to pay you each month. You could have secured the mortgage with a first lien on the property.

Now, if she defaults on the mortgage, your share of the property could be at risk. While you’re not liable for the financial end, if the bank forecloses and sells the property at a discount, your equity could evaporate.

You and your ex-wife should sit down and discuss the situation. If you can afford to pay for the mortgage, you may want to do that until your ex-wife can sell the property and find something more affordable.

Copyright 2008 Ilyce R. Glink