Qualified Home Buyers Rejected for Questioning Their Credit

DALLAS, Oct. 26 /PRNewswire/ -- If consumers question a credit account, it
could cause them to be refused a mortgage loan even though they meet all other
loan requirements, according to credit expert Eddie Johansson, president of
Credit Security Group, a leading credit analysis and rescoring firm. Johansson
suspects this is a result of confusion about how to interpret and implement a
new policy by Fannie Mae, the largest source of home financing.

Johansson said his firm has successfully resolved these cases, but most
borrowers are going to find this extremely difficult. He believes they should
not have to face this problem. Johansson said resolution has taken a week for
some cases and 35-75 days for others. Delays can cause current real estate
contracts to expire and force the borrower to go through the loan process all
over again.

Johansson said that merely calling to ask a question about a bill can result
in the account being marked as a consumer dispute which can result in the
lender's refusal. Creditors and debt collection agencies are quick to flag an
account as a consumer dispute to protect themselves under federal law. "There
are several ways that the phrase 'consumer disputes' can be put on your
account even without your knowledge. Once it's there, it often stays there.
It's difficult for you to remove," he said.

It's difficult because the usual way to correct credit information is to
contact the credit reporter which creates yet another consumer dispute. "It's
a Catch-22," Johansson said.

Johansson said the most recent case he helped resolve involved a borrower who
had excellent credit scores and met all the other loan requirements. Yet the
application was initially rejected because a credit card account was marked
"consumer disputes." The account was paid up with no late payments. "There's
no good reason to reject or delay this loan," Johansson said.

Johansson's firm, which works with both lenders and borrowers, began
encountering different types of cases involving loan rejection for consumer
disputes last February. Mortgage professionals referred to a new requirement
by Fannie Mae contained in the latest release of Fannie's desktop underwriting
(DU) software Version 7.1.

Johansson said, "The loan officers referred to DU 7.1 or to their lending
source's new requirement under DU 7.1. This was interpreted as requiring the
removal of consumer disputes from all such accounts listed by DU 7.1 - even if
there was a legitimate dispute."

Johansson said a plain reading of DU 7.1 guidelines requires the verification
of consumer disputes, but does not prohibit the borrower from having
legitimate disputes. "The refusals could be a problem in understanding or
implementing this guideline anywhere along the line from loan officer to the
actual funding source," he said.

Johansson said the bottom line is that "qualified borrowers are being rejected
for home loans without good reason. This is not good for them, the housing and
lending industry or the economy."

About Credit Security Group
Credit Security Group serves consumers and lending organizations nationwide
and advises major banks, mortgage lenders and their clients on how the system
works and how to most effectively use this knowledge. Credit Security Group
conducts seminars and educational presentations to consumers, banking and real
estate groups and associations. Credit Security Group has offices in Dallas,
Houston, Longview and Nacogdoches, Texas.

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EDDIE JOHANSSON
https://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=84994

SOURCE Credit Security Group

John Johansson of Credit Security Group, +1-903-759-0040,
media@creditsecuritygroup.com