“I just asked to see my note, and they dinged my credit score. My insurance premiums have already gone up,” Marks told HuffPost. “I went to see a lawyer, we’re trying to figure out what my options are. After this, we’re thinking about some forced mediation. Why keep paying if my credit score gets battered anyway?”

Honey, I Shrunk The Credit Score

Posted: 01- 5-11 08:58 AM

Bank Of America

Steven Marks knew he was wasting thousands of dollars every month paying the mortgage on a home he bought during the housing bubble that will never be worth that much again.

But he’d read plenty of horror stories about people having serious trouble modifying their mortgages due to bank confusion and misbehavior, so before he started looking for debt relief on his Reno, Nev. home, Marks sent a simple request to Bank of America: Could they tell him who owned his mortgage? And could they document it?

Marks didn’t get the type of response he was expecting. After initially declining to tell him who owned his loan, Bank of America provided a form letter with the name of the current investor a few weeks later. But they also appear to have lowered his credit score, the preeminent measure of creditworthiness that will principally determine his ability to obtain loans in the future.

“I just asked to see my note, and they dinged my credit score. My insurance premiums have already gone up,” Marks told HuffPost. “I went to see a lawyer, we’re trying to figure out what my options are. After this, we’re thinking about some forced mediation. Why keep paying if my credit score gets battered anyway?”

Marks asked the bank for documentation through a “Where’s The Note?” website created by the Service Employees International Union and the African American grassroots-advocacy group Color of Change. Amid reports of widespread fraud in the foreclosure process, resulting in everything from illegal fees to improper evictions, the site’s stated purpose is to offer borrowers legal leverage to challenge bank wrongdoing.

“To protect myself and my family, I need to know who owns my mortgage,” the “Where’s The Note?” request template reads. “Furthermore, in light of the recent allegations of foreclosure fraud, I demand to see the original mortgage note proving ownership over my home loan. If you fail to produce a mortgage note proving that you have a right to collect my mortgage payments, I will be forced to consider all options available to me to ensure that my family and my home are protected.”

Marks, whose situation was first described by finance blogger Barry Ritholtz, wasn’t used to financial instability. He said he’s never missed a payment on his home, or even sent one in late. Right before sending a letter to Bank of America, he’d checked his credit score — a near-perfect 780. He continued to pay on his mortgage after sending the request, only to find that his score had dropped 40 points to 740.

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“That is astonishing,” Ritholtz wrote.

A bank spokesman said it may have interpreted borrower language as a dispute, but would fix any problems created in its borrowers’ credit reports.

“Certain wording used in the letters brought to the bank’s attention may have been interpreted in some cases as raising a possible dispute. The bank is taking steps to clarify the handling of these requests, and when and if a dispute coding should be placed on the account,” the spokesman said. “In any case, once a possible dispute has been researched and the findings result in the removal of the dispute coding, it should no longer be reflected in the customer’s credit profile. Bank of America will review files that may have been impacted and make any necessary corrections in credit reporting.”

SEIU spokesman John VanDeventer said the union has received more than 100 complaints similar to Marks’ since the launch of “Where’s the Note?” While Wells Fargo and GMAC have been the subject of a few complaints, he said, the overwhelming majority have come in regards to the activities of Bank of America.

Another of those complainants, Leigh Dasinger from Milbrook, Ala., received a form letter nearly identical to the response Marks received. The similarities in the document, which Dasinger provided to HuffPost, suggest that the bank is deploying an automated process to handle the requests.

Bank of America doesn’t own either Marks’ mortgage or Dasinger’s — it owns the right to “service” their loans. In good times, a loan servicer collects payments and forwards them to the investors who own the loan, skimming a little bit off the top for their services. In bad times, BofA and other servicers charge late fees, negotiate new terms with troubled borrowers and, frequently, foreclose.

Servicers report borrowers’ payment history to the so-called “Big Three” credit-reporting bureaus — Experian, TransUnion, and Equifax — who plug that data into algorithms for determining credit-worthiness. Borrowers can raise disputes over items on their credit reports, which, apparently, is what the bank told the bureaus Marks and Dasinger were doing.

“Further as a member of the credit granting community, Bank of America, like most creditors, relies on the accuracy and validity of the information obtained from the various reporting agencies,” the bank said in both its letter to Marks and its letter to Dasinger. “Therefore, we will not remove the negative credit reporting from your credit file.”

HuffPost asked several credit and servicing experts to review the letter.

“When you dispute information to a creditor like BofA … they’re supposed to say ‘account disputed by consumer.’ But they’re not disputing the information on the credit report, they’re asking, ‘Who owns my mortgage?'” said credit-reporting expert Evan Hendricks, editor of the newsletter Privacy Times. “Bank of America responds wrongly to this by interpreting it as something that has to do with credit reporting, and something to do with the way they’re reporting a consumer’s information to credit-reporting agencies.”

It appears that the credit-score trouble can only affect borrowers in good standing on their mortgages. For a borrower like Marks who had never missed a payment, reclassifying his mortgage from an account in good standing to a disputed account removed good information from his credit report. As a result, his credit score dropped.

“They’re treating these letters as credit-reporting disputes, but the request is not actually a dispute,” said National Consumer Law Center Attorney Chi Chi Wu. “If it’s retaliation — threatening to damage someone’s credit report for making a good-faith request — that certainly raises questions about the legality of the practice under several consumer-protection laws.”

Targeting a borrower’s credit score could be classified as retaliation, according to Wu and other consumer lawyers, and it’s illegal for banks to retaliate against borrowers for exercising their rights under many consumer-protection laws, including the Truth In Lending Act. Both TILA and the Real Estate Settlement Procedures Act require banks to tell borrowers who owns their mortgage.

In fact, banks are required to notify borrowers whenever their mortgage is sold to another bank or investor, but as banks went into mortgage mayhem over the past decade, this obligation was routinely lost in the shuffle, along with other paperwork requirements — some mere technicalities, others that lead to banks throwing the wrong people out of their homes. Bank of America has been cited for forging documents in the foreclosure process, and for improperly breaking into the homes of its borrowers.

It’s not clear whether BofA is intentionally attempting to intimidate borrowers, or whether this is a mistake created by a high-volume business that is not above cutting corners in order to reduce costs.

“They tend to really automate everything they can so they don’t have to use staffing resources on disputes,” says Wu. “Whether it’s a screwup or something more malevolent, it’s definitely a problem on Bank of America’s end.”

18 Responses

  1. That is a great tip particularly to those new to the blogosphere.
    Brief but very accurate information… Appreciate your sharing this one.
    A must read post!

  2. Well, no one even wants to borrow anymore — many do not even want to own a home anymore.

    They destroyed their own empire.

  3. Thanks India, great statement you make as well, we American have become so “dependent” on others telling us what we are, can and can not do, we depend on the “government” to help us, to protect us, to guide us, well look around folks and see where that dependency has taken us, to pure hell; despite the fact that we are living a HUGE financial tragedy, we all MUST see this as an opportunity to regain our true American identity. Who we are and can and can’t do must not be dictate it by some idiotic FICO SCORE or some other stupid and ridiculous number IMPOSED on us by some bunch or jerks trying to make us feel guilty for not taking “responsibility” for the fraudulent Sh****t sold to us, I’m so dying to show them how irresponsible I am!! I’m dying to show them how much I care about their stupid “ratings”, as far as I am concerned they’ll be better off rating themselves, I know what their rating is in my book!!! bastards!!!

  4. Way to go, Charlie! Can’t improve on that statement.

    As Charlie has recognized, it’s a matter of deciding whether one will allow TPTB (which I’m hoping will soon be TPTWere) to define us. The numbers, the grades, the certifications and official approvals all matter not when it’s our life and our future in the balance.

    Their methods of keeping us docile and terrified of not “making the grade” are what provides them the power to erase whatever efforts we’ve made to, in many cases, merely exist without harm or causing harm to others.

    It’s most important to maintain your independent and individual sense of self, not surrender to an entity your value and your ability to succeed. Allowing any one or group to “grade” you is a form of servitude, a relinquishing of your individuality. Get back to what matters to you and those you care about. Reject their false paradigm and experience the true freedom of self determination.

  5. the days when credit was important are gone!!, when “someone” manipulates it that easy, it’s nothing but another way to defraud the consumer, would not be surprise at all if all the Gan/banksters own those rating agencies, I personally don’t give a crap about my credit, never have, never will, do i or have i checked? yes, and as per their “standards” it’s not bad at all, however they can take that number and shove it where the sun never shines. Subjecting the course of my life it’s nothing but giving away my power as an individual, yes I know, we are in a capitalist country, so what? that doesnt mean i’m going to run my life with their stupid number/score, I own my life I run it!! not the “credit/fraud bureau”. The hell with them. As far as I’m concerned they can play with that number all day long!! HAVE FUN FRAUD/CREDIT BUREAU!!!

  6. PJ,


  7. What do people expect from the “sit down and shut up cabal”. This is discriminatory and illegal and will be the next big issue as more and more homeowners start to investigate the legitimate party of obligation. Each and every homeowner should be able to make inquiries. My advice to people should they go down this path is always send a copy of any request to their state banking authority and their state AG, under separate cover, as well one really is not obligated to let the bank or servicer know that you have done so.

  8. Ian

    Yep — doing the same.

  9. Here is BOA’s response to my QWR:

    “With respect to your request for the original Note, you cite no authority supporting your claim that you are entitled to the information/documentation you requested, and we are not aware of the existence of any such authority.”

    As far as my credit score is concerned, I could be bothered with it anymore. I will not be seeking credit from any financial institution or retailer ever again. Creditors have no place in my life, nor in the lives of my offspring and their offspring. True freedom comes from being debt-free.

  10. The one of the best web forum to look at for credit score discussions is

    More than 2 million posts there but it has extensive FAQs and moderators. Lots of information on bringing a suit against the credit reporting agencies (pro se) in small claims or fighting creditors-collections for credit cards and smaller loans using FDCPA, FCRA & state equivalents. The mechanics of dispute, verification, validation and real-life responses of the creditor/collector is covered fairly well.

    That stuff won’t directly help you very much in a foreclosure fight. However, you might want to know how to rebuild your credit scores after bankruptcy, foreclosure or whatever. That is a good place to check out.

  11. After receiving and ignoring multiple QWR’s from me, B of A continued to post negatives on my credit report. These are all violations….do they care?

    They’re running the most blatantly fraudulent business model ever witnessed, with no fear of government regulatory or judicial intervention. What have they to lose?

    India’s right. Fight on, don’t worry about credit scores, those will be trashed in any well defended action. They own the battle field. Their Achilles heal is slowly being exposed. B of A is going down. Death to Wall Street!

  12. It’s not just B of A. I sent a QWR to Chase and they put a “disputed account” note on my credit reports. I could not tell exactly what impact it had on my score as I did not have before and after scores.

  13. What seems to be overlooked in the discussion here is that the entity that generates the “credit score” or at least the algorithms that are used for the “score” is an outfit in Minnesota, the Fair Issac Corp. Why not just file suit against Fair Issac? When F.I. gets buried under lawsuits for manipulating the credit market with their “score” monopoly, then they will re-think the way they do business with these counter-party financial predators.

  14. IMO, worrying about your credit rating whilst defending your home against foreclosure is akin to worrying if your hair looks good immediately after an accident. It’s yet another scare tactic, a cudgel that they use to keep you afraid of challenging them.

    Stop and think about the egregious interest increases on credit and the voluminous amount of articles describing credit/interest abuse and consider the likelihood of fair credit and borrowing practices in the near future.

    On balance, your credit rating is in jeopardy whether you demand the note or not due to the overwhelming lawlessness of the financial industry. Just step up and deal with what you can, as you can and ignore the “what ifs” that are constantly being offered as reasons for toeing the line.

    Exercise what remaining “rights” you have and consider the importance of protecting, for most of us, what is our most significant asset.

    Bankruptcy may eventually be your only, last defense against foreclosure and thus, your “credit rating” will tank anyway. Focus on what really matters not the petty distractions that they’re constantly waving in your face to weaken your resolve. Do you really care about “credit” or additional debt if you’re fighting to protect your home and family?

    In addition, as Dave Krieger indicates their moves to “ding” your credit rating is a violation and can be dealt with in other ways. In most QWRs it is stated that they are not to report your request for your note to a credit reporting agency. It is your right to demand the information and a violation of those rights if they cause harm to your credit rating.

    Re: 12 U.S.C. 2605 et seq. (RESPA-QWR)

    Protection of credit rating:

    During the 60-day period beginning on the date of the servicer’s receipt from any borrower of a qualified written request relating to a dispute regarding the borrower’s payments, a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request, to any consumer reporting agency.

    NOTE: This Section provides for damages for any negative credit which is reported to any credit bureau which causes damage

  15. Has anyone else seen a hit to their credit scores when bank/servicer is other than BOA- if I recall correctly, such behavior is illegal under FDCRA. Are the other TBTF banks doing the same thing?

  16. Credit reporting and scores were basis for subprime lending. Once a “lender” got you into a “mortgage” — they had to keep you there. Credit reports are loaded with errors — some very big errors — and some errors that borrowers do not even know are errors.

    Questioning a mortgage tips off servicer that you may be considering getting out of that mortgage. Thus, they need to lower scores to make it more difficult to get out.

  17. Since 2001 every time I requested a payoff amount from WAMU and later JP Morgan Chase, they attempted to foreclose. 3 years ago, my payments were up to date as well, but I am still in court.

    Someone tell Jamie Dimon we all know he is lying.

  18. Think about this the next time you send out a QWR and DVL …

    Could this be used as “bait” for a lawsuit?

    Could you use state statutes on fair credit reporting, as well as deceptive trade practices, and a bill of quia timet as a resolution?

    Many are starting to.

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