Lesson Learned! Always check your credit regularly from ALL of the BIG 3 reporting agencies.
Cliff notes are at the end of this post.
Right at the peak of the housing bubble in 2006 my wife, a single public school teacher, purchased a small condo. It was not an investment it was just a simple little place a block from the beach for her to live in and enjoy the Florida lifestyle.
Well we all know the story of the next few years. Around 2011-12 units in her community with the same floor plan as hers were selling for about $75-80k. She had paid $165k and during the first few years she lived there the HOA had hit her with about $30k in assessments over and above the regular monthly dues that she was wondering how she was ever going to pay off. In 2012 she very reluctantly decided to walk away, understanding the consequences.
The first lien holder was a small local Florida bank with only 16 branches - First Federal Bank of Florida. They foreclosed on her in late 2013 and took title. They sold the unit to an individual in Feb. of 2014. So according to well established law, the mortgage in question was wiped out over 3 years ago.
Her credit was crappy for a bit but she followed it with Credit Karma and used all the tricks to try to get it back up to par. Credit Karma uses TransUnion as a basis for their score calculation BTW. Since then she has rebuilt her credit nicely and started getting some pretty sweet credit offers sent to her on a regular basis. One of the credit card offers she got included free credit monitoring with Equifax. She opened that account and let some time go by watching her FICO scores get up there pretty nicely over the next few years.
In the meantime I on my own financially have flipped a couple of houses and added 2 SFHs to the investment portfolio as buy-and-holds. I have excellent credit.
Well now fast forward to today and with almost 3 and ½ years gone by, and 18 month old toddler in the house, and enough toys in the house for 5 kids even though we only have one we started shopping for a house with more room and a bigger yard. We shopped for a house that we would need both of our incomes to qualify for. We do not currently have an FHA mortgage and we actually put an offer on a house and have it under contract not worried about our ability to get a loan under that program…
Then of course BAM! Our favorite loan officer ran our credit only to find that my better half, according to EXPERIAN, has a currently active, reported every month, and seriously delinquent mortgage on her credit and we simply will not be able to proceed until we get that settled.
First Federal never “cleared” the mortgage out of their system.
She has called First Federal’s collections department and every other number she can find. It’s like talking to a wall. She has begun the process of challenging the reporting but It will probably be a pain including hiring legal counsel to get it corrected. This is the kind of activity that some of the big banks have been sued for over but this being a small local bank they don’t seem to have their processes straightened out.
Luckily it looks like we might be able to move some money around and get the loan in my name only but if we do it will be by the skin of our teeth.
If she had been checking all 3 agencies all along we could have been challenging this all along and would have avoided a very stressful situation. We certainly could have stopped this behavior years ago simply by being more diligent.
Cliff notes:
Bought a condo at the peak of the craziness
Realized condo was worth half of what was owed
Let the condo go back to bank
“Rebuilt” credit over the next few years, checking 2 of the big 3 agencies regularly and tracking FICO scores
Did not check experian along the way, all the while the first lienholder, who had foreclosed and took title of the property continues to report to experian that the mortgage is active and now over 4 years delinquent.
Bummed
