Can a negative mortgage escrow be reported as past due on my credit report?

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I found out after pulling my credit report that my mortgage lender was reporting me as $ 6,400 past due on December 31st when one of their agents told me on December 29th that all that was needed to bring my account current was $ 858. When I inquired last week about the reporting to the credit bureaus, I was told to send a letter to the research department. It was also suggested that I request a loan modification. Within a day after they sent the paperwork for the modification, changes had been made to my account history reversing payments made in December and not displaying payments made in January, and showing a negative escrow in the amount of $ 6,400. Needless to say, I haven’t submitted the modification paperwork. This reporting has caused my credit score to plummet. What recourse do I have?

  1. Reply
    May 19, 2011 at 2:46 am

    I wouldn’t be worrying about my credit score at this point. I would get everything straightened out with the mortgage company. There could have been an escrow payment made between 12/29 and 12/31 for either real estate taxes or insurance. Since your December and January payments are not showing, it sounds like the payments have bounced.

  2. Reply
    Randall Parker, MBA
    May 19, 2011 at 3:22 am

    You have a number of ways to combat this, but you may need some outside help.

    I would dispute the item with the credit bureaus first, as you will need to do this before disputing the item with your mortgage company. Dispute the amount reported, the fact that it shows a late payment, and anything else that you believe may be incorrectly reported. Send your dispute via Certified Mail with a Delivery Receipt (online version is fine).

    If this doesn’t solve the problem, send a complaint directly to the mortgage company, also via Certified Mail with a Delivery Receipt.

    If you have paid your account on time and the only adverse element of the account is a deficiency in the escrow account, then you should not have any adverse reporting on your trade line. The lender is responsible for properly maintaining the escrow account, and if they made an error in calculating your payment, then they will need to notify you of any adjustment to your monthly payment prior to your next adjustment date.

    As for the loan modification, you may contact a company that performs this function, or you may handle it yourself. I would recommend that you check the government’s “Making Home Affordable Program” first (see link below). You can do this yourself, and you may be surprised at how easy this can be handled.

    Just be sure to gather all of the required documents and complete the paperwork carefully, for best results. Contrary to popular belief, you do not have to be late on your payments in order to qualify for a modification.

    Good luck!

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