There are Two Insider Strategies that you can use to remove Foreclosures from Credit Reports, and today, I'm gonna explain how to do each one!
Second, only to Bankruptcy, Foreclosures are the most damaging items that appear on Credit Reports.
They cause huge drops in Credit Scores and have such a bad stigma that many creditors won't even consider lending to someone with a Foreclosure on their record.
But that's not the worst part of a Foreclosure!
A Foreclosure on a Credit Report means a person or a family lost their home, and now their credit has been damaged so badly that they probably won't be able to buy a new home for a very long time.
It's a slow and terrible experience, and no one should have to go through it. But it happens. So, until the mortgage lending system changes, people need to learn how to remove Foreclosures from their Credit Reports!
HOW THIS RELATES TO US
For anyone new to Credit Repair, a Foreclosure is a legal action that occurs when a lender takes possession of a property from a borrower after the borrower fails to keep up with their loan payments.
The Foreclosure process varies by state, but it typically looks like this: Default, a Notice of Intent to Foreclose from the lender, the Foreclosure Filing and Trial, a Notice of Sale, the Sale of the Property, and Eviction.
It's a grueling process that lasts an average of 852 days, and it ends with a Foreclosure being listed on your Credit Report for 7 years from the date of the first missed payment.
According to FICO, the impact of a Foreclosure depends on what your Credit was like before it began. The higher the Credit Score was, the more room it has to fall, with some Scores dropping over 100 points!
Foreclosure rates did drop to historic lows in 2020 and 2021 due to Pandemic economic relief policies, but when those policies ended in 2022, Foreclosures drastically rose 169%, with over 248,000 being initiated.
THE THING TO REMEMBER
There are two types of Foreclosures: "Judicial Foreclosures" and "Non-Judicial Foreclosures." The difference is simply whether or not the courts are involved in the process.
About half the states only permit Judicial Foreclosures, but the other half allows lenders to choose between a Judicial and a Non-Judicial process.
Because Judicial Foreclosures are filed with the courts, they are considered Public Records. Public Records are different from most negative items that appear on Credit Reports because the courts don't actually send these Records to the Credit Bureaus.
Mortgage lenders report them to the Bureaus, or the Credit Bureaus buy the records from companies like LexisNexis, which collects the information from public record databases like PACER.
I know this sounds complicated, but all this information changing hands means there's room for error everywhere, and those errors are how you remove items from Credit Reports!
WHY THIS IS IMPORTANT
When the Credit Bureaus receive Public Records from LexisNexis, they often list the Furnisher of information as the "Recorder of Deeds," the "Clerk of Courts," the "Magistrate," or the "Municipal Court."
They do not list the actual Furnisher!
This amounts to false reporting, which directly violates the Fair Credit Reporting Act and provides a perfect reason to Dispute the Foreclosure.
WHAT YOU NEED TO KNOW
As always, you start the Credit Repair process by Disputing any incorrect information that appears on the Credit Report. Beyond that, there are Two Insider Strategies for Removing Foreclosures from Credit Reports.
STRATEGY #1 - Dispute the Public Record
STEP 1: Sign up for a PACER account.
PACER is a public records database that anyone can access for free, and companies like LexisNexis use it to gather our data.
STEP 2: Contact LexisNexis and request a Consumer Disclosure Report
Thanks to the FCRA, they're required to provide you with a copy for free.
STEP 3: When you have the PACER account records and the LexisNexis Consumer Disclosure Report, compare the information in both.
Look for inconsistencies and Dispute them with LexisNexis just like you would with a Credit Bureau. They follow the same rules.
If you're able to remove the Foreclosure from the LexisNexis Report, the odds of getting it removed by the Credit Bureaus seriously increase!
STEP 4: Dispute the Foreclosure with the Credit Bureaus.
Do this just as you would any other item. If the Bureau verifies the information, move on!
STEP 5: Send a simple letter addressed to the Clerk of the Court where the Foreclosure was filed.
There's no need to get into specifics. Just say something like:
"I have a record from your court appearing on my credit report. I've disputed the item with the Credit Bureaus Equifax, Experian, and TransUnion - all of which confirmed the record was verified by you. Please provide the procedure in which you verify records with the Credit Bureaus."
Send this letter to the Clerk of the Court with a self-addressed, stamped envelope and your return address to make it easy for them to respond.
The Clerk of the Court should respond with a letter explaining they DO NOT report to the Credit Bureaus.
STEP 6: Make a copy of the letter you received from the Clerk of the Court and send it to the Credit Bureaus along with a demand for deletion.
It doesn't have to be written exactly the same way, but it should be something along the lines of this:
"I have previously disputed (INSERT Public Record Name / Reference #) with you, and in response, you verified the item as accurate, stating that you have verified the information with the court. I contacted the court, and their response is enclosed. It is clear they do not report to you or any credit bureau for that matter; therefore, your initial response verifying the item with the court was either an error or a lie. Either way, the reporting requirements do not comply with FCRA § 611 (15 U.S.C. § 1681I), and the information must be deleted immediately."
The Bureaus know the law and understand they have a potential violation if they don't remove it. So they will typically respond with a deletion.
If the Bureaus refuse to delete the Foreclosure, despite your valid reason for removal, it's time to file a complaint with the CFPB because you are entitled to fair and accurate reporting.
If the Foreclosure is removed, you'll be on your way to financial recovery!
And if you'd like copies of these Public Record Dispute Letters, you can download them FREE at CreditRepairCloud.com/Public-Record-Dispute.
STRATEGY #2 - Send a Qualified Written Request
This is a bit advanced, but Credit Repair Expert and Millionaires Club Member Bruce Politano recently shared this proven strategy with me.
In the real estate world, there's a letter known as a Qualified Written Request or QWR. A QWR is a letter that you or someone acting on your behalf can send to your mortgage servicer to request information about your mortgage account or to claim that the company has made an error.
In this case, you would write a QWR and request all documents related to the mortgage account that was Foreclosed, stating that you want to review them for suspected errors. You need to be clear. You want everything!
Your servicer must generally confirm it received your letter within 5 business days and respond with an answer within 30 business days.
According to Bruce, you've just requested so much documentation that, chances are, the servicer is not going to send it. They're either going to ignore you, in which case you can file a CFPB complaint against them.
Or they're going to remove the record of the account.
It's not guaranteed. They may actually send you a ton of documentation. But if they do, you can go through each page, look for inconsistencies and Dispute them just like any other piece of incorrect information.
MY FINAL POINT
A Foreclosure is the second most damaging item that can appear on a Credit Report. It means someone lost their home, and they won't be able to get a new one for a very long time. To me, that's unacceptable.
Disputing a Foreclosure may seem slow and complicated, but when it comes to helping people find a home. We do whatever it takes.
I'll end by saying…
If you still need a Credit Repair Cloud account, check it out. It's the software that most Credit Repair businesses in America run on. Sign up here for a Free Trial!
And if you'd like to change lives and grow your own Credit Repair business, check out our Credit Hero Challenge!
It's an amazing program, and we've got another challenge starting in a few days, so grab your spot right now at CreditHeroChallenge.com!
So take care, Credit Hero!
Keep Changing Lives!