CoreLogic implemented its new CoreScore credit scoring model at the end of March. The CoreScore consists of 2 parts. The first is a report consisting of data that may not have appeared in conventional credit reports compiled by the top three credit bureaus (Experian, Equifax, and TransUnion). The second consists of a composite score based on the data in the CoreScore Credit Report combined with traditional credit bureau data and scores.
Examples of data that will now be available to lenders under the CoreScore include next things. Missed rental payments, evictions, foreclosures, delinquent homeowner’s association dues, tax liens, child support judgments, credit card judgments, and even applications for payday loans. Much of this data comes from public records. In addition, CoreScore will identify borrowers that owe more on their mortgage than the property is worth (underwater mortgages). And, mortgages with small lenders that may not routinely report to the major credit bureaus (up to 70% more prevalent among lower score borrowers).
Based on the information provided by CoreLogic, it appears that the CoreScore model will have a disparate impact on the lower score/lower-income individuals and families. The CoreScore will especially impact those that have gone through economic hardship resulting in foreclosure, short sale, or even delinquent mortgage or rent payments.
An area of concern for many consumer attorneys is improper reporting of foreclosure actions, which are generally public records. And, they often include named defendants that are not the borrowers on the defaulted loan.
For example, imagine you took out a mortgage in 2005 in your name only. But, you only placed yourself and your spouse on the title. You subsequently default on the mortgage and foreclosure action is filed. When the bank files its lawsuit it will often name not only the borrower but also any party that may have an interest in the property (i.e., your spouse on the title), as a defendant.
Fast forward a few years later... You and your spouse are back on your feet. Moreover, you would like to purchase a home again (presumably one that is worth what you will owe on it). Because you recently went through foreclosure, your credit is too weak to obtain a mortgage. Your spouse gets a copy of her credit reports from the top 3 credit bureaus. It shows that her score is in the 700s (usually high enough to qualify for a proper mortgage). However, when the lender pulls the CoreScore report, she may be rejected based on the public record showing that she has been sued in a foreclosure action. In the aftermath of the housing crisis, this type of scenario may become increasingly common.
CoreLogic claims that CoreScore complies with the Fair Credit Reporting Act (FCRA). The FCRA requires the removal of most negative information after 7 years. According to § 605 of the FCRA, the report may not include any information relating to civil suits, civil judgments, accounts sent to collection, foreclosures, etc. that are more than 7 years old. The FCRA also requires Credit Reporting Agencies to provide you with a free copy of your consumer report. Also, they have to provide procedures for you to dispute incorrect information. CoreLogic is offering this information both directly and via the FCRA central source[1].
If you uncover an item that is being improperly included in the report, you may dispute the item. Do this by notifying CoreLogic by phone or mail. Under the requirements of § 622 of the FCRA, CoreLogic must investigate disputes.
And, they must update your file within 30-45 days if they determine that the item is being reported incorrectly.
[1] 877-322-8228, www.annualcreditreport.com, or Annual Credit Report Request Service, PO Box 105281, Atlanta, GA 30348-5281
If you have questions about foreclosure, loan modification, bankruptcy; or other alternatives, please feel free to call my office at 954-484-9987. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.
