How to Remove Mortgage Lates

So you got a “mortgage late”. You thought you paid your mortgage on time, but for some reason the bank never got your mortgage payment.

It happens everyday. Homeowners fail to pay their mortgage on time for one reason or another. I’ve heard every excuse in the book as a former Account Executive. But usually mortgage lates occur when homeowners are between homes. It’s understandable when you move from one home to another, paying off one mortgage and acquiring a new one. But you need to be extremely careful during that period to ensure everything is paid as agreed.

[When are mortgages due?]

Put simply, mortgage lates kill your credit score. And mortgage lenders and banks aren’t particularly keen on lending to homeowners who couldn’t pay their mortgage on time in the past.

However, because of the frequency of mortgage lates committed by homeowners in recent years, some mortgage lenders and banks now allow one 30-day mortgage late in the past 24 months before loan application.

Unfortunately, that only allows you to be late once in the last two years. What happens if you miss your payment more than once, or get a “rolling late,” which essentially counts for two late payments? Or if you get a 60-day late, or worse? What do you do?

Get the Mortgage Late Removed from Your Credit Report

You’ll likely need to get those mortgage lates removed from your credit report if you plan on financing any new lines of credit, especially if you plan on getting a new purchase mortgage, or refinancing your current mortgage.

If you don’t, you’ll be stuck paying a premium for any new financing you qualify for in the form of a higher mortgage rate.

Here’s the problem. If your mortgage late is substantiated, there is little you can do about removing it from your credit history. You got the late for a reason that was nobody’s fault but your own, and you have to pay the price.

But if for any reason that mortgage late was the fault of the bank or lender, the loan servicer, or another third party, you can get it removed from your credit report.

The first step is to determine what mortgage account is showing up as delinquent on your credit report. Get a free credit report and find out exactly when and from whom the mortgage late is reporting.

The next step is to call, e-mail, or write to the lender or bank reporting the mortgage late on your credit report. Discuss the late payment with a representative of the bank or lender and explain why you believe it is erroneous. This step can be quick and easy, or painful depending on how easy it is make your point and clear up the mistake.

Assuming the bank or lender recognizes their error, they will send you a letter on their company letterhead detailing the mortgage late, complete with the account number and the time the late or late payments occurred. They should also inform the credit bureaus of their mistake, which will boost your credit score once the delinquency is eventually removed.

It is essential to keep the letter you receive from them in a safe place, or even make copies of it. You may need to use this letter next time you apply for a mortgage or another line of credit.

If you need to resolve the mortgage late payment immediately, once your credit is pulled by a bank or lender, simply send the letter to the credit reporting company the bank or lender used to pull your credit. Once they receive the letter, they will be able to remove the late(s) and issue a credit supplement.

This will solve the mortgage late problem, but your Fico score may still be deflated for a while before the credit bureaus take notice. In that case, you will likely need to do a rapid rescore as well to update your scores immediately.

Do not waste your money on rapid rescoring if you don’t have a legitimate excuse for the lates, or paperwork to document any error made by the issuing bank or lender.

If you aren’t doing any new financing, but want the mortgage lates removed, simply make a copy of the letter, and send a copy to the credit bureau(s) reporting the error. Explain that you want the mortgage lates removed and they will remove them after verifying your letter. This is a great way to remove the late payments, but it will take time, so this method isn’t useful if you need quick removal.

Assuming you aren’t able to get the bank/lender to cooperate, you can dispute any late mortgage payments with the credit bureaus directly by visiting their respective websites and looking for the dispute page. If they take your side, the late payments will be removed and your credit score will rise, though the process can take several months.

Always pay your mortgage on time, no matter what the circumstances. Mortgage lates are one of the best ways to harm good credit, and poor credit will lead to a higher mortgage rate.

Tip: How to get a mortgage with a low credit score.


19 Comments

  1. Tani June 22, 2013 at 6:10 pm -

    Good tip. I didn’t realize they could be removed once they hit your credit report. I guess it’s worth a shot, nothing to lose.

  2. Sherwin July 19, 2013 at 2:31 am -

    Even if you have a legitimate mortgage delinquency on your credit report, you can still argue it with the credit bureaus. Simply use the dispute forms on their websites (Equifax/Experian/TransUnion) and if the lender doesn’t respond to your dispute, they will have to remove the late from your credit report. That should give your credit score a good boost and will relieve you of any issues related to having a mortgage late on your credit report in terms of qualifying for a subsequent mortgage.

  3. William February 25, 2014 at 4:22 am -

    This worked for me. I simply disputed the late mortgage payments on my credit report and within about 45 days the delinquencies were removed, no questions asked. I guess the lender or servicer didn’t respond to the dispute notice, so I win!

  4. louis July 15, 2014 at 2:03 pm -

    The problem is if the lender reports months later that you were indeed late your screwed. Even if they removed it before.

  5. Colin Robertson July 15, 2014 at 2:31 pm -

    Louis,

    If you were indeed late they have all the right to report it as such. If you’re able to get it removed that’s a bonus.

  6. Debra urbina October 6, 2014 at 7:24 am -

    I have a release of mortgage which states cancel and discharge of said mortgage and called circuit court where it was filed and says zero balance but have sent all three credit bureau copies of release where it says cancel and release but my mortgage company says the info on credit report is correct and just used a different acct number so the balance is still on credit report what do I do

  7. Colin Robertson October 6, 2014 at 9:57 am -

    Debra,

    Have you tried disputing the information on your credit report with the bureaus? Or contacting the mortgage lender directly?

  8. Carol January 26, 2015 at 8:26 am -

    My question is, I did a deed in lieu of foreclosure and it was reported back in July of 2011, however Equifax has just reported the delinquency in 2013, so it appears to be a new lateness and now my credit score has been affected (again). It was lowered when the delinquency happened back in 2011 and I have been since then still paying my other creditors on time and trying to wait out the 7 years, why would they wait two years to report this?

  9. Colin Robertson January 26, 2015 at 10:47 am -

    Hey Carol,

    Not sure why Equifax is reporting it two years later than when it apparently occurred. Perhaps they are reporting not the foreclosure itself, but some other event related to it? Ideally if/when you apply for a mortgage, a tri-merge credit report (all three bureaus) will indicate that the original delinquency was in 2011. Some might recommend a dispute to get any information corrected.

  10. Bibi January 30, 2015 at 1:45 pm -

    Hello, I am having problems with a mortgage of a house that i am not living in. Six years ago I got divorce. My ex husband kept the house. We are both in the loan he has stopped making payments on the house and now is affecting my credit tremendously. We are not able to refinance or sell the house, due to the devaluation price of the house. Is there any way that I can be out of the loan? Please advise.

  11. Colin Robertson January 30, 2015 at 3:59 pm -

    Bibi,

    Generally, a refinance/sale is the only way to get out of the loan. Have you looked into a refinance via HARP or another underwater program with your lender. Or perhaps a loan modification? Homes prices have gone up a lot lately so it might be worth another look.

  12. Nadira January 31, 2015 at 11:39 am -

    Hello,

    My loan was under modification. BOA said the only way to be in the program is if I show late payments on my loan. They advise to pay late. During the modification they transferred the loan to another lender who took over the modification. Everything that they asked for were given to them. They also said I had to be late on my mortgage. Both banks had said that “once you’re in a modification/workout program it will not affect your credit.”

    I never got approved for the modification and it has been since 2010. I finally sold the house in 2014. I reapplied for another mortgage loan and was denied. The reason for the denial was because of the lateness on my mortgage payments with both banks. The banks refused to modify their reporting. Please advise.

  13. Kelly February 2, 2015 at 11:32 am -

    I keep hearing from my mortgage lender, “that it is their policy to only remove 1 late charge per year.” Is there not someone who can remove them all? I mean, after many times calling, I have gotten 4 removed in one year. Long story short. I have taken over the budget after my husband has accrued these late fees and is why I want them gone. And find it ridculious no one can remove them. Is this true or is it just bank “policy” to make up a policy to collect your money?

  14. Colin Robertson February 3, 2015 at 12:56 pm -

    Hi Nadira,

    Unfortunately, I think this was a common problem during the crisis. It sounds like they told you the lates wouldn’t affect the modification itself, but made no mention of subsequent mortgage applications. Perhaps working with the credit reporting agencies (Experian, Equifax, TransUnion) and/or the lender to attempt to get the lates removed from your credit report could help, though it’ll probably take time even if successful.

  15. Pinky March 13, 2015 at 3:00 pm -

    I have late payments on my mortgage account because it has been sold several time to different companies. In addition, I received modification that released me from the balance owed and to start fresh. Is there any way I can have those late payments removed?

    Thank you.

  16. Colin Robertson March 16, 2015 at 9:34 am -

    Pinky,

    As noted in the article, it’s sometimes possible to dispute delinquent accounts with the credit bureaus to get the late payment activity removed. But there’s no guarantee if the creditor validates the information.

  17. Chad M April 8, 2015 at 8:27 pm -

    Colin,

    Great article. I saw the following and I need to comment because so many people are stuck in their loans because of one Mortgage late. Usually a honest mistakes and I understand, but it’s still your fault.

    “Here’s the problem. If your mortgage late is substantiated, there is little you can do about removing it from your credit history. You got the late for a reason that was nobody’s fault but your own, and you have to pay the price.”

    Your readers need to know that they need to have a VERY good story before calling the lender. Please don’t wing it. They must either show that it’s the lender’s fault or is some sort of mistake on “their ” end. I highly suggest that your clients leave it to a professional. Call someone, anyone, but do not try to talk their way out of it. We have clients who tries to give the Sob story, but ends up admitting to the late or lates which “substantiates” the late like you said while it’s being recorded. A sob story will NOT work because the agents on the other end of the line have heard EVERY single story under the sun and they are death to your story.

    You can delete this post if you like, but we can remove mortgage lates guaranteed. Fees are paid after the work is done. Please email me. I know we can help some people.

    Thanks,

    Chad

  18. Colin Robertson April 11, 2015 at 9:48 am -

    Hey Chad,

    What do the pros do differently that the agents on the other end haven’t heard or seen before? Just curious, thanks for your note.

  19. Chad M April 17, 2015 at 11:43 pm -

    Colin,

    Ans: The right story. One must create a story that makes it “their fault.” There are alot of laws and legal tricks that one can use. Every case is different – how is not something I can answer here. =)

    The agents/robots on the other end of the line is mainly looking to stick to “the script” and never “accept fault” because if the banks/creditors/data furnishers say, “sorry, it was our fault” (in writing) can becomes proof in a court of law if the that particular late mortgage payment causes harm to the client. If this late causes the borrow to lose a property (with equity) then the creditor is then liable for the lost which can be in the 100s of thousands.

    IE: Common story: a loan/note gets sold from one paper holder to another, then to another. Borrower sends payment to an old lender with a couple of days left before it’s late. The check, then, bounces back to the borrower 15 days later. The mortgage payment is late. uhhh-oh…. The borrower’s scores drop by 80-100 points. The borrower is stuck with that company for at least 24 months and a refi is not possible.

    FICO is funny, at least to me. The range is 350-850 (loosely) For a credit card: from 350-680 its a automatic denial or you get 300 bucks with 24% APR; from 720 – 850 it’s an automatic approval. so, the difference is 40 points guys and gals; the true range of FICO is 40 points! (it is a bit better with RE because the most secured loan at 620). So, if you are a A student, imagine going to F with one late payment. FICO is broken.

    Note: Colin, that last part was for you. I apologize if that sounds like an attempt to advertise on your blog. Please delete that portion if you don’t mind.

    C

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