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.


14 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.

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