Firm Cries Foul on Credit Reporting, Mortgage Loans

Nearly one in two borrowers is plagued by medical collection accounts that are lowering their credit scores and limiting their ability to get a mortgage, said mortgage and credit expert Rodney Anderson, of Rodney Anderson Lending Services, in a press release Monday. When the Federal Reserve announced its plan to invest up to $600 billion in mortgage backed securities owned by Fannie Mae (FNM), Freddie Mac (FRE) and Ginnie Mae, mortgage interest rates dropped to their lowest point since February 2008.  “However, few borrowers may actually qualify for these savings,” Anderson said, because in addition to tighter lending standards and declining home values, borrowers are being plagued by what he sees as problems in the nation’s credit reporting system. Anderson, who claims to be country’s top producer of FHA/VA loans, said 45 percent of the 1,701 loan applications he received between June and September 2008 had borrowers with at least one medical collection account. “In evaluating these loans, we uncovered a huge injustice against the American public,” said Anderson. “The tragedy is that the collection accounts, even those that have been paid in full, are lowering these individuals’ credit scores, often to the point that they either can’t qualify for a loan, or will have to pay higher interest rates if they do.” Anderson, a vocal advocate in the credit arena, believes medical collections are particularly problematic because medical billing is notoriously error prone, and because collection accounts — even erroneous ones — can lower a credit score by 100 points or more. It’s probably safe to say, however, that a majority of the medical industry will disagree to some extent with allegations of consistent errors wrongly damaging borrowers’ credit. Nonetheless, Anderson said he found through his own analysis that medical collection accounts are routinely reducing borrowers’ credit scores by 60 to 100 points or more, while at the same time lenders are requiring higher credit scores to qualify for loans. Anderson has initiated a petition — for a Credit 911 Medical Relief Bill — to create a federal law mandating the permanent removal of a paid or settled medical collection account from the consumer’s credit report within 30 days of settlement; hence, giving consumers an incentive to settle their claims. “I’ve seen many hard working, conscientious individuals who diligently address their monthly obligations, but because they unwittingly incurred a medical collection account, are forced to settle for a mortgage rate that’s half a percent higher than if they’d never had that collection account,” adds Anderson. “That half point can translate into thousands of dollars in wasted money, and that’s only for a home loan. “In this market, where interest rates and low home prices present the ideal time for buying, we need to make sure that individuals who deserve credit, get it,” Anderson said.  The question remains, however, if borrowers have recent, medical collection accounts, is it in anyone’s best interest to grant them additional credit? Write to Kelly Curran at kelly.curran@housingwire.com.