Removing charge off for mortgage. HELP!

[mkay86]

I have always had perfect credit. I am a crime victim and lost my life savings and ran up $100k of credit card debt due to an already grand jury indicted criminal extortion. Trial awaits. Once the criminal was arrested, in 2006, my father-in-law stepped in and worked with an attorney to settle these 2 credit cards. They were moved to one account and charged off in 2007 at 50%. This now appears on my credit report as 2 accounts that were delinquent and charged off. There is also a term stating 'foreclosure proceedings beginning' even though credit cards cannot be foreclosed. I brought in a credit consultant (not an attorney) who called BoA, supposedly as high as the CEO's office and was told they would not change the credit report. His efforts cost me a wasted $1000.

Over these 3 years, as I am a relatively high earner(well into the 6 figures and am a health care provider), I have saved, always (as my pattern was for 25 years before and the 3 years after) been credit worthy. My scores are 815, 720,725. Prior to this they were 825 or higher.

I am applying to refinance. In 2007 I was forced to switch to an interest only 10 year/30 year loan to combine all the debt this crime had caused. I still have about $350k of equity in my home. I would like to take advantage of the historically low rates to switch to a 30 year fixed loan. With rates where they are, it would cost us only an additional $150 per month, but we would be able to stay in our home we love long term and be able to build some equity.

I also have some business moves I must make which involve loans and credit. My lease runs out in 1 year in my business and I need to move and will need a loan.

I am so upset in that I just spoke to the bank's mortgage broker that I have applied to and he said my application will be denied because of these two charge off's. I am so upset. This was brought on by a crime. My pattern of behavior is obviously different. I lost everything in the crime. I feel victimized again. Help!

Do I have any options available to me?

[chane]

Yes, dispute the accounts with the CRAs. You don't need to give a reason. It's usually better not to.

Read everything here: Basic Step by Step Beginner's Guide to Credit Repair

and everything else in the beginner's section. With those scores, I can't believe they won't give you a loan...that's mind blowing. I would dispute them and if that doesn't work there are other methods. You may also want to try another lender...after you dispute everything.

[mkay86]

Chane,

Thank you.

What I was told by the large bank that I applied to was that my scores were fine, but the 'foreclosure proceedings started' in the description of the Equifax comments on the first credit card (the one that had it's balance transferred to the second one which was, in turn, charged off at 50%) are what their underwriter objects to and will decline the mortgage application. That term 'spooks' them. This, despite the fact that the TU and EXP comments in the very same box say what should be there, 'balance transferred/account closed'.

I appreciate your helpful comments and did call a mortgage company (not bank) to test the waters. They pulled my credit report and showed it to their underwriter who gave preliminary and conditional approval. If my financials, savings, tax returns, business returns all are as I said (and I know they are) AND appraisal (75% ltv), I was told by the rep.(owner of the company) they would approve. I asked them to give me that in writing with the rate and costs. I am waiting for that.

The broker that works for the bank that I originally applied to has said to me that he wants to take on my credit report to rid me of the injustice that it shows. He has already contacted the 3 agencies and is proceeding. Do you recommend I let him proceed in the hopes he can clear my credit report and delay the application process?

Any other advice would be greatly appreciated. Thank you!

[chane]

It depends if he knows what he's doing or not. It also depends on how long you can wait.