How to Get Late Mortgage Payments Removed

Late mortgage payments on a credit report can significantly affect an individual’s financial standing. These negative entries can lower credit scores, potentially increasing the cost of future borrowing or hindering approval for new loans. This article explores several approaches individuals can take to mitigate the effects of past late mortgage payments.

Understanding Late Mortgage Payments

A mortgage payment is considered late when not received by the lender on its due date, plus any grace period. Lenders typically report a payment as late to credit bureaus once it becomes 30 days past due. Subsequent reporting occurs at 60, 90, or 120 days past due, with each successive report carrying a more severe negative impact on a credit score. These reports remain on a credit report for up to seven years from the date of delinquency.

The presence of late payment marks on a credit report can substantially lower a credit score, as payment history is a significant factor in credit scoring models. A single 30-day late payment can cause a score to drop by dozens of points, and multiple delinquencies can lead to even larger decreases. A lower credit score can result in higher interest rates on credit cards, auto loans, and future mortgages, making borrowing more expensive. It can also affect approvals for rental applications, insurance premiums, and even some employment opportunities.

Goodwill Request Process

A goodwill request is an appeal to a mortgage lender to remove a late payment mark from a credit report. This approach is most effective for isolated incidents of late payment, particularly if the borrower has a history of otherwise timely payments. The request should state the account number and the specific date of the late payment. It should also include a brief, honest explanation for the lateness, such as an unexpected medical expense or a temporary job loss, without making excuses.

The letter should emphasize the borrower’s consistent payment history before and after the incident, demonstrating reliability. Borrowers should politely request the removal of the derogatory mark. Sending the letter to the lender’s customer service or credit reporting department is advisable, often via certified mail to ensure receipt. Waiting 30 to 45 days for a response is typical; if no response is received, a polite follow-up call or letter can be beneficial.

Disputing Inaccurate Reporting

Consumers have the right to dispute inaccurate or incomplete information on their credit reports. The first step involves obtaining credit reports from all three major credit bureaus: Equifax, Experian, and TransUnion. These reports can be accessed annually for free through AnnualCreditReport.com. A thorough review should identify any errors related to mortgage payments, such as incorrect payment dates, misreported amounts, or payments reported late when they were on time.

Gathering supporting evidence is crucial before initiating a dispute. This evidence could include bank statements showing timely payments, canceled checks, payment confirmations from the lender, or correspondence proving a payment was not late. Once inaccuracies are identified and evidence collected, disputes can be filed directly with the credit bureaus online, by mail, or by phone. A dispute can also be filed directly with the data furnisher, which is the mortgage lender.

The Fair Credit Reporting Act (FCRA) mandates that credit bureaus investigate disputes within a reasonable period, usually 30 days, or up to 45 days if additional information is provided. If the investigation confirms the information is inaccurate or cannot be verified, the item must be removed from the credit report. If the dispute is denied, consumers can still add a statement to their credit report explaining their side of the story or file a complaint with the Consumer Financial Protection Bureau (CFPB).

Negotiating with Your Lender

Direct negotiation with a mortgage lender can be a viable option, especially when late payments are due to financial hardship. Before contacting the lender, borrowers should prepare a comprehensive overview of their financial situation, including income statements, expenses, and documents supporting the hardship, such as medical bills or unemployment notices. A hardship letter explaining the circumstances that led to the late payments and outlining a plan for future payments can strengthen the case.

Lenders may offer various solutions to assist borrowers experiencing hardship, such as payment deferral, where missed payments are added to the end of the loan term, or a loan modification, which can alter loan terms to make payments more affordable. A repayment plan might also be an option, allowing borrowers to pay back missed amounts over a set period in addition to their regular payments. These solutions are generally evaluated based on the borrower’s specific financial situation and the lender’s policies.

Initiating contact with the lender’s loss mitigation or customer assistance department is the first step. Many lenders have dedicated departments and online portals for submitting hardship applications. Borrowers should communicate their situation and inquire about available programs. Document all communications, including dates, times, and the names of representatives spoken with, and retain copies of all submitted documents. Regular follow-up on the application status is advisable until a decision is reached.