Mortgage Research Network Podcast

Hi everyone, welcome to the Mortgage Research Network Podcast, a show that covers news and advice for first-time homebuyers. I'm your host, Tim Lucas, the editor of MortgageResearch.com and a former mortgage professional, and with me is Craig Berry, a mortgage originator with 25 years experience.
Good to be here, Tim.
Just a note that this podcast is AI-generated, but the article on which it's based was produced by people. This podcast's content is also reviewed for accuracy. And, Tim and Craig are real people. Without further ado, let's get into today's topic.
Today we're talking about disputing errors on your credit report. Here's something that'll blow your mind - trying to fix those errors could actually prevent you from buying a house. The entire mortgage industry has this bizarre relationship with credit disputes that most people don't discover until it's too late.
Hold on now - how could trying to correct mistakes on your credit possibly hurt your chances of getting a mortgage?
Well, it's all about how mortgage lenders handle disputed accounts. When you file a dispute, they have to completely remove those accounts from their analysis. And if those disputed accounts total more than $1,000 which isn't much these days your whole application could come to a screeching halt.
That seems like such a low threshold. What happens to people with legitimate disputes they're trying to resolve?
Hmm... that's where it gets really interesting. Different loan types handle disputes in completely different ways. Like with conventional loans, Fannie Mae and Freddie Mac use these complex algorithms that first try to include the disputed items, but if that doesn't work, well, you're looking at some serious red flags.
So what you're saying is the computer systems just can't handle these disputed accounts properly?
EXACTLY! And here's the wild part. Some lenders might try something called "manual underwriting," where an actual human looks at your file instead of the computer. But not all lenders even offer this option, and even when they do, you're looking at significant delays.
You know what this reminds me of? It's like when you're trying to dispute a speeding ticket when you're pretty sure you were going the limit. You still have to go through the proper channels.
Oh man, that's such a good comparison! And get this - timing is absolutely crucial. Unless you're dealing with medical debt or actual fraud, you're better off waiting until after your mortgage is completely closed and funded before disputing anything. It's like trying to fix an airplane while it's flying; technically possible, but probably not the best idea.
So what should someone do if they find legitimate errors while they're house hunting? Just ignore them?
Well, here's the strategy experts recommend: Try applying for the loan even with those inaccurate accounts first. You might actually get approved anyway. But if you absolutely must dispute something during the process, you need rock-solid documentation to back it up.
That makes sense, but what about the impact on your credit score? Wouldn't those inaccurate items be hurting it?
That's another layer of complexity right there. When you remove a dispute, your credit score might actually drop because credit bureaus often don't consider disputed accounts in their scoring models. And here's something that really catches people off guard, when you go to remove a dispute, you have to tell the credit bureaus and creditors that you "agree with the balance and prior paying history.
Oh wow - that sounds like it could have some negative implications in the future.
You're absolutely right about that. Credit experts strongly advise against removing disputes on truly fraudulent accounts because creditors could use that statement against you later. And you have to go through this whole process with each credit bureau separately, plus the original creditor.
This whole system seems difficult to navigate, to say the least.
You know what's really fascinating about this? The rules keep changing. Like, medical debt disputes are usually fine now, and some loan programs don't care about disputed accounts under $1,000. But keeping track of all these exceptions and rules is practically a full-time job.
That really highlights why working with professionals who understand these nuances is so important.
Exactly right. Because at the end of the day, we're talking about the biggest financial transaction most people will ever make. And here's something that really puts it in perspective; a single disputed charge of just $200 could end up costing you your dream home if you handle it at the wrong time.
The ripple effects of these policies must be enormous when you think about it.
Oh, they absolutely are. What seems like a simple action that could help your approval chances could jeopardize the whole homebuying process. Like you said, it's worth talking to a lender who can guide you through your best strategy, even if homebuying is still a ways off. You don't want to make a misstep now that makes it tougher to qualify in the future.
For those listening, if you'd like to learn more, visit MortgageResearch.com and type credit dispute in the search bar. See you next time on the Mortgage Research Network podcast.