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Copyright 1995 - 2005
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Christine Baker



Mortgage Credit
Updated 10/3/04

Mortgage Credit Basics
Lenders violate the law and get away with it

Mortgage Credit Basics

In the US we have three major credit reporting bureaus:

Experian (TRW), Equifax (CBI) and Trans Union.

Often creditors report your payment history and account balances to only one or two of the three credit bureaus. Citibank, Capital One and others sometimes don't report the credit limit, and some banks don't report at all.

NO credit is BAD credit!

Insufficient credit history is bad credit!

Credit INQUIRIES lower your Fair Isaac credit scores.

Public records such as judgments, bankruptcies, foreclosures, tax and other liens are included on your credit report.

Most mortgage rates, terms and conditions are based on FAIR ISAAC credit scores:

FICO for Experian, Beacon for Equifax and Empirica for Trans Union.

 Credit scores CHANGE even with NO changes on the reports

Ameriquest Mortgage - Unsurpassable incompetence, perjury and financing the mortgage SPAMMERS we all despise

Lenders violate the law and get away with it

In 1996 my clients had a tremendous problem with American Savings reporting a foreclosure that never happened.

They had already disputed this foreclosure in 1994 and I was just amazed to see that back then they had gotten the attention of an American Savings VP:

They had a 1994 letter signed by an American Savings VP apologizing for the incorrect reporting and promising correction.  Unfortunately, she had lied. They again reported the foreclosure.

My clients had been prequalified by Old Republic Bancorp in San Francisco in 1996. They contacted me after Old Republic subsequently declined their loan. Under the tax law at the time, they had only a few weeks left to replace their previous residence before incurring a HUGE tax liability.

I looked into the lending practices of First Republic Bancorp:

  • Three prequal letters (qualifying for purchases up to $600,000) turned out to be worthless, even though my clients had provided 1040's, pay stubs, everything!

    They declined the loan due to the credit reports. I can't understand how First Republic could issue prequal letters without reviewing the credit.
  • I discovered that Loan Disclosures were NOT prepared until I requested them.

  • When I  received the disclosures, they contained mistakes and blanks.

    Whoever took the loan application also left all income, employment and interviewer information blank.

    It looked like they had a "Quick Qualifier" in mind and they intended to complete the application with the data required to qualify for the loan.

First Republic Bancorp demonstrated incredible incompetence and blatant disregard for RESPA and TIL regulations.

The real estate agent had recommended First Republic Bancorp.

Your typical lender - real estate agent relationship was established with one goal in mind:

Control of the buyer!

After my clients started working with a different real estate agent, their loan was declined and First Republic Bancorp wouldn't approve a loan for any amount.

The reason for declining the loan: 

Information provided by the credit bureaus.  That's when my clients found out about the American Savings foreclosure on their credit.

Old Republic Bancorp management never responded to any of my faxes.  Instead, several months later, I received the legal threats from Lasky, Haas & Cohler, attorneys in San Francisco:

".... we hereby demand (1) that you immediately withdraw all of the false and defamatory statements about First Republic which appear on your web site, and (2) that you include on your web site a complete retraction of those false and defamatory statements.   Please be advised that if you have not done so within the next 3 business days, First Republic shall pursue all legal remedies available to it.

Very truly yours,

William A. Logan, Jr."

It's nice to see that the BayHouse web site is read.

My public response:

"PLEASE sue me, First Republic Bancorp."

Since 1996 I published my First Republic Bancorp experience.  I have NOT changed my assessment of First Republic, and you're not reading my retractions.  

And of course they didn't sue me, and it's unlikely they ever will.  They have NO legal remedies, and they know it.

They know that I have a huge file, filled with evidence of their numerous TIL and RESPA violations as well as proof of their incompetence. 

I'd like nothing better than being sued for publishing the truth.

While trying to get answers from Old Republic, I spent a LOT of time faxing and calling American Savings.  Understandably, my clients were getting VERY anxious.

Time was running out. We were literally counting days. One lender after the other declined the loan due to that foreclosure on the credit report.

They didn't care at all about the 1994 American Savings VP's letter - apologizing for the INCORRECTLY reported foreclosure.

Eventually I got American Savings to contact the bureaus directly and they corrected their reporting.

And it wasn't easy.  You'd think that an incorrect foreclosure on a credit report would get their attention.  But no, I had to send numerous faxes and threaten with legal action.

For about two weeks this case had my full attention with daily faxes and phone calls. Most of my clients couldn't afford that type of service, the total was around $1,500.

I was hoping my clients would agree to let me publish the entire "event" as on the Transamerica documentary and allow me to file complaints with the regulatory agencies.

I also recommended they hire a lawyer and sue both American Savings and Old Republic Bancorp. 

What you read here includes only a few of the many unethical and illegal practices of the real estate and loan agents involved.

However, my clients decided that "you live only once" and their quality of life was more important. They got their house and wanted to get back to leading a "normal" life. I respect that, and I understand their reasoning.

No doubt, it's a hassle to sue and file complaints. In recent years, I also tried to evade the deception and greed dominating the real estate, mortgage and just about any business.  There's nothing like hiding in the bush or desert for a few weeks or months, getting away from it all.

But I still hope that sometime *somebody* will put up a public fight.

As long as lenders can get away with breaking the law and extreme incompetence, they have no reason to change their business practices.

I'm aware of some law suits and settlements including "non disclosure" clauses. That beats doing nothing, but it won't hurt the lenders' ability to get new business.  They don't get the bad publicity they deserve.


  • Review your credit reports WITH the credit scores from all three credit bureaus a year prior to your planned purchase - even if you are not aware of past problems.

Don't work with lenders/brokers who

  • ask you to sign an incomplete application.
  • ask you to sign BLANK disclosures (a common practice.)

  • don't provide (mail) the disclosures within three business days from the date of application.

  • don't provide you with a copy of your credit report.

  • use a credit report supplier that doesn't correct data with the CRAs.

Prequal letters are worth LESS than the paper they're written on - you need the pre-APPROVAL subject only to the property conditions.

  • Many borrowers erroneously believe that only mortgage brokers engage in unethical and illegal practices. 

  • Major banks routinely KNOWINGLY break the law.  They know that TIL and RESPA enforcement is practically nonexistent. 

    Home Savings of America (now Washington Mutual) and California Federal advertised APRs *several* percent below the actual APR for their home equity loans year after year.

Learn how to get the mortgage and rate you applied for and check the BayHouse Forum for the latest on credit disputes and credit scoring.

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