Mortgage Underwriter Stating My Wife has $208k in Student Loans That We Know Nothing About

[CoastLawyer2030]

Update: After much detective work I have realized that they have not only wrongfully imputed these loans onto my wife, but they have doubled my own student loans that I still owe ($104,000) and counted those effectively four times ($208k for me and $208k for her) in their underwriting. I don't know why the $208k/2 = $104k didn't strike me sooner, but oh well.

I do not believe this is their fault. MyFedLoan just closed and I had to transfer my loans to a new servicer (Aidvantage). This servicer is brand new and I think they screwed up the reporting.

I am drafting a lengthy email to the underwriting team at Ally to resolve the issue.

Original Post

My wife and I are in the process of applying for a mortgage for a new house. The underwriter has been asking me for an absolute ton of documents to such an extent that I knew something was up, so I called.

She advised me that our debt-to-income ratio was 62%. I told her that was impossible -- we make approximately $14,000/month and our only liability is our mortgage ($1,492) and my student loans, which have had a $0 payment since March 2020. She said it's that mortgage plus my wife's student loans.

Well, my wife and I paid off her loans back in 2017 and 2018. She has had a zero balance that entire time and we have never received any mail regarding student loans since then.

The underwriter sent me a screenshot of what they are looking at on their end. They show a nauseating $208,000 in student loans. I told her that was impossible. I asked for a more detailed reading and almost all of these loans were taken out after my wife graduated.

I am obviously freaking out so I decided to pull my free credit reports from annual credit reports. All three show my wife's student loans as paid off, and none of them show the student loans that the underwriter is mentioning.

What on earth is going on here? I am losing my mind. Obviously we will not qualify for the mortgage if these student loans are considered.

[BruDude]

Ask them to confirm what source the information is being pulled from, then investigate with that source. They should probably be able to find out.

[KlangFool]

Make sure that your wife's name was spelled correctly. And, the SSN number is accurate.

KlangFool

[CoastLawyer2030]

Ask them to confirm what source the information is being pulled from, then investigate with that source. They should probably be able to find out.

I asked them this and they said due to regulatory reasons they could not share this information.

[Nutmeg]

My wife and I are in the process of applying for a mortgage for a new house. The underwriter has been asking me for an absolute ton of documents to such an extent that I knew something was up, so I called.

She advised me that our debt-to-income ratio was 62%. I told her that was impossible -- we make approximately $14,000/month and our only liability is our mortgage ($1,492) and my student loans, which have had a $0 payment since March 2020. She said it's that mortgage plus my wife's student loans.

Well, my wife and I paid off her loans back in 2017 and 2018. She has had a zero balance that entire time and we have never received any mail regarding student loans since then.

The underwriter sent me a screenshot of what they are looking at on their end. They show a nauseating $208,000 in student loans. I told her that was impossible. I asked for a more detailed reading and almost all of these loans were taken out after my wife graduated.

I am obviously freaking out so I decided to pull my free credit reports from annual credit reports. All three show my wife's student loans as paid off, and none of them show the student loans that the underwriter is mentioning.

What on earth is going on here? I am losing my mind. Obviously we will not qualify for the mortgage if these student loans are considered.

I can understand that this is stressful. We can’t really answer this; only the mortgage underwriter can tell you where they obtained the student loan information shown on the screen. I recommend that you send the copies of the credit reports and any other documentation you have showing that the student loans have been paid off to the underwriter and request more detail as to where the underwriter obtained the info for the screenshot.

[Nutmeg]

Ask them to confirm what source the information is being pulled from, then investigate with that source. They should probably be able to find out.

I asked them this and they said due to regulatory reasons they could not share this information.

It seems odd to me that there exists a regulation anywhere preventing an organization from telling your wife the source of information about herself. That would be like my asking my doctor whether my latest immunizations were recorded in my records and her replying, “Can’t tell you; HIPAA.”

It also seems that your mortgage broker might have an interest in this mortgage going through, and perhaps you could contact her to see if she has any advice. This cannot be the first time the company has turned up inaccurate personal info from public records.

[gavinsiu]

Get a credit report and see if the loan shows up. I recall decades ago a friend of mine tried to get a car loan and is told that he owes mortgage on a house which of course he did not own. They mixed up someone else's info with his.

[Big Dog]

can you obtain a Payoff Letter from the loan processor?

[CoastLawyer2030]

can you obtain a Payoff Letter from the loan processor?

These are from a processor that my wife never had/used.

[CoastLawyer2030]

Get a credit report and see if the loan shows up. I recall decades ago a friend of mine tried to get a car loan and is told that he owes mortgage on a house which of course he did not own. They mixed up someone else's info with his.

Pulled all three and these loans aren't on any of them.

[runninginvestor]

Does the credit report that you pulled show the mortgage company pulling credit on your wife? When we've applied for mortgages, the hard credit inquiry shows up on our credit reports immediately. If it didn't show up on your wife's, they might have pulled the wrong person's report.

[CoastLawyer2030]

Does the credit report that you pulled show the mortgage company pulling credit on your wife? When we've applied for mortgages, the hard credit inquiry shows up on our credit reports immediately. If it didn't show up on your wife's, they might have pulled the wrong person's report.

Strangely enough yes; it shows this bank (Ally) pulling her credit on 07/21.

[Nutmeg]

Ask them to confirm what source the information is being pulled from, then investigate with that source. They should probably be able to find out.

I asked them this and they said due to regulatory reasons they could not share this information.

It seems odd to me that there exists a regulation anywhere preventing an organization from telling your wife the source of information about herself. That would be like my asking my doctor whether my latest immunizations were recorded in my records and her replying, “Can’t tell you; HIPAA.”

It also seems that your mortgage broker might have an interest in this mortgage going through, and perhaps you could contact her to see if she has any advice. This cannot be the first time the company has turned up inaccurate personal info from public records.

One more thought: did the underwriter say that she couldn’t tell you the source of your wife’s info, or that she couldn’t even tell your wife?

[Weathering]

The good news is that if something bad were going on, then those student loans would be delinquent, and your wife's credit score would be in the trash. It sounds like the student loan processor may have a mix-up (they mis-typed a social security number or something). I'd call them next.

[runninginvestor]

Does the credit report that you pulled show the mortgage company pulling credit on your wife? When we've applied for mortgages, the hard credit inquiry shows up on our credit reports immediately. If it didn't show up on your wife's, they might have pulled the wrong person's report.

Strangely enough yes; it shows this bank (Ally) pulling her credit on 07/21.

Maybe this will help?

https://selling-guide.fanniemae.com/Sel ... 5-2017.htm

Seems like they have to work with you in a dispute.

[HappyPappy]

Ask them to confirm what source the information is being pulled from, then investigate with that source. They should probably be able to find out.

I asked them this and they said due to regulatory reasons they could not share this information.

It seems odd to me that there exists a regulation anywhere preventing an organization from telling your wife the source of information about herself. That would be like my asking my doctor whether my latest immunizations were recorded in my records and her replying, “Can’t tell you; HIPAA.”

It also seems that your mortgage broker might have an interest in this mortgage going through, and perhaps you could contact her to see if she has any advice. This cannot be the first time the company has turned up inaccurate personal info from public records.

+1 to this. A mortgage broker claims they have info about your wife showing she owes $208k, but they cannot tell you (or her??) where they're getting that from?

Maybe this is all completely normal, I have only ever bought one house, but the fact they company will not share with you information about your wife, with your wife, sounds sketchy. How could she have loans without their showing on her credit reports?

[Nate79]

Try another mortgage company.

[momvesting]

Also, look closely at each entry of her loans on her credit report and see if every category is filled out correctly. We had a similar situation many years ago on our first home. My purse was stolen just before we started the mortgage. One of the credit cards, the one we used daily, showed the old (stolen) card as closed with a $2500 balance and a $2500 minimum payment due. Although we always used and paid off, the card being closed made the minimum payment = the total balance. We were able to get it cleared up as soon as paying off our regular use/pay off card was updated on our credit report. I know this isn't the exact same, but it's possible that just one incorrect field in the reporting of the student loans is being picked up in the processor's computer system.

[CFIT]

Equifax sent out bad credit information this spring causing some people who should have qualified for loans to be denied. I don't know if this is involved in you experience, but it is interesting.
https://www.cbsnews.com/news/equifax-wr ... dit-score/

[Jack FFR1846]

Pull credit reports from all 3 bureaus and then lock all of these. It sounds like someone has her information and is using it to get credit.

[exodusNH]

Pull credit reports from all 3 bureaus and then lock all of these. It sounds like someone has her information and is using it to get credit.

It could also be a mistake / data matching error.

The US Government mandated credit site, annualcreditreport.com, is still offering weekly credit reports.

[HootingSloth]

Try another mortgage company.

If they are giving you a hard time about information that is clearly wrong, and they will not even tell you the source of the misinformation so that you can clear it up, this would be my approach. There are many fish in the sea.

[InvestorHowie]

We went through the same ordeal when we refi'd in 2020. While the loan was in underwriting they found a tax lien reported for a name that matched that of my DW (common name) but for an address in Chicago at least 15 miles away from any previous address of ours. We were forced to do the legwork, get an affidavit from the Secretary of State affirming that this was not our lien and then (after several days of back and forth) it was struck from her record.

I'm hoping for you that this is just sloppy paperwork somewhere along the line as was the case for us and not a more serious identity issue. Best of luck but please know that you're not alone.

[CoastLawyer2030]

Try another mortgage company.

If they are giving you a hard time about information that is clearly wrong, and they will not even tell you the source of the misinformation so that you can clear it up, this would be my approach. There are many fish in the sea.

My concern in doing this is that I am supposed to close on August 22 and I would be too late to try and get on board with another lender.

[anon_investor]

Try another mortgage company.

If they are giving you a hard time about information that is clearly wrong, and they will not even tell you the source of the misinformation so that you can clear it up, this would be my approach. There are many fish in the sea.

My concern in doing this is that I am supposed to close on August 22 and I would be too late to try and get on board with another lender.

Talk to the underwriter, sounds like they mixed up your wife's credit report with someone elses.

[CoastLawyer2030]

Try another mortgage company.

If they are giving you a hard time about information that is clearly wrong, and they will not even tell you the source of the misinformation so that you can clear it up, this would be my approach. There are many fish in the sea.

My concern in doing this is that I am supposed to close on August 22 and I would be too late to try and get on board with another lender.

Talk to the underwriter, sounds like they mixed up your wife's credit report with someone elses.

After much detective work I have realized that they have not only wrongfully imputed these loans onto my wife, but they have doubled my own student loans that I still owe ($104,000) and counted those effectively four times ($208k for me and $208k for her) in their underwriting. I don't know why the $208k/2 = $104k didn't strike me sooner, but oh well.

I do not believe this is their fault. MyFedLoan just closed and I had to transfer my loans to a new servicer (Aidvantage). This servicer is brand new and I think they screwed up the reporting.

I am drafting a lengthy email to the underwriting team at Ally to resolve the issue.

[anon_investor]

Try another mortgage company.

If they are giving you a hard time about information that is clearly wrong, and they will not even tell you the source of the misinformation so that you can clear it up, this would be my approach. There are many fish in the sea.

My concern in doing this is that I am supposed to close on August 22 and I would be too late to try and get on board with another lender.

Talk to the underwriter, sounds like they mixed up your wife's credit report with someone elses.

After much detective work I have realized that they have not only wrongfully imputed these loans onto my wife, but they have doubled my own student loans that I still owe ($104,000) and counted those effectively four times ($208k for me and $208k for her) in their underwriting. I don't know why the $208k/2 = $104k didn't strike me sooner, but oh well.

I do not believe this is their fault. MyFedLoan just closed and I had to transfer my loans to a new servicer (Aidvantage). This servicer is brand new and I think they screwed up the reporting.

I am drafting a lengthy email to the underwriting team at Ally to resolve the issue.

That's crazy. Good luck. Does Ally still use Better.com? When I did arefi with Ally a couple of years ago it was really Better.com in the background.

[CoastLawyer2030]

That's crazy. Good luck. Does Ally still use Better.com? When I did arefi with Ally a couple of years ago it was really Better.com in the background.

Yes.

[chazas]

I was very happy with my Better refi’s rate from back in the low rate days, but their underwriting folks could only be contacted via an intermediary. I had something simple to communicate and it took several tries. I can’t imagine it’s gotten better (no pun intended) with their layoffs.

My advice is, don’t send them a “lengthy” anything. Clean, simple, as few bullet points as possible. You may have to bang them over the head with it numerous times. They will never digest something lengthy.

[DonIce]

I had some very disappointing experiences lately with Ally on a much simpler issue than mortgage underwriting. Would go elsewhere.

[David Jay]

The 208K is easy, it is both the old loan and the new loan. The old loan will "go away" next month.

The issue is showing the 208K outstanding for each of you.

[Lafder]

Didn't you say your student loan servicer just changed?

It sounds like they got the loan balance from the old and new company, and the original company still had the balance due, yet the new one had it as well.

As far as your wife "owing" the same amount, I do not have a simple explanation for that other than spouses finances get tangled at times (I know this should not happen with student loans). Was she by chance a cosignor on any of the loans?.

Can you show the underwriter your statements from the old and new student loan companies as well as your and your spouse's credit reports that you pulled?

Maybe they will tell your wife where her supposed student loans are and she can get a statement from them saying she does NOT have a balance due with them.

It is ridiculous if the underwriter can not tell her where the supposed loans are. It is impossible to get a letter saying zero balance from every single student loan company out there. But.......she can try if needed.

The fact that the amount is exactly the same for both of you, and exactly double the true balance makes it unlikely they actually have reports of these loans. 4 loans with the exact same balances ought to raise some alarm bells for a thinking underwriter.......

[CoastLawyer2030]

I was very happy with my Better refi’s rate from back in the low rate days, but their underwriting folks could only be contacted via an intermediary. I had something simple to communicate and it took several tries. I can’t imagine it’s gotten better (no pun intended) with their layoffs.

My advice is, don’t send them a “lengthy” anything. Clean, simple, as few bullet points as possible. You may have to bang them over the head with it numerous times. They will never digest something lengthy.

I had some very disappointing experiences lately with Ally on a much simpler issue than mortgage underwriting. Would go elsewhere.

For better or worse I did not see this post until now and went ahead and sent them the lengthy email. It very thoroughly set forth (1) they are undercounting my income because they are not adding my distributions from my S-Corp; (2) they are double counting the student loans; and (3) their estimated payment for the student loans is wrong.

I must say I am also incredibly disappointed thus far. Everyone I am working with is Pacific time which is making communication difficult.

Moreover, in addition to the student loan cluster, like I said they are not counting *any* of my distributions from my S-Corp as income. I know this because my underwriter said they could only verify $9,000 in monthly income. I did some back of the napkin math and figured out this total included only (1) my salary from my City job; (2) my wife's paychecks; and (3) my salary from my S-Corp (this all totaled $9,100/month by my math).

I do distributions every 3-4 months and sent them statements showing a $13,000 distribution in January and a $25,000 distribution in June. I also gave them a balance sheet showing $24,000 in accounts receivable, which will result in another $20,000 distribution this year -- and even that is low because that assumes ZERO future income other than these already existing A/R. These distributions will total $58,000; my K-1 from last year showed $55,000.

I honestly cannot for the life of me believe that underwriting is even an issue.

[hand]

I am drafting a lengthy email to the underwriting team at Ally to resolve the issue.

It may be worth taking the time to recognize each party's motivations - if rates have gone up since you locked, the lender may be happy for your loan to fall through either based on documented flaws (even if incorrect) or by running out the clock on the issues you flag with your lengthy email.

If it were me, I'd document the earnest money amount you stand to lose should the sale fall through and send using your legal title / stationary as a less than explicit threat of litigation should their errors cause you to be unable to close. Perhaps this gives the underwriter enough motivation to escalate or push through to close.

On the other hand, housing market appears to have shifted - do you still want the house, or does a financing failure give you a free pass to walk away?

[CoastLawyer2030]

I am drafting a lengthy email to the underwriting team at Ally to resolve the issue.

It may be worth taking the time to recognize each party's motivations - if rates have gone up since you locked, the lender may be happy for your loan to fall through either based on documented flaws (even if incorrect) or by running out the clock on the issues you flag with your lengthy email.

If it were me, I'd document the earnest money amount you stand to lose should the sale fall through and send using your legal title / stationary as a less than explicit threat of litigation should their errors cause you to be unable to close. Perhaps this gives the underwriter enough motivation to escalate or push through to close.

On the other hand, housing market appears to have shifted - do you still want the house, or does a financing failure give you a free pass to walk away?

Rates have actually gone down since we locked in our rate. I actually made sure to send my email from my law firm email address. For better or worse I gave them six additional attachments; there is honestly no way they can keep up with their incorrect numbers.

We definitely still want the house. I am terrified that their incompetence is going to make this fall through. We already sold our current house for a great price and we cannot back out of that deal.

[hand]

For better or worse I gave them six additional attachments; there is honestly no way they can keep up with their incorrect numbers.

With all due respect, they can very easily keep their incorrect numbers - by doing nothing. It is way easier, more pleasant and more profitable for the underwriter to focus on their pile of easy to process requests than to spend time (and productivity) detangling your issue.

20 days is quick to close, but there should be lenders who can get it done, especially if you already have all your documents in order. If it were me, I'd be calling around to find a lender who is willing to understand your situation and guarantee a quick close.

[CoastLawyer2030]

For better or worse I gave them six additional attachments; there is honestly no way they can keep up with their incorrect numbers.

With all due respect, they can very easily keep their incorrect numbers - by doing nothing. It is way easier, more pleasant and more profitable for the underwriter to focus on their pile of easy to process requests than to spend time (and productivity) detangling your issue.

20 days is quick to close, but there should be lenders who can get it done, especially if you already have all your documents in order. If it were me, I'd be calling around to find a lender who is willing to understand your situation and guarantee a quick close.

I already have appraisal and inspection, and now with all my docs in a row, I could probably still get this closed by August 22.

[CoastLawyer2030]

After all this, the mortgage has been conditionally pre-approved. I still have a call scheduled for tomorrow with the underwriter to confirm they have everything they need.

[niceguy7376]

What are distributions from a S Corp?
Dont you run a salary payroll for a S Corp?

[theplayer11]

I was very happy with my Better refi’s rate from back in the low rate days, but their underwriting folks could only be contacted via an intermediary. I had something simple to communicate and it took several tries. I can’t imagine it’s gotten better (no pun intended) with their layoffs.

My advice is, don’t send them a “lengthy” anything. Clean, simple, as few bullet points as possible. You may have to bang them over the head with it numerous times. They will never digest something lengthy.

I had some very disappointing experiences lately with Ally on a much simpler issue than mortgage underwriting. Would go elsewhere.

For better or worse I did not see this post until now and went ahead and sent them the lengthy email. It very thoroughly set forth (1) they are undercounting my income because they are not adding my distributions from my S-Corp; (2) they are double counting the student loans; and (3) their estimated payment for the student loans is wrong.

I must say I am also incredibly disappointed thus far. Everyone I am working with is Pacific time which is making communication difficult.

Moreover, in addition to the student loan cluster, like I said they are not counting *any* of my distributions from my S-Corp as income. I know this because my underwriter said they could only verify $9,000 in monthly income. I did some back of the napkin math and figured out this total included only (1) my salary from my City job; (2) my wife's paychecks; and (3) my salary from my S-Corp (this all totaled $9,100/month by my math).

I do distributions every 3-4 months and sent them statements showing a $13,000 distribution in January and a $25,000 distribution in June. I also gave them a balance sheet showing $24,000 in accounts receivable, which will result in another $20,000 distribution this year -- and even that is low because that assumes ZERO future income other than these already existing A/R. These distributions will total $58,000; my K-1 from last year showed $55,000.

I honestly cannot for the life of me believe that underwriting is even an issue.

distributions aren't added in. Your business income is reported on schedule E(from k-1) for the scorp and flows to line 8 on your 1040. That's the number the lender look at, they wouldn't add distributions to that number.

[chazas]

For better or worse I gave them six additional attachments; there is honestly no way they can keep up with their incorrect numbers.

With all due respect, they can very easily keep their incorrect numbers - by doing nothing. It is way easier, more pleasant and more profitable for the underwriter to focus on their pile of easy to process requests than to spend time (and productivity) detangling your issue.

20 days is quick to close, but there should be lenders who can get it done, especially if you already have all your documents in order. If it were me, I'd be calling around to find a lender who is willing to understand your situation and guarantee a quick close.

Agree. They don’t like complicated things. I’m a biglaw partner, and a nonequity one at that, but I get a K-1. They kept asking me for business financial statements, information about accounts receivable and payable, “customer” information, and all kinds of things I would never have access to. My firm traditionally provides a letter verifying income and that’s it. They finally “got it” but it took a lot of tries. Probably why most of my partners use their private banking mortgage specialists, even though at the time you couldn’t touch the internet lender rates, so it worked out ok for me.