Wednesday, March 4, 2015

Exactly How An Owelty Lien Works I

Perhaps no other topic that I address triggers the interest amongst family law attorneys as does the famous Owelty lien. I think I know why. It’s a bit of a mystery. But, why is it a mystery? Lawyers are known for their ability to understand complicated and complex issues and to, not only make sense of them but, argue them before a court.

The mystery is made somewhat more clear by the Texas Constitution Article 16, §50, (a) which allows
(3) an owelty of partition imposed against the entirety of the property by a court order or by a written agreement of the parties to the partition, including a debt of one spouse in favor of the other spouse resulting from a division or an award of a family homestead in a divorce proceeding;

I hope to clarify what may be somewhat unclear and mysterious about the Owelty lien.
This “Owelty of Partition” performs two very important functions:

1.    It secures the interest of the grantor in the awarding of a family homestead. This is the same way a lender secures its interest in a property when it advances money for its purchase or refinance (which is a renewal and extension of the “purchase money”). Lenders secure their interest with a Deed of Trust. The divorce settlement secures the grantor’s interest with a deed as well; a Special Warranty Deed with Encumbrance for Owelty of Partition, to be specific.

2.    Most importantly for our purposes, it allows the financing of that lien to be performed without relying on the restrictive and, sometimes, disqualifying features of the Texas Home Equity loan. In other words, for a qualified borrower, it allows us to TURN WHITE PAPER INTO GREEN MONEY.

This finance-ability of the grantor’s interest is critical in Texas because of the equity financing laws. (More on that next week). It’s critical in all other 49 states as well but even more so in Texas. In 49 states, Fannie Mae and Freddie Mac underwriting guidelines set the maximum LTV (Loan To Value) ratio at 85% when “cashing out.” State laws do not regulate equity financing in these states – as I said, underwriting guidelines do. Texas is different. The maximum LTV ratio is set by law at 80%.

Now, Fannie and Freddie may raise their maximum LTV ratio (in cash out transactions) to 90%. In fact, until just after the financial meltdown of 2008, Fannie’s max LTV for cash outs was 90%. But, state laws do not address these matters. The market and consequent underwriting standards govern these matters.

Here’s the kicker. Owelty financing is not “cash out” financing. The maximum LTV ratio is not set by state law in such a case. It is controlled by the market and underwriting standards. And that standard for LTV maximums is 95%. This means that a borrower can access 15% more of their home’s value if they avoid “cashing out” and, wisely, employ the Owelty lien for the buyout to their ex-spouse.

There are other favorable elements to Owelty financing which do not exist in equity or cash-out financing. I will discuss these in the coming articles.

Wednesday, February 18, 2015

Why I Preview Drafts of the Divorce Decree - Part II

This Is Why It Is Important For Me To Preview Drafts of the Divorce Decree

Last week, I discussed why every word in a borrower’s decree is read, reviewed and underwritten. The assignment of debt was the key illustration and element in the first reason why I PRE-underwrite (review prior to finalization of divorce) drafts of divorce decrees. Too much debt assignment can disqualify a potential borrower and trigger a loan denial – no matter what appears on their credit report.

Here’s a second reason I preview divorce decrees:

A decree provides underwrite-able data for loan approvals. Here’s one example of “underwrite-able data.”

Qualifying Income
Forgetting the relaxed underwriting standards of the late 1990’s through 2008, it is a nearly universal axiom that lenders must judge the risk level of a loan by a set of fixed parameters – namely: credit patterns, the collateral-property (especially the LTV or Loan To Value ratio), assets, debts and income.

Of paramount importance in this matrix is the borrower’s income; specifically, their debt/income ratio.

But, there is more than the immediately measurable income. For example, an applicant may be making $5,000 per month but she may, in fact, be self-employed as a contract laborer with only a few months remaining on the contract. Or, an entrepreneur may be making $25,000 per month in his new business but have very little experience in running his own enterprise. How prudent would it be for a lender not to consider these factors in their lending decision? This judgment is a measure of “income stability.” In other words, how likely is it that the income will continue? The loan, after all, is for a long period of time – up to 30 years – during which the lender must receive consistent installment payments.

So, what does the lender seek in terms of income stability? For how long might a lender seek to assure that their borrower will receive enough income to make these payments? For whatever reason, 3 years of continued income (whether by employment or by whatever means) is the standard underwrite-able expectation.

Here’s the problem. Only one person knows the future and He usually doesn’t spell it out in readily discernable, layman’s language. And, as everyone knows, mortgage lenders work for the devil so God isn’t inclined to tell them much anyway.

Seriously, lenders only have a few methods of predicting the likelihood of continued income. One is past performance. The metric for that is 2 years’ experience in the same line of work. There is another metric for child support and alimony which I discuss below. Another measurement is the employer’s statement.  But, employers are rarely willing to make such statements for obvious reasons. The Fannie Mae form – Verification of Employment – still has a section that asks “Probability of Continued Employment?” Most employers leave it blank or enter “Does not comment.” And a lender cannot force a commitment one way or the other from an employer.

There is one instance wherein the lender can predict – very accurately – the likelihood of continuance of income: Divorce. Think about it. A divorce decree tells a lender exactly how long support is ordered to continue….to the day, month and year.

So that we don’t get lost in nuances of underwriting standards – snooze time – let’s review. I PRE-underwrite divorce decrees because they reveal to the lender exactly how long support income will continue and, therefore, how much of that income is considered “qualifying” for loan approval purposes.

I said that there was a different metric for “past performance” when it comes to child or spousal support. When it comes to employment, the look-back is 2 years. But, when documenting support income, the requirement is only 3 months (for FHA financing) or 6 months (for conventional financing).

Here’s an example of how PRE-underwriting can save the day for a divorcing borrower.

Jane had documented receipt of child support (for her 10, 12 and 14 year old children) for the required 6 months. We planned to close the loan in July. Her 14 year old would turn 15 in June and was currently in the 9th grade. As is usually the case, when the oldest child turns 18 or graduates from high school, support for the remaining two children drop (in this case from $2250/month to $1725/month as an example only). She had planned on qualifying with $2250/month; but, because of the three year continuance can only use the $1725/month as qualifying income.

We advised that support continue at the higher amount for an additional 2 months (a difference of only $1050) and that accommodations be made to adjust for the difference in the division of assets. The paying husband/father just agreed to do it in order to help the wife/mother qualify so not adjustments had to be made. The point is that these minor adjustments could be made and that they made all the difference between qualifying for a mortgage and not.

This happened only because 1) we knew how to apply the rules for qualifying income and 2) we previewed the decree, offering suggestions for minor but NOT substantial changes in the settlement.

Such a solution cannot occur when divorcing clients do what virtually all mortgage lenders tell them to do – “get your divorce, bring us the decree and let’s see what we can do.”

My friends, that method is a formula for disasters and loan denials. There is a better way. That’s what I do.

Thanks for reading.

Noel Cookman

Wednesday, February 11, 2015

Why I Preview Drafts of the Divorce Decree - I

Why I Preview Drafts of the Divorce Decree
Part I

In my Assessment/Approval – my report to you about a client’s qualifications and conditions for mortgage financing – I always include the following paragraph in red

Please copy us on drafts of the decree before they are executed by the parties. We will pre-underwrite this draft to assure a smooth transaction. Pertinently, divorce decrees are universally underwritten as part of a loan file for any applicant who has been divorced. In any case, the client’s decree will most certainly be underwritten in this instance. ‘Tis better to pre-underwrite than to be caught by surprise.

The paragraph provides a brief explanation as to why I want to review the decree before its execution. And I will discuss other reasons and benefits to a divorcing borrower (immediately or in the future) in future newsletters on the subject.

The major reason I need to preview the divorce decree – and a lot of folks do not know this – is because an underwriter will read every word of it. Not only will the underwriter review it but he/she will consider everything in it as relative to the loan file.

Here’s a good example. A divorcing husband purchased a car for his soon-to-be ex-wife in his own name and credit – NOT using her name/credit to obtain the loan. In their thinking, this would help the wife qualify to refinance the mortgage in her own name, the debt not showing on her credit report. (The liability, obviously, did not appear on our borrower’s credit report). But, the proposed divorce decree assigned the debt to wife.

When I discussed this with the husband – and why the wife might not qualify with that extra debt – he eventually understood but initially had a difficult time comprehending that a debt which does not appear on a credit report still counts against the borrower.

You see, in every other situation – in normal circumstances – the only way to know what debts must be counted against the all-important debt ratio is for the lender to examine the borrower’s credit report. This couple thought they could “game the system” by simply getting a loan in the other’s name, thereby exempting it from the borrower’s credit report.

This is a major reason lenders require the entire, conformed divorce decree when underwriting a file – the detection of all debts.

And this is why I preview or PRE-underwrite the decree before its execution. As you know, I will have already been processing the loan for the client – way before every other lender wants to even take an application.

And this, my friends, is how we assure successful closings – we do not throw things to the wind and hope for the best. We give the entire settlement meticulous review and make recommendations accordingly.

Thanks for reading.
Noel Cookman

Wednesday, February 4, 2015

What Is An Assessment in a Divorce Settlement?

One of the greatest values you can give your divorcing clients is a set of tools to implement their settlement and agreements.

Think of it this way – if your client (or opposing) is ordered to refinance the recently-awarded marital residence and include a buyout to their former spouse, how beneficial would it be if everyone in the process (clients, attorneys, the court/mediator, children) knew, in advance, that this would actually happen? What if you knew – BEFORE FINAL DIVORCE – that they could actually turn white paper (decree) into green money (buyouts, payoffs)?

Well, there’s a way to achieve that. That’s what my Assessment tells you.

In as concise a form as possible – usually less than two pages – my Assessment

1.       analyzes the situation,
2.       offers brief explanations of how mortgage finance affects the settlement (and vice versa) and
3.       makes clear recommendations for decree language and settlements.

As a note to #3, I adhere to the principle of non-interference. That is, I do not see my role as trying to affect terms of the settlement. I strongly believe that this is between the parties and their attorneys. My concern is to accommodate, as much as possible, the agreements that are contemplated. However, certain features of a settlement will either allow or disallow loan approval. Therefore, some tweaking is sometimes called for.

Here’s an example. A wife wishes to be awarded the marital residence under the proviso that she refinance its mortgage and, thus, relieve the husband of its credit liability. She needs support income to qualify for this mortgage. The wife tells me that spousal support is contemplated at $2,000 per month for two years. Well, one of the mortgage rules is that such income must continue for 3 or more years after loan closing. So I ask, “can you live with $1,333 per month for 3 years?” If so, all $1,333/month is qualifying income while $0 of the $2,000/month could be counted as her qualifying income (because it does not extend for 3 years or more after loan closing). There are usually a few other adjustments to be made but that’s the general idea.

Thus, I have not affected the actual dollar amount that is to be paid/received; I have simply recommended that it be structured in such a way as to allow the client to get financing. And, incidentally, the payer benefits as well when he needs financing – instead of $2,000/month counting against his debt ratio, now only $1,333 counts against it. It’s almost always a win-win.

Also, I have to advise regarding (what I call) limits to financing. That is, while I never tell a party “you should get this much or they should pay this much,” I do have to say one of two things

-          “It will take this many dollars to qualify” or
-          “For that amount of support, your loan amount cannot exceed $X.”

This is all in a concise Assessment. And by the way, the Assessment is as fluid as a divorce settlement process is. That is, it requires updating and refinement. This is because everything about a divorce settlement affects loan approval. That means I have to update the Assessment.

Here’s how you get my dynamic, award-winning, stupendous (well, pretty important anyway) Assessment for your case: Tell your client to call me. Or ask opposing to have their client call me. The one who needs financing (whether refinancing or purchasing in the foreseeable future) needs to make that call.

“Hi Noel; my attorney gave me your number” is the beginning of a dramatically and substantially better settlement with the advantage of my Assessment about


Noel Cookman


Wednesday, January 21, 2015

Why Wait?

Why Wait?

We all deal with hesitant customers and clients, folks who are just not sure that they want to "pull the trigger" on a divorce, a filing, a transaction, et al. When it comes to qualifying for a mortgage, there is never an upside to waiting. Several months ago, a client called to find out if she could qualify to refinance the mortgage and roll in a buyout to husband. Yet, when I sent her the link to apply for the loan, she said that her attorney had advised waiting - that, it was too early for her to apply. I asked the reason. There was none - just, "it's not time." I understand that there are many features of a divorce that affect many other issues; and about which I need to know nothing. So, I tend to just let these matters go and not push it with the client or attorney. But, no one - the attorney, the client, opposing, the lender - is ever served well by the client-borrower waiting to "pull the trigger" on getting their financing package in place. Here’s why:

7 Reasons Divorcing Clients
Should NOT Wait to Call Me and Get Started

  1. Support income pay history. If child or spousal support is needed for qualifying income, a pay history has to be documented. In conventional loans, the minimum pay history required is SIX (6) MONTHS (In FHA it can be as little as 3 months). That's less than my average *pipeline time. I can't tell you how many times a new customer has called just when the settlement was winding down; I realized that an extensive (3-6 months) of support would be required in order to close the loan and I had to tell them "if only you had called a few months ago, I'd have you ready to close by now." It makes no sense to start documenting this at final divorce when a few simple tactics can have most clients already documented and ready to close upon final divorce.
  2. Credit may need to be enhanced. This takes time - up to two years and rarely less than 4 months (if "credit repair" or even resolving disputed accounts is required). Why not get started earlier than later? There is no down side to starting as soon as possible. If your client does get started, you have given them a 3-4 month head start. That's extra value for your client.
  3. Avoid last minute rushes and the stress involved. Especially if you are settling and finalizing in the next several weeks, things can get a little crazy if the client is being rushed to get his/her documentation together. Of the top 42 stress producing life events (, 17 are more than likely present in most of your clients.  In the coming years as more research is done – and from my experience these past few years since 2010 - the process of obtaining a mortgage loan (whether refinancing or purchasing) will climb to a more prominent place on that list, no doubt. Suffice it to say for now, the mortgage process compounds the stress already experienced in divorce. The greatest benefit of my help is only realized in the context of a mortgage application - actually getting the deal done, turning "white paper into green money." (See #7) So, the early start strategy can do nothing but help and, most probably, deflect unnecessary strains upon your clients.
  4. The appraisal. That critical property value has to be determined - often for the purposes of agreeing on buyouts. Appraisals - that is, those which are useful for financing - can only be ordered and obtained by the lender as part of a mortgage application and process. No appraisal ordered simply as part of settlement negotiations can be used (or even consulted) in a mortgage loan application. Of course, the appraisal should be obtained not too early but not too late. The timing is crucial. If ordered too early, the appraisal will expire and will require a "recertification" (at a cost) or an entirely new appraisal. If ordered too late, the settlement will not have time to consider the report of "opinion of value."
  5. I need to PRE-underwrite (review) the draft of the decree. Many lawyers and borrowers still do not understand that a lender will underwrite every word of a divorce decree - even decrees from 20+ years ago. Why? Among other reasons, all divorces have the potential of creating liability and assigned or contingent debt. But, here's the thing - just as the underwriter's review of the decree takes place only as they underwrite a loan file, so my review is only useful in the context of a full and completely documented loan application. Otherwise, I'd be trying to do something for which I am not trained or licensed - practice law (reviewing decrees and providing some sort of input???). No. I can help most by making sure the loan file is not subject to the unknown - and that means, taking the application early, processing the file and PRE-underwriting the decree.
  6. You and your client get free consultation - on call, any time, whenever you need it. But, this consultation is more organized, less rushed, more thoughtfully considered and weighed in light of other factors when I have a full loan file in front of me. In fact, it’s the only way I can responsibly consult you and your client. Otherwise, I’m just giving out general outlines of lending guidelines. This is nominally helpful; but, hardly what you need. My consultation is precise and effective inasmuch as I have the necessary information.
  7. The house. It's usually the biggest issue in regular divorces. Many times, a client will say, "when we get the house figured out, we're ready to finalize." Virtually all of the time, the house and its financing - at least from the perspective of getting the deal done - are intertwined with all other features of a settlement: debts, assets, property, child (support), etc. So, why is it treated as a last minute add-on? How it is handled will affect, like no other feature of a divorce, whether or not financing is obtainable, whether or not we can “turn white paper into green money.”


We can have you ready for court, collaboration, mediation, whatever form the negotiation takes. But, it requires that an application be taken, that documents be vetted and reviewed, that numbers be "crunched" and that values be determined (or estimated professionally). How much different would your next meeting feel if you walked in and said, "my client is pre-approved for a mortgage with a buyout of $XYZ....not only are they 'pre-approved,' but, their loan has been processed, is out of underwriting, the appraisal obtained and the lender is waiting on the final settlement."

Of course, sometimes the client calls as soon possible and we just begin to work with the circumstances, whatever they are. Still, I estimate that there are several thousands of divorce cases each year that could be kept out of financing problems (now, immediate or distant future) by simply getting started with me earlier than later.

I've tried to think about a down side to this - I just cannot come up with one. This is mainly because - if there is a reason to wait, I will have the file in "preliminary" status while pushing off to the future the official application start date, while immediately engaging in the work of developing a realistic and workable pre-approval. It's more work for me up front – but, that's what I want to do. Everyone wins by my early action. Take advantage of it.

*pipeline - The total loans which a loan officer is currently working on but not yet closed. Most loan officers like pipelines of not much more than 45-60 days. Reason? It's simple - they don't get paid on loans that have not closed. A long pipeline means more work with no pay. However, I have structured my business for the past 12 years to anticipate longer pipelines; this is what it takes to serve you and the client.

Noel Cookman

17 Stress Producing Events Your Clients Are Most Likely Experiencing
(See for all 42

1.   Divorce (well that's obvious)
2.  Marital Separation
3.   Marital reconciliation (often there have been attempts at reconciliation; I didn't realize that it produced stress but it makes sense)
4.   Major change in health or behavior of family member
5.   Sexual difficulties
6.   Major change in financial state (e.g. a lot worse off or a lot better off)
7.   Major change in the number of arguments with spouse (e.g. a lot more or less)
8.   Taking on a significant (to you) mortgage
9.   In-law troubles
10.  Major change in living conditions (e.g. new house, renovating)
11.  Change in residence
12. Major change in church or spiritual activities (e.g. a lot more or less than usual)
13.  Major change in social activities (e.g. clubs, dancing, movies etc.)
14.  Taking on a small loan (e.g. purchasing car, TV, freezer etc.) [e.g., putting legal bills on a credit card]
15.  Major change in number of family get-togethers (e.g. a lot more or less)
16.  Holiday or vacation and 17. Christmas [at some point during the course of the divorce process, the calendar is going to produce a holiday, vacation or Christmas.]







Wednesday, January 7, 2015

Refinance the mortgage….attempt to refinance the mortgage….OR apply to refinance the mortgage??

I’ve seen it all….usually in reverse. And it’s pretty much guess work – nearly all of it. Here’s why.

When two lawyers, two clients and a mediator (or, in court, a judge) are presented with the conundrum of a spouse who is being awarded the house but which has a mortgage which is in the name of the grantor spouse, the hope is that the grantee spouse will be able to refinance the mortgage and remove their spouse from its liability. It’s ALWAYS a good idea to do this. There are no up sides to keeping a divorced couple joined at the mortgage. Too many bad things can happen, not the least of which is a grantor spouse who, years down the road, has ruined credit and absolutely no practical recourse, Deeds of Trust to Secure Assumption notwithstanding.

I dealt with a client a few years ago whose ex-spouse of 18 years had defaulted on the mortgage more times than one could count but would always catch up on the payments before foreclosure and, thus, cure the default. His credit was “in the tank” and there was nothing, really, that he could to about it without paying off the $180,000 mortgage for an ex-wife of over 18 years. Not really a good option.

But, no one around the negotiating table knows IF the grantee spouse can qualify for the mortgage. So, everyone does the best that they can. Which is require that the grantee spouse refinance the mortgage….attempt to refinance the mortgage….OR apply to refinance the mortgage. Or maybe, nothing at all.

Clients, attorneys and courts (judges, mediators) need a reliable way to know – in advance, with a high degree of assurance – that the grantee has already qualified for a mortgage. And I don’t mean PRE-qualified. I mean QUALIFIED.

Here is what everyone else does – this is the expectation and common practice – and, by contrast, what we do.

Wait until divorce is final before taking the application. This is crazy. It gives assurances to no one and leaves the process to chance. We take the application as early as possible.

Wait until the divorce is final before stating an approval. Again, this helps no one. The parties, the attorneys, the court – all the people involved – need to know what to expect.

Wait until after divorce to get the property appraised. So, how does anyone know what equity is in the property and how much of it can be accessed. But wait – it gets worse.

An appraisal of the property is obtained while negotiating terms, separate from the loan application….and a buyout or asset division is agreed based upon that appraisal. THIS IS DISASTROUS. We order the only appraisal that matters – the one ordered by the lender and the only that can be underwritten for the mortgage loan. These two different appraisal types can vary wildly in opinion of value. Plus, it’s a waste of money since another appraisal will have to be ordered for the loan anyway.

Wait to see if the child support or spousal support is documented properly. We don’t just look at the documentation for support payments – we tell the client (and attorneys) exactly how the documentation must be generated. In this manner, the all-important “pay history” for qualifying support begins earlier than later. And therefore, the loan closes sooner than later, providing buyouts and refinances (to remove spouse from liability) sooner than later.

There are many more differences but, you get the idea. 

Here’s how you can walk into a mediation or meeting or make that phone call or show up in court prepared to state that the grantee has already been approved for a loan: Have the client call me – AS EARLY AS POSSIBLE IN THE PROCESS. There is no advantage for them or for anyone in waiting.

Here’s you talking to your client: "Call Noel as soon as you leave my office."

Or….."hold on, I’m calling Noel right now….I’ve got you on speaker phone."

Or…..(to opposing): "If you call Noel, he’ll get this cleared up for you and there will be no guess work."

Why spend any more time thinking about it, wondering about it, worrying about it?

You can know.


Noel Cookman

Tuesday, November 11, 2014

How To Cite Debt Account Numbers in a Divorce Decree



Typical problem in mortgage financing for divorced borrowers: Divorce decrees assign debts and generally designates those debts by citing the creditors and account numbers’ last 4 digits. A debt assignment might look like

a.    Debt to CITI card account number XXXX 8109 or,
a.    Debt to CITI card account number ending in 8109.  

One would think – no problem; how often are the last four digits confused with another debt belonging to the spouse? But, that’s not the problem. Here’s the rub…

Most credit reports cite the first 12 digits of a revolving account, LEAVING OUT THE LAST FOUR DIGITS TYPICALLY CITED IN A DIVORCE DECREE.

This makes the assignment of debt impossible to determine for a mortgage underwriter – impossible, that is, without extra documentation. An account statement must be obtained, matching the full account number to the partial number cited in the decree and partial number cited in the credit report. But, have you noticed lately – credit card statements are (more and more) only citing the last four digits of the account number. Obviously, this is all for security – or to make the consumer feel more secure. So, if such is the case, the borrower has to fax or scan their actual credit card to the lender so that the match can be made. Hold on – that’s not the end of it. Common sense and clear documentation would, at this point, have the correct account matched up properly for the underwriter. But that’s not always good enough. Increasingly, lenders want the credit report to match up and to verify the full number so that it is VERY plain that the account assigned in a decree sufficiently matches the debt on a borrower’s credit report. This requires a little time and little money – not a lot now but, I anticipate more as time passes.

One might think “they’re getting a little picky here aren’t they?” I have only one response – you have no idea! [See my eyeballs rolling?]

There are two simple fixes –pick one.


There is actually another one – make sure the borrowing client is working with me and I’ll take care of all this, spelling out in painful detail exactly how the decree’s assignment of these debts should appear – all you do is copy-and-paste; and, do your lawyer stuff – bam yow! Problem solved.

But, let’s say your client (or opposing) will need to finance the mortgage. But, for some inexplicable, insane reason they are not using me for the financing. Can you still help them? Yes. Here’s how.

STRATEGY NUMBER NEXT - The full, the best, the most assured FIX – outside of my report

1.    Get a copy of the credit report (of the client who must finance or refinance a mortgage) from the mortgage company they are working with. Pulling your own or having the client provide one they obtained from the internet will not work. All reports are not equal and only information that appears on the lender’s credit report matters.

2.    Make note of all accounts to be assigned (to either party) in the settlement – match up the credit debt information you have with the credit debt information on the credit report. Think like an underwriter….a suspicious underwriter (as if there is another kind).

3.    AMEX is different – deal with it first. AMEX uses and “account identifier” number – not the actual account number or any partial citation of it. I call it a “faux number.” It usually begins with a 3. Cite the entire number. If someone “harvests” this number from your decree in public records, they can’t really do anything with it – it’s not the account number. I would cite the AMEX card number as you usually do – maybe “ending in 3389” or something like that; and then, tag the designation with “also identified by faux account number 3333444455559999,” the number printed on the credit report.

4.    In most other accounts listed in your decree, cite the accounts by the account numbers appearing in the credit report – or some recognizable part of those account numbers. You do not need all the numbers – just enough for the underwriter to recognize the assigned debt.


You have VISA Card account number 4444 5555 6666 7777 and you would normally cite this account as

VISA account “ending in 7777” or “XXXX 7777.”

The credit report cites the account numbers as 4444 5555 6666…leaving out the 7777 that you would normally cite.

You would simply write it as VISA account “beginning with 4444 and ending in 7777” or “4444 XXXX XXXX 7777.”

You could actually cite it as “beginning with 4444” and leave it at that. Why? Because the underwriter can see that the account number begins with the 4444.

You can do this with any variation of account numbers as they appear on a credit report.

Sometimes a creditor only reports 4 digits of an account number. Truck payments come to mind for some reason. You know that, most likely, there are more digits in the actual account number. It’s a pretty safe bet that you could cite those 4 digits as “designated by [actual four digit number].” When it’s an installment payment rather than an open revolving account, what’s a n’er-do-well going to do with that account number anyway? Pay a little extra against the balance?

STRATEGY NUMBER NEXT – if you do not have a credit report to work with

This is the shortest and easiest – and most nearly always will work.

Use the first few/four digits and the last few/four digits to designate a debt. You obviously need to have the account statements with the full account numbers on them. But, it’s rare that a credit report would use a citation of account numbers that did not include either the first few digits or the last few.