ADDING
VALUE TO YOUR CLIENTS’ DECREE
HOW TO
DESIGNATE DEBT AND CITE IT EFFECIENTLY IN A 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.
STRATEGY NUMERO BEFORE UNO – LET NOEL
WORRY ABOUT IT
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.
Example
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.
