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.
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.