Coding of Derogatory Credit Status > Reporting an Account in Foreclosure

When an account proceeds to the foreclosure process, the reporting steps are as follows:

1.Verify action code 94 and date of occurrence is entered on the Letters & Actions screen.

2.Enter hold code 7 (legal hold) or 9 (legal hold) on the Letters & Actions tab.

3.When the Credit Reporting screen is updated and hold codes 7 or 9 are on the loan, Special Comments code BO-Foreclosure Proceedings Started is displayed.

4.When the foreclosure has been completed, you should place hold code "1" (foreclosure complete) on the Letters & Actions tab. The Special Comments code "H" (foreclosure) will automatically be placed in the 2-Year Late Pattern field.

5.Enter the charge-off date.

6.Change the general category to 80 (foreclosure or charge-off real estate secured by first liens).

If the account proceeds to foreclosure sale, hold code 1 (foreclosure completed) should replace the 7 or 9 hold code. When hold code 1 is on the account, the Credit Bureau Status is 94 and an "H" (foreclosure) is put in the 2-Year Late Pattern field on the Credit Reporting screen. If the account is sold to a third party, hold code 94 could be used together with a Special Comments code of "AX" (account paid from collateral) on the Credit Reporting screen showing that the account was paid off before the foreclosure was completed.

WARNING

If you pay off a loan that should be reported as a foreclosure prior to updating the Credit Reporting screen at monthend, the loan must have a hold code 1 on the Letters & Actions tab. The credit account status will show as a paid-in-full loan without these hold codes.

When an account was in collection, foreclosure, voluntary surrender, repossession, or charge-off and the account comes current, hold codes should be placed on the accounts so that at monthend when the status is verified, a modified status can be shown. For instance, placing a hold code 94 will result in a Credit Bureau status code of 65 (account paid in full, foreclosure started).

As a result of the foreclosure sale, if the account is paid off, either in full or less than the full amount, a special comment code of "I" (election of remedy) can be entered.

Hold code 94 gives CB status 65 (account paid in full, foreclosure started).

Hold code 95 gives CB status 64 (account paid in full, was charge-off).

Hold code 97 gives CB status 61 (account paid in full, was a repossession).

Hold code 98 gives CB status 63 (account paid in full, was a voluntary surrender).

All of the above hold codes are only used when the account pays off after being in the referenced-to status.