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Dwayne B.
Dwayne B., Lawyer
Category: Consumer Protection Law
Satisfied Customers: 32154
Experience:  Practicing for over 20 years and handled many cases and trials for consumers.
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This question pertains to credit score cleanup. When

Customer Question

This question pertains to credit score cleanup. When recently applying for a home equity line, a junior bank representative informed me that the bank provides loans in second lien position. After submitting application for the subordinate (second) lien with said bank, the bank denied my application, singularly citing the first lien as reason for rejection. It seems the bank rep was misinformed, the bank only provides second equity lines behind their own first line (which would only make sense if rates had changed and the first lien had a better rate). Here is where the problem is: during the application process the bank did a hard inquiry with all three credit rating agencies (which obviously negatively impacted my FICO score). Now, instead of this being their mistake, instead of treating the second application as a revision, they've treated it as a completely "new" application, and conducted another hard inquiry with all 3 agencies - once again hammering my credit score. Here is where it gets a little complicated / interesting. The second time I submitted the application, I did not include the approval form for them to run my credit, which they proceeded to do anyway. When the bank rep asked for the credit release form, I expressed my concerns that I did not want my credit checked again, particularly as it was within 30 days of their last mistake, and especially if there were other reasons they could potentially deny my loan. After being told they would not process the loan without the credit release form (which they already conducted) I submitted the documents with a cover letter, telling them I did not want them to run my credit again if there were other reasons outside what they cited as the only problem initially (i.e. the only reason I re-submitted the application was to remove the first lien, after being informed that was the only issue). Now the bank has comeback and denied my application due to a drop in my credit score (caused by the bank). So - what are my legal options here? What is the likelihood of the bank removing the inquires if pursued legally? Based on the above outline, is this something banks usually chalk up to clerical error, or do they pushback and force someone in my position to pursue it legally?
Submitted: 4 months ago.
Category: Consumer Protection Law
Expert:  Dwayne B. replied 4 months ago.

Hello and thank you for contacting us. This is Dwayne B. and I’m an expert here and looking forward to assisting you today. If at any point any of my answers aren’t clear please don’t hesitate to ask for clarification. Also, I can only answer the questions you specifically ask and based on the facts that you give so please be sure that you ask the questions you want to ask and provide all necessary facts. Please note: This is general information for educational purposes only and is not legal advice. No specific course of action is proposed herein, and no attorney-client relationship or privilege is formed by speaking to an expert on this site. By continuing, you confirm that you understand and agree to these terms.

I need you to be more specific in your question(s) if you could. When we answer general ones like "what are my rights" or "what are my options" we have to give general answers and, invariably, the customer responds with "I already knew that". This type of forum works better if you ask specific questions so we know exactly what you are looking for.

As to the specific questions you asked:

What is the likelihood of the bank removing the inquires if pursued legally?

I'm not sure that the bank can "remove the inquiries". I have been told by the credit reporting agencies (CRAs) that the creditor can ask for them to remove info but they are under no obligation to do so and, in fact, often don't. However, if you sue the bank and include the CRAs on there as well then they are bound by the judgment and have to do what the court orders. However, I've founds that creditors, especially banks, seldom remove things they have put on a credit report without an order of the judge.

Based on the above outline, is this something banks usually chalk up to clerical error, or do they pushback and force someone in my position to pursue it legally?

They force you to file a lawsuit and usually take it to a trial or at least a hearing. You may want to start by having a local lawyer who does Consumer Law or Civil Litigation (you can find a list of them at send them a demand letter threatening to sue them unless they correct the problem. That increases your chances of them doing it without a lawsuit but they usually still refuse. Also, don't send the letter yourself because if you do and they refuse then they absolutely won't change their minds without a court order.

If your question has been answered then I'd offer my best wishes to you and ask that you please not forget to leave a Positive Rating so I receive credit for my work.

Of course, please feel free to ask any follow up questions in this thread. I want to be sure that all of your questions are answered. In addition, once you issue your Positive Rating the question will lock open and no longer time out so you can come back to it anytime in the future if you think of any follow ups.

Customer: replied 4 months ago.
Rather than "I have been told by the credit reporting agencies" I was hoping for a more anecdotal reply in that "based on our experience with this type of matter"....I understand "what are my options" are a bit vague, but than again, I would think based on the specifics outlined (and your disclaimer at the beginning of the message) you'd follow with something along the lines of "in our experience, we've found these steps to work best". Moreover, if your firm specializes in this matter, why does having a local attorney matter when this is more federal than local? I understand that CPA laws very amongst states, but when dealing with federal banks, the intricacies at the state level should be addressed after providing a general blanket response at the federal level.So, to be more specific, based on your extensive experience in dealing with these matters, what is the typical outcome for your firm in dealing with situations like these:
1) rep at bank gave me false information which led to me filing an application for a second lien, which was denied because of the existing first lien. The bank rep specifically told me they do second liens and they knew my first wasn't with their own bank. Therefore, the application being rejected was a direct result of the bank's error. I have the paper trail to back this up.
2) The second application was also rejected due to misinformation. I was told, and have documentation, that proves the bank said the only reason I was denied the second lien was because of the first lien, but after resubmitting, the bank has denied me for other reasons.Thank you
Expert:  Dwayne B. replied 4 months ago.

I should have made that statement clearer. I was provide that information during sworn testimony at depositions, it's more than just "a friend mentioned".

Even though the case may be in federal court, you still want a local lawyer because, 1) the laws among the Circuits and Districts differs slightly, 2) the local lawyers know that judges propensities, most of the federal judges are plucked from their role as lawyers the area in which they will serve, 3) the expense of hiring a lawyer from a ways off adds up quickly as they have to travel for hearings, etc.

1) I've found that banks don't tend to do well at trial. One reason is that banks often hire lawyers that are very good office lawyers but not as good at trial. They don't seem to recognize it is a different skill set. Cases often settle as you get right at trial, but unlike cases with, for instance insurance companies, they don't settle as early as often. Under your specific set of facts I would think you have a very good chance at trial, assuming that the judge believes you (and I see no reason he wouldn't with the paper trial you say that you have). Your specific instructions not to "hit your credit report" again is clear, there was no real need to do so, and it will lower your credit score, although you need to have someone testify to that fact as well as the amount that it was lowered. I don't know that you can recover against the bank for them denying your application since there is nothing in the law that mandates they do so but you can recover for the damage they did to your credit.

2) Again, there is no law stating that the bank must give someone a loan. There are obviously some reason that are blatantly illegal, such as denying the loan due to your race, gender, etc, but unless one of those fit your situation I don't see a way as to damages for this. Any money you lost because of the denial could be recovered and there appears to be something more here than their denying you because of your credit score. If that was the only reason then once the issue was cleared you would have been approved. Instead, they came up with different reasons. This usually indicates a discriminatory cause for the denial but you don't mention anything that points in that direction so this will be something that your lawyer has to discover through discovery and depositions.

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