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Emerald
Cherry Bomb


Joined: 12 Aug 2009
Posts: 179
Location: California

Medical Debt Responsibility Act
PostPosted: Mon Jun 20, 2011 2:41 pm Reply with quoteBack to top

I see a lot of Medical Collections on reports when run. I do believe that many of these should have been covered by insurance and most of the time the client is not aware of the collection. I'm hoping this new bill goes through.

Titled the Medical Debt Responsibility Act, the bill would require the three national credit bureaus — Equifax, Experian and TransUnion — to expunge medical collection records of $2,500 or less from files within 45 days of their being paid or settled. Currently, by contrast, paid-off collections can remain in files for as long as seven years, exerting their heaviest negative impacts on consumer scores during the initial two years. The bill is co-sponsored by Reps. Heath Shuler (D-N.C.), Don Manzullo (R-Ill.) and Ralph M. Hall (R-Texas).
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Mortgagepower
Flash in the pan


Joined: 27 Aug 2009
Posts: 87

Re: Medical Debt Responsibility Act
PostPosted: Tue Jun 21, 2011 2:32 pm Reply with quoteBack to top

Thanks for sharing, I hope this bill is signed into law. I had several clients this year with the same issue. Just recently a borrower who was purchasing a 500k home with 20 down payment had a 706 credit score for a $50 dollar medical collection he paid off a few months earlier. That same $50 dollar collection cost him thousands of dollars in origination charges due to the Fannie Mae risk based pricing.
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cpruitt
Dud?


Joined: 12 Oct 2007
Posts: 21

Re: Medical Debt Responsibility Act
PostPosted: Thu Jun 30, 2011 5:13 pm Reply with quoteBack to top

It's always better if a problem can be handled without a new law. However good a law sounds there are usually some unanticipated consequences that are worse than the original problem!

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Carl Pruitt
FHA Guidelines And Commentary
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SoCalGal
Dyn-o-mite!


Joined: 01 Jul 2008
Posts: 390

Re: Medical Debt Responsibility Act
PostPosted: Mon Jul 04, 2011 2:19 am Reply with quoteBack to top

Quote:
That same $50 dollar collection cost him thousands of dollars in origination charges due to the Fannie Mae risk based pricing.


How is it possible that a borrower with a 706 FICO score was penalized "thousands of dollars" pursuant to Fannie Mae's risk based pricing? Did the subject property cost in the multi-millions? Do the math. An extremely high loan amount is the only way a ding on his credit score resulting in a 706 FICO (versus 740) would cost very much at all.

It makes sense that, $50 or $500, a debt is a debt. If the debt was only $50, why didn't he pay it? It's far more tenable that a $500 debt went unpaid than a $50 debt.
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SoCalGal
Dyn-o-mite!


Joined: 01 Jul 2008
Posts: 390

Re: Medical Debt Responsibility Act
PostPosted: Mon Jul 04, 2011 2:22 am Reply with quoteBack to top

Quote:
Titled the Medical Debt Responsibility Act, the bill would require the three national credit bureaus — Equifax, Experian and TransUnion — to expunge medical collection records of $2,500 or less from files within 45 days of their being paid or settled. Currently, by contrast, paid-off collections can remain in files for as long as seven years, exerting their heaviest negative impacts on consumer scores during the initial two years. The bill is co-sponsored by Reps. Heath Shuler (D-N.C.), Don Manzullo (R-Ill.) and Ralph M. Hall (R-Texas).


Would this law be retroactive to any specific date?
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Emerald
Cherry Bomb


Joined: 12 Aug 2009
Posts: 179
Location: California

Re: Medical Debt Responsibility Act
PostPosted: Mon Jul 04, 2011 10:17 pm Reply with quoteBack to top

SoCalGal wrote:
Quote:
Titled the Medical Debt Responsibility Act, the bill would require the three national credit bureaus — Equifax, Experian and TransUnion — to expunge medical collection records of $2,500 or less from files within 45 days of their being paid or settled. Currently, by contrast, paid-off collections can remain in files for as long as seven years, exerting their heaviest negative impacts on consumer scores during the initial two years. The bill is co-sponsored by Reps. Heath Shuler (D-N.C.), Don Manzullo (R-Ill.) and Ralph M. Hall (R-Texas).


Would this law be retroactive to any specific date?


Not that I am aware of. This is getting a lot of press but I haven't seen anything passed yet.
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