Q&A: Foreclosure Not Showing Up in Public Records Section of Credit Report

Lee,

My house was foreclosed 10/2012. I pulled my credit reports and seen that its not in the public records section on my credit report. Is that good or bad? Why was the foreclosure never reported? Is there some way that this could still show up as a public record on my credit report? If it does will it still stay there for seven years? I'm trying to clean up my credit and a foreclosure that could pop up at any time is a big worry for me. 

Thanks,
Glenn

Glenn,

Foreclosure is an interesting beast. Just like bankruptcy or tax liens, its a public record. That is, anyone can go to the courthouse (or, these days, hop online) and verify that you lost your home in a foreclosure. What makes foreclosure different is that you aren't likely to find foreclosure in the public records section of your credit report.

The reason you even have a public records section within your credit history is that there needs to be an area for negative records that aren't born directly from your current or past financial accounts. Take bankruptcy for example. Filing for bankruptcy tells lenders that you have problems managing your money and pose a high lending risk--but bankruptcy doesn't directly derive from any one existing account. A collection account, by contrast, appears on your credit report as a separate entry but originates with a single delinquent debt that probably appears elsewhere on your report.

As a matter of fact, when you examine your report, you may not even see the word "foreclosure" anywhere. You might and you might not. What lenders see, however, are a set of codes. Your original mortgage loan will show that you defaulted on the debt and a code exists within the tradeline that lets a lender's computer system know your home was subsequently foreclosed on by the lender. The credit bureaus also recognize the codes and adjust your credit score accordingly. It's highly unlikely that the bank didn't report the foreclosure. If you aren't seeing any evidence of it in the tradeline for your mortgage its almost certainly in the code.

Let's say, just for the sake of argument, that your bank never reported the foreclosure. After this long the bank would be in no hurry to "fix" their error--even if they were to discover it (which is also unlikely. Foreclosure is the most unorganized area of banking, imho). No matter how much it might feel otherwise, the bank doesn't have a personal vendetta against you. They report foreclosures to the credit bureaus because they signed a contract with the credit bureaus agreeing to do so. After two years, nobody really cares anymore.

If by sheer chance some bank employee were to notice that you had a previous foreclosure that wasn't reported and update your credit reports, the entry wouldn't remain for seven years. The reporting period begins with the event, not when the event was reported. So the foreclosure would be removed from your credit report in 2017.

Best of luck,
Lee