Many homeowners assume once they have a short sale or foreclosure, it would be very difficult for them to own a home again, let alone get a good credit rating.

Certified credit specialist Julie Macc says the moment any negative or derogatory information is listed on a credit report, it will affect a credit score anywhere from 60 to 160 points, so short sales and foreclosure definitely hurt a client's credit score. However, it is possible to remove a short sale or foreclosure from a credit report.

According to the Federal Fair Credit Reporting Act, everything reported on a client's credit report must be 100 percent accurate and verifiable. At a recent meeting of members of the Silicon Valley Association of Realtors, Macc indicated studies show 93 percent of consumers have inaccurate information on their credit reports. You can challenge inaccurate reporting in your credit report, she says.

"Are the dates and amounts reported correct? Is it being reported as 'charged off' when payment was accepted for release of the lien? Does the credit report reflect the account as being closed? Often the account is being reported as open," says Macc.

If a borrower believes the mortgage loan servicer or lender has made a mistake regarding their mortgage, under the Real Estate Settlement Procedures Act, the borrower can file a Qualified Written Request for information about all questionable fees, entries, documentation and a life of loan history (all fees and payments ever made on your mortgage) from your lender.

The lender has five days to acknowledge receipt of the request and 21 days to provide the requested documentation or request an extension with an explanation of why an extension is needed. Macc, who also serves as a legal consultant on behalf of the Century Law Group, says to date, the firm has never had a client whose lender has fully complied with the QWR, or responded in the time set forth by the federal guidelines.

Consumers may file a complaint with the lender(s), and in most cases against the three credit bureaus: Experian, TransUnion and Equifax. If the lender does not respond, or refuses to comply with the borrower's QWR, the borrower may take the matter to small claims court and sue the lender.

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