Doctors and Bankers: A Cautionary Tale

So.

Yesterday was the mortgage loan application, for fun. The lending officer came to my apartment to do it. Lovely. I mean, kind of weird, but lovely. They’re a small mom & pop company of independent agents who process loans and, of course, sell them to a bank (most likely Wells Fargo or GMAC), and they also do homeowners insurance. They’re very nice people, they motivated me to clean, and I detect no hints of intent to screw me. Plus they didn’t even want a glass of water.

Anyway. The loan officer, who is darling, pulled out all the paperwork from what she’d run on my financial history since 1977, and that’s when it hit.

Remember when I had that endoscopy back in February? And remember how my insurance through the contract with my union is an asshole and didn’t pay nearly what they should? And so I appealed their coverage? And the doctors in question (anesthesiologist and pathologist) knew of the appeals? And I had made good-faith payments to both of them in the amount of 20% of the total bills, which is what I believed I actually owed, to hold the accounts? I had even updated them both at the beginning of the second week of September.

Yeah. Pathologist still sent me to collections. On September 12th.

And didn’t tell me.

Two weeks later, I hadn’t even heard from the collections agency.

It showed up on two of the three credit reporting companies, TransUnion and Equifax. I had checked all three to make sure there were no errors or “red lights.” Nothing had shown up, but I think I checked about two days before the pathologist sent me to fiscal purgatory. Take a wild guess what that did to my credit score.

Dropped me 97 points.

I have excellent credit. Seriously. I was hovering near 800 in my scores before this hit. Now I’ve dropped below 700 on TransUnion and Equifax (the report didn’t show up on Experian).

If you could have felt what happened to my stomach when this woman showed me this report, you would have thought you’d just summitted the highest point of any roller coaster known to man and then fallen from it in an uncontrollable corkscrew.

Emphasis on screw.

The very kind and empathetic woman assured me that this would not affect my ability to get the loan. Apparently, lenders understand that doctors, insurance companies and unions in contracts with insurance companies are assholes, so they have a provision that says that outstanding medical collections within reason are permissible. If I were getting an FHA loan, any medical bill outstanding in the amount of $1000 or more would be a problem. But I’m not getting an FHA loan (and this particular collection was only for $358. Combined with the anesthesiologist, it’s more than $1,000, but the anesthesiologist isn’t an asshole).

As I told the lending officer: it’s not that I can’t pay the bill. It’s that I shouldn’t have to. It’s that the insurance company did as they are wont to do and tried to refuse payment, and the pathologist’s office decided to be disingenuous and vindictive even after they’d been paid about 40% of the bill.

She completely understood. But the fact remained: this was going to be an issue. It had already nicked me for a quarter of a percent on the loan’s interest rate. If I didn’t get it cleared up right away, it could haunt me.

So as soon as, and I mean as soon as I had signed and initialed umpteen pieces of paper (including the one that said what I will pay if I wind up playing out the loan for its full 30 years – I laughed out loud) and the loan officer had left, I got on the horn to the collections agency. The debt is now, begrudgingly, paid, and they faxed a letter to the loan officer saying that the report had been made to TransUnion and Equifax in error, the debt was paid in full and they would be removing the report from my credit history permanently.

Phew.

But here’s the hook: it will still take up to 30 days to reflect on my credit report. And the removal of that blemish does not mean my scores will go back up to 795. If I’m lucky, they will go to 720 (though the one on Experian will remain at 790 or higher). So I’m left to “build up my credit” from a huge blow, through no fault of my own. Sure, I still have really good credit. But it was only one bill, from one doctor, due to one fight with an insurance company through the union, that hit me so hard.

As I was told, the reason it hit me that hard is that I don’t have “qualified debt.” In my stellar credit history, there is nothing more cumbersome than a car loan, which is much easier to get than a mortgage. If I had a previous mortgage loan, the hit wouldn’t have been nearly as hard.

After I got off the phone with the collections agency I didn’t know existed, I fired off a furiously-typed missive to two of my three sisters (the ones who are homeowners – the youngest didn’t get it – she’s 22 and a worrier and didn’t need to know), knocked back a martini, blessed the Russians for their contribution to society and told myself there was nothing else I could do. I just have to wait until I hear from the bank about the loan.

This morning I woke to discover that my back has absorbed all the stress of the last week and is no longer cooperating with the rest of my body.

Hell if I’m going to the doctor.

******
Now on my bookshelf: Do Not Ask What Good We Do – Robert Draper

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6 thoughts on “Doctors and Bankers: A Cautionary Tale

  1. Isn’t it jacked up? They’ve got you over a barrel, because even if you’re right, you’re penalized for clinging to the principle. I’m all for healthcare reform. Also? As a former realtor who routinely saw people’s credit scores, I can assure you: most people would *kill* for a score in the low 700s. Scary, isn’t it?

    • Oh, believe me, I’m very happy to have such great credit, but I spent 17 years building it with five cars, two major credit cards and two or three retail credit cards (and whatever odd assortment of other things there have been). To drop a girl with that pristine a history by 97 points for a 2-week-old healthcare complaint? Come on, people! I never would have thought that kind of thing would have that huge an effect. Unbelievable. Nothing is relative. The current lending environment, though much safer for banks and more practical than the previous “anybody can get a loan” operation, makes it so hard for even the best among us. And I think it’s pretty clear that I am one of the best among us. 😉

  2. Sorry, I am late to the party but I am trying to catch up on a ton of blog reading…and this is a subject I know a lot about as I have been a Realtor since 1986 and have dealth with more credit unions, mortgages and home buyers than you could count. I am thinking it is a gazillion and one.

    How credit scores work seems to be the most convoluted, unfair system on the planet. I could write a series of blogs on the injustices of how this has affected people.

    A couple of things stood out in your post though that I was curious about.

    1. Why wouldn’t you go FHA? On FHA you only have to put 3.5 down and their requirements are usually more favorable to first time home buyers? Also, credit scores greater than 620 usually don’t have problems getting loans. (at least that is true in the middle of the country where I do business)

    2. I wouldn’t count on Experian staying put on your score. They might not of caught up to the collections ding yet. Some mortgage companies combine and average the 3 credit unions so it would be nice if Experian does keep you at 790 but I would keep an eye on it.

    3. With that being said…every time a mortgage company pulls your credit scores it lowers it a bit. You can check your own credit scores (called a soft inquiry) without hurting your score.

    As for anything dealing with medical bills….I hate medical billing practices as much as I hate starvation and the bubonic plague. I am not exaggerating (much) either. What is wrong with our system that has made “taking care of yourself” out of reach for most of the country and then fight with you over the issue if you can pay or not? or in your case if the amount is fair or not… I am sick of every one saying there are “affordable options” when it comes to health care. I have hunted high and low for plans to cover people over 50 that are in good health (thats me and my husband) I carrry my own insurance because as a real estate agent I am a contract worker. I pay $20,000.00 a year for it.

    • I didn’t go FHA because it would have been more expensive for me in the long run with the upfront mortgage insurance premium and the regular mortgage insurance. I didn’t need the concessions FHA gives. It also makes it harder on sellers because the government puts so many requirements on a sale (multiple inspections, etc). Plus it’s a hassle with all the paperwork, requirements, etc. Basically… if I don’t need help from the government and a standard loan saves me money in the long run, the FHA loan isn’t necessary.

      I am keeping an eye on things with my credit to make sure the Experian record doesn’t get nicked. Hopefully it won’t, since the record of the unnecessarily collection has been expunged.

      As for health care… there are a lot of ways this can be talked about, but in my personal opinion, chief among them is that costs have to come down. What docs charge has to come down, so if that means tort reform,let’s get tort reform. 20 minutes of propofol is not worth $1300.

  3. Ya, we didn’t go FHA, either. A conventional loan is generally much better if you don’t need the concessions and have enough down.

    Medical billing is another topic I have seriously ranted over. People with insurance get totally screwed; even more so in the last few years with the future of health care uncertain. I totally think they are gouging prices to make money now because the gravy train of inflated prices may be coming to an end………………….

    I had one thing that went to collections- even got the some state watchdog agency involved. In the end, I paid the $20 in question (didn’t help that the company changed insurance carriers and the original bill in question didn’t get sent to me until well over A YEAR after the service- but only just the portion in question) to the company which sent it to the credit agency (who I could never actually get a hold of and wouldn’t send but a single document to me) and then never cashed the check. Nearly 2 years later, I’m still taking those funds out when I balance my checkbook, because even though they in theory only have 60 or 90 days to cash it, I’m not waiting to find out they are going to screw me over 5 years later…..

    And, it goes without saying- make copies of everything and put the copies in a file that you’ll still have 20 years down the road.

    The medical system needs a major enema…………………..

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