I am a customer of Saxon by default (someone sold my mortgage to them) and if I had the opportunity I would have said no AND I would have asked this question. How do you report to the credit bureaus and WHAT do you report?
In all my years of monitoring credit I have never come across a company that does so much harm to its new customers as Saxon. Saxon will report both your principal balance AND add your interest payable from the following month even though the mortgage agreement says you pay it in the following month. Therefore, if you took out a $200,000 30 year 7% interest mortgage and you made your first payment your payment was amortized at $1330.60/month. Your first payment according to the amortization schedule is made and applied like this. $1166.67 of your $1330.60 goes to interest and the leftover $163.94 will reduce your principal to $199,836.06. You would think your balance then to be reported to the credit bureau would be $199,836.06...$163.94 less than the $200000 you borrowed showing those who look, that you are paying as agreed and reducing your balance.
What Saxon does, is it reports your balance NOT at its principle $199,836.06 but rather $201,001.77. It is the current principal plus the interest for the payment you are going to make the 1st of the next month. That reflects that you owe more than you borrowed and that you are not reducing your principal, both of which reduces your credit score.
Since creditors only look at scores and not what is behind them, your creditors will never know what is happening or that you are a good customer paying down your balance with a skewed score.
Now how long would it take you to get your reported balance under the original borrowed amount if you pay as agreed? In this case 6-7 months to break even. Can you afford to wait? Is this fair? Not only do I believe it isn't but I also believe it is coercion on Saxon's part to force conciencious consumers into paying at least a full payment of monthly interest ahead of the agreement to maintain or improve their credit scores. To me that constitutes a breach of a mortgage agreement as originally signed and NOT full disclosure on Saxon's part. Other than coercion and deviousness there can be no other good reason Saxon would intentionally report this harmful way to the credit bureaus on behalf of its customers.
Check your credit reports and if anyone reports in this manner complain as high as you can go or better yet, ask about how an institution how it reports your debt to the credit bureaus and run from anyone that things its ok to report a higher balance than you borrowed if you are a good customer paying as agreed.
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