Empty credit report on borrower?

[David Fligor]

I am dealing with something of a mystery and would love to get pointed in the right direction or told not to worry about it.

I have placed a bid on a 2nd NPN on a single family house in Connecticut, which was accepted. Before placing the bid, I reviewed a credit report that showed fairly bad credit, but a lengthy history. As part of due diligence, I asked for an updated credit report. The new report shows zeros for everything; not enough history to track. As if the borrower vanished. SSN on the new report and the old report match.

This is a 2nd NPN, and appears to have plenty of equity covering the first and the second, assuming the original information about UPB on the senior loan (from the original credit report and from the seller's information) and this junior loan is correct. FMV conservatively $225k, senior note UPB $135k, the 2nd lien note I am buying UPB $19k with about $10k of arrears. The ProTitle current owner report shows clearly that neither lien has been released. All taxes are current, no bankruptcy, and the house is not being foreclosed on. Therefore, even though this is a 2nd, I was more focused on the collateral than on the borrower's credit.

Any ideas on why a credit report on the same name and SSN would go from a lengthy history to a bunch of zeros? Should I close on the note anyway given that there is plenty of equity and starting foreclosure will either get the borrower to wake up or else will result in me receiving the full UPB plus interest, etc.? Thanks.

[Chris Seveney]

@Jay Hinrichs - I do not invest in 2nd's but I would probably want to check if the 1st is performing and determine approx. payoff on the 1st to confirm if there is or is not equity in the property.

For 1sts I only check credit if we are doing a modification to see if the borrower can pay. In some instances they truly had a hardship and then get back on track, in  others they have so much debt and there bank statements show they have no $ while not paying a car or mortgage payment just shows they are free spenders and I do not bother and go right to foreclosure.