Why doesn't DVC report loans to credit repording agencies?

[Just People]

I know they check your credit when you apply, but the actual loan never gets reported. I'm not complaining, as not having it on your credit report helps your debt ratio. I wonder though, if someone decides not to make anymore payments, besides dvc taking away your points, what else can they do? Well I guess they can use disney's other best kept secret... Attourneys.

 

[JimMIA]

First of all, regardless of whether they report the loan initially, I assume they would report it if the reporting agency inquired as part of updating your file. The fact that Disney checked your credit is captured by the credit reporting agency, and inquiring whether Disney issued credit would be a normal part of updating your file. Also, the mortgage is recorded in the county where the property is located, so that is public record. So although it might not initially be reflected on your credit score, I'd bet the system will eventually catch up.

If payments or dues are not paid, the first thing Disney does is put a lien on the account. If that's not paid, they foreclose. Both the lien and foreclosure are also public record that anyone can easily find, and both would certainly affect someone's credit rating.

 

[browniemtb]

JimMIA hit the nail on the head in technical terms......but the way I look at it is that you truly don't own any property. So in reality if you default on the note Disney merely shuts your account down and reclaims the points. I'm sure there is a process but its a far cry from a home foreclosure. Disney sits in the drivers seat when it comes to DVC ownership with little risk of losing cash.

 

[CarolA]

It costs money? That's the main reason hospitals don't. Disney figures they can easily seize the asset back so they aren't at risk and just don't feel like dealing with the agencies IMHO.

 

[drusba]

JimMIA hit the nail on the head in technical terms......but the way I look at it is that you truly don't own any property. So in reality if you default on the note Disney merely shuts your account down and reclaims the points. I'm sure there is a process but its a far cry from a home foreclosure. Disney sits in the drivers seat when it comes to DVC ownership with little risk of losing cash.

It is the same legal foreclosure process as a home or other real estate foreclsosure but it is a lot easier for Disney because you are not occupying the property and lose all rights to use as soon as you fail to make payments.

 

[JimMIA]

JimMIA hit the nail on the head in technical terms......but the way I look at it is that you truly don't own any property.

Well, actually you will own a deedable property interest once you pay off your mortgage.

The issue, however, is not what you own. It's what you pay or don't pay and how that might affect your credit. Clearly a default and foreclosure on a $20,000 or so mortgage would be a serious creditworthiness issue.

Many people who have to keep a close eye on their credit score are already going to be feeling the pain from the ongoing tightening of credit standards, especially the changes in credit card policies announced by the Fed today. Even without a serious credit disaster like a foreclosure, many people who formerly were able to obtain credit will find rough going and much higher costs for the next several years.

It's also not accurate to say that Disney suffers no loss in a foreclosure -- they do. Their loss is the difference between what they sold the points for plus their legal expenses of foreclosure and whatever they calculate the recovery value of the once-sold points to be. I think they use a figure around $50-55 per point as their cost, so on a relatively new contract, they'd have a loss of at least $50 per point or so. That's a real loss of real revenue, not some dumb accounting trick.

 

[ElizabethB]

It's possible that Disney prefers to avoid creating public information about the number of defaults on DVC property loans.

 

[JimMIA]

It's possible that Disney prefers to avoid creating public information about the number of defaults on DVC property loans.

Not sure what you mean. If they file a lien or a foreclosure action, those are both civil court proceedings and are automatically public record.