Lender ruining credit with false info. Help!

Here's the story - I have a HELOC on a condo in San Francisco, which had ended up with Principal Bank from the original lender. I had brought down the balance to $22.54 in June 2011, then made a payment of $26.21, and received a statement from Principal showing a balance of $0.00. The loan was then sold to Nationstar Mortgage. I had started a search for a studio in Manhattan about that time, and... [more]

Here's the story - I have a HELOC on a condo in San Francisco, which had ended up with Principal Bank from the original lender. I had brought down the balance to $22.54 in June 2011, then made a payment of $26.21, and received a statement from Principal showing a balance of $0.00. The loan was then sold to Nationstar Mortgage. I had started a search for a studio in Manhattan about that time, and was hoping to use the HELOC to fund part of the purchase. When I was ready to make offers and called Nationstar to order checks, I was told that the HELOC had been suspended (by Principal Bank), and that it would take 5-7 business days for Nationstar to research before reinstating it. After almost a month or more of follow-up with no feedback, I discussed with my broker, and in the interest of time, decided to go for a traditional mortgage. My credit score used to be in the high 700's so I didn't even think about it when I called a mortgage broker and gave her my information. She called me later and told me I had a collection item on my report, but still pre-approved me telling me that I would not qualify for the best rates. When I pulled up my credit reports I could not find any "collection item", but the HELOC under Nationstar was listed as a negative/adverse item, and my score had dropped 85 points as a result. After many phone calls and a complaint to BBB, I finally got two letters from Nationstar addressing both issues. The first (which is not directly related to the discussion here) stated that the HELOC (with < 50% LTC) was suspended because my orignal note requires the condo to be my primary residence. Well, nothing I can do about it, but have been unsuccessful so far in getting a copy of the original note. The second stated that they had resent my information the the credit bureaus, which would take 30 days them to update. After patiently waiting for 6-8 weeks and I saw no change, so I inspected the reports more closely. Several pieces of information in different reports were false such as - 1) Remark "SETTLED - LESS THAN FULL BALANCE" / "Account legally paid in full for less than the full balance" / "Paid in Settlement/Never late." 2) Date paid: 8/5/11. 3) Date closed: 8/5/11. I have an introduction letter from Nationstar following the $0.00 statement from Principal Bank, stating that they would be servicing my loan, and that the balance is $0.00. I have since been receiving monthly statements from Nationstar with payment coupons for $0.00. I called Nationstar and they assured me that even though the loan is suspended, it is not closed (The concern here being that could it be impacting my debt to credit ratio adversely). I also never made any payment to Nationstar as reported (I did write them a check for $0.00 out of spite, but that was just a week ago). I also faxed them them statements from Principal Bank to show the loan was not "settled". I disputed the information twice with one of the bureaus, it just came back with "Verified, no change". Trying to deal with Nationstar has been a futile exercise so far - they seem to be telling me one thing, then something else to the bureaus. I am also in the process of disputing the information again with all three bureaus in writing, providing with supporting evidence, as the ealier disputes were made online/by phone earlier. So while the most logical step would appear to get the information corrected from Nationstar, anything that is communicated to Nationstar gets a assurance that the matter will be resolved within 5-7 business deys, and then just ends up in a black hole. I am writing to get someone else's perspective on the issue or if I am missing something. Do you see the account as "settled" or "closed"? Does the account appear to be "paid in full less than full balance" - I see it as "paid in full MORE than the full balance". The most frustrating part is that not a single apartment that I had been keen on earlier is available any more, and I haven't seen any similar ones come up lately. Any advice/thoughts appreciated. [less]