Onity and Equifax misreported a paid-off mortgage, lawsuit alleges
The dispute centers on what happened next. In January 2026, the borrowers pulled their three-bureau credit reports and found the mortgage reporting inaccurate, the filing says.
On the Equifax report, according to the lawsuit, the account showed a payment status of “Wage Earner Plan,” an account rating of “Derogatory,” and a creditor remark reading “Account involved in Chapter 13 debt adj.” The filing contends the account should instead have reported a “Current” status, a “Paid/Closed” rating, a high balance of $173,925, and a remark noting the mortgage was closed or paid with a zero balance.
The borrowers allege the derogatory entry “materially misleads lenders to believe” they surrendered the property and discharged the mortgage as unsecured debt through bankruptcy – which, the filing says, is not what happened.
The borrowers disputed the reporting on or about February 14, 2026, court papers state. Equifax responded on February 23, 2026. Rather than making the requested corrections, the lawsuit alleges, Equifax “deleted the Onity mortgage without explanation.” The filing claims Equifax “seemingly saw the word ‘Bankruptcy'” in the dispute and removed the tradeline without contacting Onity to investigate. In the alternative, the suit pleads that Equifax did forward notice of the dispute to Onity, and that Onity then failed to conduct a lawful investigation.
The lawsuit draws a contrast with the other two bureaus. Experian and Trans Union, which are not defendants in the case, each corrected the account and reported it as transferred and closed, without the negative bankruptcy indicators, according to the filing.
