Every so often a disputed account shows up on a client's credit report. It's concerning and requires attention. When I explain, folks become perplexed and I get questions such as: “I disagreed with the charge, so I disputed it”. Or, “It's my right to dispute the account; plus, the creditor is wrong”. 
You are attempting to set the record straight, I know. Credit issues are personal and asking someone to surrender the fight creates a sense of defeat. So, I wanted to explain more about the effect of disputed accounts on the mortgage process.

• What is a disputed account?
  As afforded the consumer by the Fair Credit Reporting Act, a dispute is the right to contest the validity of an account on their credit report. It usually arises when a consumer believes the information is incorrect or the creditor was unjust with a charge. The credit report will show the trade-line as disputed.
• What does it mean, exactly?
  Besides providing consumer satisfaction, disputing an account makes it invisible to your FICO score. This may be advantageous  if that account is derogatory-- such as a collection.  
• What does it mean to your lender?
  Your lender is concerned because the presence of a disputed account calls into question the accuracy of your credit score. If  the dispute is overruled by the credit bureaus and the account is factored back in and your credit score might drop. Plus, you will now be responsible for the payment and balance.. 
• What should I do?
  I'm not suggesting you stop disputing accounts; however, there are some stiff mortgage rules concerning them.

When applying for a conventional loan,  Fannie Mae or Freddie Mac require the following:

“...the lender must confirm the accuracy of disputed tradelines reported on the borrower's credit report. If it is determined that the disputed tradeline information is accurate, lenders must ensure the disputed tradelines are considered in the credit risk assessment by either obtaining a new credit report with the tradeline no longer reported as disputed...”

FHA has  similar concerns although perhaps more tolerable.  They will consider the balance and age of the account to help determine the risk:

“The total outstanding balance of all disputed credit accounts or collections are less than $1,000, and
Disputed credit accounts or collections are aged two years from date of last activity as indicated on the most recent credit report.”

I should state that, in some cases, disputed accounts are ignored by the automated underwriting system – a computer generated analysis of your loan. In these cases, the lender might choose to ignore them. Also, there are provisions for identify theft cases.

How can I fix it.
A disputed account has to be resolved by the credit bureaus. There are several ways to handle this.

1. Deal directly with the credit bureaus: Experian, Equifax and Transunion.
2. Work through the creditor to remove the dispute.
3. Or, your lender might have a credit resource that can expedite the processIn most cases you must put the request in writing.  

In most cases, you must put the request in writing.  Once the dispute is removed, your lender will likely pull a new credit bureau in order for a more accurrate credit score.  Disputed accounts can present a hurdle for your mortgage application, but with diligent work, they can be cleared up putting your loan closing back on track.