Why has this been flagged up?

Planeahead

Made some silly mistakes when I was younger and run up some debt but after having my first kid 5 years ago, I decided it was time to grow up and take responsibility. I cleared of all debts that I knew about but had already got 2 defaults on my credit report which are due to fall off in June. 

3 years ago, I received a phone call from a debt collection agency saying they had been passed my debt of 2.5k from a bank which I had totally forgot about and had no correspondence as had moved house. I offered to set up payment plan and gave debt collection agency a friends address for correspondence as at that time I was living abroad and they required a UK address but I never heard anything back from this company.

Having applied for a mortgage and passing initial credit check, I thought everything would be ok as my 2 defaults only have 9 months left to run but my broker has came back to me to say that the lender is wanting me to add my friends address onto my credit report even though I've never lived there and address was only used for that one correspondence. Not only this but have noticed that address they have got is slightly wrong, they have house number 81 where it was actually 91, they say that it's definitely 81 that they have so guessing debt collection agency made a mistake when updating their system and that's maybe why I've never heard anything more from them. 

I've checked Equifax, Experian and Check my file and there is no mention of any defaults other than the 2 that I settled 5 years ago. There is also no mention of friends address on any of my credit reports. 

I really don't know what to do as believe that this debt could now be enough to set me back 3 years and prevent me getting any mortgage. Should I add this friends address onto my credit report?

I also have no idea how the lender knows about this address as the original debt was with a totally different group of banks than the one that I've applied for a mortgage with and no mention of the address on any credit report. Is this likely to cause me issues with all lenders and prevent me from getting a mortgage?

ACG

You would be surprised at what lenders have access to. 

You could go back and say that according to their T&Cs you have to give the correct information as it would be mortgage fraud to not and so to say you lived at an address you have never lived at would then constitute mortgage fraud... I doubt it will fly, but it would be nice to use the T&Cs against a company for once wouldnt it. 

Failing that you have 2 options, make the change or find a new lender. Personally, I think I would find a new lender otherwise any future applications will not correspond with this application which could then flag up inconsistencies.