Credit Report Explanation Letters

I don't think the bureaus would do anything other than append his "statement"/explaination to the bottom of his credit report. But that won't keep the account from being reported negatively; it will just give "his side of the story" to anyone who looks at his credit.

If his disability is formally recognized as a legal incapacity, he may be able to avoid the contract. In the laws of contracts, one of the requirements for a contract to be enforceable is a person's "capacity to enter into a binding agreement." If your brother lacks such capacity (by virtue of his disability), then he may be able to void his role in the deal.

Another technicality has do do with where he signed on the contract. He either signed on the front as a co-buyer, or he signed on the back as a guarantor. It does a make difference. Co-buyers should generally share equal access to the vehicle, since they both own it. If your brother does not live with that friend, if he never has access to the vehicle, and the car dealer knew that at the time of sale, then he can argue that they should have never let him sign as a co-buyer. Instead he should have signed as a guarantor. A lot of state laws will support that argument.

Also, under the credit practices rule, they should have given your brother strict disclosures which outline his role as a guarantor. If they didn't provide him such notice, they may have violated federal law.