     Anonymous | Wednesday, March 15, 2000 - 10:54 am 
Hello, I have a BK on my record that is 3.5 yrs old and am trying for a FHA loan with 3% down.
The loan officer says the numbers(ratios)are good but my scores show 540, 532 and 659. I have I have restablished my credit with a car and 2 credit cards for two years and no lates, ect. My problem is that I have a student loan collection account (paid) that was after my BK but was transfered into collection after being 15 days late on my payment arangement. The account was pre B.K. and but its showing a paid collection after the BK. I also have a utillity collection (paid) for under $100 that is showing as a result of moving and not recieving a statement. The loan officer is trying to get it to go with computer underwriting and says we might need to go to manual underwriting and have it signed off. I would like some advise on what I can do to improve my chances on getting the FHA loan, any suggestions???? |
| Don Semler (Dsemler) | Wednesday, March 15, 2000 - 04:13 pm
First your loan officer is wasting their time trying to go with an automated underwriting system. The system won't approve this.
First thing I would have you do is write out a letter explaining everything.
1) Why did you have the BK. Why is this situation now behind you? Why won't it happen again?
2) Get proof that the student loan was paid pre-bk. You need a letter in writing from the servicer.
3) Why did you have a collection after the BK with a utility company. Just moving won't cut it? You need to try and elaborate a bit more.
Also, if there are any accounts that were included in your BK that do not show "Included in BK" then you need to start writing letters to the CRA's and send a copy of your BK papers.
Also, watch the number of inquiries as this will drop your score. Look at your credit. If the accounts you have are at or near the max credit limits, you score will also be pushed down.
Finally, tell you loan officer to get a full package ready(excluding appraisal) and shop that around. This would include all of your income doc's, credit letters and proof, rental history(assuming you must be renting)(this must be steller) with cancelled checks and a VOR, and then present this nice neatly explained package with a cover letter to the underwriters.
Most LO's don't want to work this hard so watch for the old switcherroo to a B/C product.
And one more thing. you should be willing to pay a bit more for this extra work so don't hammer them too hard on their fees or they probably just put your file in the desk drawer. Fair woudl be something like 2-3% or $2-3k including Yeild spread. |
| Christine Baker (Admin) | Wednesday, March 15, 2000 - 04:56 pm
Thanks Don, excellent advice!
A loan like this is a ton of work to get approved. And since we're talking MORTGAGE, I'll move this to the FINANCE Section. |
| Greg Fisher, creditscoring.com | Wednesday, March 15, 2000 - 08:17 pm
Don:
Why is he wasting his time with automated underwriting?
Anonymous, what are the four reasons your score is not higher from each of the repositories?
Why do you think one score is much higher than the other two? Is the high score from a complete report-- approximately all the same information as the other two? Or, for instance, is there a significant difference in the number of credit lines?
Are all the accounts that were in the bankruptcy listed as such? Do any have balances?
If there are inaccuracies, did the loan officer attempt to help you change the reports with the national repositories, so the score changes? Why wouldn't you try to do that while trying the manual method? There's a myth that you have to treat the credit bureaus with kid gloves-- and write the perfectly worded letter that will make them fix your report. Fight it. Force them to obey the law and correct every single, solitary mistake. You don't have to spend a lot of time on it. Just write letters, AND call them using the infamous telephone numbers they were fined by the FTC in January for not answering.
Consider using a name so we know who you are. I'd like to hear what happens. Please document it-- you may want to use the documents for further action. What do you have to lose? |
| DougK | Thursday, March 16, 2000 - 07:01 am
Don, In response to your questions, the loan officer had me write a letter of explination for the BK. He has run a full report with the CRA'a and we have gone through the whole report and cleaned up the errors and missreportings so we have an accurate report now. I am trying to get the utility collection removed from my report so all that I will have is the student loan collection showing. We are able to trace the account to pre-BK on the report. I have given a good explination on the student loan collection and he is currently taking to the Finance manager about the situation.
My question would be on an FHA loan, which I have heard aren't score driven, what are the minimum requirements and would I still qualify with my situation and a good letter(s) of explination?
Also, If this company won't do an A paper, would it be worth hunting for another lender?
He is already hinting at an A-paper but we havent given up hope yet. If this is the case I think that I might wait a year or so until my scores improve.
Thanks for the advice!
Doug |
| DougK | Thursday, March 16, 2000 - 07:22 am
Greg,
In response to your questions, We don't really understand why there is such a discrepancy in the scores. He has run the full combined report and we have cleaned up the misreportings but I am not sure if they have gone through line by line and mathced every trade line with each agency to find out the score differences.
We did find that their is an account that should have been included on the BK and is reporting as Paid/Profit/Loss with no collection remark by it.
I am not sure what agency is reposting this.
My Equifax score is the highest of the three, 659(too bad they throw away the highest and lowest and use the middle score.) He doesn't seem to be complaning about the score discrepancies so much as the post BK collections on my report. I am trying to get the utility collection removed so that all I will have is the student loan collection. Any other advice that you may have would be appriciated and I will keep you informed
on the status of the loan.
Thanks!
Doug K. |
| Don Semler (Dsemler) | Thursday, March 16, 2000 - 12:14 pm
First to Greg's comments:
While I agree he should write the letters to the CRA's, the problem that I run into is "time". Most of the time when people want to buy a house they first make the offer and then go see if they can qualify. (Bad Realtor's do it this way to get the parties tied up in hope's of making some $$). Ideally the borrower seek the mortgage prior to the house. Since they are under time constraints with the purchase contract, they don't have a lot of time to wait for the CRA's. I believe they have 30 days to resond to disputed item. (I may be wrong on this).
As for Doug:
Without having averything it's hard to say. If you are working with a bank, you might have a tough time since they are not able to shop it. If your working with a broker, you've got a better chance.
I doubt you will get the collection off, and even of you get it off the report you have, it may show up on the lender's report. The best way, since it was your, is jsut to face up to it and write a tear jerking letter explaining how you missed it. Really poiur on the emotions and make sure to point out how all of the problems are behind you. You loan officer will have to sell this. They will need to write a cover letter expaling the bad points and the list all the factual good stuff. IE: Job time, time at current residence, other seller credit, great pay on rent, other assets, reserves, little or no change in payments, etc. This is what they get Paid to do!!
As for changing lenders, only as above if they are a bank and not a broker.
As for waiting. Get into the house now. Don't wait. Yes you might pay a higher rate but you can refinace it later. If you wait, rates may rise and you might end up with the same rate anyway in a year. Also, make sure it is a fixed rate. 30/15 is ok. but don't do a 2/28 or 3/27 ARM. At that high of LTV you setting yourself up for trouble as FNMA and Freddie don't do 90+ LTV refi's on non-agency loans.
Anything else-- let me know. |
| Anonymous | Thursday, March 16, 2000 - 12:42 pm
My personal experience: Applied for a mortgage, and my combined credit reports showed a total of 4 charge-offs. I called the "mortgage credit reporting agency" (the company that "combined" my 3 CRA's reports into a single report - not to be confused with the 3 CRA's themselves). I was able to "convince" her on the telephone that 1 item was past 7 years old, and she told me she was going to delete it on the spot. The 2'nd item was a creditor that actually sued and won a judgement against me in small claims court for $ 5,000. I settled with them a week after the judgement for $ 500, and got a signed release of the judgement. I faxed that to her and she said she would delete that one as well. The third was a $ 50.00 bill from a dentist that I had trouble with the quality of his work. I paid him, and faxed the receipt to her, and she removed that one. The last item was to a collection agency that I had to settle for $ 1,500. Again, once I got a signed receipt stating the account was "settled", I faxed that to her and she removed it from her report. The result was that she removed ALL 4 negative items from HER COMBINED REPORT, and I got my mortgage. NONE OF THIS AFFECTED THE ITEMS ON THE 3 CRA's REPORTS - in fact, they were still there. The dentist agreed "not to respond to my challenge", so I was able to dispute the dentist's charge and get it off my CRA's reports that way. The other 3 I had to just let die after the 7-year clock had expired.
I do not understand why a "mortgage company credit reporter" will "remove" items from their combined report to the lender after you pay them, thus making it look like you never were late, while the CRA's will not remove it but simply put a notication that it is "PAID WAS xxx DAYS LATE". It seems that the mortage company credit reporting companies are easier to deal with. But I don't understand why paying a charge-off makes me "mortgage worthy" but not "credit-card worthy".
Any ideas or comments? |
| Don Semler (Dsemler) | Thursday, March 16, 2000 - 05:46 pm
This has become a problem in the industry. This is one reason why Lender's pull their own report. This way the data can not be changed. This stuff happens quite often, more in the past than it does now. As lenders have seen their portfolio's season there default rates tend to rise. This is normal. However, each file that goes into default is usually completely reviewed in order to help determine why it went into default. Generally their looking for fraud on the part of the borrower or person that sold them the loan. If the lender doesn't pull their own report and the loan doesn't default, nobody's hurt. However, if it does default, they are likely to come after the entity that sold them the loan, the credit agency for altering the report and anybody else who was involved in the deception.
When your report was fixed it probably didn't change the score since the score's are based on the raw data, it probably just made it look a bit better.
Which ever lender you went through, probably did not pull their own report. I would speculate that you've had you loan for at least a year since in the past year lender's have gone more to automated U/W and most B/C lender's pull their own reports. |
| Anonymous | Friday, March 17, 2000 - 08:18 am
Got the mortage in June of 98. So are you saying that if a person had a chargeoff, but his score still made the "cut", then today's lenders would not demand the borrower "payoff" the chargeoff before approving the loan? It would make sense if that was the case.
My impression for the mickey-mouse was to allow the loan to (at least superficially) meet some type of guideline for making the loan "re-sellable" (I.E. the mortage company already has a sales agreement with a third party to sell all their "A" paper, so the mortage company simply wants some CYA paper that showed that (again, superficially) you were an "A" loan - in other words, the mortgage company could say "his report did not show a single charge-off" (never mind that the credit reporter deleted 4 charge offs from the report before giving it to the mortgage company). Is my impression accurate? |
| Anonymous | Saturday, March 18, 2000 - 02:43 am
This *could* be true for this situation, but not for others. My experience included the services of the company actually removing the item from my credit report at TU. Apparently, this particular company had/has access to the raw data (apparently through some agreement with TU). I provided the proof to them just as I would have to TU. I know this for a fact, because I've received two more reports (directly from TU) in the 5 months since the mortgage application, and the item remains deleted.
Please note that this was a collection account, and not a regularly reported item. And this was only for TU through this particular company. |
| Don Semler (Dsemler) | Monday, March 20, 2000 - 11:18 am
In answer to anonymous 3/17/200--
You had to have the score originally to qualify. You right on the second part though. Since you must have had the approvable scores, the idea of removing the delinquent credit only made the loan package cleaner. This way when sold to the secondary market they could produce documentation that the charge offs were paid.
If the accounts were not paid, most likely you would have been required to pay them. sually anything over $100 depending on the LTV. |
