     mali (Mali) | Thursday, August 10, 2000 - 03:44 pm 
My husband and I are attempting to get preapproved for an FHA mortgage. We should have waited a couple of months before applying but we didn't know much about credit reporting until very recently. We have several collections (charge-offs) which will be over 7 years old in the next couple of months. When our mortgage lender pulled our credit reports she let us know that these needed to be paid off before we would be approved. At first we were kicking ourselves for not waiting a little while and checking to make sure they were off but then we decided we would just call and attempt settlements. We figured it would be fairly easy since we were not aiming for deletion (they will be coming off soon enough anyway) and since these are so old and past the sol. Well, when we called all of them knew we were trying to get a mortgage so they were unwilling to negotiate. (One collection agent even said "face it, you are never going to get your loan until you pay this off"). My question is how do they find out? In other words, does the company that obtains the merged credit report call your creditors? Has this happened to anyone else? I was shocked. Our lender said that there is nothing we can do because once they see it it must be paid off or settled. Should we just wait a few months and reapply with another company? That seems like our only alternative. These collection agencies have added on interest, as well. We were looking for like 20% settlements and instead we were looking at 150%!  Any advice? |
| Christine Baker (Admin) | Friday, August 18, 2000 - 09:46 pm
Wait a few months! The collection agencies must have obtained your credit and noticed the mortgage inquiry. Nobody would call and notify them, they must have ran your credit after or while you called them.
Obviously, telling you that you're never going to get a loan is not true, and you know that.
I'd advise all 3 credit bureaus that the 7 years are about up, to ensure they'll be removed in a timely manner. |
| Michael Bardelli (Bull22) | Saturday, August 19, 2000 - 10:17 am
I was in a similar situation before getting my mortgage. I was owing Ford Motor credit several thousand dollars for a repo in 95. My mortgage broker said they wouldn't give me a loan until that was paid off. They ended up settling for 20% of what I owed. I guess the mortgage lenders fear that if they give you a loan and you close, the creditors will place a lien on the property. If they do that, the creditors feel that you no longer have an incentive to pay the mortgage and that means an expensive foreclosure process for them. I personally think that that form of "cross collecting" should be illegal. With your situation, you should be able to simply tell the mortgage broker that the debts are now passed the SOL. Christine is correct though, the creditors ran your credit at some point in time and saw the mortgage inquiry. At that point, all they have to do is sit back and wait because they know that your phone call is coming. As for settlements, once they know that you are trying for a mortgage, they won't work with you at all. I got lucky with Ford. They were nice enough to settle for 20% and they knew I was trying for a mortgage. Christine is right though. Wait for them to drop off and then try again. Good luck.
Mike |
| mali (Mali) | Sunday, August 20, 2000 - 04:08 pm
Thanks to both of you. I guess we will just wait awhile. Like I said, I would be willing to settle they aren't willing. These are all past the sol as well but for some reason that doesn't matter to our lender. Thanks again. |
| Amy Duncan (Amydd) | Sunday, August 20, 2000 - 09:47 pm
I wonder if the new lender will question the inquiries on your report from the collection agencies. |
| Christine Baker (Admin) | Sunday, August 20, 2000 - 09:57 pm
Only inquiries within the previous 90 days show on the RMCR (residential mortgage credit report.) If there are inquiries, the borrower will have to write a letter stating that no new loans were obtained. The fact that inquiries are listed should not be affecting the underwriting negatively.
Of course the Credit Scores will most likely still be lowered by those inquiries. |
| Amy Duncan (Amydd) | Monday, August 21, 2000 - 12:57 am
But if they see an inquiry from ABC COLLECTIONS won't that raise some flags? If you claim ignorance, could an underwriter contact the collection agency (listed on the inquiry) directly? |
| Don Semler (Dsemler) | Friday, August 25, 2000 - 05:01 pm
It won't matter from an underwriter point of view. There only concern is whether or not you took on additional debt.
As for the collection company. Try negotiating this week with them. Most collectors are on commission. Since you in the last week of the month, they are more apt to settle to hit their bonus.
Make sure you have the money ready to western union. Also, GET ALL SETTLEMENTS IN WRITING BEFORE YOU PAY!!!! |
