Please advise! I am in the process of purchasing a home and will need to start looking for that perfect mortgage loan in less than 2 weeks. So, in preparing myself, I decided to purchase my credit report from all 3 CRA's and, to my surprise, a collection account has recently been recently added to all 3. The total is approximately $800. I honestly do not recognize this account at all, so I disputed the item with the CRA's and, in less than 1 week, I received notification that the item was going to remain in my report (at least from one of them). Here's the deal... I honestly do not recognize this account and there is a large chance it is not mine. In other circumstances, I'd somehow continue the dispute process, directly with the collection agency. However, my priority right now is my mortgage. My scores have already been affected and there is nothing I can do to reverse this other than prove the account is not mine or somehow negotiate with the collection agency that I'll pay the balance if they agree to REMOVE the account as if it had never existed. From reading in this forum and others, this type of dispute is very time consuming (I need to close on a loan in less than 1 month) and reaching such aggreement is virtually impossible (I cannot take chances now). Fortunately, the collection agency has no idea I am in the market for a mortgage loan and just sent me a letter stating they'll accept a 50% settlement payment and consider the account as PAID. Now, I know this will continue to affect my scores, but, at least, the account will be closed and I will be able to get a loan (luckily paying only 50% of this amount, which I'm sure is not mine to start with... remember what my priority is). My question to you is... How honest are these people with these letters and how soon after they receive payment do they report the account as paid to the CRA's? TIA!
What do you mean do I have a common name? What are you? A collection agency lurking in these forums trying to see what their debtors have to say about them and their plans regarding the debts? If not, I apologize, but I do not understand your question.
Yes, one lender only. They know about the collection, but I turned their offer down. They did not contact the collection agency at all.
No - what the poster is asking is if you have a common name such as John Smith, or Mary Black - as opposed to, say, Edna Pendergast. There's a very good chance if it is not yours that the collection agency mixed you up with someone else with the same, common, name.
WHOOPS! I am paranoid. Sorry. *LOL* No, I do not have a common name. However, rather than starting a dispute process right now, I'd rather do anything (including paying a debt that might not be mine) in order to be able to get a good mortgage within a month. My question is whether these settlement offers from collection agencies can be trusted and how long it normally works for them to report to the CRA's once paid. TIA!
ontrack, please ignore my stupid outburst and come back and comment. From reading your wise comments on other posts, I've gathered you're sort of the help-all guru around here. I apologize.
Ontrack was trying to make a point - when you have a common name AND you have applied for a mortgage or "pre-approval"... What happens is that the CA's buy reports from the CRA's. that show which folks have applied for a mortgage and - just as in your case - the CA slaps a collection on there, whether it is yours or not, because they know people will be stressed and inclined to pay off the collection in order to "save their mortgage application" I would not do anything but send the validation letter to the CA. If time is important with the mortgage ask the lender about "Rapid Rescoring" to thwart the CA's efforts!
I understand. Well, I don't think that's why the CA reported that account. Even though I just found out it was in my file, it has been there since last November and I had not applied for a pre-approval until this past week. Again, what's the deal with these settlement letters and how does it work after I send payment in (if I decide I will)?
I would say that you need to look back at previous posts to see examples of settlement letters. You want to be very careful. Key terms to look up would be "accord and satisfaction". It would not hurt to pay a lawyer to draft the letter to protect all of your rights, and to make sure that 1. They remove any negative TL on ALL your CR's in return for payment 2. They agree NEVER to insert a TL on ANY CR related to this transaction 3. They agree that the account is closed, paid as agreed, and has 0$ balance due 4. Since the account is closed and paid, they will not "sell it off" to another unsuspecting CA
You should be careful since if you settle on paying an account that is not yours, whatever they might have said to get you to pay, you might still find a negative tradeline on your report that interferes with your mortgage, or results in a higher rate, easily costing you more than what you paid to avoid the problem. The problem is that having paid, you may find it more difficult to get the resulting, still negative, paid tradeline removed, since the CA and the CRA will presume that paying it is an admission that it was your debt. The CA will have little incentive to work with you when they have nothing to gain. You are presuming that you will reach an agreement, and in effect they will send a nice signed contract agreeing to remove, which they will promptly follow in good faith, all for just the cost of their alleged debt. Although this may happen, you can't guarantee this outcome, and if you compromise your rights, either by failing to validate within 30 days of initial contact, or by paying a debt you never owed, and for which you can't even identify the account and actual amount owed, you are in a poor position if it doesn't work out. If you are sure it is not your account, you can fully challange it, preserving your rights, and if they screw you, you can sock them with real damages. Even though you might prefer the other path, you need to be ready to go down this one.
I understand and will certainly take every single of your comments into consideration when making a decision. They all make perfect sense to follow when you have plenty of time. However, I don't think you fully understand where I stand. I have had a contract on my pre-construction property for over a year and they finally finished it. As per my contract, I NEED to close in less than 30 days. Now, is that enough time for this type of dispute with a CA to be completed and a mortgage loan to be found? I don't think it is and I feel you will all agree. What other choices do I have? These are the only ones I see: 1) Default on my contract and lose my $8K deposit and 13 months waiting. NOT. 2) Let the bank that's giving me the mortgage pay the full amount of my collection, as no bank will give me a loan with outstanding debts. 3) Settle with the CA now before I do anything else mortgage-related and they find out I am seeking funding and withdraw their settlement offer (they know about # 2 above). Do you see other ways I could go in MY situation? Unfortunately, I don't and, out of those three, I thought the last one was the most prudent: I could get a mortgage paying half of the balance on the collection. Whether mine or not, the point is I don't have time to dispute and would need to pay it in full if I need a mortgage less in a month. If you agree with me, my original question remains: how trustable are these letters and when will I see changes in my reports once I pay? Thank you all for your input. I'd appreciate further feedback, as --I am sure you can see-- I am quite tight with time.
Re: Re: Collection - Mortgage - Settlement Ask your lender about the Rapid Rescore Program http://www.access-credit.com/html/rapid_rescore.html
Re: Re: Collection - Mortgage - Settlement Letters are not trustworthy or untrustworthy, its the people behind them. Some CAs have "settled" for less than the account balance, and then sold the remainder, or sometimes all, to a second CA. Most consumers keep such poor records this seldom hurts the CA. You could look at other people's experience with this particular CA.
Re: Re: Re: Collection - Mortgage - Settlement Good point. However, isn't this time-consuming as well? Not the actual scoring, but the validation process that I would need to go through before in order to be able to present proof for the Rapid Rescoring. I have read people can go on disputing an account for as long as 2 years, especially with people like Midland Credit (the CA that's reporting me). I could send a letter requesting validation and wait. From what I have read, there's a big chance they won't answer in 2-3 weeks (if they answer at all). By then, I will have to have already found a mortgage. Unless I'm not getting the point of Rapid Rescoring, I would need to have proof that this account is not mine. My only proof would be for these people to send me a letter confirming that it isn't. What do you suggest?
Re: Re: Re: Re: Collection - Mortgage - Settlement That is the point of using Rapid Rescore - YOU Don't do it the Mortgage Co. does it...they have contracts witht he CRA's to get it done FAST for their clients who are going to closings!
Re: Re: Re: Re: Collection - Mortgage - Settlement If you settled with them, you would want a letter that at least the account was paid anyway, since otherwise the lender would probably require you to pay them to close. The rescoring then would be for a settled collection, not a removed one, but at least your loan would go thru, although possibly on poorer terms. You might mark your payment check "Debt disputed, paid under protest", and proceed to demand validation and sue for damages if/when you find the debt was not yours, but you might want to run that approach by an attorney first. I don't know where that leaves you to bind them to the settlement agreement.
Re: Re: Re: Re: Collection - Mortgage - Settlement Because of the money involved, it may be worth talking to an attorney at this point anyway, since you can't guarantee that they will be responsive enough to not damage you. They might be more responsive to a demand from an attorney, since it would make more clear that if they have made a mistake, they might have to pay for it. When you are buying property, you must get used to the fact that you will be paying for everything, one way or another. You pay mortgage fees, you pay for inspections, you pay for escrow services, you will pay the principal and interest on the loan, you will pay taxes, you will pay for repairs to preserve the value of the property, you will pay for insurance against things going wrong, and you may pay legal fees to defend the value of the property you buy. That is all part of it. When you cut corners to save a few bucks, you run risks. Do you want to pay to protect your interests, or pay multiple times for a debt you don't owe. If you are sure this is not your debt, what does that say about the trustability of the CA attempting to collect it?
Re: Re: Re: Re: Re: Collection - Mortgage - Settlement Right, I understand the mortgage company does it for me. However, what would they show as proof to the CRA's if I have nothing to give them? I don't have anything to give them because I have no response from the CA. I have no response from the CA because I am yet to start the validation dispute and I understand they take sometimes months to respond... when they do respond. Am I not getting the point of Rapid Rescoring? Please advise. Thanks once again.
