mortgage and old bad debt

Discussion in 'Credit Talk' started by sunny, Aug 18, 2000.

  1. sunny

    sunny Guest

    I'm plaining to buy the house soon , i had over 6-8k old charge offs (some from 93,96) I know in order for me to qualify these old debt needs to be paid off just wondering if i can consalidate these old charges and made couple payments on time and have consalidat company show all these accouts are in payemnt palns on the credit report what are my chances to get the mortgage? I know previously i was speaking with a 1 loan officer and he tols me as long as u paid off/made arrangement with the creditor u should be able to qualify ?

    is that tru , I mean i dont have enough money to pay off all me old debts and put down the down payment

    please let me know

    thx
    sunny
    sundude@zeenext.com
     
  2. kim

    kim Well-Known Member

    There was a guy a few months back that said you didn't really have to pay all your olds debts in order to qualify for a mortgage loan. However, my experience is you have to pay the debts off. So, in that case, it depends on your lender and who you talk to.

    Re: bills from 1993, it's time for them to fall off the report isn't it. Don't consolidate these loans, you will start the clock over again, when these 4 and 7 yr old debts are near being dropped off your report.
     
  3. Steven Z

    Steven Z Guest

    Sunny, there is another option. That is FHA loans, called Fannie Mae and Freddie Mae loans, these are the biggest loan guarantor in the country and NO approved loans "DO NOT" require collections/charge-offs to be paid off.

    Here are the urls from previous postings and threads discussing this topic on this site, perhaps they'll refresh Kim's memory as well

    http://board.creditnet.com/read.php3?num=1&id=8791&thread=8679

    http://board.creditnet.com/read.php3?num=1&id=7952&loc=0&thread=7952

    http://board.creditnet.com/read.php3?num=1&id=5982&thread=5935

    Personally, I have no house and had previously NEVER been interested in talk of mortgages. I was peripherally aware that only in the mortgage industry was the horrible practice of cross collections followed wherein mortgage companies and lenders DEMAND all items on a report to be paid before granting a new loan, regardless of the validity the age or the amount of the claim. Quite simply the mortgage industry is in collusion with the collection/credit industry and DO NOT have your best interests at heart.

    Then I saw David W's posts (him being a FHA mortgage broker) and said to myself "sh&t why would anybody willingly let themselves 'screwed over' when they don't have to", I attempted on many credit sites to find even ONE person in the mortgage industry to defend their actions, none has ever come forward which tells you all you need to know.

    Honestly, I cannot tell you how good FHA houses are or how smooth your loan arrangement will be with them, but for the chance of saving 6-8k in outdated debts, closing costs and a down payment you'd be well advised to check it out and as for the loan officer you spoke with tell him to 'stick it'.
     
  4. kim

    kim Well-Known Member

    I remember those posts quite w

    and I also stated I spoke from my experience and when I was shopping for a lender not one of them told me that I didn't need to pay my old debts, and I went to several lenders.
     
  5. Patm

    Patm Guest

    forget the 93 charge off. It must be removed from your credit report after 7 years, which is this year.
     
  6. Patm

    Patm Guest

    the clock doesn't start over! the FCRA says in plain language that a pre 97 debt must be removed 7 years after the date of charge off, and charged off debts after 97 must be removed 7 years after the date of initial delinquency leading to the chargeoff.

    get a letter from the creditor stating the date of charge off (for 96 charge off) and exactly 7 years later, the credit reporting agencies are required by federal law to remove the items. If they don't, you write them. If they do not remove them, you sue for declaratory relief in state court. The FCRA provides that jurisdiction may be either state court, or federal.

    In California, one can't obtain declaratory relief in small claims. Filing the lawsuit in Superior Court costs $196, and the trial will take 5 minutes before a judge, if the CRAs don't comply following the lawsuit.
     
  7. DAVID W

    DAVID W Guest

    It's true, generally speaking we do not require collections/charge-offs to be paid as a condition of the loan. With charge-offs over 4 yrs old and good pay history since you shouldn't be require to pay them off.

    There are rare instances when they are less than 4 yrs or 2 yrs old (depending on loan program) that U/Wring requires them to be paid but that is the exception not the rule.

    For example, I have a Borrower closing on the 28th who has 5 collections -5/94, 10/94, 2/95, 8/99, & 8/99 each in the $100 - $700 range. Fico's range from 590 to 620. None are required to be paid and the Borrower is using that money for Down Payment. It's an FHA loan and Steven is correct, that loan program rougher credit.

    DAVID W
    DWacaser@LandMarkmtg.com
     
  8. kim

    kim Well-Known Member

    Which explains why I...

    had to pay my collections ~ they were all within the past 3 years.

    Thanks for your input.

    DAVID W wrote:
    -------------------------------
    There are rare instances when they are less than 4 yrs or 2 yrs old (depending on loan program) that U/Wring requires them to be paid but that is the exception not the rule.
     
  9. kim

    kim Well-Known Member

    I believe that if he consolidated the loans into a new loan that will constitute a new agreement. Example ~ 7~$500 charges off, ready to drop off = 1- $3,500 loan/new contract/agreement.
     
  10. Patm

    Patm Guest

    but the new loan (from another lender) will not be delinquent.
     
  11. Patm

    Patm Guest

    how can you get a mortgage with a 620 FICO?
     
  12. me

    me Well-Known Member

    a 620 is not all that bad for mortgages - you may have to go through a special program or you may have to pay a slightly higher interest rate, but people with FICOs lower than that can get mortgages.
     
  13. kim

    kim Well-Known Member

    True Pat, it would not be deliquent. My point is ~ if the stuff is about to drop off within the next year ~ why enter into another contract and have the possibility of it going deliquent and be on your another 7 years.
     
  14. me

    me Well-Known Member

    David - question for you

    What FICO range would a person typically need to be havet in order to be approved for a non-FHA normal mortgage with 5-10% down but with a fairly high debt to income ratio(with the new mortgage included in the ratio). I was told by a mortgage broker that I would probably qualify currently but with an interest rate about .5-.75% higher than the average. What would an appropriate FICO be (ballpark of course because I know it depends on the circumstances)?
     
  15. DAVID W

    DAVID W Guest

    RE: David - question for you

    The higher your assets the lower your FICO can be to be approved on an A paper 5% min Down loan program. With good assets and credit history last 4 yrs, I've had approvals with low 600 middle FICO's.

    We are a total risk lender, therefore, we're not always restricted by "traditional" rules. Traditional rules require a middle score of 640 or better.

    It sound like you may have a pricing "hit" for a "Stated Income" program which allows higher ratios. Over 1/2% higher in rate is high.

    DAVID W
    DWacaser@LandMarkmtg.com
     
  16. me

    me Well-Known Member

    RE: David - question for you

    Thanks!!
     
  17. Jody Hodon

    Jody Hodon Guest

    RE: David - question for you

    I broke a apartment lease early and a collection agency (Pierce Hamilton & Stern) wants $2000. This info. is on my credit report as unpaid, I have sent no payments. Should I try to settle with them or should I try to build new good credit to offset this unpaid debt?
     
  18. Jody H.

    Jody H. Guest

    RE: David - question for you

    I broke a apartment lease early and a collection agency (Pierce Hamilton & Stern) wants $2000. This info. is on my credit report as unpaid, I have sent no payments. Should I try to settle with them or should I try to build new good credit to offset this unpaid debt?
     
  19. J.A. Mason

    J.A. Mason Guest

    RE: David - question for you

    You should try to settle or make payment arrangements. Creating good credit on other accounts will not offset this negative. It will not goaway.
     

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