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Mortgage Loan Pending - need to settle


ddt0907
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I have a collection item that is 5 yrs old. The collection agency has been writing me for years trying to settle this account. They have continually offered to settle this account for less than $3000. The last letter that I received indicated that they would settle for $2300. Well recently, I applied for a mortgage loan and the underwriter insisted that I pay the collection or my loan would be denied. When I called the collection agency to settle, NOW they want $7000 AFTER I told them that I had a loan pending (I know....it was dumb of me to tell them). Am I just royally screwed? Is there any way to get them to honor all those other offer amounts to settle? I do not have $7000. Please help!!!

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All the negotiating leverage has shifted to the creditor. You will either have to find a way to pay them the $7,000 or you will need to let this deal go and wait either until the debt is settled or out of statute. The latter is not a cure-all though because underwriters have the own standards and the form 1003 will continue to require you to disclose even an out-of-statute debt.

In the mortgage frenzy of the early '00s, you could probably have found another mortgage program that would cost a bit more in interest but let you slide on the collection. Those days are long gone.

If other players in the deal are willing to lower their price or cut their fees you may be able to pay the creditor. Or a relative may step in and help you resolve it. Other than that, you're stuck.

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