kelsey65

New Collection Account Prior to Closing Date

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My husband and I had our credit pulled during the middle of May for a mortgage. We were pre-approved for a FHA mortgage and found a house at the beginning of June. My husbands score was 685 and mine was 680. We do not qualify for a conventional loan because our debit to income ratio is to high with some deferred student loans. We wrote an offer on June 3rd which was accepted with a closing date set for 30 days later July 3rd.

Unknown to us the home was purchased at sheriff's tax sale and the although the sales date was March 22nd, it did not transfer ownership through the assessors office until April 18th. We then found out that you can not obtain Mortgage Insurance on a house which has been flipped in under 90 days per FHA guidelines. There are a few loop holes to this rule, but after researching 13 lenders none of them will close on a FHA mortgage until 90 days has past which will be July 18th since it didn't transfer ownership until April 18th.

We finally came to an agreement with the owner to extend our contract with a closing hopefully by the end of July. However our lender can not set or promise a date as right now our loan is just more or less waiting. They will re-activate our loan on July 18th. Everything has been taken care of already; title search, appraisals, home inspection, employment/asset verification and we were completely approved ready to go. This morning we pulled our credit reports again and an old unknown debt for $1200 has shown up. We will pay this first thing Monday morning but are seriously concerned that if/when they recheck our credit prior to closing since it will be more than two months later this will break our mortgage deal and we won't be able to obtain financing.

Anyone have any ideas? We know this will reset our collection date. We are ok with that. It shouldn't drop the score too much. More worried about a new collection account just showing up that probably won't update to being paid by the time we are trying to close at the end of the month.

Thank you anyone for your thoughts!

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A lot of CAs / JDBs have set up triggers with the bureaus...meaning if you go for a car loan, home loan or any other big credit item, they will find out and sometimes put their old debt on there as a way to get paid.

Send a dispute to the ASAP - like tomorrow via Express Mail.

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A lot of CAs / JDBs have set up triggers with the bureaus...meaning if you go for a car loan, home loan or any other big credit item, they will find out and sometimes put their old debt on there as a way to get paid.

Send a dispute to the ASAP - like tomorrow via Express Mail.

I agree about the triggers....its very common to see a contact after a mortgage or auto application.

However, if you are seeking a mortgage, you don't want to have a dispute on your record because you can't get an approval with a dispute showing on the CR.

The CA's know this - that's why they send the dunning notice right after a mortgage pull.

You might want to try a PFD. Or, if you are getting an FHA loan talk to your loan officer to see if they will add the "debt" to the HUD as a separate line item.

If you can dispute this without getting the dispute notated on the CR, then do so. It's a dirty trick the CA's play all the time.....:(

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I agree about the triggers....its very common to see a contact after a mortgage or auto application.:(

I hope with the new Federal government oversite of the credit bureaus starting in September, that these kind of practices will stop.:censored:

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I did an FHA last year and they tried this on me. I was lucky to have a good underwriter and bank that just worked around it. Most banks will pull your credit one more time prior to closing. Most people don't know this and run out and buy a new TV or car. Shoots the loan down real quick.

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If the money ($1200) is not an issue and you are certain you actually owe it then I agree with Denita.

Try a Pay for Delete. Get it in writing in advance if you can. Then it becomes a non-issue when you complete the mortgage.

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