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ndkblondie

To qualify for a mtg do Charge Offs need to show as Paid or just 0 balance?

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We are recovering from devastating loss and ruin to our credit from 2008 and now ready to purchase a home.  Many of our charge offs and collections read as 0 for balance and several are still showing a balance.  

 

Three questions:

 

I read that charge offs should all read as 0 balance, is that correct?

 

I have two trade lines that say they are still in collection but in the comments they say they are charged off or sold, what do I do with this conflicting info on those trade lines?

 

To qualify for a mortgage, does the trade line need to read as paid or does a 0 balance do the trick?

 

This will make the difference on whether we can get it done or not. 


Thank you!!

 

 

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CO's with a balance and "sold to another lender" with a $0 balance are all danger signs that somebody may be suing you.  Mortgage underwriters don't like that.  Highly unlikely you'll be approved.

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These are all out of SOL so no danger of being sued, from 2008 and we are in Cali so 4 years.  Our broker said as long as they are all paid he can get it done, my question is does a 0 balance on a CO suffice or does it actually have to say the word "Paid" on it?

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Paid.

 

And be prepared for a high rate on the mortgage....

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I'm in the same boat, I have charge offs/ sent to collections however the balance is not 0

 

But my CR says that the debts should fall off 1/2014 & 2/2014 -

 

I would like to purchase a home, how will this affect my interest rate? If at all...

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I'm in the same boat, I have charge offs/ sent to collections however the balance is not 0

 

But my CR says that the debts should fall off 1/2014 & 2/2014 -

 

I would like to purchase a home, how will this affect my interest rate? If at all...

@BugAboo7 - It depends on your credit score more than anything else.  

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,

The years I was a loan officer reviewed many credit reports, personally help many resolve past debts.

Once the balance is paid, the status will be updated to show “Paid Charge off” or "Settled" and the balance will be updated to zero.

When qualifying for a mortgage many times (depending on the individual underwriter as preclosing conditions) the borrower would need to provide an additional settlement letter showing that the account had been settled.

Your two trade lines that are charged off or sold?

The items that show sold - most likely was sold to a collection company's at penny's on the dollar. They will be attempting to collect as much as possible in an attempt to make a profit. How much you will pay to settle the debt is determined on how well you negotiate with them.

One negotiating tactic that could done - mentioning an appointment to speak to an attorney about doing a chapter 7 bankruptcy to wash away your debts. (I do not want you to do bankrutcy - only mention it). Next say a relative is concerned about your credit and will be helping you by providing the funds for a settlement. (Firmly) state you want to do a settlement. .

The methodology with this - if you did an actual Chapter 7 , a bankruptcy can dismiss revolving debt away. A collection company will lose everything unless they settle for something. Second If you try to do a settlement on your own, you are required to provide pay stubs and checking account statements. Then they will determine how much you will pay them. By saying another person helping you settle, they cannot ask to see that person's income of bank statements. That way you have more control to determine the settlement.

When borrowers do a settlement for less, the credit will report this as "Settled For Less". This is can be a "weight" preventing a credit score from raising as quick if it wasn't worded differently. When negotiating a lower settlement, one of the items you want reported to the credit bureaus is "Settled As Agreed".


Good Luck

.

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Maybe I am an exception. I applied for a USDA loan in late 2010 and was approved. I had TWO CO's at more than $30,000.00 a piece. I was approve early 2011 for a two hundred thousand no money loan. Last year a JDB picked up my account which was by then a year past SOL and tried to collect. No dice, he didn't get a dime. Today, checked my CR and he is gone, dropped off and my score went up on all three...... :nannersplit:

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Maybe I am an exception. I applied for a USDA loan in late 2010 and was approved. I had TWO CO's at more than $30,000.00 a piece. I was approve early 2011 for a two hundred thousand no money loan. Last year a JDB picked up my account which was by then a year past SOL and tried to collect. No dice, he didn't get a dime. Today, checked my CR and he is gone, dropped off and my score went up on all three...... :nannersplit:

 

 

Tom,

 

The years I have worked in mortgages, I can honestly say every situation is different.  Looking at the USDA Credit Requirements concerning your credit history.

 

A credit history reflecting any or all of the following is considered unacceptable credit history:

* More than one 30-day late within the past 12 months.

* Bankruptcy or foreclosure discharged less than 36 months

* Outstanding judgments within the past 12 months

* Two or more rent payments 30 days late within the past 3 years.

* Outstanding collection accounts with no payment arrangements

* Outstanding tax liens or delinquent federal debt with no payment arrangements

* Accounts converted to collections in the past 12 months.

 

The USDA Credit Requirements clearly state what not acceptable.

 

You having $60,000 in outstanding collections then being approved for an USDA loan in late 2010 and later in 2011 for a $200k loan? 

 

You being an exception, obviously, there is more to your story.....

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Tom,

 

The years I have worked in mortgages, I can honestly say every situation is different.  Looking at the USDA Credit Requirements concerning your credit history.

 

A credit history reflecting any or all of the following is considered unacceptable credit history:

* More than one 30-day late within the past 12 months.

* Bankruptcy or foreclosure discharged less than 36 months

* Outstanding judgments within the past 12 months

* Two or more rent payments 30 days late within the past 3 years.

* Outstanding collection accounts with no payment arrangements

* Outstanding tax liens or delinquent federal debt with no payment arrangements

* Accounts converted to collections in the past 12 months.

 

The USDA Credit Requirements clearly state what not acceptable.

 

You having $60,000 in outstanding collections then being approved for an USDA loan in late 2010 and later in 2011 for a $200k loan? 

 

You being an exception, obviously, there is more to your story.....

 

No! There isn't, this is the truth, the whole truth. I own a home in TX. Decided to buy another home and made application for it in late 2010, at the begining of 2011 it was approved and we bought the second home. Now, after two years the second JDB has dropped off. I have never missed a payment on either house and life is pretty good. Why they approved me, I don't know. But, now all I have on my CR is two CO's that will drop off in 2015. I now have my home in TX up for sale, so before long I will only have the one again.

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http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

http://www.rurdev.usda.gov/HAD-Guaranteed_Housing_Loans.html

 

Guaranteed Housing Loans

Eligibility: Applicants for loans may have an income of up to 115% of the median income for the area. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories.

Approved lenders under the Single Family Housing Guaranteed Loan program include:

Any State housing agency; Lenders approved by: HUD for submission of applications for Federal Housing Mortgage Insurance or as an issuer of Ginnie Mae mortgage backed securities; the U.S. Veterans Administration as a qualified mortgagee; Fannie Mae for participation in family mortgage loans; Freddie Mac for participation in family mortgage loans; Any FCS (Farm Credit System) institution with direct lending authority; Any lender participating in other USDA Rural Development and/or Farm Service Agency guaranteed loan programs.

Terms: Loans are for 30 years. The promissory note interest rate is set by the lender. There is no required down payment. The lender must also determine repayment feasibility, using ratios of repayment (gross) income to PITI and to total family debt.

Standards: Under the Section 502 program, housing must be modest in size, design, and cost. Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code adopted by the state and HCFP thermal and site standards. New Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and HCFP thermal and site standards. Existing manufactured housing will not be guaranteed unless it is already financed with an HCFP direct or guaranteed loan or it is Real Estate Owned (REO) formerly secured by an HCFP direct or guaranteed loan.

Basic Instruction: 7 CFR Part 1980

For more information about this program, or to file an application, contact the local Rural Development office in your area.

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Thanks Race.....I don't know about modest size, mine is just over  2500 square feet. It's 52 years old but has been remodeled and you couldn't tell it from one built today. At the time I bought this one they had a law on the books allowing a person to own one home and still buy another as long as it was a certain distance from the first. That allowed me to be able to buy my second home.

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No! There isn't, this is the truth, the whole truth. I own a home in TX. Decided to buy another home and made application for it in late 2010, at the begining of 2011 it was approved and we bought the second home. Now, after two years the second JDB has dropped off. I have never missed a payment on either house and life is pretty good. Why they approved me, I don't know. But, now all I have on my CR is two CO's that will drop off in 2015. I now have my home in TX up for sale, so before long I will only have the one again.

Pretty amazing, I have never seen a mortgage granted with that kind of outstanding debt on a chargeoff.  

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