TexanNCali

Paying off MCM collection for FHA loan approval?

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I had a collection from MCM on my CR's. I was able to have the TL deleted. I believe the SOL has passed. I am not exactly sure of the DOFD. MCM has not provided a lot of info. I was able to obtain when the last payment was made from the OC.

My wife and I would like to apply for a FHA loan within the year. It has come to my attention that FHA loans require collections over $2000 to be paid, settled, or payment arrangements made before the loan will be approved. Unfortunately, the amount owed is just a bit over $2K. Although the TL has been deleted, I feel that when mortgage inquiries hit my CR the TL will reappear.

Since the TL was deleted, MCM has sent monthly settlement letters that I have not responded to. We recently moved back to TX and I have not received any letters. I have changed my address thru the USPS and have updated my new address with current creditors.

Recently, I found out that the OC sold the TL to MCM with an incorrect balance. I am awaiting a refund from the OC. I spoke with the OC who gave me the balance owed but that does not match what was listed on my CR. It does not match what the OC told me was owed when I initially contacted them 2 years ago. I was also told that MCM had tacked on a $200 charge as a collection fee. This info was all explained to me via phone. I will have to attempt to follow-up with the OC to obtain this info in writing.

If and when the TL reappears, I will be able to dispute the current balance if it is still incorrect. I do not want to pay this debt. I always felt the amount owed was wrong and now the OC has confirmed that. This TL was opened without my permission, using my SSN but I can't claim identity theft which might jeopardize a family member. I should since they had no regard for my well being but can't. I still believe the new balance is incorrect. When I first noticed the TL on my CR, I immediately called the OC to obtain as much info as possible. I was given limited info, told to call MCM, and that all records had been sold to the CA. Approximately 1.5 years later, I was contacted by the OC and was told I was eligible for a refund. I asked how they calculated the refund as all the records were sold. My request fell upon deaf ears. After talking in circles with the OC, I hung up frustrated.

If the lender wants me to pay off the debt, I will. I do have a few concerns. If I pay less then the amount owed, wouldn't that reset the SOL. Couldn't MCM then sue for the full amount or sell the remaining debt to another CA? Wouldn't paying the debt, in full or partial, lower my credit score? MCM settlement letters state "If you pay your full balance, we will report your account as paid in full. If you pay less than your full balance, we will report your account as paid in full for less than the full balance." I have to admit that I do not trust MCM. I've worked hard to remove negative TL's and have been paying my current debts promptly for the last 4.5 years. Should I settle sooner rather than later so my score has a chance to bounce back? Can MCM tack on a $200 collection fee? I also feel that since the SOL has passed or will shortly, I will be in the best position to negotiate before the mortgage inquiry.

 

This forum has been a tremendous resource. I thank everyone for their guidance and input. For anyone who's just starting their credit repair journey, I offer this advice...don't give up, be patient, responsible, and you too can achieve a higher credit score. Thanks again for any suggestions or advice.

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Interesting...... Four years ago I moved from TX with two collections on my CR's. I applied to FHA for a 100% no down payment and got the loan for a two hundred thousand dollar home. I had two banks willing to give me a loan on the home. WF was one of the banks. I would approach a lender and see what they say.

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May I ask when you purchased your home? Was it after 10/15/13? I believe that's when the new FHA guidelines went in to effect. I also believe that there are other things that go into consideration. I've read that lenders may take 5% of the collection amount and factor that into your debt to income ratio and that you can submit a letter explaining why the debt was placed with a CA. I'm not sure if lenders factor in SOL's. I will continue to do research.

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