topic Re: Unpaid charge off/collection question in Mortgage Loans

Unpaid charge off/collection question

tipofthespork — Wed, 20 Jun 2012 13:12:29 GMT

So I understand why a mortgage broker wouldnt want to give you a loan with outstanding charge offs and collections, but why not of they were past SOL?

I mean technically just because the debt ages off your CR doesnt mean you can't be sued. It simply means that you could use the SOL defense (providing you state statutes aren't longer than 7 years).

So wouldn't debts outside the SOL for your state be Handled the same way? Thanks

Re: Unpaid charge off/collection question

mrordinary — Wed, 20 Jun 2012 14:58:34 GMT

You know, I agree and wonder the same thing....

Re: Unpaid charge off/collection question

drkaje — Wed, 20 Jun 2012 15:20:28 GMT

Does age stop those items from representing increased risk of default? Someone linked an article (on another forum) and the author essentially wrote scores are supposed to estimate our risk of going 90 days late within 2 years. If he's right; then scores are only a small part of the equation on bigger loans.

I do think being past SOL at least means they don't have to worry about judgments or liens. It might be a case where shopping around for another company makes sense.

Stinks that there's no way to have access to underwriters, and knowing what's a definite no-go without taking hard pulls. I realize a lot of that stuff is proprietary and would make the mortgage process too easy for consumers. In the same vein, it would save a lot of trouble and time.

Re: Unpaid charge off/collection question

tipofthespork — Wed, 20 Jun 2012 16:09:46 GMT

Yeah stinks that we can't have access that underwriters requirements.

This account is an unsecured loan that I defaulted on in April 2006. The original balance due was a little over $3000.

I contacted them about a settlement recently and they informede the balance is now over $8000 because of fees and interest.

I don't know of ANY underwriter that would approve a $8000 unpaid charge off, even though it's outside SOL.

Re: Unpaid charge off/collection question

mrordinary — Wed, 20 Jun 2012 18:53:51 GMT

Same boat here....$11k CO from 2008... out of SOL, but I'm just gonna assume we'll have to pay it or set up arrangements to pay.

Re: Unpaid charge off/collection question

tipofthespork — Wed, 20 Jun 2012 19:57:09 GMT

Maybe we will get lucky and one of the mortgage gurus will chime in.

On another note, I spoke with the credit counsellor that works for the mortgage company and she said don't worry about paying it. So I don't know what's up with that??

If it helps any I'm trying to get a VA loan. I know with
VA you need "12 months clean reporting". This is reporting but was charge off 5 years ago.

I assumed that the lender would say it has to be taken care of.

Any insight?

Re: Unpaid charge off/collection question

Becca0509 — Wed, 20 Jun 2012 21:33:54 GMT

One thing to remember is that mortgage underwriters are in a league of their own and they couldn't care less about SOL. They can be nit picky and go back as far as your credit report goes into looking into them, but generally they look at the last 2 years worth of collections/charge offs. Anything in the last 2 years indicates a lack of responsibility in paying back your debt, which in their minds translates into you being irresponsible with a mortgage. Unless of course you have one from a previous mortgage, which is a big problem especially if it's in the last 3 years (that's self explanatory through I think) Medical collections don't matter unless they are a high amount (like $3,000 or more)

The biggest cause of cocern is if you have any account with a "dispute" status, regardless of its age. You usually have to get them removed before an underwriter will accept the loan. FHA loans will allow up to 1 dispute. I hope that helps you understand?

Re: Unpaid charge off/collection question

Apollo232 — Sun, 22 Jul 2012 19:44:29 GMT

SOL doesn't stop them from trying to collect. However, it does stop them from sueing you.

Re: Unpaid charge off/collection question

Familywantsahouse — Sun, 22 Jul 2012 20:54:59 GMT

We just closed Friday with one outstanding 6.5 year old charge off.

Re: Unpaid charge off/collection question

OptimalFICO — Sun, 22 Jul 2012 21:11:25 GMT

Tipofthespork wrote: If it helps any I'm trying to get a VA loan. I know with
VA you need "12 months clean reporting". This is reporting but was charge off 5 years ago.
I assumed that the lender would say it has to be taken care of.

You may want to check with other VA lenders. VA regulations have been rapidly evolving. For example, as of last October 2011 VA Buyers couldn't pay for Section 1 termite repairs. Now VA Buyers can pay for closing costs not to exceed 1% of the purchase price (including Allowables and Nonallowables - they just can't pay for the termite inspection itself).

If it turns out you absolutely must clear the debt, regardless whether it has ballooned from $3,000 to $8,000, the lender will likely settle for pennies on the $3,000 sum since it is past the SOL and they can't legally collect any of it. Try for a PFD (pay for delete). Make sure in contacting them that you don't do anything to reaffirm the debt or it will start the SOL all over again. I've read there is a sample letter here in the forums, so make sure you find and use that one to protect yourself.

Re: Unpaid charge off/collection question

Deepauk — Sat, 13 Oct 2012 17:49:17 GMT

How to clear unpaid mortgage charge off from CR. ( Mine was 89 K and after Charge off they show as ZERO dollars on report ).

I got call from a collection 2-3 times but I ignore it.

Now I see I am within SOL realm, also I see folks say that past SOL they can collect. Can anyone advise what is the best mode of approach to settle at a lesser amount and whom to approach..

Please advise.

Re: Unpaid charge off/collection question

NorCal1 — Mon, 25 Mar 2013 02:21:32 GMT

‎07-22-201201:54 PM

We just closed Friday with one outstanding 6.5 year old charge off.

Congratulations on your success!!

Could you please provide some details; e.g., was this an FHA or VA loan?

What was the discussion with respect to this one item still on your report--in other words, did your file sail right through, or did you have to jump through some hoops?

Can you provide the name of the lending institution?

We were turned down late last year, due to five, six year old collections, and one charge off; all, well past the SOL.

To qoute the lender..."well, even though they are past the SOL, they may still try and sue you. :smileyfrustrated:

Note: On all the collection letters I receive, it states right there, in the small print--"While we cannot sue you due to the age of the debt, we can still attempt to collect."

We are waiting until after November, when the collections all fall off, at seven years, and then we will see how it goes with the one charge off, which never was sent to collections, and will be 6.5 years old.