PFD for a $26K AMEX Charge Off - Need Advice

[Anonymous]

I have a $26K American Express charge off that has been with a CA for almost two years now. Last payment was made to AMEX in Nov/Dec 06. I live in CA and the SOL is 4 years so I would be at the half way mark of this timeframe around Dec 07/Jan 08. The CA contacted me by letter about it 3 weeks ago to offer an unspecified less-than-full settlement amount. Other than that letter I only hear from them every 3-4 months. I have a few questions:

1) If I do a PFD letter to AMEX how much of the $26K should I offer?

2) Will sending the PFD renew their interest in pursuing collections effects/judgements against me? How would they know if I would be worth suing? I have no substantial personal assets other than a $22K 401K and an old paid off car worth less than $4000. I have no mortgage

3) Has anyone had any luck with such a large PFD with AMEX?

My husband and I want to buy our first home but know that this charge off is our only obstacle. Any advice to help me remove this charge off is greatly appreciated. Thanks for responding!

[phumanr]

I think it really depends on what your FICO scores are....do you happen to know them? (www.myfico.com). This is the score your mortgage company will use.

I have had old collections, a BK, and a foreclosure, and have been able to obtain a mortgage. I would hate to see you waste your assets to pay off Amex, when you could qualify for a mortgage. When you negotiate, I believe your statute of limitations will renew, and they may be able to come after you legally...I would let the collection ride.

Other thoughts?

Phumanr

[Anonymous]

My ficos are between 615-628. I'm afraid to even apply for a mortgage because of this charge off. I wouldn't think any lender would even consider loaning me $275K for a house when I have such a big charge off. Are there any companies that would work with someone with a tarnished history as mine?

[SpecFile]

Mrs. B,

When dealing with mortgage companies, tarnished histories can be overlooked with a larger down payment.  Are you trying to finance 100% or do you have some funds available for dp?

[phumanr]

I did a 100% loan through Wells Fargo...1 year out of foreclosure. There are other  companies such as Eagle Lending, Country Wide and Century Home Mortgage. You will have to be prepared to pay higher interest rates.

You could also try Cartus Mortgages, or maybe even FHA. If you go with a 100% mortgage, you will have to keep the scores up to refinance from a 2-1 ARM.

If you want a home, you can do it, but with higher interest rates.

Phumanr

[Anonymous]

Actually my parents have offered to foot 20% down plus closing costs. However I don't want them to know about this charge off. If they did make the down payment for my husband and me would the charge off be disclosed to them? Will the mortgage company require the $26K be added to the loan so it can be paid off?

We're looking at a $350 - $365K range before the DP. How high would the rates be 8%? more??

[SpecFile]

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Mrs_B wrote:

Actually my parents have offered to foot 20% down plus closing costs. However I don't want them to know about this charge off. If they did make the down payment for my husband and me would the charge off be disclosed to them? Will the mortgage company require the $26K be added to the loan so it can be paid off?

We're looking at a $350 - $365K range before the DP. How high would the rates be 8%? more??

---

Parents helping out is good.  20%  down is great and that way you won't have to pay PMI.  You can figure that closing costs will be approximately 3% of the sales price of the home.  The charge off should not be disclosed to anyone but you and your husband since that is private info on your CRs. 

Mortgage companies don't care about charge offs that you owe to someone else and would certainly not add a debt you have with a CCC to the mortgage amount. 

Your rates will depend on your income and credit.  You need to shop the rates with a couple of different lenders.  I work with Wells Fargo Home Mortgage every day and they have been a very popular lender for my clients.

[SpecFile]

And let me know when you are getting ready to buy.  It is a buyers market out there so buy new construction.  The pre-owned market is so bad right now that you can usually get into something new for the same price or even less.

Let me know what builders you are looking at and i will give you the low down on quality and customer sat. ratings for that particular builder.

Best of luck to you!

Message Edited by SpecFile on 09-05-2007 04:57 PM

[Anonymous]

We've actually feel in love with a KB home in the San Bernardino County in CA. It's going for $350 - $365K depending on the options. If for some reason we don't get that one we also found another new construction house with JR Horton in the $360 - $370 range.

Would loan officer consult with me and my hubby on the likelihood of a loan approval without actually pulling our CRA files? Or if we pulled them ourselves and showed them? I wouldn't want to have an inquiry listed if their is no chance of getting approved...

[SpecFile]

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Mrs_B wrote:

We've actually feel in love with a KB home in the San Bernardino County in CA. It's going for $350 - $365K depending on the options. If for some reason we don't get that one we also found another new construction house with JR Horton in the $360 - $370 range.

Would loan officer consult with me and my hubby on the likelihood of a loan approval without actually pulling our CRA files? Or if we pulled them ourselves and showed them? I wouldn't want to have an inquiry listed if their is no chance of getting approved...

---

They will run your credit and depending on your middle score they will qualify you for different programs.  Do not pull it yourself and try to show it to them.  Lenders have this happen all of the time and for the most part people pull their FAKOs because they don't know any better.  FAKOs do nothing for the lender and will be tossed in the trash.

The mortgage industry is in real trouble right now and cannot offer the same types off financing that they did a year ago.  Choose your lender wisely to make sure that they will get the deal closed.  I have heard nightmare stories about lenders going BKed on the day of the customers closing.  You don't want that trust me.  Go with a well known, national lender.

Let the lender do all of the work because that is what you are paying them to do which is originate the loan. 

I will reply with your builder info by PM.

Hope this helps.