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Member
Posts: 5
Registered: ‎09-06-2011
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FHA Qualifying Chances and CA Settlement reporting importance

I'm hoping you can tell me if I can qualify for an FHA loan by submitting the following information about myself:

 

Income: $5,600 montly gross ($71,000+ gross on final check stub of 2012)

Source of Income: Full Time, Salary, W-2

Monthly debt payments:  DTI – 7% ($400 monthly to IRS for the next year or so)

Employment:  how long at current job  - 5 years on 1/30/13

Assets/Reserves:  Cash on Hand $12,000 (adding 1K+ plus monthly); 3 cars – no outstanding loans

Location:  Scott County, Iowa

Property:  Single family house

Price Range:  $140,000 - $180,000

Transaction Type:  FHA mortgage (first time home buyer, sole residence)

 

 

Credit Stuff

Equifax - 688 as of 1/16/13 (Score Watch)

Accounts (with Neg Info)Amount OwedStatusWorst NegativeComments
Discover$0Bad Debt/Collection120 day late in June 2008Paid off in full Nov 2011
Target NB$0Paid as agreed120 day late in May 2008Paid off in full Dec 2011
Capitol One$0Paid as agreed120 day late in Nov 2008Paid off in full Jan 2012
HSBC$0Charge-off90 day late in Oct 2008(See next line)
CA for HSBC$4,342Collection120+ days past dueSettled in Full Jan 2013, Waiting on CR updates

 

TransUnion - 664 as of 1/8/13 (report pulled by me)

Accounts (with Neg Info)Amount OwedStatusWorst NegativeComments
Discover$0Paid after Charge OffNonePaid off in full Nov 2011
Target NB$0Paid as agreed120 day late in May 2008Paid off in full Dec 2011
Capitol One$0Paid as agreed120 day late in Nov 2008Paid off in full Jan 2012
HSBC$0Charge-offNone(See next line)
CA for HSBC$4,342Collection120+ days past dueSettled in Full Jan 2013, Waiting on CR updates

 

 

On 1/14/13 payment was accepted on Settlement in Full by the CA listed above.  This was a yearlong fight to settle the HSBC account listed above it.  Four months ago they got their lawyers involved, so I got a lawyer.  Despite repeated requests, my lawyer has proven useless in getting a PFD or any type of agreement from the CA regarding credit reporting.  On 1/14/13 after receiving payment the CA sent a form document (standard “release”) to my lawyer wanting all parties to sign it.  This document only mentions that matter is settled and I have no future obligation to them or the OC regarding the account.  It mentions nothing about credit reporting, 1099Cs, or NDAs.

 

I want to find and buy a house ASAP!  If I only have the signed “release” in hand, what are my chances of getting a FHA mortgage with the info provided?

Valued Contributor
Posts: 3,302
Registered: ‎06-09-2010
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Re: FHA Qualifying Chances and CA Settlement reporting importance

Are your scores present after payment of collection reporting? Or your collection payment is not showing as of yet?

 

Your income is sufficient for the amount of home you want to purchase.

 

DTI is excellent.

 

Employment is W2 and good at 5 years.

 

12k in reserves presently is good amount, but if you are paying the closing cost this will be about $0 after down payment and closing cost. But still qualifiable.

 

Some times paying off the collection can hurt you more then help you when applying for a mortgage. But in my opinion being responsible and paying off your debt is always the right thing to do.

 

Once your collection payment reports, will be a determing factor.

 

What are your positive tradelines?

 

How old are your positive tradelines?

 

The present information you gave you would qualify, except you still need to see if paying the collection brought your score down. I would wait until reports update and see if your scores were impacted. If they stayed above 640 you still would be fine to qualify depending on other credit information needed from positive, open tradelines.

Good Luck
May all your dreams and wishes become a reality!
Established Member
Posts: 12
Registered: ‎09-28-2011
0

Re: FHA Qualifying Chances and CA Settlement reporting importance

Mortgages is my daytime. Reading through the forums on myfico is what i do when Im not underwriting. Smiley Happy

Congrats on paying off all of the baddies! I would definetely wait for the CR to update with the last item you settled with HSBC. But it looks like you may be buying a house soon. I would contact a Loan Officer in your area. Overall profile looks good.

Starting Score:TransUnion: 521(1/2013), Equifax: 467 (1/2013)
Current: TU 623(lender pull) EQ: 598 (myfico) EX: 612(lender pull 1/2014)
Goal Score:All scores 660+ by Dec 2014!!!

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Valued Contributor
Posts: 1,115
Registered: ‎10-31-2011
0

Re: FHA Qualifying Chances and CA Settlement reporting importance

sounds like you are good to go and you lawyer was an absolute waste of money.

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Member
Posts: 5
Registered: ‎09-06-2011
0

Re: FHA Qualifying Chances and CA Settlement reporting importance


JM-AM wrote:

....

What are your positive tradelines?

 

How old are your positive tradelines?

 

The present information you gave you would qualify, except you still need to see if paying the collection brought your score down. I would wait until reports update and see if your scores were impacted. If they stayed above 640 you still would be fine to qualify depending on other credit information needed from positive, open tradelines.


I have Cap1 MC opened in Oct 2011.  I use it for online purchases only and pay off the balance 1 or more times a month.. It's utilization % is probably hurting my TU score though.  I used it a bunch in late December (after paying the balance) so it was at 26% when I pulled my last TU report.

 

I also have an old car loan that EQ reports and TU doesn't.  It was started in Sep 2000, no lates during the 5 year auto loan.

 

No other accounts open though. I didn't want any new applications/inquiries because of how quickly I thought I'd be applying for a home loan.

 

Also, no lates on any accounts in 4+ years (excluding the CA).

 

 

And I'm actually hoping paying the collection settlement improves my scores.  This CA is reporting all balance increases (from interest) once or twice a month.  Granted I haven't done a ton of research on the topic, but I have always assumed that in almost all cases Settled in Full has a better impact than an unpaid collection.  I thought when it came to CA reporting statuses the following is true: No TL > Paid in Full > Settled in Full > Unpaid/Late. (Granted I believe for CA TLs that

TL Deletion is much better than Paid in Full, Paid in Full is moderately better than Settled in Full, and Settled in Full is moderately better than Unpaid/Late.)

 

Why would "Settled in Full" hurt my score more than not paying it?  That seems very illogical to me and I don't process illogical things well at all.

 

Member
Posts: 5
Registered: ‎09-06-2011
0

Re: FHA Qualifying Chances and CA Settlement reporting importance

I guess my dilemma is what to do tomorrow.  Do I sign the “release” that the CA sent (see last paragraph of OP) or tell my lawyer I want better language added (in regards to what and when something will get reported)? 

 

My fear is that I sign this document and then the CA takes months to report changes further delaying this while process. (THESE PEOPLE ARE EVIL PERSONIFIED!) What happens to my loan process if the CA takes their sweet time reporting everything?

 

How much effort should I spend trying to get this CA to delete the TL? Would I have better chance at this than my up-to-this-point ineffective lawyer?

 

Should I try to get any other TLs removed via GW?  The obvious tradeoff is negatives removed vs higher AAoA.

 

 

Thank you all for your help and insight.

Valued Contributor
Posts: 3,302
Registered: ‎06-09-2010
0

Re: FHA Qualifying Chances and CA Settlement reporting importance

Paying off the CA no matter what the wording is will have no impact on your scores.

With that being said, under manual review it shows you are responsible and pay your debts.

I believe in doing the right thing when you owe the debt, so congrats for being responsible.

Trying to have the CA remove the reporting all together will give you a change in score. Just remember that sometimes the change is negative because of different factors, change in AAOA as an example. But in the long run it will quickly improve your scores.

Good luck
Good Luck
May all your dreams and wishes become a reality!
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