HELP-must close by 10/30 and loender wants me to pay all collections

[Anonymous]

I'm hoping some of you can give me advise that will help me breathe.  We are getting an FHA 203k loan for a short sale that the seller's bank is requiring to close by 10/30.  So far everything is on track for closing (which is a miracle as that is about 38 days all told).  We were approved for our loan by the underwritter with typical conditions of updated paystubs, reserves, etc.  Except they want us to pay off all collections and submit a credit supplement showing the collections as paid off.  I can afford to pay them (if I can even figure out who to call, at least one is BOGUS and another has N/A as the creditor).  I'm worried about the score drop only as it relates to my closing,  Broker says it won't affect the closing.  He says I need to get Paid in full letters from the creditors, he'll submit that to the reporitng companies to get the credit supplement, but that there won't be new scores.  Is this man right?

At this point, I cannot get a new lender or we will miss the deadline and the bank may just foreclose on the house instead of short sale (they aren't known for making the most logical decisions). 

Any advise on how I should approach these companies?  The largest one is for $1300 from Asset Acceptance for a total Bally's Fitness Scam back when I was a moron and they were totally unethical and misleading.  I'm hoping I can negotiate it, but will they give me a letter immediately?

Thanks, Jenny

[Anonymous]

Have you talked with your LO about the possibility of paying these at closing?

[ShanetheMortgageMan]

A credit supplement is where the credit vendor has a statement from a creditor, and instead of updating the information on the credit bureau level (which would also update scores) they just update the information on the credit report that they generated so the underwriter will see $0 balances on all the accounts which they are requiring to be paid off.  Now that doesn't mean that the credit scores wont' also be affected by you paying the collections off, however the scores would not be affected by the credit supplement, they'd actually be affected when the CA's update with the credit bureaus that the collection account was paid.  This could lower your scores if those accounts are older accounts, with dates of last activity over 12 months ago.  If the lender doesn't re-pull credit again during the process, then the changed scores won't affect anything... it's still recommended that you pay them off at closing, rather than during the process of your loan though.