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Help!!! Roadblock in Mortgage! USDA GUS Approved...

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Anonymous
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Help!!! Roadblock in Mortgage! USDA GUS Approved...

Was originally pre-approved with very little conditions. But today I got a call from the lender asking about a charge-off in 2011 for $12,300 (repo). Because he's pulling it up it shows on my file as a "collection" account, but literaly everything I see including my previous lenders report shows it as a charge-off (which shouldn't affect DTI) but because he sees it as a collection they are wanting to assess 5% towards DTI ($615) which puts me over the 42% DTI by 2% (44%) now.

 

He's waiting on a response from his lenders, but if this is outside statue of limitation, but he suggested setting up a $100/mo payment with them and I really dont want to re-age this account when it's going to fall off less than year. (march of 18 it falls off).

 

Also I thought over a 640 mid-score didnt require collections to be paid?

 

Any idea for options?

Message 1 of 11
10 REPLIES 10
StartingOver10
Moderator Emerita

Re: Help!!! Roadblock in Mortgage! USDA GUS Approved...


@Anonymous wrote:

Was originally pre-approved with very little conditions. But today I got a call from the lender asking about a charge-off in 2011 for $12,300 (repo). Because he's pulling it up it shows on my file as a "collection" account, but literaly everything I see including my previous lenders report shows it as a charge-off (which shouldn't affect DTI) but because he sees it as a collection they are wanting to assess 5% towards DTI ($615) which puts me over the 42% DTI by 2% (44%) now.

 

He's waiting on a response from his lenders, but if this is outside statue of limitation, but he suggested setting up a $100/mo payment with them and I really dont want to re-age this account when it's going to fall off less than year. (march of 18 it falls off).

 

Also I thought over a 640 mid-score didnt require collections to be paid?

 

Any idea for options?


^^^I don't know USDA well at all. Have you tried for a conventional mortgage or FHA?

Message 2 of 11
Anonymous
Not applicable

Re: Help!!! Roadblock in Mortgage! USDA GUS Approved...

Unfortunatly I need the 0% down payment program. And there is no local grants for my income.

Message 3 of 11
VALoanMaster
Valued Contributor

Re: Help!!! Roadblock in Mortgage! USDA GUS Approved...


@Anonymous wrote:

Was originally pre-approved with very little conditions. But today I got a call from the lender asking about a charge-off in 2011 for $12,300 (repo). Because he's pulling it up it shows on my file as a "collection" account, but literaly everything I see including my previous lenders report shows it as a charge-off (which shouldn't affect DTI) but because he sees it as a collection they are wanting to assess 5% towards DTI ($615) which puts me over the 42% DTI by 2% (44%) now.

 

He's waiting on a response from his lenders, but if this is outside statue of limitation, but he suggested setting up a $100/mo payment with them and I really dont want to re-age this account when it's going to fall off less than year. (march of 18 it falls off).

 

Also I thought over a 640 mid-score didnt require collections to be paid?

 

Any idea for options?


Hi Kladd85,

 

Unfortunately the lender is following the USDA guidelines with regards to the options given to you. If I were you I would make your LO prove that the account is reporting as a collection & not a charge off on the credit report they are using. If the accounts does indeed report as a collection the next option would be to see if your file still remains approved through GUS with the higher DTI. If the increased DTI changes your GUS approval, look for a way to pay off some other debt. The last option would be to switch lenders.

 

 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 4 of 11
Anonymous
Not applicable

Re: Help!!! Roadblock in Mortgage! USDA GUS Approved...

Thanks for the response VA. He did provide me the report, and it doesn't say "collection" on the file. But the file is under the "Collections" header. But I don't understand why it's reporting that when the comments are charge off bad debt / charge off to be exact. And on Expieran, MyFico, and CreditKarma, Nerdwallet, etc. Everyone does not show this as a collection.

 

The other lender also has my report and while it's marked as derog, it doesn't mark it as a collection.

 

And does SOL not apply to this?

Message 5 of 11
Anonymous
Not applicable

Re: Help!!! Roadblock in Mortgage! USDA GUS Approved...

He did still submit it to his investors underwriting to see what comes of it. I did have GUS accept approval originally and my DTI is very good (36%) 5505 income / 750 total payments.

 

But naturally if they apply this old account, it puts me over. There isn't much other debts I can pay down. (Car loan $451, $88 Student Loans, $150 personal loan, $75 in CC (very low balance cards).

 

Theroritallicaly I can pay down my Personal loan, and CCs and make it up, but I don't have enough to do that. I'm so spent from boosting my score and paying off cards the last 6 months I've dwindled everything I have. And naturally I'm in the middle of an offer with a house from the pre-approval accept from GUS.

Message 6 of 11
Anonymous
Not applicable

Re: Help!!! Roadblock in Mortgage! USDA GUS Approved...

Read that link and look for 10.9 section about collection. I got clear to close with USDA. Closing on Tuesday. We had to pay off our collections. Now we have no collection on our credit report. I guess it depends on some lenders on how they want the collections to be done but they have to follow USDA guidelines and requirements.

https://usdalinc.sc.egov.usda.gov/docs/rd/sfh/3555/ByIndividualChapter/Chapter10_Credit_Analysis_DRA...

Below link is about Ratio
https://www.rd.usda.gov/files/3555-1chapter11.pdf

Message 7 of 11
VALoanMaster
Valued Contributor

Re: Help!!! Roadblock in Mortgage! USDA GUS Approved...


@Anonymous wrote:

He did still submit it to his investors underwriting to see what comes of it. I did have GUS accept approval originally and my DTI is very good (36%) 5505 income / 750 total payments.

 

But naturally if they apply this old account, it puts me over. There isn't much other debts I can pay down. (Car loan $451, $88 Student Loans, $150 personal loan, $75 in CC (very low balance cards).

 

Theroritallicaly I can pay down my Personal loan, and CCs and make it up, but I don't have enough to do that. I'm so spent from boosting my score and paying off cards the last 6 months I've dwindled everything I have. And naturally I'm in the middle of an offer with a house from the pre-approval accept from GUS.


Do you have a 401K? If so you can check into taking out a loan against it to pay off/down some of your debt & the monthly payment for the 401K loan doesn't have to be counted against your DTI.

You may need to change lenders. 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 8 of 11
Anonymous
Not applicable

Re: Help!!! Roadblock in Mortgage! USDA GUS Approved...

For those interested I did have to agree to a payment agreement with the collector. To suffice my DTI and provide a letter that I am under a payment arrangement. I was issued a letter that I can settle for 25% of the balance at a later date. But honestly I'm likely to just stop payments after a few months as the account is due to fall of next year.

I also found out th collector is not even reporting, but ALLY is. So Ally has no control at this point to alter SOL or fall off date. I also made to explain that I am not acknowledging the debt and simply arranging a payment until a later date. I never confirmed the debt at any given point or said anything that would allow them to alter SOL.

So for now the house is in forward progress made a payment and sent the letter to my LO. He's sending it the underwriting team that requested it and hopefully no more conditions pop up.
Message 9 of 11
rmduhon
Valued Contributor

Re: Help!!! Roadblock in Mortgage! USDA GUS Approved...

Be careful because entering into a payment plan and then defaulting on it can reset the SOL even if you don't acknowledge the debt as yours.
Message 10 of 11
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