Need Advise......Applying for mortgage with charged-off repo

[Anonymous]

Husband and I are applying the a mortgage and our application has been sent to a second level of underwriting. The problem is a charged-off repo and a loan on my husbands report.  And our debt to income ratio is high 51% because it includes these accounts.  They both are scheduled to fall off later this year early next year.  Our credit scores are over 620 but under 640.  We have good standing accounts for past two years.  We are going through USAA, we tried to get a VA loan, my husband is active military, but was denied.  They referred us to the Military Family Loan side of the house for a FHA loan stating they may be able approve.  The person I've been talking with said that he experience has been when a application is sent to second level underwriting it is denied and we should try a credit union FHA loan.  I'm lost.....I've not spoken with anyone in underwriting to see what we can do to get approved.  How do I improve our chances?

Thanks,

D

[boomhower]

You need to get that tradeline corrected.  If it is charged off it should not be reporting a payment.  Get that straightened out and it sounds like you should be OK.

[kjm79]

Look into Navy Federal Credit Union.

[jasimae]

That charged off repo is likely what's affecting your husband's scores.  Your best bet would be to try either a PFD or pay it to a zero balance.  I, too, have a charged off repo on my report and am trying to purchase a house in the next few months.  I had a settlement arrangement with the collection agency but when the settlement did not update on my report I contacted the original creditor who stated that they will continue to report a balance until the account is paid off.  They changed the status on my credit report to "charge off" when they received the settlement payment.  However, given that I did pay down a substantial portion of that debt, my score increased.  I have decided to push back my mortgage application until I can pay down the balance of that account, especially given the new FHA rules about collection accounts over $1,000.