Paying off Collections at Closing USDA loan

[youshallcallmedragon]

Hey everyone,

Thanks in advance for reading this! I am hoping I can get someone on here that has some experience with paying off a collection account before closing on a mortgage.

We are in the LONG AND exhausting process of getting a USDA gauranteed loan in SC. We have been working on this for months and are currently in our SECOND set of conditions for our mortgage. We are hoping this is the last set. My husband has a mid 700 score, while mine is in the mid 640s. (I have been rebuilding my credit for over a year now - but that's another post).

Our lovely underwriter has required that we pay off a collections account on my credit that is almost 5 years old for $1100. This account is with none other than the friendly folks at PORTFOLIO RECOVERY <Sarcasm>.

They have asked me to pay it in full at closing. I'd rather settle this account since it is WAY over the original amount of $500 (Capital One). Is there a way to do this? PRA won't give me any kind of letter at ALL that says they'll settle for X amount. When you call them it's basically "Pay XX amount today - after we get your debit card information we will mail you a letter". NO I am not giving them my account information! I am also not agreeing to anything until I get this in writing. Is this wrong? Is it typical for them to have to provide me with something in WRITING saying how much they will settle for? Am I wasting my time with this? Should I just pay the whole thing at closing? They are the WORST there. I am SO ready to close on this house it is not even funny. Scheduled closing is 09/30. Thank you so much in advance!

Lindsay

[trix_r_4_kids]

I closed on a USDA Guaranteed loan last year.  Like you, I also had a collection from PRA.  Mine was really old, too.

We just paid it at closing, in full.  At that point I didn't want to mess around or risk losing my mortgage.

As much as it hurts, just pay it.  It's not worth losing your house over a few hundred dollars.

You'll win in the long run.  In a few years, PRA will be off your report and you'll have a string of positive marks on a well deserved mortgage.

[youshallcallmedragon]

Thank you Trix! I believe you are right.. Unfortunately! It's not worth the risk!!