Credit Card Center Advertiser Disclosure†
12-14-2012 08:57 AM - edited 12-14-2012 08:59 AM
We recently received our loan approval with conditions from underwriting and most of them were no big deal - updated statements, LOEs for addresss, names on credit reports etc but the biggy that suprised even our mortgage broker was that the underwriter wants us to pay medical collections that are 6 + years old and are about to expire due to age.
There are all related to the same medical issue and time period, but because there were different doctors billing for different things, the entire bill was pieced out to different collectors so instead of one large collection, I have 9 small ones, some of which are even duplicates. The total amount is just under $3000.
Our mid scores in the low 700's and this is an FHA loan. The rest of our credit is clean. We do have a high DTI (just under 49%) with this loan because a lot of our income was not counted due to medical insurance premiums and unreimbursed business expenses deducted from our qualifying income.
Our mortgage broker sugguested we write an LOE for the circumstances surrounding the collections and hope that the underwriter doesn't require us to pay them.
Has anyone had any success with appealing a condition like this with an underwriter? We are hoping to close before Christmas and this would push us past our closing date.
12-17-2012 12:25 PM
Letters of explanation have been known to work but YMMV. Depending on how busy the UW is will depend on how fast of a response you will get to your LOE. Many UW are swamped with deals trying to close before year end.
If the LOE is not sufficient for the UW, then you can either pay off the collections, or try a different lender.
Hope things work out in your best interest, good luck.
12-18-2012 04:09 PM
If thea collections are close to coming off, you should work a settlement PDF or just wait them out. They may accept way less than what is owed. Unless you have found THE house, I think I would wait it out.
12-19-2012 08:20 AM
Waiting the 6 -8 months for them to age off the credit reports won't work if we want to buy this house, so the first option we're going with is LOE to the underwriter to see if she will allow it to go unpaid. If that's is a no, then Option 2 is to ask them to be paid at closing. If that is still a no (and we have a super-grinch for an underwriter) then Option 3 is we will try to settle for paid or SFD as fast as possible. If that doesn't work, then we will just pay them as quickly as possible.
12-22-2012 06:50 PM
Honesty is the best policy. It probably helps too if it's old and the only baddie on your report. Without going into too much personal info, we briefly explained the circumstances of why we didn't pay the original bill (dispute with hospital billing), turned over to collections and unable to remove from credit reports dispite disputing with credit bureaus. Then I closed with how we made changes since then to avoid falling into a similar situation going forward. (we switched health insurance plans).
Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.† Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
* For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While myFICO always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.