Mortgage Loans

[marlosmi]

After lurking here for a while, and gleaning a ton of valuable information (thank you all), I finally got my scores high enough to take the plunge (mid score 643) and apply for a USDA mortgage.  I was preapproved yesterday and there is a turn-key construction home being built that I would love to make an offer on.  It won't be finished for approximately 90-120 days.  So here's my dilemma... I have two collections on my report and one charge off.  The charge off is for Credit One Bank, reports a zero balance, and is out of the statute of limitations for my state as of this past May.  I also have a collection to Solberg and Kennedy for $389 from a water cooler rented from Culligan that they refused to pick up and an $879 collection from LVNV for an Orchard Bank card that is reporting as a "factoring account" with "collection account" in the comments.  Date of last activity is reporting as February of 2009, but they are updating it monthly and charging interest every month.  The loan officer commented that I should pay these off now.  I'm questioning this because I know that paying a collection account can open up a whole new can of worms and tank your scores.  The underwriter won't even see the loan packet until after I've made an offer, and since the score is only good for 60 days, it will have to be run again before closing since the house isn't going to be completed for some time.  I'm in a conundrum and don't quite know what direction to go and thought someone might have some insight into the situation.  Thank you so much in advance for any help!

[Booner72]

Hi and welcome.  If you arrange to "PFD" the collections, which means you pay, they delete the account from the credit reports, then it won't be a problem and your scores can go up.

Paying collections doesnt open up cans of worms.  It won't help your score, but it looks better, and if your LO told you to pay them, then you have to pay them.  It is simply not true that paying a collection will hurt your score.  I've paid over 12 in the last year and never ever did I get hit by any drops for paying a collection.  You will be fine.  *But shoot for the PFD if you can.

[marlosmi]

Thank you for the great advice!  I will try PFD with the Solberg and Kennedy.  I did try with LVNV (multiple times :-/ ) and they just won't have it.  I did happen to ask the LO if the underwriter might allow the collections to be paid at closing and she said "oh, well maybe".  LOL  Guess I can just get them out of the way now. :-)

[jules0580]

I am doing USDA and the us didn't make me pay the collection I had first but when they sent it to USDA they did make me pay it so I did a PDF, however they needed proof it was paid to complete us they were not gonna let me pay at settlement

[marlosmi]

Good info to know, thank you very much.  I'm going to just knock them out this month (fingers crossed for a PFD on the one) and then they're taken care of well before we even approach settlement.  I'm guessing I should just mention to them I need proof of payment and they can send me a letter that states such?

[jules0580]

Yes for mine they sent me an email. Just a heads up my lo did say I could do a settlement payment if they would take that. Most will only do a pfd for full balance but it's worth a try seeing if u can pay lower. Mine wouldn't take a settlement amount at all but e LO did say it was ok if they would, she actually suggested I offer half no point in paying t all if they would take less, but mine was under five hundred and the ca said they don't take settlement for less than five hundred

[rckstrscott]

---

marlosmi wrote:

Thank you for the great advice!  I will try PFD with the Solberg and Kennedy.  I did try with LVNV (multiple times :-/ ) and they just won't have it.  I did happen to ask the LO if the underwriter might allow the collections to be paid at closing and she said "oh, well maybe".  LOL  Guess I can just get them out of the way now. :-)

---

Find a way to hit LVNV with a BBB complaint. That has worked for LOTS of people here, but you need some form of legitimated ammunition to go after them with. Can you think of anything they did wrong while pursuing your debt? Usually, they didn't send out dunning notifications, and on my credit report the address they list bounces back when I DV them...

In my scenerio, I complained via the BBB of the violations per the FDCPA and they deleted the account. I received a response in 4 days, and it was gone within 19. Just food for thought.

I agree with Booner. Her and I have been here roughly the same amount of time, went through the mortgage process, and worked on rebuilding. Paying collections has never hurt me either, even if I couldn't get them removed. I had 19, I have 3 left that I am STILL working on removing, but I have paid them all.

-scott