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Hello all! Here is my situation. I have worked very hard to get myself in a great position for a mortgage. I got my pre-approval, confirmed purchase offer, house inspect and appraisal done. I just got my mortgage commitment letter and the only condition on it is to show that a student loan on my credit report was paid in full. Here is the deal with the student loan. I have a private student loan that when into default a couple years ago. The loan was paid off by another company as a guarantee to the loan. So the original loan has been paid in full, and I pay the other company $200 a month (I have been paying this since the loan was put in default so around 18-24 payments so far). The underwriter wants a letter showing that the original loan was paid in full. I guess technically that account has been PIF, but I am very very nervous about this condition, and I did tell my mortgage officer about all of this from the get go and he says its not a big deal. As a side not my DTI is next to nothing and I was approved up to 275K , but the house is only 186K......I like being more conservative. :-) Any feedback will be greatly appreciated.
You might have some problems proving that the loan is paid in full, because it really has not been.
When the loan went into default, the guarantor paid the original loan holder and the loan was transfer to the guarantor. You are still on the hock for the original loan plus any collections fees.
You said you made 18-24 payments so far, did you ever try to rehabilitate the loans to get them out of default. I also had a student loan I default on, just completed the rehab about two months ago, saw a 40 point jump in my score once it was all said and done.
I called them and they said that they dont rehab private loans, just federal ones
Call the original loan company and ask for a letter stating the loan was paid in full by the guarantor.
@Anonymous wrote:Call the original loan company and ask for a letter stating the loan was paid in full by the guarantor.
+1
I can't offer any help, but I am going through a similar situation (defaulted private student loans), so I have a question for you.
What is this second company you are referring to that you now make payments to? Did they essentially buy the defaulted loan from the OC or did you somehow apply for a loan with the second company to resolve the default with the 2nd company? I'm just curious about the facts because I'm trying to figure out how to manage my defaulted loans and buy a house too! Thanks
Thanks to everyone on the imput. I requested the letter and I should have it today. I will post with the results.
MBOhio2- The company I make payments to is the company that i guess paid the loan off. I did not apply for a separate loan. Hopes this helps.
Definitely update us on how it goes!