? - Repo - How will it affect Mortgage app?

[FunnyHoney]

Hello!

Really long story short.

In October 08, we were in way over our heads. Thought abt filing BK, decided against it. But lost our car. After paying on a used car for almost 4 years, we STILL owed 13K on it. They took it and sold it for 4K, and said we owed 9K.   I was dealing with a 3rd party biller. I tried calling and writing to set up payment arrangements - I DID not want this to go to an attny.

We spent the next 12 - 14 months paying off EVERYTHING (20K total).  There are baddies on our report - but everything is paid.

I get a letter from a collection agency...for the balance of the car (which they jacked up to 13K). I immed. DV'd them. It took them abt a month, and they came back and said "This matter is now closed. The account is not being reported."

The OC (3rd party biller) is showing up on CRAs - well on two of them. One (EX) is showing transferred.  TU is showing Charge Off  - but in the comments says transferred.

How will this affect a mortgage app?! I can't pay it... the OC says they don't own it. The CA says they closed it.
If I have the proof and letters, will that work, do you think... or will the bank require I pay it off.

I have the means to settle, if need be...

I don't know what to do...

We were planning on house hunting next month.

Thanks in advance.

[Anonymous]

More than likely you are going to have to pay it with it being that recent.  They are going to want to see proof that it is paid, not just that the collections shows closed.  The reason is that more than likely that collection has now been sold off to another collection company.  Bottom line is that it is still fairly recent and most lenders are going to be afraid that someone is going to come looking for that money (and they will, trust me).  Being that new they could file for a judgement and get a garnishment on your wages which would put the loan in serious risk as generally a garnishment is 25% of your after tax earnings or so.  Also, it will require you to disclose if you have had any vehicles repo's within a certain timeframe so there is no way you can legally not disclose this debt to the lender and hope they do not catch it, or it does not pop back up.  You can try to talk to lenders and see which ones might be most willing to work around it (i.e not require it paid) or if any will accept some sort of payment arrangements.  IF you do have to pay it off, and since it has already been sold twice, you should be able to negotiate it down to maybe 1/2 of wha the current balance is.

[FunnyHoney]

Thank you for your response! =)

The repo happened in October 2008.

It was finally sent to a CA in January 2010.

I followed normal protocal and DV'd the CA.

The CA said that the account and matter is closed, I am assuming they realized that the OC didn't follow proper protocal themselves.

Nothing is reporting on my credit bureau - as far as a collection account goes. However, the OC (which was a 3rd party biller for a small credit union) is showing the account as "transferred".

If it is sold to another CA, I will DV them. I do not owe the amount they say I do, and they did not send me proper documentation. I have copies of my letters, including the CMRR signed, and the response back from the CA.

Worst case scenario... if it EVEN appears that it will show up on my credit report - I will offer to pay. I have the means to do so.

I just can't pay it now (nor do I want to pay what they are requesting) because there is no one to pay. It's closed at the OC, and at the CA.

So that's really my question... because proper protocal wasn't taken at the OC or the CA level, would a lender still find me responsible?

What if I paid it before it was reported again to the CRAs - I would just need to show proof to level set the "transffered"... Maybe I can use the "Closed" letter to do the same...

It's weird... I didn't even consider the fact that the repo might be too new to get a loan, even if paid.

We've worked our tails off - and really stayed postive. I hope some lender will take pitty and realize that we are walking into this with no debt, great income, and lessons learned.

I guess... do I work with a broker, or with a bank?  I work for BoA, and would get a $5K "gift" if I use them... but I wonder if they would be willing to work with me, or if I would have better luck going through a broker who may have other lenders....

/sigh    This is hard stuff!

lol...

[FunnyHoney]

Oh... just wanted to point out that the OC is showing a ZERO balance.  Is that in my favor?!

Should I just bite the bullet and talk to someone (lender)?

[Anonymous]

The balance is what you owe.  Once it goes into repo status, there are legal charges and you continue to build late fees.  Often the bill, if the balance is ignored, will end up 2x what the original balance was.  You get hit with a late fee each month and interest and those fees compound.  SO, tha balance they are showing is probably acccurate.

Having a repo in 2008 and then having the collection show up this year could easily derail an application.  It depends on some other factors, but that alone is enough for a UW to say no.   (that does not mean they will of course)

You can keep DVing them or whatever that is not the point.  Any lender is likely to want to see proof that this has been paid in full and that it can not come back.  DV'ing and stuff is great when you are trying to build your credit, etc but once you are in the process of buying a home, they do not care about that.  They want to know the debt is taken care of.

Someone now had this file and when you start applying for a mortgage they will contact you.  Most debt companies keep an eye on your credit file if they have an account with you.  If you are looking for a mortgage they know they have you over the barrell and can force you to pay or you will be unable to buy a home.

Last, the fact that it is not on the credit profile currently does not mean much.  You legally have to disclose it to the lender and they will want to make sure it poses no danger to the loan.  Plus, isn't the original car loan that shows it repo/charged off/ transfered on your credit?

[FunnyHoney]

It does show as chargedoff/transferred with zero balance.

If it comes to all of that, I will pay it. But I am not going to pay it until they validate it.

That's all I am asking them to do. And it's my right to request it.

So, I guess it's a wait and see. I will wait a month - and see what happens. Make sure everything else is in order... and then possibly start talking to a lender to see what they think I should do.

Thank you again for your response! It's been very helpful!!

[Anonymous]

good luck with it.  And yes, it is your right to DV any collection agency.  But, that has nothing to do with the bank being willing to lend you money.  And every month you wait you are probably adding a couple hundred dollars to the balance.

One thing, You should definitely talk to a bank now because the simple fact that you had a large collection account pop up in January could derail a loan in and of itself.  They generall like to see 12 months clean credit and this is only 4 month old it appears.  So no use rushing to pay it if you are disputing it if the bank is going to say no anyways.  To be clear, usually one late or collection will not kill a deal unless there are other issues with the file and the UW uses the collection/late as an easy out.  But, this is a pretty substantial collection so you never know.

[FunnyHoney]

I will have to reach out - great idea.

The thing is it's not showing as a collection at all - so in essence, the report is showing no AA for the last 14 months.

I will call today and see what they say - good call.  thx!

[Anonymous]

Dont know if this will help or not but I too was in a similar situation over a year ago when I wanted to purchase a home and started paying bills on time and fixing my credit, I had a repo on my credit from 2005 that was sold off and then I had a collection agency calling me for the balance of money owed that I couldn't pay in full and they did not want to make payment arrangements. Well after deciding I wanted to buy a home last year and working with a mortgage broker he too said it had to be taken care of even if it was in 2005 and he didn't care how I did it even if it was payment arrangements but if I did go that route they wanted to see 12 months of payments  Which would have pushed me back another year into buying a home Well after contacting the OC they were no help and just told me they sold it to another CA. After DVing the CA for about 4 months and getting no response or coopertion from the CB and being at my whits end a person here on Fico suggested that I contact the BBB in the state where the CA resided and also the OC in that state. Well I took the advice and did both, and I dont know if it was luck or not but both companies blamed the other and the CA admitted they could not find my collection info.......................both the OC and CA deleted the items off my credit file within 2 weeks Believe me I was so happy I cried becuase that was my "major baddie" showing on my credit report. I had others but that was a doozie in terms of the $$$! I am happy to report I closed on my house Nov. 2009

Good luck to you

[Anonymous]

you got lucky.  Usually the UW will not care if it is deleted off your report or not.  Once they know you owe the balance, they will want  proof that it is paid off whether it is on your report or not.  Things like this have a tendancy to pop back up (and I would be surprised if somewhere down the line your does not).  ANyways, I hope the OP can figure it all out and get on with their home buying journey.