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Settled vs. Pd Collection

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Anonymous
Not applicable

Settled vs. Pd Collection

The BF has a collection acct with Portfolio due to fall off in Dec and outside of the SOL.  Of course, we're trying for a mtg now.  PRA has offered to settle for 72%, which I think is crazy high for an account out of SOL and 4 months from falling off the report, but that's another story altogether.  My question is PRA will only report Settled rather than PIF, not budging on that one and everyone knows PRA will not PfD, so no dice there, how will the Mtg UW view a settled vs pd collection?  I know it won't help his score other than PRA will stop reporting EVERY SINGLE MONTH, so in the sense that it will stop hurting it will help, but not in any other way until it falls off in Dec.

Message 1 of 10
9 REPLIES 9
frugalQ
Valued Contributor

Re: Settled vs. Pd Collection

since you are looking to obtain a mortgage now, I would wait and let the mortgage LO/UW advise you on how/when to pay the collection.  You don't want the update to possibly negatively impact your credit score.

 

just start the mortgage process with the collection unpaid and let them guide you....

 

good luck!!

AmEx Green NPSL | Amex BCP 16K | Citi Simplicity 10k | Discover IT 9K | Chase Slate 7.5K | Amex Hilton HHonors Surpass 7K | Capital One QuickSilver 6K | Home Depot 5k | Chase Freedom 4.5K | LOC 2.5K
Message 2 of 10
Anonymous
Not applicable

Re: Settled vs. Pd Collection

I agree, 72% is very high in that situation.

 

I would be thinking 20% or even less.

 

How big is the CA amount and what was it for?  I think they view medical collections lower.  I believe it goes secured debt, (mortgage then auto then personal), revolving debt, and then medical debt. 

 

My understanding is that manual UW would rank PIF, then legally settled for less, then not settled at all.

 

Have you already applied for a mortgage?  I would suggest doing the 'opt out' procedure at least 10 days before a mortgage app to prevent any bottom feeders from trying to capitalize on your situation.

 

If it is a manageable amount sort of small, maybe being rid of it forever is a good approach?

 

HTH

 

 

 

Message 3 of 10
Anonymous
Not applicable

Re: Settled vs. Pd Collection

It updates every month- each month they take it off and put it right back on so it appears to be a new collection.  I called to ask them to remove the dispute codes since I'd already tried through the CRA and they said PRA wouldn't remove them and I'd need to call them directly, while I was on the phone making that request, I figured I'd ask about how much they'd settle for.  It's a debt I owe, it won't hurt to pay it since they update monthly- just don't know how UW will look at settled vs pd, and if I pay then the monthly knock ends

Message 4 of 10
Anonymous
Not applicable

Re: Settled vs. Pd Collection


@Anonymous wrote:

I agree, 72% is very high in that situation.

 

I would be thinking 20% or even less.

 

How big is the CA amount and what was it for?  I think they view medical collections lower.  I believe it goes secured debt, (mortgage then auto then personal), revolving debt, and then medical debt. 

 

My understanding is that manual UW would rank PIF, then legally settled for less, then not settled at all.

 

Have you already applied for a mortgage?  I would suggest doing the 'opt out' procedure at least 10 days before a mortgage app to prevent any bottom feeders from trying to capitalize on your situation.

 

If it is a manageable amount sort of small, maybe being rid of it forever is a good approach?

 

HTH

 

 

 


$754 Cap1, offered to settle for $550.

 

Yes, I've already opted out and was working on removing dispute codes

Message 5 of 10
frugalQ
Valued Contributor

Re: Settled vs. Pd Collection

i don't think the underwriter will care whether it states PIF or Settled...as long as you have documentation showing that you no longer owe the debt.  My DH had a judgetment on his report in 2009...we settled it for less than the amount owed, and when we refi'd, we just showed them the letter from the CA showing that we settled and the debt was considered closed.

 

if you wait to pay it at closing or something like that, the UW may require you to pay it in full.

 

do you have a lender you plan to use?  if so, call the LO and ask them what's the best route.

AmEx Green NPSL | Amex BCP 16K | Citi Simplicity 10k | Discover IT 9K | Chase Slate 7.5K | Amex Hilton HHonors Surpass 7K | Capital One QuickSilver 6K | Home Depot 5k | Chase Freedom 4.5K | LOC 2.5K
Message 6 of 10
DallasLoanGuy
Super Contributor

Re: Settled vs. Pd Collection

we will consider it paid.

 

a better option would be to not touch it until after you buy.... you dont have to pay off collections and charge offs to get a loan.

this would put you in a better negotiating position with the collector

Retired Lender
Message 7 of 10
Anonymous
Not applicable

Re: Settled vs. Pd Collection

We did an app for preapproval with DCU, my mid credit score was 785, his was 666 and we were denied for his "history". 

 

The LO sent the file to underwriting notwithstanding the fact that I'd told him 1 collection would be removed within the next day or two and we wanted to wait until that happened, repull credit and go then (it has now been removed, but wasn't before it was submitted).

 

I thought all of the dispute remarks had been removed prior to our submitting the application, but some came back (shocking, I know) and I asked the LO which accounts with which bureaus and I'd call and remove them again- he didn't wait on that either prior to submitting. 

 

The BF also has 3 pd student loans that are negative that should be coming off on their own from EQ in Nov (other 2 bureaus have already deleted) and I requested an early exemption (EQ is awesome and removed the AID even though the request is being processed)- somehow only 1 acct showed up on the Tri-Merge.

 

So now, based on our denial for his history, we're trying to do anything we can to "clean" it up- I figure UW always prefers a pd collection to an open collection, so while I was on the phone with them anyways trying to get the AID comments removed, I'd inquire about a settlement.  And if it's pd, they'll stop reporting it EVERY FLIPPING MONTH.

 

He also has a med collection that we're working on removal using HIPAA method.

 

So, DallasLoanGuy, any suggestions for who we should apply with in SC?


@DallasLoanGuy wrote:

we will consider it paid.

 

a better option would be to not touch it until after you buy.... you dont have to pay off collections and charge offs to get a loan.

this would put you in a better negotiating position with the collector


 

 

 

Message 8 of 10
DallasLoanGuy
Super Contributor

Re: Settled vs. Pd Collection

shanethemortgageman lends in all 50 states

 

Retired Lender
Message 9 of 10
Anonymous
Not applicable

Re: Settled vs. Pd Collection


@DallasLoanGuy wrote:

shanethemortgageman lends in all 50 states

 


Thanks, I PM and emailed him.  And thank you for replying over on that other board- you're the only person who did

Message 10 of 10
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