Urgent help needed to close

[myfico5378]

Hi Everyone,

I will try to make this brief.  My sister and brother-in-law were preapproved in Jan for a home.  They made an offer at the end of February.  Then the lender called and told them they no longer qualify due to the change in minimum by FHA to 620.  I went over to help them review their reports because I've had great luck raising my DH's score by 150 points and have been reading the forums for a long time.  My BIL's reports are the problem as he has the lowest scores and is the sole income provider for their family.  I know what to do to clean them up, but am really afraid to make a mistake because they only have 2 weeks to secure financing or lose their contract.  My questions are:

1.  If we dispute items and the CRA updates the status to "in dispute - reinvestigation in progress", but doesn' t resolve it before the lender pulls their credit again, will that prevent close?

2.  How does a rapid rescore work?  Their lender didn't offer them any suggestions to help.  They just sent a copy of their reports and scores and told them they don't qualify. 

3.  Their lender listed TU "fico classic 04" with a score of 580.  We pulled his TU from myfico on the same day and it was 609.  How do we pull the same scores they are using so we know if/when the scores have improved enough? 

My sister added BIL as an AU on a couple of accounts on Monday and paid off the balances, but they haven't been updated yet.  Statement dates were this week, so hopefully, they'll report soon.  I'm checking daily.  My hope is that will be enough to boost his score as he has virtually no credit.  They have an auto loan that is 3 months old.  Everything else on his report is collections that are 3-6+ years old.  We are just a couple months from the drop date on 2 of them, so I'd like to dispute them and they would probably fall off, but I'm afraid it could take too long and hang them up.

Thanks in advance for any help you can offer!!!

[llecs]

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myfico5378 wrote:

Hi Everyone,

3.  Their lender listed TU "fico classic 04" with a score of 580.  We pulled his TU from myfico on the same day and it was 609.  How do we pull the same scores they are using so we know if/when the scores have improved enough? 

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There are three versions of FICO scores floating out there: '98, '04, and now '08. A majority of lenders still use '98 as does this website. Traditionally, '04 is lower for most people. I'm not up to speed on the mortgage process, but could they try a different lender? I suppose you'd want to rate shop anyway.

It isn't possible to pull your own TU'04 score. More and more lenders are still switching to '04. If most do so, then this website will reflect that.

[myfico5378]

Thank you for your quick response.  Another question, my best friend is closing on a house right now also and she showed me the credit report that her lender used.  It lists "Transunion Empirica".  Which version is that?  If that is '98 then it would match what myfico says and my BIL would only need 11 points instead of 40.

I told them they need to apply elsewhere and see what happens, but since we know his FICO scores are too low at this point, they wanted to see if we can get them up first.  They were originally offered 5% fixed for 30 years with 0 points.  So, I think that is probably about as good as any other rate they would be offered, but I think they need a lender that is going to help them through the process some!   

[llecs]

TransUnion Emperica is just part of the name of the score. The full name for the '04 version is "TransUnion Emperica Classic '04". They may want to ask and confirm with that lender that they use '98.

[Anonymous]

DO NOT DISPUTE ANYTHING.

FHA recently changed procedures to include that any and all disputes on credit records must be resolved before loan closing.  In other words, you can not have active disputes with the credit bureaus.

as far as lenders go, everyone I looked at used 04.  IF you are happy with the rate and the communication of the LO stick with them. 

The AU accounts may bring the score up depending upon hwo old they are and the balances, etc.  You would probbaly have to do a rapid rescore to make sure they are all updated prior to this.

There is little you can do to get a score up in 2 weeks as almost all processes take 30-60 days to resolve and then report.  Paying down balances to under 9% and PFD for collections (if the CA will agree) are about the only 2 things.  If there are some collections on his report that could be PFD right away that would help.  You could give letters from the CA stating Paid/Zero balance and that would help with a rescore.

[myfico5378]

Thank you, Mickie08.  That's what I was afraid of.  I had seen that Fannie was requiring all disputes be resolved, but wasn't sure if FHA was as well. 

The oldest AU account that he was added to is 8 years with less than 10% balance, but I don't know if that one will report.  The other 2 are 3 or 4 years old, I think and my sister paid them to a 0 balance the day she added him as an AU. 

I think I'll talk to them about a PFD.  Most of the collections are really small and he doesn't have a clue what they are for, but it would be worth the $500 or so to clear them up even if they aren't valid.  Only one of them is more than they want to spend right now.

My other concern is whether or not it would do more damage to delete.  If he had ALL of the collections removed and the AU didn't report, he would only have 1 tradeline left and it is only 3 months old.  One account that is showing in installment (not collections) that has a past due balance from an Electric company is several years old.  The age may be helping him more than the past due balance, right?

[Anonymous]

I would say try a new lender.  I just closed yesterday, I did no't have any fico trouble all scores above the mid sixes, but my loan packet arrived late the day before and during closing my loan officer made a comment about how busy he was in the past few weeks.  He said that mortgage brokers couldn't do anything below 620, but he could still do loans below that, and that people previous preapproved were bringing his contracts to him.

[john398]

Are you positive its FHA that cant have any active ddisputes? According to Dallas its an Fannie Mae Guidline not an FHA one

See this link http://ficoforums.myfico.com/fico/board/message?board.id=loans&message.id=34007

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mickie08 wrote:

DO NOT DISPUTE ANYTHING.

FHA recently changed procedures to include that any and all disputes on credit records must be resolved before loan closing.  In other words, you can not have active disputes with the credit bureaus.

as far as lenders go, everyone I looked at used 04.  IF you are happy with the rate and the communication of the LO stick with them. 

The AU accounts may bring the score up depending upon hwo old they are and the balances, etc.  You would probbaly have to do a rapid rescore to make sure they are all updated prior to this.

There is little you can do to get a score up in 2 weeks as almost all processes take 30-60 days to resolve and then report.  Paying down balances to under 9% and PFD for collections (if the CA will agree) are about the only 2 things.  If there are some collections on his report that could be PFD right away that would help.  You could give letters from the CA stating Paid/Zero balance and that would help with a rescore.

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[Anonymous]

I may have been wrong on that one then.  Either way, disputing stuff on your reports is what you do to get ready to buy a house, not 2 weeks before closing.  There would be no valid reason to do so now as they would not reflect for 30-60 days and it would still be a red flag to the underwriter even if FHA is still allowing it.  PFD for collections and paying balances down are the only ways to likely see a 30-40 point jump in two weeks.

[WannaHouse]

I think your best bet is to contact the CC's and ask if and when they report. explain that the updated scores are needed to close on a house loan. Maybe you will get them reported.

Can't hurt to try...