Why Don't I Qualify?

[Red22]

I am looking to purchase a home in the near future using the CALPERS Home Loan Program.  I have contacted a loan officer twice in the last year to see if I qualify.  I got their names from the list provided on the CALPERS site. I've only talked to 2; and the 1st one wanted me to pay some company $1200 to do credit repair(which I passed on and did my own credit repair!) and the other only told me that I have too many collections, even though the collections were scheduled to fall off this year. They never seem very interested in helping me qualify for FHA and complete my goal. Since my last conversation with an LO a few of my old collections have fallen off, but I still have 2 collections on my account which are Midland (whom I am just going to pay the settlement offer and try to GW later because they won't PFD and it's within SOL) and Rickenbacker which I have disputed because I don't know what it is for, (waiting on response from CRA's because they didn't respond to my DV) both of these accounts were placed on my CR in 2007. I have been rebuilding my credit in the past 13 months and would really like to know if I am on the right track.  I would really really like to make a home purchase soon. This is my information:

My current CR scores are in my siggy

2 Collections:Midland (old Tribute Account)-$1431

                      Rickenbacker:  $1149

2 Paid Collections--1 settled and 1 paid chargeoff

Income: $40,000

Source:  On the job FT for 7 years (same company)

Monthly Debts:  $463(includes car payment and minimum payments

                       Jared:$170/$3,000 , Kay:$90/$3,000, JB Robinson $0/$3000, CreditOne: $6/$300,  BofA: $0/$700 secured, Cap1:0/$300,

                       Walmart:$0/500,  Fingerhut:$0/300

                   Current Rent Payment is $1050 (not included in monthly debt)

Asset Reserves:  401K 

                           Checking:  $150

                           Savings: $400

 Location:  So Cal

                  SNBNDO County

Property: Looking to purchase a single family home

Transaction Type:  First time buyer

I know my savings are a little scarce, but I'm working on that!  How much reserves should I have? Would I qualify for FHA?

Also thinking of applying for first time home owner's assistance program offered by the city I live in along with the CALPERS Member Home Loan Program?

[Anonymous]

how much are you looking to spend.

also, Calpers underwriting is fairly strict from what I know and has gotten worse since Calpers lost a lot of money in all the market crashes.

From my calculations, you have about 900 or so to spend on a mortgage.  I know that does not buy much in so cal (I live in Temecula)

Also, the credit minimums for Calpers used tobe 620, but even a year ago, to get a 630 loan approved would need a failry clean file.  I would not be surprised if now they prefer (maybe not require) 660 - 680 scores.  On a 620 score they are very likely going to want to see a clean file (all collections paid in full), no disputed credit items, 5% down payment (although if you are using a down payment program this helps), and a couple mortgage payments in reserve.  I don't know where calpers is now on underwriting, but again, if they were strict a year ago, it will have only gotten stricter in the last year.

[ShowCredit]

The first thing you need to do is buy your real FICO scores and not FAKO.  Then you will know where to start.

[Red22]

These are my real scores purchased through My Fico!! Only Fako listed is EX!

[Red22]

Not Sure what I want to spend, I would like to know what I qualify for ....Wouldn't LO give me that information or will I have to have that info going in.

My "My Fico" scores are TU: 653 and EQ: 644 not sure of EX:?

[Anonymous]

he LO can give you an estimated price range, but if you are not yet ready to qualify they will not usually do that.  You need to look around and see what type of house you want and the price range you are looking in.  900 ona  mortgage (payment, interest, taxes, HOA's, home owners insurance , and MIP combined) is not going to buy you alot of house in So Cal.  Depending upon taxes and insurance, you are probably looking at no more than 125K or so.  That may be a bit high or a bit low, but I would not expect to be able to go higher than that and it may need to be lower if depeding on taxes/etc.

with your current scores (and some of the collections falling off), you should be OK to go ahead and start trying again.  Reading back through your original post, it is obvious that up to recently your scores were still well under the necessary mark so that is why the other lenders did not take your application seriously.  Now, Calpers may have tightened restrictions as I mentioned before, but if they have remained the same, you may be eligible now.  The only way to know is to apply.  Tell the LO your situation (they don't need the long story, just a snapshot of right now).  Give income and current credit scores and debts.  They should be able to give you a rough estimate if they think they can work with ou prior to pulling credit.  This is not an official statement from them though.  Once they have a rough idea of your situation and think you can proceed, have them pull credit and submit all docs immediately (previous 30 days paystubs, last 2 years taxes, copies of DL for anyone on the loan, etc).  The sooner they have everything the quicker the process can go.

[Red22]

Thanks for your input, but I think I am going to wait until I pay the 2 collections first.  I'm going to accept the Midland settlement offer which is 70% of the total debt. Will pay the end of this month and then offer a PFD for Rickenbacker.  If Rickenbacker doesn't accept, then I'll just PIF and then call LO in Jan 2010 once my CR are updated. I had my last old collection fall off today and only got a 5pt. bump on my TU, you think I will get another bump once these CO are paid?

[cdtotten]

You will not get a bump from paying off your COs. If anything, it will lower your score for making the delinquency appear more current. From a manual underwriting standpoint though, it will help. Just don't expect a FICO increase at all.

Keep in mind that settlement isn't going to help you at all either.

[Anonymous]

+1.

Paying off the old CC will likely lower your score a few points when it updates the date of last activity.

[Anonymous]

Settlement make no difference once it is in collections.  A paid collection, settled collection, and active collection all count the same.  The only parts that matter once it is a collection is date of deliquency (so they know how old it is) and date of last activity.  They "rate" your collection accounts by date of last activity with the most recent activity getting the highest weight.  That is why a recently paid off collection will lower your score quite often.

Also, to OP.  If there are willign to settle for 70%, they will almost certainyl settle for less.  Try going at them with 50% as long as you have the cash right away, they will likely accept.  Especially if they bought the debt verses them servicing it.  If they bought it, they likely paid 10-20 cents on the dollar or less for it.