paid medical collections after chapter 7

[Anonymous]

Hello,

can someone tell me if UW will have a problem approving FHA loan if I have multiple paid medical collections from one year ago? Chapter 7 BK discharged 3 years ago, no lates since the BK. The medical collections resulted because my daughter had lengthy medical evaluations and insurance through her father. all bills were in his name and i had no idea he didn't pay them until they were in collections. i paid them after the fact, tried to get them removed through multiple methods including Hipaa process. long story short the CA told me that there was nothing they could do, and her dad and I are jointly responsible. Is this something that the UW will overlook if I write a letter explaining? Also I think my tradelines may be a problem now. I have 1 CC that is a year old and never late and 3 SL with no lates. also have 3 other cc with no lates but they are all only 4 months old and the SL have been sold so they show about 3 year history, then paid off through consolidation and back on my report through different company as of jan of this year (so basically they are now show with a shorter history even though they are the same student loans.) is this something that the underwriter can still use as active tradelines? I just want to make sure i have the 3, which i do, my credit report just makes it look like i don't because of the SL being sold to diff company.

thanks!

[Anonymous]

by the way if it makes any difference it would be for a sub 620 mortgage and i was preapproved no problem. (i know this doesn't really matter in the long run,) my midscore was 615 when they originally pulled. but now it is 601 (mortgage inquiries made it drop). im very upset because i was so close to 620 before and now its probably going to take months to get close again. there are no baddies falling off (which are only the med collections) for another 2 years and my CC utilization is already low, (around 2%). don't know what else i can do to bump my score. Maybe i can try increasing CC limits but i dont think i have had them long enough for my CCC to approve increase already. I am starting to wish i would have just waited like 6 more months before starting this process. I feel like i would have a better chance because my tradelines would have aged and my score probably would have been 620, but now im so much further away. and I just don't know how the UW will take the paid medical collections after BK. I am already under contract, paid earnest money and appraisal and feel like its not going to go through now. any advice would be greatly appreciated.

[bassethoundmom]

I'm in the same boat except my midscore is 632.  I have heard on these threads that the FHA does not like to see negatives after BK.  My loan officer keeps saying, "I think it will be fine."  I did receive automated approval, I'm in contract and have a GFE. I submitted letters of explanation yesterday.  I'm worried and have been hoping for a response on my thread for several days!   I will post my results on your thread as soon as I find out. 

[Anonymous]

thanks for sharing and good luck to to. at least your score is above 620 so you do have something in your corner. I am starting to think that my LO is just trying to make a buck and didn't really look through my file thoroughly. i am greatful to have this knowledge now and i won't be applying for a mortgage again until I know that i qualify. I guess i'll have to try for a conventional loan once my scores are high enough which probably won't be for a few years, but at least that will give me time to save up for the heafty down payment i'll need for a conventional loan. hopefully i'll be a homeowner someday. i have come to the realization that it just isn't going to happen right now. i wish i wouldn't have waisted my time, money and effort, and gotten my hopes up for nothing. but hopefully things work out for you.

[Anonymous]

My thought is that while moving forward is worth a shot, sub 620, past BK, recent collections (paid or not does not matter), and only 1 current tradeline that you can show 1 straight year of paymet history is going to be a really tough push through underwriting.  The collections have some obvious circumstances, but you are basicly asking an UW to ignore 3 basic requirements of 95% of the lenders out there:

no post BK lates

3 solid tradelines with 12 month history

620 FICO

You could probably pull one of these and possibly get away with it, and maybe even two woth the right bank and well written letters of explanation.  But all three is a long shot.  Just make sure that before you actually sink money into a property that you have a full UW approval, and not just the automated approval as those are no where near as bullet proof as they used to be.  Good luck with it.

[bassethoundmom]

Well Mickie, that makes me feel slightly better as I have 4 open tradelines with a 3 year positive history and I have a mid 632 score.  I will definately share my outcome as my LO said that the post BK issues aren't as significant as they used to be.  (they may be just blowing smoke to make me feel better?)  

[Anonymous]

To clarify, any LO that is telling you ANYTHING is more lenient now than before is blowing smoke.... PERIOD.

BK rules are farily straightforward and clean credit is about as much of a must have post BK as there can be.  The only "leniency" may be in the exceptions to waiting periods for extenuating circumstances.   

[bassethoundmom]

Thanks for the reply and I'm sorry to hear that!  Sounds like I may be rejected according to those rules?  The waiting and not knowing is awful

[Anonymous]

Post BK lates do not have to be deal killers, but you have to show some other compensating factors usually (i.e extenuating circumstances, low DTI, solid FICO, etc).  It is the combination of factors in the OP's post that sounds pretty thin to me.  That said, many a file will get turned down just for post BK lates, especially if the BK is more recent (say past 4 years).  If you have a 6 year old BK, and a couple lates with a good reason 4 years ago but spotless credit since you have a different situation than someone who just now hit the 3 year mark for the BK rule and had a couple lates 12-18 months ago or so if you see what I mean.  It alsways comes down to the file as a whole, but post BK lates are definitely one of the biggest red flags there is. 

[bassethoundmom]

For anyone following this thread, I was approved.  I have a closing date of 7/20/10, yippee!