Desperate for HELP!

[Anonymous]

Ok 2 years ago our house went into foreclosure and it was only in my husbands name. The reason for the foreclosure is he got laid off from Ford motor company where he has been employed for 11 years. He was laid off for like 6 months which was enough to fall drastically behind in our house payment. We didn't think at the time we had any hope so we let it go we then moved before we even had to into a rental and rented that house for a year and are now in another rental and we will be in this house for 1 year in May. This is the issue we have 3 small kids and I am pregnant, not only are we paying too much here, but there is no room and we need to buy asap!

So, I recently applied dh for 2 secured credit cards capital one,hsbc and we are waiting the cards in the mail.Mother in law is also putting dh on her american express and we just got a car lease through Ford. Mother in law cosigned for dh for the lease and the lady told us my husbands credit must not be THAT bad because when they ran his credit it wasn't flagged or anything. These are my questions dh has 2 credit cards on his account that have since been charged off one of $2500 from 2006 that is capital one and the other is Citi and it $997 and is charged off and is from 2008. This is where i am confused the most we can do is settled these accounts but from what i am reading this will only hurt dh's score because they are old charged off accounts and have been charged off so do we just not pay them? The reason I am asking is because we are considering applying for a home loan in 3 months before this lease is up so we do not have to rent again for another year. So if we are planning on applying we need to know what to do, what not to do and are we absolutely crazy for thinking we may get approved? See I have pretty good credit and will be on the loan as well so I'm thinking this will help to get preapproved? Dh's score through transunion is 580 and on that report the foreclosure is shown as not a foreclosure but says "settled for collateral of the home" besides the two credit cards dh has a few small odds and ends that we will be taking care of in the next 30 days. If dh gets his new cards by next week how long before they start reflecting his scores? Worse case scenerio dh is willing to ask his parents to cosign on a home and they have teir 1 credit with scores in the 800's! Also regarding the few odds and ends do we just mail in checks to these places?

[RobertEG]

Unpaid debt, regardless of whether it has been charged-off or referred to a debt collector, remains unpaid debt forever, until paid.

The issue is dealing with delinquences that have been reported along the path of the debt.

The FCRA provides consumers some relief in the form of seting limits on how long prior derogs reported to their credit file can normally remain in credit reports issued by a CRA.

First, you need to know the date and severity of each and every delinquency and derog in your credit report.

If the derog was a monthly delinquency under the OC account while it was open, then just add 7 years to each of their individual dates, and that is the date that each must cease inclusion in your CR.

If the derog was a charge-off or collection, then you must know the DOFD on the OC account that preceded the CO or CA.  The CO or CA then has a CR deletion date of 7 1/2 years from that DOFD.

Decisions on whether or not to pay a debt are personal.  If you are contemplating not paying a debt, the very first thing to consider is whether the debt is sill within the statute of limitations (SOL) for your state.  If it is still within SOL, you run the risk of legal action.  And payment of any debt wont, in and of itself, require deletion of any derogs reported to the consumer's credit file

New cards are relatively minor in comparison to the negative impacts of the old, and major, derogs.I see no real boost there.

[Anonymous]

In today's lending environment you could be in for a real fight. It's hard to kno wwhere you stand because all the details are not listed as far as incomes, debts like car payments, student loans, etc. The foreclosure is a foreclosure and no underwriter is going to overlook that regardless of what the report says. It may not prevent you from getting the loan, however, you may be required to have more money on the table for downpayment, reserves in the bank to cover a number of months of mortgage, etc. Your husbands score can come up, but work diligently to make sure everything is correct on his reports. When he gets the cards, use them sparingly and make sure your utilization reports at 10% or less each month. Just find out when the statement prints each month and make sure you pay down to 10% or less before that date and don't touch the card again until the balance reports. 3 months isn't enough time to have the cards really help get his score over 640 (FHA lender minimum score) unless there are enough glaring errors on his reports that can be removed. Also, the risk in disputing errors is if the debt comes back verified and then you get a dispute line on your report. Those are tough to get rid of in a short period of time, and will stop a mortgage from funding with many programs. So you have to be careful. You may need to take the next year in the rental and build some time with the new cards. Also you get more time to save for downpayment and closing. The foreclosure will be older as well. The new baby presents an issue space wise, but you'll love the little bundle of joy just the same, even if is a little tight at home. As far as the parents co-signing, I would be against it as a parent. That makes them liable for the mortgage as well. If your husband is laid off again, they have to pay the mortgage like it was their own to keep their scores in the 800s. Suppose they want to make a major purchase (another home or vacation property, or need a home equity loan or HELOC), but can't because they have this extra payment that will be included in their debt to income ratio. This could present them a real problem. God forbid someone has an illness and they need to borrow and can't. Its not pretty, but you have to think about what position they could potentially face. Also, the lender may or may not allow it if they aren't occupying the property. Those are things you have to find out. It is daunting, but it can be done, so don't give up. The key is that you have already started in the right direction and you're getting help. Read the forum here and see what steps to take. Believe me, the information here works!