01-31-2013 07:59 AM - edited 01-31-2013 08:03 AM
I am in the process of appyling for a home loan. When they pulled up my credit report they saw an entry with Portfolio Recovery on an old $4000 debt on a Wells Fargo credit card. They guy said that they could try to still get the loan but that the underwriter may request that we pay off the debt. It is due to be dropped off my report July 2014. I told them that if they could assure me that they would approve me the loan that I would go ahead and pay it off. (Im still waiting to hear back from him after he speaks with the underwriter.)
1) Does anyone know if this is a normal request?
2) And I'm wondering if the best option would be a pay-for-delete offering half? However the original debt was $3300 (our balance) but Portfolio lists our balanceto them as $4000 (our credit limit). Should I offer half of the original debt or the $4000?
3) This debt shows on my Experian report 3 times. One from Wells Fargo who reported as a charge-off, and twice from Portfolio - one showing closed and one showing open (both with the same details). How can I get atleast one of the Portfolio entries off. There is no need for there to be two seperate entries right? We have not made payment or contacted them in any way ever.
Thank you for any help on this!
01-31-2013 08:10 AM
1) Very common request. Always assume the lender will require you to pay off the debts first. Our lender had us pay $130. I thought it would be too low and I didn't want to rock the boat with the CA since our scores were high enough for approval anyway.
2) If I had that, and if Portfolio were reporting, I would prepare to offer 100% for expediency during the mortgage process. However, I would start lower if I was certain they accepted settlements and if they accepted PFDs. Some CAs frown on PFDs but are open to GWs. YMMV and I'm not familiar with Portfolio.
3) Portfolio should only report once assuming this is the exact same debt. You could dispute the extra and let the CRA sort it out. But because you are in the mortgage process, some lenders will deny you if they see a dispute comment. I'd hold off on that and either offer a PFD, or pay it off and GW later. Wells Fargo can report though.
Welcome to the forums!
I'd suggest reading the following:
Credit Scoring 101 - great for knowing what is in your credit score and to see how your score is impacted.
What Steps Do I Take - great for learning the repair process.
and Example letters - PFDs, GWs, DVs, etc.
01-31-2013 09:15 AM
Well my score is 614 at the moment so if I can get approval for a home loan if pay off the debt I will. And I am reading up now on Portfolio and they dont seem too eager to do PFD's but on some they do? They also seem to approve GW deletions sparingly too. I was hoping that they would see that it is almost up for being dropped frommy CR next year (according to TU rpt) and $2000 is better than nothing right? But you are correct in the fact that I need this done asap so I will probably be paying it all.
I just worry that making payment on it will therefore update it and it be on my CR for another 7 years, am I right on that? Where if I just wait it out it will be gone? Maybe I should just wait to buy a home after it comes off? The reason being is that I will be using my credit quite a bit in the coming next few years (kid going to college and new car needed) and am working to get it ALL cleaned up so having it update and remain for 7more years seems like I am going backwards.
01-31-2013 10:00 AM
It will not remain on there for 7 more years whether you pay it in full, partial, or not at all.
It is going to drop off in 2014 no matter what, unless they try to illegally keep it on there longer, in which case you would have to pursue additional means to remove it (dispute, lawsuit etc)
01-31-2013 10:25 AM
Portfolio is one of the toughest nuts to crack. They are adamant about not accepting a PFD, even if it's in full. Personally, I would wait to hear what the underwriter has to say BEFORE paying a dime. They are pretty good about settlements though. Talk to the underwriter about this as well as they may want a full satisfaction before proceeding with the loan.
Also, do you know if they even own this debt? I'm surprised they haven't tried to sue for this amount. They're giving me a hard time about $1400, grrrrrrr
01-31-2013 10:42 AM
If you have an immediate requirement to satisfy the debt as a condition for loan approval, messing with a PFD plus settlement negotiation is riskly.
You are asking for two concessions from the debt collector.... CR deletion, and acceptance of less than the full amount. It's difficult enough to simply get CR deletion.
That type of negotiation is apt to take some time.
Additionally, I am not sure that CR deletion would even be an issue with the lendor unless that deletion is also needed to meet their minimum FICO score requirement.
They are already aware of the unpaid, delinquent debt. Paying with or without CR deletion wont erase their knowledge that, at the time you applied, you had unpaid delinquent debt. They most likely just want it paid.
Do you need the CR deletion to additionally meet a minimum score requirement?
01-31-2013 11:00 AM - edited 01-31-2013 11:04 AM
The PFD would simply be for my peace of mind and I realize now that IF they agree it would have to include the full amount. But if I pay the full amount I figure I should atleast ASK for PFD. But if it is going to be coming off next year anyway I guess that's not a big deal really. I was just under the impression that ANY change as far as payment etc to the TL would cause it to restart for the 7 year drop off date. Glad to know it wont.
And yes I am waiting to hear back from the UW but figured I'd get as much information I could so I'd know what to do or atleast have an idea of what he may be requesting.
I have not requested DV from them recently but am fairly certain that they do own it. It does have dispute comments on the TL where I tried to dispute them years back I guess to see if they would drop off. Im not sure how else they would have the information about me and the OC account if they didnt own it?