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Valued Member
Etno
Posts: 39
Registered: ‎04-06-2012
0

Mortgage Ready - Settle Collection or Leave it alone?

I have two collection accounts (AMEX and a CA). Both refuse to do any kind of PFD or goodwill adjustments, but they are offering me good settlement offers of 25%. I cannot afford to PIF. The accounts are a little over 4 years,SOL in my state is 6 years. I will be applying for a mortgage in the next 6 months. I realize I won't get any help score wise in settling these, but am I also correct in thinking that I won't be able to get a mortgage with outstanding collections? Would it be better to just settle them so a manual review shows that they are at least settled?

 

 

Thanks!!!

Valued Contributor
rckstrscott
Posts: 2,660
Registered: ‎04-25-2011
0

Re: Mortgage Ready - Settle Collection or Leave it alone?


Etno wrote:

I have two collection accounts (AMEX and a CA). Both refuse to do any kind of PFD or goodwill adjustments, but they are offering me good settlement offers of 25%. I cannot afford to PIF. The accounts are a little over 4 years,SOL in my state is 6 years. I will be applying for a mortgage in the next 6 months. I realize I won't get any help score wise in settling these, but am I also correct in thinking that I won't be able to get a mortgage with outstanding collections? Would it be better to just settle them so a manual review shows that they are at least settled?

 

 

Thanks!!!


Usually any outstanding negative debt will have to be paid and closed before you can close on a mortgage..

 

-scott

Starting FICO Score: 10/10: TU 498 | EQ: 502 Current FICO Score(lender pull): 09/14: TU: 784 | EQ: 752 | EX: 784
Collections Removed: Hunter Warfield, CBE Group, Merchants Credit Guide, EOS-CCA, Enhanced Recovery, Portfolio Recovery, UCB, American Collection Company, Medical Business Bureau, Jefferson Capital, Credit Portfolio Associates, FCO, LVNV, Convergent, Armor Systems
Other Negative Entries Removed:Plains Commerce CO, HSBC CO, 2008 Judgment Santander Reposession


Positive Accounts:10/10: 0 | 07/12: 6 | Mortgage Closed 5/12, Macy's AMEX $13900, Citi/Home Depot $8500, Capital One Cash Rewards $3500, BOA $7500 Total Utilization: 3%. AAoA: 2yr, 9mth. INQS: 1 TU, 1 EQ, 3 EX
Valued Member
Etno
Posts: 39
Registered: ‎04-06-2012
0

Re: Mortgage Ready - Settle Collection or Leave it alone?

So my only option would be to just settle these and try to goodwill and have them removed after they have been settled?

 

 

Frequent Contributor
scarrollprint
Posts: 382
Registered: ‎06-26-2012
0

Re: Mortgage Ready - Settle Collection or Leave it alone?


Etno wrote:

So my only option would be to just settle these and try to goodwill and have them removed after they have been settled?

 

 


yup - unless they will take a higher percentage (you said they'd settle for 25%) and delete - but like you said they won't PFD.

 

If you can't PIF deletion is the only thing that will keep it from saying "settled for less" unless your willing to do a deal where they mark it "paid in full" but thats highly doubtful since that would be asking them to report inaccurate info.

 

Whats the MAX you can offer - if you can offer 75% then I'd say  you said I could pay 25% and be done with it; i'm willing to give you 75 if you delete the whole thing.

 

DON'T even HINT your looking at a mortgage to them. They will look at that as leverage. Basically if you play it like "I don't care if its on there, but would rather it not and I'm willing to give you more money" you have 2 legs to stand on. If you say "I'm trying to get a mortgage" they know that them being on your report is leverage against you.

 



Current: Eq- 624 Ex - 631 (lender pulled) TU - 661 (lender pulled)
Goal 700+ across all three
Valued Member
Etno
Posts: 39
Registered: ‎04-06-2012
0

Re: Mortgage Ready - Settle Collection or Leave it alone?

Thanks to everyone for your responses so far!

 

If I can't get it to be marked "paid in full" and I end up settling and it stays on my report, will it re-age and then take 6 years from then, or is it the date of first deliquency? 

Frequent Contributor
RW771
Posts: 311
Registered: ‎08-16-2011
0

Re: Mortgage Ready - Settle Collection or Leave it alone?

I believe it still goes by the Dofd, even if you make any payments. I think the only thing the time thing applies to is when the clock "re-starts" on the SOL...meaning it extends the time they can legally sue you.

 

When I was buying my house I had to make sure all collections were paid. I was able to settle real low with some companies and even got some of them to agree to completely remove them off all 3 CR's. They key is persistence, and sometimes you have to go all the way to the top, but it can be done. Even if they don't delete it, showing it paid should suffice, should your lender require all outstanding debts be paid. It wouldn't hurt to ask and see if they could email/fax/mail you something in writing for your records to show the debt has been paid just in case.

 

Good luck to you! Buying a house is an exciting time :smileyhappy:

 

05/31/2013 672 EQ (Fico), 03/08/2012 697 TU (Fico)

Closed on my first home 12/07/11! Officially a homeowner, thanks to this forum!!!

Frequent Contributor
JohnPTEX
Posts: 402
Registered: ‎02-23-2012
0

Re: Mortgage Ready - Settle Collection or Leave it alone?

My advice from personal experience:

 

I attempted to pay a CO prior to obtaining an approval letter from the mortgage company and the CO compay added a KD on the month of the settlement - dropped my scores 100 points - had I waited until the mortgage company gave me my approval based on the current scores I'd be buying this month instead of renting again - once the scores are checked they seldon recheck - all you need is the letter that the debt was settled - timing is of the essence - at least for me


Starting Score: TU:619 (02/24/2012) - EQ:629 (02/24/2012)
Current Score: TU:632 (06/21/2012) - EQ:672 (06/21/2012)
Goal Score: 740


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Frequent Contributor
scarrollprint
Posts: 382
Registered: ‎06-26-2012
0

Re: Mortgage Ready - Settle Collection or Leave it alone?


JohnPTEX wrote:

My advice from personal experience:

 

I attempted to pay a CO prior to obtaining an approval letter from the mortgage company and the CO compay added a KD on the month of the settlement - dropped my scores 100 points - had I waited until the mortgage company gave me my approval based on the current scores I'd be buying this month instead of renting again - once the scores are checked they seldon recheck - all you need is the letter that the debt was settled - timing is of the essence - at least for me


However most mortgage companies won't approve you until you have all open collections in a paid off state no? In that case once you start THINKING about buying a house is when you should be contacting collection agencies and trying to PFD.



Current: Eq- 624 Ex - 631 (lender pulled) TU - 661 (lender pulled)
Goal 700+ across all three
Frequent Contributor
JohnPTEX
Posts: 402
Registered: ‎02-23-2012
0

Re: Mortgage Ready - Settle Collection or Leave it alone?


scarrollprint wrote:

JohnPTEX wrote:

My advice from personal experience:

 

I attempted to pay a CO prior to obtaining an approval letter from the mortgage company and the CO compay added a KD on the month of the settlement - dropped my scores 100 points - had I waited until the mortgage company gave me my approval based on the current scores I'd be buying this month instead of renting again - once the scores are checked they seldon recheck - all you need is the letter that the debt was settled - timing is of the essence - at least for me


However most mortgage companies won't approve you until you have all open collections in a paid off state no? In that case once you start THINKING about buying a house is when you should be contacting collection agencies and trying to PFD.


Let me rephrase - have them check your scores - they tell you to pay them off - you do and then get preapproval by showing them the letter they were paid without rechecking scores- i guess at least in my situation had I had them run my scores PRIOR to me tryingto pay them off I would have been ok

 


Starting Score: TU:619 (02/24/2012) - EQ:629 (02/24/2012)
Current Score: TU:632 (06/21/2012) - EQ:672 (06/21/2012)
Goal Score: 740


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