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Member
DanaC
Posts: 10
Registered: ‎07-22-2013

Which do mortgage underwriters use? Date Opened or Date Reported?

After years of clean-up and disputes, I have finally taken the plunge and applied for a mortgage loan.  I knew I wasn't ready last year, so I didn't even apply.  Instead, my father bought & financed my house for me, and has been selling it to me on a private land contract.  Now he wants to purchase a new home, but my mortgage loan is weighing down his DTI ratio, and I am trying my best to refinance to get the debt off his DTI. (No good deed goes unpunished!)  

 

Anyways, I am 30 days into the process.  I got my pre-approval, mortgage broker got a "Approval/Eligible" from the FHA Underwriting software, I have submitted all documents to my processor, & had my appraisal. Principle Loan amount is $58,000 + Closing Costs = Total of $62,700 (No cash required to bring to closing).  Appraisal came in at $115,000. If my math is right, that puts me at 54% Loan-To-Value. 

 

I have worked very hard, and my scores have greatly improved since last year.  TU 637 EQ 609 EX 653, they are using my middle-score of 637. 

 

Mortgage broker sent my application to underwriting last week, it was DENIED.  Reason Stated: "Credit Risk outweights Benefit. Recent damage to Credit History within 36 months." 

 

Both she and I were shocked!  She says she's seen far worse files get approval, and I have been very careful to make sure my credit has been flawless over the past 3 years!  She then sent my application to a different lender who takes scores down to 580 for underwriting, and I am waiting to hear a decision from them. 

 

I re-pulled all of my credit reports, and saw an OLD collection JUST popped up on the 4th of July this year!  This is B.S.!  The DOFD for that account was 09/2008.  Almost 5 years old! 

 

My question is, which date is more important to mortgage lenders/underwriters?  This is the only "recent damage to credit history" on my report, but the ACTUAL DOFD was 5 years ago!  Is this considered and treated like a new collections that just occured, and hurting my score as well? 

 

Any help with this would be greatly appreciated, I am so frustrated!!!  Thank you. 


Starting Score: 526
Current Score: TU 730 EXP 715 EQ 705/b>
Goal Score: 750+

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Moderator Emeritus
llecs
Posts: 32,880
Registered: ‎08-04-2007

Re: Which do mortgage underwriters use? Date Opened or Date Reported?

IMO, the recentness of the reporting is more important. If a CA reports, the "open date" is when the CA took over the account and lenders understand that. However, if it recently reported then you'd have a challenge with the added baddie and most FHA-lenders will factor that in and usually will require you to pay it in order to be approved. Also lenders don't like to see any new collections, regardless of the DOFD, leading up to the mortgage app. Seems like there's a FHA guideline that calls for a denial in cases of recent lates/baddies, though I got approved via a FHA loan w/ a 1 yr old CA reporting on one report only (scores were in the high-600s).

 

A new collection, regardess of DOFD, will sting. Even an old reporting CA at 7 yrs could potentially return to you a solid double-digit gain if removed (on a clean report).

 

Did you opt out? I'm guessing but I think the CRA alerted the CA that you applied for a mortgage and that compelled the CA to report. If you hadn't opted out, then certainly do so now. I'd send a DV to the CA. If they verified and you agreed, then send a PFD. I would also reapproach the lender with a high down payment and see if they'd accept it.

 

 

Member
DanaC
Posts: 10
Registered: ‎07-22-2013

Re: Which do mortgage underwriters use? Date Opened or Date Reported?

That's the answer I was afraid of :smileysad:

 

I asked my mortgage broker if I could "opt out", and the answer I received was, "We never share info. As a matter of fact, I believe it's against the law for mortgage companies to give out any info at all, for any reason." So that settles that?

 

I immediately disputed the collection, and it is only reporting on Experian.  But with what you are saying, it may be enough to disqualify me from the mortgage.

 

They are using a CR pulled 06/19 (without this baddie), but I am sure they will refresh credit again before closing, either denying the loan, or (hopefully)making it a condition of the loan to pay it off. 

 

I'm sorry, but what is a DV?  I am willing to try any and everything to get this deal done, what terrible timing for an old debt to pop up!  :smileymad:


Starting Score: 526
Current Score: TU 730 EXP 715 EQ 705/b>
Goal Score: 750+

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Senior Contributor
DaBears
Posts: 3,923
Registered: ‎10-26-2012

Re: Which do mortgage underwriters use? Date Opened or Date Reported?

[ Edited ]

DanaC wrote:

That's the answer I was afraid of :smileysad:

 

I asked my mortgage broker if I could "opt out", and the answer I received was, "We never share info. As a matter of fact, I believe it's against the law for mortgage companies to give out any info at all, for any reason." So that settles that?

 

I immediately disputed the collection, and it is only reporting on Experian.  But with what you are saying, it may be enough to disqualify me from the mortgage.

 

They are using a CR pulled 06/19 (without this baddie), but I am sure they will refresh credit again before closing, either denying the loan, or (hopefully)making it a condition of the loan to pay it off. 

 

I'm sorry, but what is a DV?  I am willing to try any and everything to get this deal done, what terrible timing for an old debt to pop up!  :smileymad:


DV is a Debt validation letter sent to the Collection Agency. This is what you send them. Since they added the collection to your report it will be considered a timely DV which they have 30 days to validate.

 

"I pulled my credit bureau report, and I discovered that you claim I owe you a debt. Under § 809 of  the FCRA, send me validation of this debt." 

 

 

 

§ 809.  Validation of debts   [15 USC 1692g]

(a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing --

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.

(c) The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

 

Community Leader, 


DaBears

 

Member
DanaC
Posts: 10
Registered: ‎07-22-2013

Re: Which do mortgage underwriters use? Date Opened or Date Reported?

Thanks for the advice.  I went ahead and sent a DV and filed a complaint with the CFPB. 

 

**Update** My loan application was denied at underwriting.  Reason: Insufficient Credit History. 

 

Wish my LO could've told me that BEFORE spending $500 on the Appraisal and $2,000 more on FHA Repairs!  Ugh. 

 

On a positive note, I had a $5,000 judgement completely deleted from my report, making my scores jump! 

 

 


Starting Score: 526
Current Score: TU 730 EXP 715 EQ 705/b>
Goal Score: 750+

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