topic Re: Charge Offs - Settlement vs PIF in Mortgage Loans

Charge Offs - Settlement vs PIF

Anonymous — Tue, 20 Oct 2015 20:43:08 GMT

I know this question has been asked probably more then few times on this forum. But I am new and would like to get direct advise. I have 3 Charge off which are 3.5years old. Speaking with Chase Mortgage Rep, he said I need to Pay in Full NOT Settle. Ofcouse PIF is financially lot tougher then if I just settled. My goal is to qualify for a Mortgage loan in 1year or so. So what advise do you have for this newbie? Should I just do PIF?...

Re: Charge Offs - Settlement vs PIF

StartingOver10 — Tue, 20 Oct 2015 21:31:33 GMT

My advice: Stay away from Chase and go to another lender especially if you are going with FHA type loan. Stay away from the big box banks now because they are super conservative and this is one of the items that is considered a lender overlay.

Other lenders won't require the Charge Offs to be paid in full. Of course, if you can get a PFD (pay for delete) that is your best option.

How large are these charge off's?

Re: Charge Offs - Settlement vs PIF

Anonymous — Tue, 20 Oct 2015 21:45:43 GMT

Thanks for your reply! 3 charge offs total around $10K. Settlement as you know can be a fraction of the cost around $2K. Big difference when you are also trying to save up for a loan. I live in the bayarea, so not sure if FHA loan would work for me.....due to median house in bayarea is $650K. What type of credible lender (non big box) would you recommend? Thanks again!

Re: Charge Offs - Settlement vs PIF

StartingOver10 — Tue, 20 Oct 2015 22:01:56 GMT

Well, I should have asked you first the projected loan amount first because if you are considering a jumbo loan, then Chase is okay. I don't remember where the loan becomes jumbo in CA because it is different than most of the rest of the country.

I know it is contradictory - but JPM Chase does jumbos well and not much else.

Two of the other board members here are in or around your area and are excellent lenders and will be able to answer your questions specific to your area, check dpeezy and check Shanethemortgageman. You can pm them right here from the board.

Re: Charge Offs - Settlement vs PIF

Anonymous — Tue, 20 Oct 2015 22:12:57 GMT

Looking on FHA Loan Limit is $625K. It's in the ball park, but due to rising home prices probably wont' work. Thanks for your help and recommendations!

Re: Charge Offs - Settlement vs PIF

Anonymous — Wed, 21 Oct 2015 01:32:17 GMT

Holy Cow! Thought living in the Northeast was expensive!

Re: Charge Offs - Settlement vs PIF

Anonymous — Fri, 23 Oct 2015 02:52:47 GMT

@Anonymous wrote:
I know this question has been asked probably more then few times on this forum. But I am new and would like to get direct advise. I have 3 Charge off which are 3.5years old. Speaking with Chase Mortgage Rep, he said I need to Pay in Full NOT Settle. Ofcouse PIF is financially lot tougher then if I just settled. My goal is to qualify for a Mortgage loan in 1year or so. So what advise do you have for this newbie? Should I just do PIF?...

You need to PIF. I just purchased a house and I had one charge off 2 years old. I had to PIF. Listen to your loan officer. No matter where you go they will require you to pay that charge off in full. Trust me on this.

Re: Charge Offs - Settlement vs PIF

Anonymous — Fri, 23 Oct 2015 03:51:48 GMT

Thanks for the advise. Did you PIF during the loan process or several (6~12) months inadvance prior to applying?

Re: Charge Offs - Settlement vs PIF

Anonymous — Fri, 23 Oct 2015 04:05:42 GMT

@Anonymous wrote:
Thanks for the advise. Did you PIF during the loan process or several (6~12) months inadvance prior to applying?

I PIF during the loan process. The loan officer came back to me and told me to PIF and once that was done he was going to have a rapid rescore done. It took about 3 days to get the rescore done but it worked. The loan process is very stressful. It will make you think you will not get through it but everyone I know that has been through the process says that it was well worth it. Some nights my husband and I couldn't sleep because we were asked daily to provide this and that. We were asked to pay stuff off and write letters stating why we had multiple addresses, multiple inquires, late payments, money transferred between accounts, middle names listed on credit report, and more and more. But in the end we were approved. Your loan officer is there to help you and if not he/she is there to get a check but believe me do what they tell you and you will get approved. You can try a different place but they might still ask you to pay the charge offs. I think even though it states Charge Off, its still considered debt. As long as there's a balance it adds to your DTI ratio.

Re: Charge Offs - Settlement vs PIF

Anonymous — Fri, 23 Oct 2015 04:24:18 GMT

Thank you. I really appreciate your feedback!!

Re: Charge Offs - Settlement vs PIF

Anonymous — Fri, 23 Oct 2015 04:38:51 GMT

One more thing.. I PIF during the loan process because I wasn't aware it needed to be done. We were preapproved with the charge off so we thought we were good to go. The underwriter kept sending our file back to fix things. If you are not already in the process of escrow then talk with another loan officer to see if you need to PIF. I needed to raise my credit score and keep my DTI low. We were applying for a conventional loan and our requirements were strict. I only did it because it was necessary at the time and that was the only thing that could raise my score to 680 IN DAYS since my score was the lower of the two. You actually might be fine but always ask the loan officer why he wants you to PIF and if you don't PIF how will it affect your loan. You might find out it won't affect it that much or even at all. He might be just trying to predict what the underwriter might question.