topic Re: Interesting Observation but my lender in Mortgage Loans

Interesting Observation but my lender

capricornchanges — Wed, 09 May 2018 10:27:53 GMT

I have a very small collection in the amount of $82 on my credit report that just popped up. My lender is questioning the validity of this collection because one year ago the original creditor closed it and charged it off. He says that the original creditor would’ve taken a tax write off when they charged it off with the IRS. Therefore, they would not be entitled to sell it to a collection agency because that would be considered double dipping, getting the right off and also getting paid from the collection agency. Has anyone ever dealt with anything like this and is this justification to have the collection agency remove their collection? Please no sarcastic answers about it so little just pay it, I sincerely want answers about the Validity of this collection. And for anyone who’s interested the underwriter is unconcerned if it’s paid or not.

Re: Interesting Observation but my lender

kuku4koco — Wed, 09 May 2018 13:45:10 GMT

@capricornchanges wrote:
I have a very small collection in the amount of $82 on my credit report that just popped up. My lender is questioning the validity of this collection because one year ago the original creditor closed it and charged it off. He says that the original creditor would’ve taken a tax write off when they charged it off with the IRS. Therefore, they would not be entitled to sell it to a collection agency because that would be considered double dipping, getting the right off and also getting paid from the collection agency. Has anyone ever dealt with anything like this and is this justification to have the collection agency remove their collection? Please no sarcastic answers about it so little just pay it, I sincerely want answers about the Validity of this collection. And for anyone who’s interested the underwriter is unconcerned if it’s paid or not.

I'm being very serious here... If the Lender/Underwriter is not concerned, I wouldn't be either. At least not until after I closed. Now, with that being said... I would definitely challenge the placement of this collection. Especially if you've suffered points for it. That means, validation, goodwill and/or negotiation of 50% or less with removal. Otherwise, it may haunt you and cause problems later.

Re: Interesting Observation but my lender

JVille — Wed, 09 May 2018 14:37:51 GMT

After closing you need to deal with this collection. Unless the bank sent you a 1099 when they charged it off they can sell it to whoever they want. If the debt is yours you need to deal with it. It will haunt you for years. And drag your credit score down. Just call and arrange a pay for delete if possible. But one way or the other unless it’s dealt with it will screw you for years to come.

Now my only other question Is The Debt Yours???

Re: Interesting Observation but my lender

capricornchanges — Wed, 09 May 2018 14:43:55 GMT

No it’s not, a family member used my ssn to open it apparently, for fingerhut, they never asked for ID or a signature, and I also didn’t get a dunning from the agency

Re: Interesting Observation but my lender

JVille — Wed, 09 May 2018 21:29:00 GMT

You still need to deal with it. You can dispute it and even file a police report. It will haunt you if it’s not handled. Obviously a dispute is a problem during the mortgage process but you know who did it and a Police report is a first step. Finger Hut is famous for turning everything into collection and they will fight you.

Re: Interesting Observation but my lender

homeloanexpert — Fri, 11 May 2018 01:31:49 GMT

I see this all the time. A collection agency calls it quits or realizes that a debt that is past the statute of limitations, so they charge it off. Then they end up selling these old debts in bulk to some other collection company and BAM! You have a new collection. Depending on the circumstances of this debt, it would most likely be pretty easy to have it deleted if it’s older than 7 years old. As far as the impact on your credit, if you are in the middle of a home loan process, you will need to make that call and determine if it's worth your time to duke it out with the new collection agency or just pay it to bring up your scores. Since most loan programs no longer require that borrowers pay off collections, why worry about it? Getting back to your original question, yes it's probably illegal to be double dipping, but who is going to contact the IRS and turn them in? I am sure thousands of collection companies do it.

Best wishes!