topic Re: Charged off school loans in Mortgage Loans

Charged off school loans

700bound09 — Thu, 23 Apr 2009 02:54:01 GMT

Im in the process of looking for a home and need advice in regards to this since I may go FHA.

Had 6 loans that I defaulted early right after finishing school due to some financial issues. 2 of them ended up getting paid by claim in 01 and the other 4 I ended up rehabing and currently current on them.

Now my question, I know these have fallen off my credit report since they were paid by claim in 01, will these come up while applying for a FHA loan thru CAIVRS? Since they were paid by claim I guess these were federal loans.

Any help would be great.

Re: Charged off school loans

Anonymous — Thu, 23 Apr 2009 04:00:50 GMT

Yes they will. Just because they have fallen off of your credit report does not mean that they aren't collectable. Any owed federal debt will come up on CAVIRs.

Re: Charged off school loans

Anonymous — Thu, 23 Apr 2009 04:47:47 GMT

Are you currently in the rehab process with the other 4? It typically takes 12 months of perfect payments before they'll come out of defaulted status.

Re: Charged off school loans

700bound09 — Thu, 23 Apr 2009 05:07:18 GMT

My rehab was back in 05-06 and was completed. To this date I am paid thru 9-15-09 on all 4 loans.

Re: Charged off school loans

Anonymous — Thu, 23 Apr 2009 13:00:15 GMT

If you've rehabbed them completely (and it sounds like you did) it sounds as though one of two things happened:

1) As a courtesy (not all do this -- trust me), they've removed the uglies. or 2) a glitch happened and they're not reporting because of it.

I say that because once you finished rehab, the loans would have been subrogated and new loans put in place (which you would then finish paying off -- unless you paid them in full by the time you'd rehabbed them). Since that would have happened, they would be entirely *new* loans and would be on your CRs for another 10 years (assuming that they were in good standing).

(Not sure if that made much sense)

But to answer your question: I'm 99% sure that if they've been paid in full, they won't show up. As I understand CAVIRS, it's kind of like a tattle-tale on bad Federal debts. I could be wrong, though.

But if you're either on a good payment plan or have paid them in full, you shouldn't have ANY problem.

Re: Charged off school loans

DallasLoanGuy — Thu, 23 Apr 2009 14:36:39 GMT

6 loans

2 are paid off and 4 are rehabbed. correct?

then you are fine. we dont care(much) that they were in default..... only that they are now current.

Re: Charged off school loans

700bound09 — Thu, 23 Apr 2009 14:43:05 GMT

Yes, 2 were paid by a claim (charged off) and the other 4 I worked on and am now current as of 9-15-09. I just want to make sure I have everything in line before I apply and nothing comes up that I am not aware of.

Thanks

Message Edited by 700bound09 on 04-23-2009 07:43 AM

Re: Charged off school loans

DallasLoanGuy — Thu, 23 Apr 2009 14:46:12 GMT

I don't guess I understand 'paid by claim'

did you pay them off after they were charged off?

Re: Charged off school loans

Anonymous — Thu, 23 Apr 2009 15:08:36 GMT

Dallas, student loans don't get charged-off (officially) -- they go into default.

What happens is that when the loan goes into default, the lender files a claim with the guarantor (usually, the US or state government Department of Education). Then the Dept of Ed pays the lender off. Then the Dept of Ed goes after the student.

When the student enters into a rehab program, the Dept of Ed has them make payments on the loan for 9-12 months consecutively. Once that's done, the loan is then ... sort of refinanced with a different lender. Then the student makes the payments on the loan to the new lender.

I dunno how much sense that made.

Re: Charged off school loans

Anonymous — Thu, 23 Apr 2009 15:10:19 GMT

@700bound09 wrote:
Yes, 2 were paid by a claim (charged off) and the other 4 I worked on and am now current as of 9-15-09. I just want to make sure I have everything in line before I apply and nothing comes up that I am not aware of.

Thanks
Message Edited by 700bound09 on 04-23-2009 07:43 AM

Yeah, I'm kinda confused by the whole "paid by claim" thing, too. Usually, the claim is filed by the lender and the Dept of Education pays the lender.

Are you saying that YOU paid when the claim was filed? Or that the government did? One is good. One is a big bullet waiting to whack you in the butt, loan-wise.

Re: Charged off school loans

Anonymous — Thu, 23 Apr 2009 15:14:34 GMT

I'm actually really beginning to believe that those 2 loans are still out there and need to be dealt with. Just because they were charged off (which really isn't accurate to say -- they NEVER get charged off -- they are ALWAYS payable and due), and the claim paid by the gubmint doesn't mean you don't owe them.

If that's the case, I'd jump onto the NLDS and take care of them. If you begin rehabbing them NOW, you'll be in shape to buy a house within a year. Otherwise, not only will those loans haunt you to your grave (some people have been snagged 50 YEARS later), you won't qualify for an FHA loan.

Re: Charged off school loans

700bound09 — Thu, 23 Apr 2009 15:50:55 GMT

ok ive checked the NSLDS site and show that all my loans are current and show nothing showing defaulted etc (fingers crossed). im going to give NSLDS a call to see what they say. looks like the guarantor just sold them to another company and paid them etc.

thank everyone for your input in this issue