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Medical Collection When Applying For Mortgage

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DUISlayer
Regular Contributor

Medical Collection When Applying For Mortgage

Good afternoon,

 

My girlfriend is in the process of buying the house that she's currently renting. She has a relatively limited credit history because she has always remained debt free, with the exception of one auto loan that was paid off years ago with no late payments, and a couple of student loans that are in deferrment while she's in school. A review of her credit reports revealed a medical collection for only $75 that she wasn't aware of. After looking into it, it was a deductible from when she saw a doctor back in Sept 2014. We've called the medical center and the collection agency, and either will agree to a PFD -- they just say that it will show PIF. What's the best course of action to take? She's planning on going through NFCU for the mortgage. Should she just let a loan officer pull the credit and advise her? Or pay the collection then have them pull it? Thanks in advance.


   $1,500        $4,500        $1,000        $1,000       $13,500       $3,100        $1,000        $1,000        $15,000
     5/06           7/07            5/11            8/17            8/17           9/17           10/17         10/17          10/17

FICO 8 as of 11/4/17: EQ 674, TU 679, EX 665 | Gardening commenced Friday the 13th (10/13/17) | Next app: Oct '18 - 2nd AMEX

Message 1 of 7
6 REPLIES 6
RobertEG
Legendary Contributor

Re: Medical Collection When Applying For Mortgage

Treatment of medical collections varies widely when applying for a mortgage, dependent upon the underwriting criteria for the loan.

Some may require payment of any unpaid, delinquent debt, while others may treat medical collections only as part of your debt to income ratio calculation, and not require their payment.

 

I would advise an initial consulttation with your intended lendor to determine how payment of the delinquent medical debt will be treated and whether payment is mandatory.

Message 2 of 7
Anonymous
Not applicable

Re: Medical Collection When Applying For Mortgage

I'd let the mortgage officer pull her credit and discuss what to do based on the bank's underwriting standards.

 

Her having little credit history might be a problem, though.  Does she know her FICO scores?

Message 3 of 7
DUISlayer
Regular Contributor

Re: Medical Collection When Applying For Mortgage

Sorry for the delayed response. Scores as of today are: EQ 698, TU 701, EX 651. The collection is only reporting to EQ. I actually spoke with the collection agency the other day. They agreed to a PFD, and it was only $75. Worth the gamble... needed to get paid either way. Said it would be deleted and they report the 15th of every month. I'll find out next Monday or Tuesday if they really did delete it. 

 

She has student loans that are in deferrment while she's in school. One auto loan that was paid off August 2008 with no derogatory payments. I added her to my C1 account as an authorized user since it's 10 years old. 

 

Not sure why EX is 651, EQ is 698, but the collection is reporting to EQ, not EX. But that's a question for another forum. Hah.


   $1,500        $4,500        $1,000        $1,000       $13,500       $3,100        $1,000        $1,000        $15,000
     5/06           7/07            5/11            8/17            8/17           9/17           10/17         10/17          10/17

FICO 8 as of 11/4/17: EQ 674, TU 679, EX 665 | Gardening commenced Friday the 13th (10/13/17) | Next app: Oct '18 - 2nd AMEX

Message 4 of 7
Anonymous
Not applicable

Re: Medical Collection When Applying For Mortgage

Did you get confirmation of PFD in writing? Otherwise there's no guarantee they will
Message 5 of 7
DUISlayer
Regular Contributor

Re: Medical Collection When Applying For Mortgage

No, but from what I’ve read, most agencies won’t agree in writing since it violates their agreement with the CRAs. I had one collection years ago and it was the same thing. They agreed but wouldn’t put it in writing. Took a leap of faith, and they kept their word. I know there’s no guarantee, but considering they originally told me no, I guess it’s better than that.


   $1,500        $4,500        $1,000        $1,000       $13,500       $3,100        $1,000        $1,000        $15,000
     5/06           7/07            5/11            8/17            8/17           9/17           10/17         10/17          10/17

FICO 8 as of 11/4/17: EQ 674, TU 679, EX 665 | Gardening commenced Friday the 13th (10/13/17) | Next app: Oct '18 - 2nd AMEX

Message 6 of 7
Anonymous
Not applicable

Re: Medical Collection When Applying For Mortgage

Glad to hear they kept they're word. I refuse to believe anything a CA tells you since the only binding legal requirement they have with a CRA is to report accurately - there's no law saying what if anything they are required to report or not, just that whatever is reported is accurate.

Easy way to get around this is by only communicating with a CA via postal mail so you're able to establish a written record. IMO anyways.

Off topic question: are you an attorney or did you just get lucky in a defense? Your username is curious - I slayed one but was slain myself by another Smiley Wink
Message 7 of 7
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