Charge Offs - Settlement vs PIF

[Anonymous]

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?...

[StartingOver10]

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?

[Anonymous]

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!

[StartingOver10]

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.

[Anonymous]

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!

[Anonymous]

Holy Cow! Thought living in the Northeast was expensive!

[Anonymous]

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@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?...

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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.

[Anonymous]

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

[Anonymous]

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@Anonymous wrote:

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

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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.

[Anonymous]

Thank you. I really appreciate your feedback!!