Collection and FHA loan

[Anonymous]

Hi everybody!

I have a collection for about $12,000 from a car that was repo back in 2002. It was with

Americredit they sold the account to Calvary Portfolio. They are both

reporting but Americredit shows zero balance. According to DOLA this account should fall

off in 09/2009. I would like to apply for a FHA loan in March 2009 and I was wondering if

this could be a problem when I apply for the loan.

 Thanks for your help. 

[ShanetheMortgageMan]

FHA's master guidelines do not require collections to be paid off, but each lender that does FHA loans can have their own guidelines on top of FHA's.  For example Countrywide has a very strict requirement on collections, if over a certain amount ($5k aggregate) it's all required to be paid.  So when you seek out your mortgage lender that would be a very important question to ask before letting them check your credit.  If they say it needs to be paid, move on to the next one.

[Anonymous]

Hi Shane,

What if my scores are over 620 and I had a late payment on a student loan in November

2006. Do you think I could be approve via automate, assuming DTI is Ok. 

I need a 203FHA loan I am thinking on using Wells Fargo.

Thanks, 

[ShanetheMortgageMan]

Yeah you should be OK for automated underwriting, 11/06 is awhile ago.  I seem to remember Wells Fargo having requirements on collections up to a certain dollar amount (could be $10k), so be sure to ask before you go ahead with the application.

[anca21bi]

Do you know of any lenders that don't require a dollar amount paid off in collectionsI've been calling lenders left and right trying to find someone that doesn't require $5000 or less in collections.  I have a repo from 2004 that is killing me!

[DallasLoanGuy]

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@anca21bi wrote:
Do you know of any lenders that don't require a dollar amount paid off in collectionsI've been calling lenders left and right trying to find someone that doesn't require $5000 or less in collections.  I have a repo from 2004 that is killing me!

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Are you calling direct lenders?

Try a Mortgage Broker or a Mortgage Banker.

[anca21bi]

I have talked to mortgage brokers, I even met with a couple, I'm going to meet with my 3rd tomorrow. Most all say they need at leat a 580 mid-fico and no more than $5000 in collections.  One broker said I needed all of my collections paid off, and another recommended to me twice that I should file for Chapter 13-just so I can get a home.