FHA Rules on Collections

[raisinitup]

Ok so to be specific - there are 2 medical collections from 2010, sold and reported in 2013 and 1 old utility bill from 2007, sold and reported in 2013. Every month they update with a recent date but all have the DOFD correct. IYO, do you think we should add him to the loan or should he remain a non purchasing spouse due to the collections updating every month. His mid score is 660.

[ShanetheMortgageMan]

Since they are pretty old, I'd try adding him to the mortgage.  Worst case the underwriter would say no, or that the collections had to be paid, and so if that was the case & you didn't need his income to qualify then you could just remove him from the mortgage application.

[JM-AM]

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@ShanetheMortgageMan wrote:

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@JM-AM wrote:

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@MovingForward_2012 wrote:
No it doesn't. The lender goes by the date the collection was added to your credit report.

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Let me clarify a little...

The collection is an older collection and even though a new collection company just starts to report it, it will have no impact on the SOL or the time period when it will fall off your reports. UW's know this and is taken into consideration. The date that counts is the original DOFD from the original creditor.

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I respectfully disagree.  On the account that eventually went to collections, it has been my experience that it's the date when it was sent to collections that the underwriter goes by, rather than the DOFD from the original creditor.  For example if a credit card account had late payments, and eventually went to collections, the underwriter wouldn't use the first late payment date in the string of late payments before it went to collections... at best they'd use the most recent date of delinquency on the original creditor, but IMO would still go by the date it was originally sent to collections.  Perhaps I misunderstood what you meant.

I agree that on re-sold collections, the date it was sent to the original collection agency would be used.  Unless it specifies on the credit report, then in that situation documentation that the new collection agency is collecting on the account that the prior collection agency was trying to collect on should be provided.

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That was what I was referring too...

Thanks for clarifying it a little more understandable Shane...

[ShanetheMortgageMan]

Ah, I gotcha now, I thought that is perhaps what you meant so I included that last paragraph.

[MovingForward_2012]

So as long as there were collections for the medical bills and utility bill already on your husband's credit report prior to being sold and reported in 2013, he should be fine just as long as the DOFD, before the collections were sold, occurred 12 months ago. You stated they were old so I am assuming that to mean over 12 months old, old.