Old collection flagging report as new.

[light_in_Spanish]

So, I paid most of my recent negative accounts, but left one from 2017 alone that the LO said not to worry for FHA approval. But now they updated as a recent collection even though it's 2 years old and lost 6 fico points ( still under FHA guidelines). How will this affect my Mortgage process?. I'm totally feeling frustrated. They probably saw I paid off some accounts and are just Pressuring me. I already told my landlord about not renewing my lease and spent a lot of money. I'm afraid this will cause a denial.

[pgtackle2003]

What do you mean by reporting as new? Do you mean the updated date is recent? 6 points is not a big deal and the account open date will remain the same which your lender will be able to see. I wouldn't sweat it if your LO said they aren't concerned about it. 

[NC_Mtg_Loaner]

Yeah collection accounts can get sold from one agency to the next and then the next agency files a derogatory account report with a current date making it appear to be new----big bummer and I'm sorry to hear it.

It's not likely "they saw you were paying other accounts/collections off" unless they held other accounts for you that you paid.  How would they be able to access the data in your current credit report unless you gave authorization at some point?

If your score dropping 6 points is a deal killer though, you ought not to worry too much....it's only 6 points. 

[homeloanexpert]

For FHA, all medical collections are overlooked, any other open collections under $2,000.00 are also overlooked. If the open collection is over $2K, FHA Guidelines requires the Underwriter to hit you with an imaginary 5% payment payment of the balance reported. This payment is then added to your DTI. As long as the collection isn't tens of thousands of dollars, it shouldn't have that big of impact on your loan approval.

Best of luck to you!

[Anonymous]

This happened to me as well as I got closer to closing. From what I’ve read on here, if you’re applying for a mortgage and haven’t “opted out” (to prevent lurking on your reports) debt collectors can get alerted to mortgage inquiries and slap on the collection since they know you will most likely pay off the debt in order to close. In my case, I called the original creditor and paid them off after they agreed to pull back the collection from the collection agency and in the next few days it was deleted off my report. My FICO score dropped a few points however my Mortgage FICO dropped significantly to the point my middle score was under FHA requirements. So please check your Mortgage FICO scores just to be sure. I paid down utilization on my cards to pull my score back up and it did (and then some) and was able to close on my home.

[Anonymous]

Holy cow... I think this is what happened to me. We did a pre-qual. and of course, they ran a hard pull. A few weeks later, an old collection account of mine re-reported, and voila! My score tanked 70 points! I am wondering how we can "opt out" when it comes time to apply for the actual mortgage? We are doing a two-close construction to perm. loan, and I'd hate to have anything new pop up after they run our scores again.. if anyone could point me in the right direction I'd appreciate it! I just want to cover our butts so we can avoid any weird things showing up after companies decide to start trolling us... 

[Anonymous]

Yep, it’s definitely not a coincidence. If I knew beforehand I would’ve opted-out before applying for a mortgage as this happened while I was in underwriting. Lesson learned the hard way that a debt (only $122) could’ve cost me my mortgage loan if I wasn’t proactive by immediately setting the debt with the original creditor (and having it pulled from collections) and boosting my scores again before closing. In all, it’s best to take care of any debts (i.e PFD, payment plan, etc.) before applying so there is no worry of it coming to haunt you during the process. Anyway, I just searched the forum on opting-out and there was a link and I did it from there. Of course, it was too late in my case and it may not necessarily stop all “lurkers” but it gives me a peace of mind.

[VALoanMaster]

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@Anonymous wrote:

Holy cow... I think this is what happened to me. We did a pre-qual. and of course, they ran a hard pull. A few weeks later, an old collection account of mine re-reported, and voila! My score tanked 70 points! I am wondering how we can "opt out" when it comes time to apply for the actual mortgage? We are doing a two-close construction to perm. loan, and I'd hate to have anything new pop up after they run our scores again.. if anyone could point me in the right direction I'd appreciate it! I just want to cover our butts so we can avoid any weird things showing up after companies decide to start trolling us... 

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You can go to optoutprescreen.com 

[Anonymous]

Thank you! I did this yesterday for myself and my husband. Hopefully it helps a bit when we go to apply, which should be fairly soon. 

[light_in_Spanish]

So it did affect the final underwriting, I was not denied, but they said that since this lowered my scores, I need to provide with terms and conditions for pension hardship withdrawal. I sent them the info, but this will push back closing date. It was the 31st, but now who knows. I'm so frustrated 😡