VA Loan--- 1 Remaining baddy, what should I do?

[Anonymous]

Hello,

I have 1 remaining baddy that is on 2 of my 3 reports-the other report is clean.  The baddy is from apt complex about $4500; it is due to fall off reports end of year.

664 Middle Fico5 mortgage score

38% DTI

How much will the baddy play a part of equation for VA loan?  The baddy is not on my middle mortgage score listed above as that report is clean.

Thanks.

[JVille]

If it's due to fall off, you don't poke the bear! The minute a lender pulls a mortgage report they will be gunning for you. You wait!

[Anonymous]

Thanks for comments!!!

I will try the early delete hoping EXP and TU still "sometimes" do the 6 and 3 month respectively early deletes.

[VALoanMaster]

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@Anonymous wrote:

Hello,

I have 1 remaining baddy that is on 2 of my 3 reports-the other report is clean.  The baddy is from apt complex about $4500; it is due to fall off reports end of year.

664 Middle Fico5 mortgage score

38% DTI

How much will the baddy play a part of equation for VA loan?  The baddy is not on my middle mortgage score listed above as that report is clean.

Thanks.

---

Hi @Anonymous ,

It depends on how it's reporting. If it's reporting as a charge off, you should be fine to leave it be.

If it's a collection, you have to worry how the CA is reporting the debt. Unfortunately, VA updated their guidelines last year to require lenders to hit you with a payment if the CA reports one. The problem is they generally report the full balance as the payment.

[Anonymous]

VaLoanMaster,

It is showing account type as "collection" on Experian.

Account status: collection account with the total balance listed as past due as of May2020.

Can you explain this more in detail: "VA updated their guidelines last year to require lenders to hit you with a payment if the CA reports one."

I am looking at all of my options on this sitrep for either getting VA loan now wait till baddy falls off.

options--

1.  reach settlement with baddy  (does reaching settlement that does not include PFD--will this extend the 7 year clock or will it still fall off Dec2020?)  This option would allow me to go for a VA loan now/next couple of months.

2.  Try early delete for aged baddy, I have been successful with 6 months out on EX and 3 months out on TU--otherwise wait till Jan/2021

3.  Wait till they fall off EX and TU 2021--may miss the boat with the great rates now and perhaps next few months.

Thoughts???

[VALoanMaster]

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@Anonymous wrote:

VaLoanMaster,

It is showing account type as "collection" on Experian.

Account status: collection account with the total balance listed as past due as of May2020.

Can you explain this more in detail: "VA updated their guidelines last year to require lenders to hit you with a payment if the CA reports one."

I am looking at all of my options on this sitrep for either getting VA loan now wait till baddy falls off.

options--

1.  reach settlement with baddy  (does reaching settlement that does not include PFD--will this extend the 7 year clock or will it still fall off Dec2020?)  This option would allow me to go for a VA loan now/next couple of months.

2.  Try early delete for aged baddy, I have been successful with 6 months out on EX and 3 months out on TU--otherwise wait till Jan/2021

3.  Wait till they fall off EX and TU 2021--may miss the boat with the great rates now and perhaps next few months.

Thoughts???

---

Hi @Anonymous ,

Can you explain this more in detail: "VA updated their guidelines last year to require lenders to hit you with a payment if the CA reports one."

Yeah, if the collection agency reports the account to the bureaus with a minimum monthly payment, VA requires us to count that payment against your debt to income ratios. This becomes problematic when the collection agency reports the minimum payment is the balance owed. 

Does that make sense?

[Anonymous]

Ok, makes sense to me now!!!

I called Experian just to get the exact date it is showing for removal, the guy was very pleasant and stated they can sometimes remove it 2 months earlier than the removal date.  

Thanks for everyone's help!!!