ADVICE PLEASE: GM Financial REPO and HOME PURCHASE

[Anonymous]

I am buying a home and I also have a GM Financial repo.

30 days late is November 2016.

The CO amount is 29K but they are willig to "settle in full" for 25% of that amount at 7200.

My scores are high enough for me to qualify for my homeloan but I wonder if I "Settle in full" for the price they gave me will negatively affect my score.

Advice please!

[OmarGB9]

If the account hasn't been updating regularly, then yes, there would most likely be a score drop when the account updates to zero balance, though not cause you're settling or cause of the remark, but because FICO will view the account as a "fresh" derogatory with that final/latest update.

If, however, the account is already updating every month to reflect the CO status, then that final update to zero balance would actually help because it would get rid of the debt and allow the account to begin aging and over time you'd get points back.

That said, I believe most underwriters require you to take care of outstanding COs/collections anyway prior to approving you for a mortgage. I'd ask your loan officer about it.

[Anonymous]

This is my last report from almost a month ago. I get a new updat tomorrow. but EQ and EX show FC and Trans shows NR.

My mortgage guy is undecided about what to do.

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@OmarGB9 wrote:

If the account hasn't been updating regularly, then yes, there would most likely be a score drop when the account updates to zero balance, though not cause you're settling or cause of the remark, but because FICO will view the account as a "fresh" derogatory with that final/latest update.

If, however, the account is already updating every month to reflect the CO status, then that final update to zero balance would actually help because it would get rid of the debt and allow the account to begin aging and over time you'd get points back.

That said, I believe most underwriters require you to take care of outstanding COs/collections anyway prior to approving you for a mortgage. I'd ask your loan officer about it.

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[OmarGB9]

Seems to me it IS updating regularly, in which case paying it off shouldn't hurt you. I'll let others chime in, but I believe in this case it will only help.

Also, your loan officer being unsure of what to do is a little disconcerting.

[Anonymous]

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@Anonymous wrote:

I am buying a home and I also have a GM Financial repo.

30 days late is November 2016.

The CO amount is 29K but they are willig to "settle in full" for 25% of that amount at 7200.

My scores are high enough for me to qualify for my homeloan but I wonder if I "Settle in full" for the price they gave me will negatively affect my score.

Advice please!

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I strongly recommend that you speak with the lender - loan underwriter?? -  directly to get an idea of what they will potentially want with the CO. You wrote that "my scores are high enough for me to qualify for a mortgage.." There are people with 720+ FICO that cannot get a mortgage!  It is more than your score.  I would be more concerned about settling the CO and the outcome of the manual UW review as opposed to the score.

I cannot see any lender - in this environment - approving a mortgage, regardless of score,  with an unsettled charge off; or, a charge off settled for $25%. I am likley wrong, but more than likely, right.  On the other hand, if you have been told that you are qualified and, it is in writing, then that is remarkable. Good for you and congrats.  

An unpaid charge off to the underwriter is a serious red flag. What you are essentially asking them is to ignore the fact that you have not paid someone else several thousand dollars, to ignore clear risk, and to provide you with a mortgage. 

If I were a bank, I want to see it paid in full.  The only way around this is to get it removed, or pay in full. (it would be nice if OCs offered PFD for charge offs!). Would you loan money to someone who has confessed to not paying someone thousands of dollars they legally owed them??

[DebtStinks]

I'm with @OmarGB9  on both items mentioned.

#1 - A $29,000 charge off almost certainly would prevent you from obtaining virtually ANY mortgage.

#2 - I'm also concerned your loan officer doesn't have the knowledge to tell you whether or not this "update" would negatively or positively effect your credit score.

To sum up, I'm not the end-all be-all know-all, but I'm leaning strongly toward you seeing an increase in credit scores based on this:

#1 - nothing else changes on your report, including inquiries

#2 - it appears, just like @OmarGB9 stated to be updating each month which is likely hindering your credit score improvement

Best of luck in your home purchase!

[Anonymous]

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@Anonymous wrote:

I am buying a home and I also have a GM Financial repo.

30 days late is November 2016.

The CO amount is 29K but they are willig to "settle in full" for 25% of that amount at 7200.

My scores are high enough for me to qualify for my homeloan but I wonder if I "Settle in full" for the price they gave me will negatively affect my score.

Advice please!

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on the SS you shared it shows it was repod, but you still owed 29k? That seems rather steep. Is that less than the original amount you owed? I guess perhaps it fetched little at auction? I would also consider going through the paperwork (or requesting it to review) to be certain that is how much you owed after repo and auction.

I agree with the above, I cannot imagine that your mortgage wohld be aplroved with a large repo still on your CRs showing 29k owed. Most baddies need to be satisfied before being approved for a mortgage.

Good luck!