Settle Collections in order to get a mortgage

[Anonymous]

I am trying to buy a house. I got approved on the condition that I clear up a collection. I disputed the collection but they won't give up. Should I just make a payment plan with the collector to get my mortgage? What happens if I only make one payment and then never pay it again? Would that effect my mortgage? The statue of limitations is up in one year so I don't have that much longer. Some of the debt is mine but not all of it, only about 50%. Any advice. I only have about 3 weeks to clear it up.
Basically will they accept a payment plan and what happens if I only make one payment? How do I go about asking for a payment plan?
Thanks
Great site
Amy


[Edit by amyholland on Thursday, July 11, 2002 @ 07:56 PM]

[Anonymous]

If you get a payment plan with a collection agency, get everything in writing. Have them fax you the agreement to pay off the debt. You will also need to provide your loan officer with the letter stating you have established a payment plan. They will in turn count that payment toward your debt to ratio so make sure the payment doesn’t affect this to much. It sounds like your main goal is to get the house. If that’s the case, either negotiate a settlement to pay it off or agree on a payment plan. I would say closing on the house should be the most important thing concerning this matter. Your loan officer should be able to tell you exactly what the underwriter needs, paid collection or payment plan.

After you close on your home loan they can care less how much credit you get or if you make payments to other creditors, as long as they get their payment on time.



[Edit by wclewis on Tuesday, July 16, 2002 @ 01:45 PM]

[Anonymous]

I'm in a similar bind...I'm trying to get home loan with some cash back and the mortgage companies that I have spoken to insist that I pay several things that have appeared on my credit report with my cash back. Things like my 2 car loans and an old Providian card, etc..

This really irritates me because I am the person who is taking the 30 year mortgage (and it's whopping interest rate :boggle:) NOT them, but they think they can tell me how to spend my money. Aaargh! (I wonder if mortgage lenders are even legally allowed to force you to pay certain debts with funds back from your loan? Anyone out there know for sure?) I'm sorry for ranting but it peeves me bad since I planned on paying off several bills (including my car loans) just not ALL the ones that the loan companies think I should pay off. I hate having my hand forced. Darnitt, some of those debts are even approaching seven years. :rolleyes:

Anyway, the whole reason I was responding to your post is this: If you arrange a payment plan for this collection account and then stop making payments after the home loan is funded (which is what I would probably do too) won't you in essence re-age the account so it can stay on your report longer? I may be mistaken (and I am hoping that someone else here can confirm this) but I thought that if you made a payment on an old account the seven year period starts again from the date of that payment. :confused:

Can you try that and then go the debt validation route again? Also, if they do validate it I suggest you make them prove to you that you owe 100% of the debt. I bet that is where they fall on their faces since you say your only responsible for about 50%. :D

Anyway, good luck to you. I know EXACTLY how you must be feeling :upsidown: and the stress you are facing right now.

[Anonymous]

Shannon,
THe mortgage company I am going thru says that basically I have to sign a promisary note so it will reage the debt. The statute of limitations is up in 10 months so I don't want to do that. I really want to go thru this mortgage company to get the 5k off. I definately think it is some type of discrimation when if fact I have been approved at two other place, have excellent credit otherwise and putting down 33%. I am trying to act dumb and go thru the original creditor now but I refuse to pay 3k to the collection company.

[Anonymous]

If you begin making payments it will start the clock all over again in most cases. If you have time before close, you can go debt validation and dispute the account with the CRA’s. If you don’t have time to do this, you have to consider your two options and choice the lesser evil. If getting the home loan is your number one priority, you should do what it takes and then fix your credit report at a later date.