Collections-Mortgage Process

[Patientlywaitingonahome]

I’m currently in the mortgage process stage and the worst thing just happened to me. An old debt over 5 years old was just sold to a Collections Agency and I just received the notification on my Experian credit report. Will this get me an immediate denial from the Bank or will that just be a condition I will have to take care of?
I’m so sad. 🙁

[TTrumble]

Hello Patientlywaitingonahome,

Wow! What rotten timing… 🙁

It may well boil down to whether or not it was added to your credit report before or after the bank pulls your credit report prior to giving the CTC.

You best plan of action here is to be VERY proactive:

1 – Write a Letter of Explanation, submit it to your file, send a copy to your counselor, Closing Coordinator and me.

2 – Depending on the size of the collection, go ahead and contact them and offer them pennies on the dollar (I mean that LITERALLY) to settle immediately. Require they put any settlement agreement you reach IN WRITING before you send them one cent. They only paid two to three cents on the dollar to acquire the debt from the original creditor, so a quick settlement that they can still make a couple of bucks on will be very tempting to them.

3 – Do not in any way let them know or even suspect that you are in the final stages of getting a mortgage. I guarantee they will use it to hold your new home hostage until you pay the the full amount of the original debt.

In short, take the approach of “hope for the best but be prepared for the worst”.

Tim Trumble
Online Operations, NACA
ttrumble@naca.com

[Patientlywaitingonahome]

Thank you Ttrumble. I was able to set up a settlement for a portion of the amount they were asking for and they said it will read settled in full. I will send that LOE to you, my counselor and closing coordinator ASAP. I have another question. Do I suppose to see all of the conditions on my file? I can see 1 of them but 2 of them are blank.

[TTrumble]

Hello Patientlywaitingonahome,

Don’t worry about what conditions you can or cannot see on your webfile.

At least half, if not more, of the “conditions” that occur at this stage are either items that your Closing Coordinator will take care of directly or are nothing more than a notation of where the file is in the process. In other words, things that are internal in nature and that you do not need to be involved with.

You will be made immediately aware of anything that comes through that does need your attention. This is in fact probably the one point in the whole process where being proactive is not particularly advantageous. It’s definitely one of those “relax and let the system work” moments.

Tim Trumble
Online Operations, NACA
ttrumble@naca.com

[Patientlywaitingonahome]

Thank you TTrumble. I’m just waiting to hear from the seller now. I got my Inspecrion Report back and asked that the fixed the required items. One of the most important one was the roof.

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