FHA and Collections

a1sundevilsfan2 · Joined: 01 Nov 2007 Posts: 32 14.61 Dollars($)

Does FHA loans require a person(s) to pay off all collections prior to acceptance of a loan?

Guest 0.10 Dollars($)

Hi,

FHA does not require the collection accounts to be paid off as a condition for mortgage approval.

larry · Joined: 27 Jun 2007 Posts: 3328 473.51 Dollars($)

Hi,

For FHA loans, the person has to pay all the off old collections & charge-offs which are less than 1 year old.

Thanks,
Larry

0.10 Dollars($)

Hi,

I learned the answer a couple of hours after posting this question.

What I learned is what Larry indicated... Except its two years.. So, I fired off settlement letters to them...

Now my question is what happens if they don't answer?

larry · Joined: 27 Jun 2007 Posts: 3328 473.51 Dollars($)

Hi,

I think it will be better if you talk to them directly.

Thanks,
Larry

livinginnky · Posted: Fri Nov 02, 2007 10:02 am Post subject:

The answer is actually a little more complicated.

You may or may not have to pay off collections, and medical collections are usually disregarded no matter how old they are.

The great thing about FHA is the ability of the underwriter to make decisions based not on just one thing but several compensating factors. So if you have great compensating factors on everything else you may not have to pay off any collections, or you might have to pay them all including ones from over 2 years ago. It is important to remember that FHA loans are given on a case by case basis and that even though FHA sets the guidelines, it is still up to the lender on what you can and cannot do when getting a loan through an FHA program.

So the question is this. Do you have a lot of collections? Or do you have a few that directly relate to an isolated event or trouble spot in your past? This is the important difference, if you have nothing but collections your going to get denied, if you have a few from the same time period and good credit history besides you will get approved.

Hope this helps and let me know if you have any additional questions.

livinginnky · Posted: Fri Nov 02, 2007 10:07 am Post subject:

Also is this a purchase or refinance situation?

0.10 Dollars($)

for some reason I can not sign on...

Anyway, most of the collections are due cc charged off right after 9/11, a yr or so after... my industry took a SERIOUS bump.... anyway... I am back on my feet and payments for the last two years are up to date... I do have one two collections that regage the dang thing...

this is for a purchase of a home..

The underwriter told my broker i would need to pay two of the c/o and 2 collections... then Im ok (I hope) he did say I maybe able to dispute one of the co..

btw. livinginky, if your in Kentucky... I sure do miss Lexington!!! I decided I couldnt take the winters anymore!!

livinginnky · Posted: Sat Nov 03, 2007 8:29 pm Post subject:

Your in a perfect situation for FHA. Just get an approval from the broker first saying you are approved if the stipulations of paying the debts are met. Then you know you are ok to pay them.

Yes I am in Northern Kentucky. Have not been to Lexington in a long time. It is starting to get cold as we type. Where are you now?

a1sundevilsfan2 · Joined: 01 Nov 2007 Posts: 32 14.61 Dollars($)

Thats great livinginnky!! Yes, I found out late last night thats its for sure. If I pay the three and dispute the last one which I question in the first place. Then he said I should be home free!!!

I am keeping my fingers crossed....

I will be wrapping up this Monday morning....

I live in the PHX area..... the winters here I can take!!

livinginnky · Posted: Fri Nov 09, 2007 3:13 pm Post subject:

My uncle lives in Phoenix and my father (who just bought an RV) is driving down to live the winter there. You lucky dogs!

Best of luck with everything!

a1sundevilsfan2 · Joined: 01 Nov 2007 Posts: 32 14.61 Dollars($)

Well, I must say that it has been kinda rough the last couple of days. Very Happy

It was over 90!! And the a/c turned on a couple of times... Razz

livinginnky · Posted: Fri Nov 09, 2007 5:16 pm Post subject:

Lol, my heat is starting to kick on here, and the last few years the gas bill hasn't been too kind to us.

All times are GMT - 7 Hours

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