14 replies to this topic

[helpmewithcredit]

I just talked to a mortgage lender about the new FHA guidelines (coming April 1, 2012). What we were told is that in order to get a mortgage, all old collections will have to be paid IF you apply AFTER April 1 (before you can close on the mortgage). In our case, we have ALOT in $ amount in old loans/collections. Does this mean we are screwed???

Here's the breakdown (all older than 3 yrs):
Auto loan - $16k CO
Line of Credit - $15k CO
Credit Card - $3k CO
Credit Card - $2500 CO

UPDATE: Found more specifics:
1) GOOD: if there are items on the credit report that are in dispute status or items that are in excess of $1000 combined and are less than two years old, you are no longer automatically disqualified.
2) BAD: if the borrowers have collection accounts that exceed $1000.00 they must all be resolved, paid in full, or a payment agreement established with a minimum of three months of timely payments.
http://highlifecredi...g-april-1-2012/

Is this going to change the way we have to work this process of improving our credit??? In my case, I'm desperate to buy a house. So, now what? Get on a payment plan???

Edited by helpmewithcredit, 22 March 2012 - 12:58 PM.

[jop3]

With the amounts of the collections you posted, you likely would have had an issue regardless of the new guidelines. Most lenders will not allow collections that large to go unresolved.

Yes, if you want to buy before the collections fall off the report, then you'll have to pay them - either in full or get on a payment plan.

[helpmewithcredit]

With the amounts of the collections you posted, you likely would have had an issue regardless of the new guidelines. Most lenders will not allow collections that large to go unresolved.

Yes, if you want to buy before the collections fall off the report, then you'll have to pay them - either in full or get on a payment plan.

Wow, it's going to be a MUCH longer process then I originally anticipated.

[fumduck]

EVERY CONSUMER NEEDS TO WRITE & COMPLAIN TO THE POWERS THAT BE OVER THIS, IT IS ABSOLUTELY RIDUCLOUS. THIS IS NOT WHAT THE ECONOMY NEEDS....AS USUAL, THE INDUSTRY IS OVERREACTING TO THE MORTGAGE MESS.

[tiggerlgh]

EVERY CONSUMER NEEDS TO WRITE & COMPLAIN TO THE POWERS THAT BE OVER THIS, IT IS ABSOLUTELY RIDUCLOUS. THIS IS NOT WHAT THE ECONOMY NEEDS....AS USUAL, THE INDUSTRY IS OVERREACTING TO THE MORTGAGE MESS.

First this is FHA loans so not the mortgage industry but the US Government. Secondly, FHA already allows the lowest downpayment, so they are still one of the best deals out there only requiring 3.5% down. Thirdly would you like to lend 100's of thousands of dollars to someone who fairly recently defaulted on debt and didn't pay it back but now wants a house. This is just good business sense and has the FHA protecting their liens. I know it may suck for some but its a smart move.

Edited by tiggerlgh, 22 March 2012 - 09:12 PM.

[helpmewithcredit]

EVERY CONSUMER NEEDS TO WRITE & COMPLAIN TO THE POWERS THAT BE OVER THIS, IT IS ABSOLUTELY RIDUCLOUS. THIS IS NOT WHAT THE ECONOMY NEEDS....AS USUAL, THE INDUSTRY IS OVERREACTING TO THE MORTGAGE MESS.

First this is FHA loans so not the mortgage industry but the US Government. Secondly, FHA already allows the lowest downpayment, so they are still one of the best deals out there only requiring 3.5% down. Thirdly would you like to lend 100's of thousands of dollars to someone who fairly recently defaulted on debt and didn't pay it back but now wants a house. This is just good business sense and has the FHA protecting their liens. I know it may suck for some but its a smart move.

While I understand why you just said that, what about those in circumstances beyond their control (when the economy dumped a bunch of people off the payroll)? In our situation, my husband went jobless for 5 months and when he got a job, it was an hour away. This was AFTER I decided to stay home with my cousin's children that came into state custody (we eventually adopted). The state didn't pay us for 6 months during this time. We almost lost it all, but because we sold EVERYTHING but the kitchen sink, we managed to save our house. We sold our nice, paid off vehicles that had good value and bought JUNK. We sold our very nice furniture and bought JUNK. This gave us the income to pay our mortgage and put food on the table. We COULD have gotten food stamps/welfare but refused because we didn't want to become dependent on the government. It was the worst time of my life. So, we literally could NOT pay when we wanted to. We had good credit before this happened. And because job choices have been limited, my husband was forced to take the transfer offered to him which then took us OUT of our house. Another blow since our house was built in 2003 and we are now living in a 70's rental while someone else rents our house. Should EVERY case be treated the same no matter what the situation? I shouldn't be able to buy a house now? Just feels like I'm in a nightmare prison.

[jst300z]

and we are now living in a 70's rental

There are thousands, if not tens of thousands of people right now that would love to have a rented roof over their head.

With a bit of focus and the helpful people over on the credit forum, you could be debt free in a year or two and then be ready to buy yourself a home.

[helpmewithcredit]

and we are now living in a 70's rental

There are thousands, if not tens of thousands of people right now that would love to have a rented roof over their head.

With a bit of focus and the helpful people over on the credit forum, you could be debt free in a year or two and then be ready to buy yourself a home.

In a year OR two? Beside the fact that I can't come up with that kind of money even in a year or two means the ONLY way for it to happen is to break the lease with my tenants and put our house on the market AND if the tenants bail, move back into my house (since I can't afford a mortgage and rent) WHILE trying to sell my house, take that money we make from the sale and pay the bills and HOPE by that point the scores are high enough to get approved so I can then MOVE BACK here and buy a house. Otherwise, there's NO HOPE of getting these old debts paid.

Well, this sounds fun! I just wish they'd transfer my husband back so we could move home and be done and I wouldn't have to worry about all of this (right now). I could slowly rebuild our credit over time and if wouldn't be taking this emotional toll on me daily.

While you state that some people would love to have a place to rent, that doesn't make me feel better at all. I worked hard for a LONG time only to have it all stripped away. So, sorry if I don't want to celebrate living in this old house that doesn't fit our family's needs at all.

And I know I'm sounding snarky, it's just I'm feeling SO trapped and helpless. I thought I had just spent a year working on this only to find out there's no way anytime soon I'll be able to buy anything. It's quite a blow.

Edited by helpmewithcredit, 23 March 2012 - 02:41 AM.

[jaided]

and we are now living in a 70's rental

There are thousands, if not tens of thousands of people right now that would love to have a rented roof over their head.

With a bit of focus and the helpful people over on the credit forum, you could be debt free in a year or two and then be ready to buy yourself a home.

In a year OR two? Beside the fact that I can't come up with that kind of money even in a year or two means the ONLY way for it to happen is to break the lease with my tenants and put our house on the market AND if the tenants bail, move back into my house (since I can't afford a mortgage and rent) WHILE trying to sell my house, take that money we make from the sale and pay the bills and HOPE by that point the scores are high enough to get approved so I can then MOVE BACK here and buy a house. Otherwise, there's NO HOPE of getting these old debts paid.

Well, this sounds fun! I just wish they'd transfer my husband back so we could move home and be done and I wouldn't have to worry about all of this (right now). I could slowly rebuild our credit over time and if wouldn't be taking this emotional toll on me daily.

While you state that some people would love to have a place to rent, that doesn't make me feel better at all. I worked hard for a LONG time only to have it all stripped away. So, sorry if I don't want to celebrate living in this old house that doesn't fit our family's needs at all.

And I know I'm sounding snarky, it's just I'm feeling SO trapped and helpless. I thought I had just spent a year working on this only to find out there's no way anytime soon I'll be able to buy anything. It's quite a blow.

I hear exactly what you're saying! I was right there myself! We went through the whole thing. Husband getting laid off with a child on the way, neither of us being able to find work, zero income, bills piling up, an uncertain future (what a desperate feeling!!!), all of us having to move in with my sister (which was NOT a pleasant experience but thankfully we had that option!), making daily decisions about whether to pay the car payment or health insurance or groceries. My husband eventually found some menial job about ten pay grades below his former job just to pay the most basic bills (and that's LITERALLY all it paid). It was NOT a fun experience and I have a hard time even thinking back to that year of our lives (and thankfully it was only a year). We went from having everything we could ever want to having nothing. What an eye-opener. And, yes, our credit suffered for it in a huge way.

I hear what you're saying about not wanting to hear how good you have it vs. how bad it COULD be (and unfortunately, yes it could get worse and does for a lot of people - even at our worst, we still had it better than soooo many people in the world and I tried not to ever lose sight of that). But, all you want right now is a way out. It's the most trapped (perfect word!), horrible feeling in the world. But, what kept me going was the idea that I knew that our lives were not going to stay like that forever. And they haven't - we both have great jobs now and things are looking up. Granted, we now live in a TINY place (much too small for our needs and I mean MUCH) and we need to buy something soon, but I can see the light at the end of the tunnel. Hopefully you can too. Sometimes it's just a matter of forming (and sometimes re-forming) your plan to get there and trying not to get too overwhelmed at the big picture. In other words, this too shall pass.

Specifically to your situation, would it be possible to enter into some payment plans with your bills while you search for a place? Three months may be what it takes to find the right place anyway.

I know this was a huge blow to you, but even this can get worked out and worked around. Just keep remembering that it's not going to be this way forever and, one day, your kids will realize the sacrifices that you made and maybe it will help them to realize that you can get through even the hardest situations and be better for it in the end.

By the way, I hope I don't sound too cheerful - I know that's not what you need right now! Lol. Just remember that there are thousands of us right where you were and are and worse. You're not in it alone and you won't be here forever.

[helpmewithcredit]

I guess my problem is that when I set up a deadline for myself, I expect to meet it. Not only is that not happening, there is no certain deadline I can make for the future now. When we moved out of our house, I told my husband 1 year. It's over that already and we are still in a rent situation. I feel like a nomad when I rent. I guess the permanency of buying makes me feel like my kids have a home and that their school is THEIR school. My 1st grader has been in 3 schools now due to leaving our home. And the fact I dislike this house we are renting so much that I'm certain I want to move when this lease is up. If I do that, does that mean school #4 and then buying will mean another school? This wouldn't be as horrible if I didn't have kids I was taking on the ride here. I have another child entering the school system in the fall and two more the year after. So, this is VERY important to me to find a permanent home for us so they don't have to move every year to a new school. The house we are in is a 3bed/2bth. Fortunately, there is a bonus room which one child shares with the playroom. But, I have a child in the master bedroom too because we are out of space. Being that I stay home all day everyday, I feel like it's definitely something that is more in my face all the time with the lack of space.

I realize there are people in worse situations. It's just hard because the only life I live is mine and I'm in the middle of this gigantic mess. I am thankful that the student loans have been rehabilitated and the federal lien withdrawn. I guess I just had very high hopes with those gone that the scores would be high enough. YET, as someone pointed out, the other 2 biggies look like flashing red signs since they are in the SOL still. I guess a payment play is ALL I can do. We barely make it now. A payment plan will make our lives even more difficult. The hole just seems so deep sometimes, but I guess I have no other choice but to keep climbing and hope for the best. I just don't recover from such blows for a while. That was a big one for me.

Just wondering if anyone knows....what about other loan options like Homepath (Fannie Mae)? What about USDA Rural Loans? Are they going to have the same guidelines or is there a possibility of getting around paying everything using one of these loans?

Edited by helpmewithcredit, 23 March 2012 - 11:35 PM.

[helpmewithcredit]

Just wondering if anyone knows....what about other loan options like Homepath (Fannie Mae)? What about USDA Rural Loans? Are they going to have the same guidelines or is there a possibility of getting around paying everything using one of these loans?

I looked up Homepath and found 640 credit rating to qualify. Then, I called USDA and got the same answer 640, but they seemed like it was so heavily based on the score, that they wouldn't care about old debts.

[Brian B The Loan Professor]

I dont want you to get your hopes up - I agree with Danielle on this with that much in outstanding collections it is highly unlikely that any bank will finance a major loan (mortgage) with these out there. It doesnt matter what the guidelines say it is what the banks see as a prudent investment. If there is a chance that any of these can become a lien on the property lowering the value of their colattoral and putting them behind these liens when it is time to get paid back.

[helpmewithcredit]

I dont want you to get your hopes up - I agree with Danielle on this with that much in outstanding collections it is highly unlikely that any bank will finance a major loan (mortgage) with these out there. It doesnt matter what the guidelines say it is what the banks see as a prudent investment. If there is a chance that any of these can become a lien on the property lowering the value of their colattoral and putting them behind these liens when it is time to get paid back.

I will keep that in mind. Some are saying that if the OC show a $0 balance with the balance "written off" or "Charged off" and NO CA showing up on the report, then what do I owe and who do I pay? Many times the OC won't take a payment at that point. Does that change anything?

[Brian B The Loan Professor]

yes it would depend on how it shows on report

[helpmewithcredit]

yes it would depend on how it shows on report

Okay, that's good because 3 of the 4 don't have CA and 1 of the OC shows a zero balance. So, now to get the CA off for one of them, and 3 to show $0 balance. At least that's a start in the right direction I hope.