Jump to content

Please consider disabling your adblocker for CreditBoards if you have not already done so.  This site depends on advertising revenue to stay online.


Sign in to follow this  

Mortgage company is forcing me to close accounts

The last post in this topic was posted 1988 days ago. 

 

We strongly encourage you to start a new post instead of replying to this one.

Recommended Posts

I've called each credit card company and I've tried having them just suspend the account and send out a "closed" letter to the lender since the lender won't be pulling credit again, but they aren't willing to do that.

 

I would go to another lender, but the seller won't accept another extension at this point and like I said, I don't want to lose the property.

Share this post


Link to post
Share on other sites

I've called each credit card company and I've tried having them just suspend the account and send out a "closed" letter to the lender since the lender won't be pulling credit again, but they aren't willing to do that.

 

I would go to another lender, but the seller won't accept another extension at this point and like I said, I don't want to lose the property.

 

If I were you I'd just do it. Your credit won't suffer to any significant degree since you PIF and have small balances reporting. The lost credit cards are mouse nuts compared to getting the home you want.

Share this post


Link to post
Share on other sites

That is absolutely insane. I wouldn't go with them if they were the last lender in the world. What they are doing might even be illegal for telling you to do this.

 

Find another company.

Share this post


Link to post
Share on other sites

Like others here, I advise you to consent to the close, but not without an adequate explanation of what the underwriter looks to achieve (and possibly exploring with the underwriter alternatives).

 

I've been through 6 mortgages/refinances in the last 20+ years and have never encountered a request such as this. This includes loans with WF and DCU. For reference sake, my wife and I have $700k in combined open revolvers (with income less than half that).

 

Banks usually just care about DTI and utilization ratios. Closing PIF accounts doesn't help there.

 

Is there any chance that you're pushing up against permissible debt ratios (e.g. 28%/36%). If so, there's a chance that the underwriter is including reported minimum payments on those PIF accounts and sees closure as a "workaround". Most are willing to ignore such reporting provided you show evidence that you PIF each month.

Share this post


Link to post
Share on other sites

Like others here, I advise you to consent to the close, but not without an adequate explanation of what the underwriter looks to achieve (and possibly exploring with the underwriter alternatives).

 

I've been through 6 mortgages/refinances in the last 20+ years and have never encountered a request such as this. This includes loans with WF and DCU. For reference sake, my wife and I have $700k in combined open revolvers (with income less than half that).

 

Banks usually just care about DTI and utilization ratios. Closing PIF accounts doesn't help there.

 

Is there any chance that you're pushing up against permissible debt ratios (e.g. 28%/36%). If so, there's a chance that the underwriter is including reported minimum payments on those PIF accounts and sees closure as a "workaround". Most are willing to ignore such reporting provided you show evidence that you PIF each month.

It has to do with DTI: they've been counting the minimum payments on these PIF accounts towards DTI. I was just going to PIF again and provide proof of payment, but that won't satisfy them. The loan officer originally thought we could just PIF and then provide proof, but because they excluded those cards from the DTI in the initial approval, they want them closed as "hard evidence"

Share this post


Link to post
Share on other sites

True, those accounts having a balance on them even if PIF when due can nuke your DTI more than one thinks.

 

This is one time where I advise pay before cut, in addition to that whole FICO optimization thing as you are requesting credit (And a LOT of it!)

Share this post


Link to post
Share on other sites

 

Like others here, I advise you to consent to the close, but not without an adequate explanation of what the underwriter looks to achieve (and possibly exploring with the underwriter alternatives).

 

I've been through 6 mortgages/refinances in the last 20+ years and have never encountered a request such as this. This includes loans with WF and DCU. For reference sake, my wife and I have $700k in combined open revolvers (with income less than half that).

 

Banks usually just care about DTI and utilization ratios. Closing PIF accounts doesn't help there.

 

Is there any chance that you're pushing up against permissible debt ratios (e.g. 28%/36%). If so, there's a chance that the underwriter is including reported minimum payments on those PIF accounts and sees closure as a "workaround". Most are willing to ignore such reporting provided you show evidence that you PIF each month.

It has to do with DTI: they've been counting the minimum payments on these PIF accounts towards DTI. I was just going to PIF again and provide proof of payment, but that won't satisfy them. The loan officer originally thought we could just PIF and then provide proof, but because they excluded those cards from the DTI in the initial approval, they want them closed as "hard evidence"

 

If that was the case, you should have paid off all those card before the statement cut date and let one card report with $10 or so.

 

That would have given you all the leverage you need and should have increased your score.

 

I used my cards regularly during mortgage process, but I had less then 3% of DTI and like others I have very high limits.

Share this post


Link to post
Share on other sites

Ah, I understand finally. As mentioned above, you should have paid off those accounts to $0 before the statements cut so that there was no minimum payment.

Share this post


Link to post
Share on other sites

Hindsight is, of course, 20/20. I feel for you cb.

 

Understand the squeeze you're in. Closing seems the best remedy, as regrettable as it is.

 

I suggest naming the bank involved, because it's certainly seems to be one to avoid at all costs. I know, with my lenders, at most all I've had to prove prior to closing is that the accounts in question had their most recent statement paid in full.

 

Everyone typically brings balances to a mortgage app which represent monthly "transaction" balances that are PIF each month. Until now, I've never been aware that a lender would be so blind in their insistence on including such accounts in the DTI ratios. (I can't help but feel you got stuck with a very inexperienced underwriter, unless something has really changed in the guidelines since I refinanced in 2012.)

Share this post


Link to post
Share on other sites

Ah, I understand finally. As mentioned above, you should have paid off those accounts to $0 before the statements cut so that there was no minimum payment.

You win this round, sir. :)

Share this post


Link to post
Share on other sites

I've had Equifax drop closed trade lines long before 10 years more like 7 but that is beside the point. This sounds pretty unusual to me after all we're only talking about 11K available credit? I closed with a bank last April Suntrust to be specific and the issue of available credit never came up. I put down 60% of the purchase price so this might have been the reason I sailed. You putting down the minimum?

Share this post


Link to post
Share on other sites

$2300 on Discover with a $2 balance (which is my very oldest tradeline)

 

 

When I closed my Discover card 9 years ago, they said I could reopen the account if I called back within a certain period. I can't remember exactly how much time I had, but it was something like 30 or 60 days. I wonder if that's still the case?

 

Closing your oldest account means that when your Discover card falls off your report, your credit history will start with the next oldest account. In the future, your reports won't reflect how long you've actually had credit because they will only start with the oldest account still on your report.

 

Also, most of my closed accounts fell off my reports after only 6-8 years. I don't think I've ever had any stay on record the full 10 years.

Share this post


Link to post
Share on other sites

With your credit scores, it sounds like you weren't in as tough as a boat as some of us were to get a mortgage (myself included); keeping that in mind - if i were in your shoes, if it is just you and your wife, no children - same situation - I'd walk away from the mortgage; you can live in apartment or whatever until you find the right financing that is right for you and does make you hurt yourself to get that financing.

 

if however you have children and you need this house now for any number of reasons, and you have in writing that they will not change the terms on the loan or repull your credit as you mention above, then go with it. But that's crappy.

 

If i was in the same boat, but no kids... just me and my wife, i'd tell them to stick it and walk away.

Share this post


Link to post
Share on other sites

 

$2300 on Discover with a $2 balance (which is my very oldest tradeline)

 

 

When I closed my Discover card 9 years ago, they said I could reopen the account if I called back within a certain period. I can't remember exactly how much time I had, but it was something like 30 or 60 days. I wonder if that's still the case?

 

Closing your oldest account means that when your Discover card falls off your report, your credit history will start with the next oldest account. In the future, your reports won't reflect how long you've actually had credit because they will only start with the oldest account still on your report.

 

Also, most of my closed accounts fell off my reports after only 6-8 years. I don't think I've ever had any stay on record the full 10 years.

 

 

If you were ever late, even once, it's possible that the TL will be considered negative and drop off after 7 years. It's not supposed to, but it could happen, I guess. :dntknw:

Share this post


Link to post
Share on other sites

I've done 3 mortgages in my life, and had open credit card accounts with balances, and the lender never asked me to close them. What Homestreet Bank is doing to the OP is ludicrous.

Share this post


Link to post
Share on other sites

 

 

$2300 on Discover with a $2 balance (which is my very oldest tradeline)

 

 

When I closed my Discover card 9 years ago, they said I could reopen the account if I called back within a certain period. I can't remember exactly how much time I had, but it was something like 30 or 60 days. I wonder if that's still the case?

 

Closing your oldest account means that when your Discover card falls off your report, your credit history will start with the next oldest account. In the future, your reports won't reflect how long you've actually had credit because they will only start with the oldest account still on your report.

 

Also, most of my closed accounts fell off my reports after only 6-8 years. I don't think I've ever had any stay on record the full 10 years.

 

 

If you were ever late, even once, it's possible that the TL will be considered negative and drop off after 7 years. It's not supposed to, but it could happen, I guess. :dntknw:

 

I've never been late or had any derogs ever. After I posted this, I checked my reports. The 6 year old Discover card that I closed in 2006 fell off my reports in 2014. But that's just one example out of at least a dozen.

Share this post


Link to post
Share on other sites

 

 

 

$2300 on Discover with a $2 balance (which is my very oldest tradeline)

 

 

When I closed my Discover card 9 years ago, they said I could reopen the account if I called back within a certain period. I can't remember exactly how much time I had, but it was something like 30 or 60 days. I wonder if that's still the case?

 

Closing your oldest account means that when your Discover card falls off your report, your credit history will start with the next oldest account. In the future, your reports won't reflect how long you've actually had credit because they will only start with the oldest account still on your report.

 

Also, most of my closed accounts fell off my reports after only 6-8 years. I don't think I've ever had any stay on record the full 10 years.

 

 

If you were ever late, even once, it's possible that the TL will be considered negative and drop off after 7 years. It's not supposed to, but it could happen, I guess. :dntknw:

 

I've never been late or had any derogs ever. After I posted this, I checked my reports. The 6 year old Discover card that I closed in 2006 fell off my reports in 2014. But that's just one example out of at least a dozen.

 

 

That blows.

Share this post


Link to post
Share on other sites

OP,

 

I have done mortgages for many years. Without getting into the details and the reasons, your best option is to ask the loan officer to contact the underwriter and ask them to waive this closure conditions. AND you will pay these cards in FULL prior to COE and provide proof with paper trail. I am sure they will go for it.

Edited by JohnWilkers

Share this post


Link to post
Share on other sites

Sorry for your troubles.

 

I've expressed this opinion before - open trade lines are seen as a liability by more and more loan issuers. The market, and economy, are about to go through a correction (just wait until the Fed starts raising interest rates in September), and this will become more commonplace. I've had this corroborated by friends working in retail finance for big banks. Just be careful.

Share this post


Link to post
Share on other sites

Sorry for your troubles.

 

I've expressed this opinion before - open trade lines are seen as a liability by more and more loan issuers. The market, and economy, are about to go through a correction (just wait until the Fed starts raising interest rates in September), and this will become more commonplace. I've had this corroborated by friends working in retail finance for big banks. Just be careful.

 

Bunch of Baloney.. open trade lines do not equal debit. It is just the paranoia of the banks or the salamanderic bankers who just care about squeezing the common man.

Share this post


Link to post
Share on other sites

just wait until the Fed starts raising interest rates in September

HAHA!

 

Just like they've been hinting at for years?

 

I can't believe people actually still buy the BS they sell.

Share this post


Link to post
Share on other sites

If OP is dealing with Homestreet Bank and mentioned "a tough market," that means he or she is probably buying in the Puget Sound area. Y'all are seriously underestimating how hard it is to buy property up here right now and I'm a bit surprised that the seller went along with even a single extension since it's not uncommon here to have all-cash offers being made at the first open house. (Assuming an open house is held at all and the listing agent doesn't just toss the house up on MLS and let the faxes roll in.) I bought my house in Seattle towards the end of 2013 and still get a couple of business cards per month from REALTOR agents asking if I'm interested in selling so they'll have some inventory to list. It's a sizzling hot market, especially in or directly adjacent to the city.

 

OP, if this is what you have to do to buy the house you want and you're otherwise OK with the deal, take it and move on. You can always open new cards if you like.

Share this post


Link to post
Share on other sites

 

Sorry for your troubles.

 

I've expressed this opinion before - open trade lines are seen as a liability by more and more loan issuers.

 

Bunch of Baloney.. open trade lines do not equal debit. It is just the paranoia of the banks or the salamanderic bankers who just care about squeezing the common man.

 

 

To clarify, per OP, this is not about open trade lines ... it's about tradelines showing a balance and minimum payment (despite the fact that the balance is PIF monthly). Lender says they won't exclude the stated minimum payment from the DTI retio short of closure.

Share this post


Link to post
Share on other sites

Everything old is new again, it seems. I got a mortgage in 1982 (at the prevailing rate of 12%) but was required by the bank to close two of my three CC, and one bank LOC as a condition. The issue was not DTI, my credit history or anything like that. It seems the bank was afraid I would immediately launch a renovation of the co-op I was buying and rack up debt. Renovating a new co-op purchase was, and is, a very common practice of buyers in NYC. Nevertheless I thought it was nutsy reasoning by the bank, but getting a mortgage in those times was not as easy as it later came to be and I did not want to start the process over again.

What I did: I closed the cards as requested, but when I did I told the issuers why I was doing it. I got both re-opened/reissued--not sure which--a few months after closing.

Share this post


Link to post
Share on other sites

The last post in this topic was posted 1988 days ago. 

 

We strongly encourage you to start a new post instead of replying to this one.

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  




  • Member Statistics

    • Total Members
      179,978
    • Most Online
      2,046

    Newest Member
    jgreen11
    Joined

About Us

Since 2003, creditboards.com has helped thousands of people repair their credit, force abusive collection agents to follow the law, ensure proper reporting by credit reporting agencies, and provided financial education to help avoid the pitfalls that can lead to negative tradelines.
×
×
  • Create New...

Important Information

Guidelines