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Looking to buy in 2016, need advice - charge offs


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I am looking to buy in 2016. I have ~$30k saved at the moment, intend on buying in the $350-$425k range.

 

I have a 20k charge off outstanding from 2010 - lost my job at the time. I also have settled a $10k charge off from 2010 for less than the face amount.

 

I also own a property that I am currently renting (owe $74k, worth around $100k). I have never missed a payment on it.

 

My scores are in the 680-700 range.

 

My wife had a chapter 7 in 2010 as well, but she has no current source of income (stay at home mom).

 

I make $200k+ a year.

 

I am basically looking for advice on the following:

 

Should I wait until 2017 for the charge off to fall off of my reports? The SOL is 5 years, and I am NOT paying $20k that I have no legal obligation to pay. Even after it falls off, will it still show up somehow for a mortgage underwritter, so that they could still demand that it be paid?

 

Are there specific mortgage companies that won't require charge-offs to be paid? An underwriter telling me that it must be paid is basically a non-starter for me.

 

Should I sell my rental? I am not getting good income on it - management company can't keep a current tenant, so it is a cash drain at the moment. How would selling the rental affect my scores and prospects of qualifying for a mortgage? This home was originally my first home, but I moved and it is now a rental.

 

One more thing: Equifax is still reporting the charge-off as open and it was recently re-reported to the credit bureaus, as a scumbag collection agency keeps calling me at work in violation of the FDCPA. Is it worth it to send in a letter to Equifax to try to get it reported as closed? It is showing horrible utilization because it is still being reported as 'open.'

 

Thanks!

 

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If you want a mortgage, you're going to have to pay it, settle it, or wait until it falls off. And technically you do have a legal obligation to pay it off, until the SOL.

 

If you're pulling over 200k a year, there's no reason you can't come up with a 50-75% offer to settle. Some have even had success settling for 30% or less.

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  • 4 weeks later...

I am looking to buy in 2016. I have ~$30k saved at the moment, intend on buying in the $350-$425k range.

 

I have a 20k charge off outstanding from 2010 - lost my job at the time. I also have settled a $10k charge off from 2010 for less than the face amount.

 

I also own a property that I am currently renting (owe $74k, worth around $100k). I have never missed a payment on it.

 

My scores are in the 680-700 range.

 

My wife had a chapter 7 in 2010 as well, but she has no current source of income (stay at home mom).

 

I make $200k+ a year.

 

I am basically looking for advice on the following:

 

Should I wait until 2017 for the charge off to fall off of my reports? it might help your scores The SOL is 5 years, and I am NOT paying $20k that I have no legal obligation to pay. Even after it falls off, will it still show up somehow for a mortgage underwritter, not if it isnt on the reports or hasnt turned into a judgment so that they could still demand that it be paid?

 

Are there specific mortgage companies that won't require charge-offs to be paid? some do, some dont. the loan officer you call will know their policies. An underwriter telling me that it must be paid is basically a non-starter for me.

 

Should I sell my rental? I am not getting good income on it - management company can't keep a current tenant, so it is a cash drain at the moment. How would selling the rental affect my scores and prospects of qualifying for a mortgage? This home was originally my first home, but I moved and it is now a rental.

 

One more thing: Equifax is still reporting the charge-off as open and it was recently re-reported to the credit bureaus, as a scumbag collection agency keeps calling me at work in violation of the FDCPA. Is it worth it to send in a letter to Equifax to try to get it reported as closed? It is showing horrible utilization because it is still being reported as 'open.'

 

Thanks!

 

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  • 1 year later...

OK, So I'm ready to buy - trying to get this charge off removed this month. I now have $45k, will be 50k by the time that I buy.

 

Quick question - if I can get the 20k charge off removed (due to 7+ years on), will a mortgage company still pull the complete file and refuse to lend without paying it off? I am well past the SOL, and I am not paying it.

 

Also, can anyone recommend a lender that has reasonable requirements for a Jumbo loan? I am hoping to buy a place listed for $539k, but will probably get it down to $510k. That leaves me with a $460k non-conforming. I don't have reserves, but my income is $270k. I doubt I can get a seller second to make it conventional.

 

This is for Illinois. Also, I'll be a RE broker by the time I close.

 

Thanks!

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We are in the process of a jumbo VA loan in California and they are not requiring us to payoff a chargeoff. My hubby has one from 2012. We tried everything to get it removed and tried to settle with Target/TD Bank and they would not budge. But it was not one of the conditions to close and they never said a word about it. It was $6K.

Edited by lulu1972
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OK, So I'm ready to buy - trying to get this charge off removed this month. I now have $45k, will be 50k by the time that I buy.

 

Quick question - if I can get the 20k charge off removed (due to 7+ years on), will a mortgage company still pull the complete file and refuse to lend without paying it off? if you get it off.... we wont see it I am well past the SOL, and I am not paying it.

 

Also, can anyone recommend a lender that has reasonable requirements for a Jumbo loan? I am hoping to buy a place listed for $539k, but will probably get it down to $510k. That leaves me with a $460k non-conforming. I don't have reserves, but my income is $270k. I doubt I can get a seller second to make it conventional.

 

This is for Illinois. Also, I'll be a RE broker by the time I close.

 

Thanks!

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  • 2 weeks later...

​Very similar journey here. working on getting those 2010/2011 charge offs off the report. I also have EX reporting two OPEN and the simulators suggesting I pay them down.. I have zero debt today

 

​the lenders I called didn't seem concerned with the old charge offs.

 

​Good luck with the purchase lets us know how it goes, congrats on the broker license :)

Edited by mycorrado
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