fred k asked in Business & FinanceCredit · 10 years ago

what is the FHA rules ? can i get this loan if I have collection debt report on my credit history ?

I am about to buy a house and the mortgage person claim that I can not get the FHA loan b/c I have collection report on my credit report , on the other hand , I have to say that credit report also mentioned that the debt will stay in the report up to this september b/c the debt was a dismissed without prejudice and by september 2010 it will be almost 7 years from the time it came in my report , he is trying to push me to hire his friend lawyer and negotiate the debt and pay half of it to be able to get the FHA loan . I do not think that he is honest with me , seems like he is trying to find customer for his friend , I think I have to ask for more time from seller and hopefully I can get the loan b/c base on creditors I will not have this debt on my credit report after september ,but I do not know how to deal with those collector ? somebody told me I can take case to court and change it to dismissed with prejudice the the collectors will be off . please give me an advice. thanks

Update:

I got a credit report from Experian and it mentioned that the collection as NOV 2009 to march 2010 This account is sheduled to continue on record until sep 2010

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  • 10 years ago
    Best Answer

    Mortgage companies will not approve you if you have unresolved derogatory items on your credit report. It has nothing to do with FHA rules or requirements.

    It really makes no difference whether the collector's lawsuit was dismissed with or without prejudice. That has nothing to do with the reporting period which is governed by the Fair Credit Reporting Act (FCRA). Derogatory items age off your credit report 7-1/2 years from the date of first deficiency.

    If the debt is scheduled to age off by Sept, definitely just wait it out. There really isn't anything you can do to remove the item. It really would be a waste of money to hire an attorney to negotiate settlement. You can actually negotiate settlement yourself and do a lot better than half on a debt this old -- you could probably settle it for a $100. BUT it would still take 45 to 60 days for the "settled" update to show. Might as well wait the extra month and pay nothing.

    Source(s): BD
  • Anonymous
    10 years ago

    There is no rule that entitles you to a mortgage loan - you must meet the lender's underwriting standards and unresolved defaulted debts are usually an approval killer. If you'd gotten a lender preapproval first, this wouldn't have been a surprise.

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    10 years ago

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