FHA and Collections

Hi,

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

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

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?

Hi,

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

Thanks,
Larry

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.

Also is this a purchase or refinance situation?

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!!

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?

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!!

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!

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


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

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