Collections, Charge Offs, Disputes, Judgments On Credit Reports During Mortgage Process
Income, credit, debts, assets, and liabilities are all factors involved in the whole mortgage application and approval process. Credit, credit scores, and your credit report is what decides whether you qualify and determines whether your mortgage application file will proceed to the next stage, which is mortgage loan processing and mortgage loan underwriting.
Your credit report is initially analyzed by your mortgage loan originator and if there is a problem, the mortgage loan originator and mortgage loan processor will determine whether there is a quick fix or not. Some of the items that will be scrutinized are collections, charge offs, disputes, judgments on your credit report.
Collection Accounts And Charge Offs
Depending on your mortgage lender, collections, charge offs, disputes, judgments on credit reports will not disqualify you from getting a mortgage loan approval. Open collections are allowed as well as charge offs. My wholesale mortgage lenders do not require for open collections to be paid off for FHA insured mortgage loans. Same with charge offs. My wholesale mortgage lenders do not care for charge offs. Credit disputes with credit balances are not allowed under any circumstances and the credit disputes need to be removed in order for your mortgage loan application to move forward.
Credit Repair Program
Many mortgage loan borrowers who enter into a credit repair program dispute all of their derogatory items hoping that the derogatories will be removed from their credit reports. Unfortunately, credit disputes with balances are not allowed in the mortgage application process.
Credit Dispute During Mortgage Process
The dispute either needs to be retracted by the three major credit reporting agencies or the disputed item with a credit balance needs to be paid off in full and the payment needs to be recorded to all three credit reporting agencies before the mortgage application can proceed to the next stage. Credit disputes with zero balances are allowed and you do not need to retract zero balance credit disputes. This requirement is not a mortgage lender overlay. It is a Fannie Mae requirement and part of Fannie Mae’s guidelines.
Judgments And Tax Liens
Judgments and tax liens are probably the most adverse derogatory credit anyone can have on their credit reports next to a bankruptcy and/or foreclosure and many banks and mortgage bankers will not allow or approve a mortgage loan borrower who has an unsatified judgment or tax lien. Fortunately, I have wholesale mortgage lenders that do allow mortgage loan borrowers who has a judgment and/or tax lien on their credit report. However, the mortgage loan borrowers needs to have a repayment agreement in place and have had a record of paying the judgment creditor and/or the Internal Revenue Service a two month history which needs to be proven by two months cancelled checks. As long as the payment agreement and a two month payment history has been established, I can provide you with a mortgage loan approval and can proceed to the next stage of your mortgage loan approval process.