Question on mortgage and old collections

Asked by andrepena1212, Manchester, NH Tue Oct 29, 2013

I have a couple of collections that are from 2009 time frame and am trying to figure out if I need to settle those in order to get a mortgage or not. I've been told the statute on suing me for that debt has run out but it will stay on my credit report for a couple of more years. I understand that it would improve my credit score if I were to pay them off but is that a necessity to get a mortgage? Please advise. My income, averaged over last two years, is around 120k and am interested in the knowing my options.

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Elva Wormley, Mortgage Broker Or Lender, San Jose, CA
Tue Oct 29, 2013
Hi Andre,

Here are Fannie Mae guidelines regarding collections, charge-offs and past due accounts:

•For one-unit, principal residence properties, borrowers are not required to pay off outstanding collections or charge-offs—regardless of the amount.
Note: If the lender marks the collection account Paid By Close in the online loan application, DU will issue a message in the Findings report stating that the collection must be paid.
•For two- to four-unit owner-occupied and second home properties, collections and charge-offs totaling more than $5,000 must be paid in full prior to or at closing.
•For investment properties, individual accounts equal to or greater than $250 and accounts that total more than $1,000 must be paid in full prior to or at closing.

Accounts that are reported as past due (not reported as collection accounts) must be brought current.

You should definitely consult a mortgage professional before paying off any accounts.

Best regards,

Elva A. Wormley
Mortgage Consultant
(408) 615-8500
C2 Financial Corporation
2845 Moorpark Avenue, Suite 209
San Jose, CA 95128
NMLS #331981 / DRE #01274093
1 vote
Scott Godzyk, Agent, Manchester, NH
Sat Nov 2, 2013
Andrea before you reach out to the collection companies, meet with a local and trusted loan officer. If you would like a referral of some good loan officers I can certainly forward their names and numbers. They can pre-qualify you at no cost and let you know what may need to be done if anything. Collection accounts do have time limits on what can be collected depending on what type of debt is. Calling them can start that clock again so wait until you hear from the loan officer what is best. If you would like assistance with the buying process I would be more than happy to help you. Please email me at

Scott Godzyk
Godzyk Real Estate

The #1 Trulia Agent in NH
0 votes
Eric Hall, Agent, Manchester, NH
Tue Oct 29, 2013
Kelly is absolutely right. You should talk with a local lender. I have had good and bad experiences with lenders and mortgage brokers, so if you want some good advice talking with a local Realtor like Kelly or myself is a great place to start. We can point you in the right direction. And it only takes about a 10 minute phone call for a good lender to pull your credit and give you an idea of what size mortgage you can or can't qualify for. The guys I work with are also great at helping you take the right steps to become 'qualified' if you fall short. We can put you on a plan to build up your credit and become a 'qualified' buyer. Call or email me anytime.
Eric Hall
Roxo Realty
(603) 703-6022
0 votes
Kelly Black, Agent, Bedford, NH
Tue Oct 29, 2013

Truly the best way to find out about your credit history and the its impact on receiving a mortgage is to speak with a local lender. After a Mortgage expert reviews your credit report they will be able to see if there is a mortgage program that fits your current situation. I would be happy to point you in the right direction so that you are sure you are getting accurate information. I can be reached via cell at 603-289-3509 or via

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