student loans in collections but paid in full / No FHA loan??

Asked by Sweetnmean1, Statesville, NC Wed Jul 13, 2011

Called Bank of America cause someone told me they worked with anyone. I got a wild hair and allowed them to pull my credit. He said I wasn't far from the minimum requirement, but my student loans will automatically disqualify me from an FHA loan. so after 6 yrs of not being able to pay the loan, I finally get it paid in full, and now I'm gonna spend forever waiting on a lender to allow me to provide my children a decent home. I saw an answer from Daniel Fisher (agent in Charlotte,NC) But didn't reply cause I knew if I did, I would lower my score again allowing him to pull my credit and say the same thing that everyone else has. By the time I can purchase a home, my 2 oldest children will have never had a decent stable home to live in. Owner financing? Out of the question. Daniel fisher if you read my profile (about me) you'll understand why I didn't call. Any ideas anyone?

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Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Thu Jul 14, 2011
I'm not sure what type of advice you've received so far, but a paid student loan that was once in collection doesn't disqualify you for FHA per se. I take it you didn't rehab the student loan? Because if you did then often after making all of the rehab payments they retroactively remove prior late payments. If the student loan went to collection within 12 months then that is likely the issue, because with the exception of medical collections, any late payments or new delinquent accounts (collections, charge-offs, judgments, tax liens, etc.) within the past 12 months is almost always a killer for FHA financing if there is a repeated pattern.

If your credit has been clean for 2 years (like you indicated in your profile that you've been cleaning up your credit for 2 years - so I am hoping in the process of cleaning old things up there weren't new late payments & delinquent items popping up), and you've had at least 12 months of on time payments, then you should have a good shot at FHA financing as long as your debt ratio works out... collections recently paid included (it's not when the collection is paid, it's when the account went to collection).

"so after 6 yrs of not being able to pay the loan, I finally get it paid in full, and now I'm gonna spend forever waiting on a lender to allow me to provide my children a decent home" - that attitude needs to improve. It's not a lender you are waiting on, one isn't going to pop up out of nowhere - you have to find one. It stinks when you don't have the best credit and you need to get a mortgage, I see it every day, but you just need to keep plugging along and make it happen for yourself. It's great you got the confidence to contact Bank of America, and you probably didn't know, but calling up bank and getting a random loan officer isn't going to get the job done (one of the worst ways to find a good loan officer, just calling a company and getting someone random), you had Daniel Fisher extending help, however from his resume, even though he's done practically everything in the real estate industry, it doesn't look like he has extensive residential lending/underwriting experience so you'd want to get an *individual* loan officer recommendation from him and not just another name of a bank.
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