Author Topic: About to close on a new home and surprised by medical collection  (Read 77 times)

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Biscuits

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Hello all,

I am currently in the process of securing a mortgage loan with closing expected at the end of August or in early September (we are building our first home). Unfortunately, last week I was surprised by a $1000 medical collection account that was placed with two of three credit bureau. Despite having an otherwise clear credit report, nothing in collections or past delinquent payments, my credit scores dropped an average of 35 points. At this time, I have not received any collections notice from the credit collector.

I'm quite unsure about what to do; I want to clear this immediately. The house for my family and $20,000+ that I've already put down as down payment on the line. Should I negotiate to pay in full in exchange for removal of any and all information regarding this alleged debt off my credit report? Dispute? Time is of the essence for me. I need to square this away ASAP as to not jeopardize this mortgage loan.

Please forgive me if I am behind the curve with the terminology or basics regarding credit repair. I have not had to deal with this in the past, but I am deeply appreciative of any and all advice and help offered by the wise members of this board.

Thank you!

excelsior

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Re: About to close on a new home and surprised by medical collection
« Reply #1 on: June 13, 2016 01:36:20 PM »
Hello all,

I am currently in the process of securing a mortgage loan with closing expected at the end of August or in early September (we are building our first home). Unfortunately, last week I was surprised by a $1000 medical collection account that was placed with two of three credit bureau. Despite having an otherwise clear credit report, nothing in collections or past delinquent payments, my credit scores dropped an average of 35 points. At this time, I have not received any collections notice from the credit collector.

I'm quite unsure about what to do; I want to clear this immediately. The house for my family and $20,000+ that I've already put down as down payment on the line. Should I negotiate to pay in full in exchange for removal of any and all information regarding this alleged debt off my credit report? Dispute? Time is of the essence for me. I need to square this away ASAP as to not jeopardize this mortgage loan.

Please forgive me if I am behind the curve with the terminology or basics regarding credit repair. I have not had to deal with this in the past, but I am deeply appreciative of any and all advice and help offered by the wise members of this board.

Thank you!
If time is the critical factor, I would cut to the chase and call the medical collection agency (CA) and ask them to fax me or email me an itemized bill.  I would then look over that bill very carefully.  Did you have health insurance?  Did the insurer cover any of these expenses?  Were the services even provided that the CA claims? 

If the mortgage/home is in jeopardy, you could always pay the ransom but I would want to make sure the item was deleted from all 3 bureaus.  I think if you had some correspondence from the CA showing that you paid the item, you could probably give that to the loan officer and satisfy any concerns.  They could also try to do rapid-rescoring if the FICO is borderline.

I would call all 3 bureaus today and order hard copy reports from each (these MUST be mailed to you by each credit bureau--online printouts will not work).  If this stunt caused your interest rate to rise, I would document it.  After the home closing, I would be looking to go after the collection agency to help me with buying some new furniture for that home.

Bruno the JDB Killer

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Re: About to close on a new home and surprised by medical collection
« Reply #2 on: June 13, 2016 01:37:07 PM »
Just pay it, you can ask for a delete, but they do not have to give you one. Paid collections should not affect a mortgage, especially medical, they are known for making problems due to insurance company glitches.
I am not an attorney. Any information I post is strictly my opinion and should be treated as such.

kevinmanheim

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Re: About to close on a new home and surprised by medical collection
« Reply #3 on: June 13, 2016 01:46:42 PM »
CAs pay the CRAs for report updates on people who have mortgage application inquiries. That's probably what happened in your situation.

When someone is applying for a mortgage, the CA knows the homebuyer can't close on the loan with the outstanding collection account on their report. So the CAs monitor reports and wait to strike when the homebuyer is desperate.

First: Do you owe the money? Your post doesn't indicate if you think the debt is real. If it's real, why didn't you pay it? Are there other "surprises" that could come up in the next couple of months? If so, you need to be ready for them, as there is a good chance other CAs could do the same thing.

Second: If you do owe the money, get something IN WRITING from the CA before you pay, indicating that the debt will be fully resolved if you pay, and that the debt will be removed from your reports. They can and will do this if you push for it.

Third: Don't be afraid to ask for a 50% discount if you pay immediately. Just be sure to get it in writing that the debt will be settled in full.

Fourth: Don't talk about the mortgage with the CA. In the unlikely event they don't know about your mortgage app, you don't want to tip them off. They will be a lot less likely to give you a discount if they know you are desperate.