Mortgage triggers - Don't Let Your Loan Get Denied Last Minute

Mortgage triggers result in the collections that show up when a credit report is re-pulled a few days prior to closing.

Collection agencies or third party debt buyers can purchase a mortgage trigger list just as a lender might buy mortgage leads.

Here is how it works. Sometimes collections agencies do not report derogatory trade lines until a borrower has applied for a mortgage. They buy a list of recent mortgage applicants and match it against their debtor list.
The collection agency`s hope is that the borrower will contact them immediately with full payment for the collection after it "pops up". They know they have a motivated debtor. It is not a nice trick, but it works too often.
The dilemma is even if the client pays there may be a chance that the credit score could still be reduced. The reason is because it could become a paid collection with a recent date of last activity verses an older unpaid collection with less of a credit score deduction. 

Here is an option: When faced with this situation. Contract the creditor and request a proposed settlement agreement (prior to payment). The agreement should state in writing that they will remove or delete the trade line from the credit reporting agencies with a full or partial settlement and payment.
Always get it in writing and on their company letterhead.

Another Strategy: If the collection is required to be paid by the lender, then have it paid thru closing. No chance of the credit report being updated when the mortgage company makes that 'Final Credit Pull'.

Most importantly!! Make sure your loan officer understands how all of this works. This is simple stuff, but I still hear stories about loan officers requiring a collection to be paid asap.... then the collection being updated by the time that final pull happens. And remember.... Not all lenders will require collections to be paid to qualify!!

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Tom Burris
DallasLoanGuy.com
NMLS# 33505
Dallas, TX

214-763-4629 cell/text/nights/weekends

http://www.dallasloanguy.com/
The ORIGINAL 'Loan Guy' from Texas.... Often imitated, never duplicated!!!

I write about Texas Home Loans , live in the Dallas, TX area and lend across the entire Great State of Texas!!

Your Texas FHA Expert and Dallas Mortgage Expert.

 http://dallasloanguy.com/mortgage-triggers/