Half way to closing and Mortgage to be denied due to item on Credit Report, How can I get this far in the process?

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Contributor

  I am currently closing on my first home and everything seemed to be going smoothly until I was contacted that underwriting wants me to pay off a 6 1/2 year old charged off credit card or my mortgage can't be completed. First I will say that this makes no sense, that item will dissappear from my credit report in 6 months and paying it off now while dealing with all the costs of buying a home is USAA telling me to throw money away that I could invest in the property! I have already spent money on all my inspections and escrow. My credit report was the first thing that was looked at during the pre approval process, why wasnt it flagged then?? There has to be someone at USAA who can look at this rationally and waive this item. I have come too far along with this process and have already started doing electrical work and cleaning up the water sytem on this property as I was assured this process was good as done.

  Does this create too much paperwork and they dont want or know how to do it? Is USAA partnered with the credit card company and require this on their behalf? These are the only ways this makes sense to me. If a charged off credit card from 6 1/2 years ago becomes the difference in closing or not closing I will have to wait to 6 months for it to fall off my credit card and use another bank for my mortgage, this only hurts USAA if they want my mortgage.

5 REPLIES

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Mineman13, thank you for your interest and certainly can understand your frustration. To best assist you, I'll be happy to have a representative contact you during standard business hours to discuss your concern. Thank you ~Stacy

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@mineman13  When you say charged off credit card, do you mean that you and the credit card company made some type of agreement allowing you to pay off a balance at a very reduced rate?  Did you receive a 1099-C and pay income on it at the time?   If so, please be very careful about revisiting this issue especially if the credit card company has not contacted you.  If you contact the credit card company about any outstanding debit and they have not contacted you, then the clock could potentially start all over on their ability to collect any potential debt from you.  Each state has a different statue of limitation on debt collection but the most important thing is to not respond or initiate contact with a company that you owe money to if they have not been contacting you.  

 

From my personal experience with USAA and their mortgage group, they are not organized.  If you look through this board, you will see that what is happening to you has happened to other members.  My advice is that if you do decide to pay off the charged off credit card get it in writing from the USAA mortgage group and their underwriting group that your mortgage will be approved and you will close as scheduled.  If they will not put it in writing, then I am not sure I would trust them.      Again, I speak from experience.  (My refinancing was approved but it was short of a nightmare and we have a lot of money at USAA, 3x more money outside of USAA, credit scores around 800, no bounced checks ever, 6 figure income for 20+ years).

 

@USAA    I only post because I don't want this member to get totally screwed.  This member is correct that if there was something that was maybe questionable it should have been addressed from day 1 and we all know that credit reports are pulled very early in the process.  

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Thanks for your input. I have no plans of paying anything since this goes away in 6 months. I just feel like something is fishy here, if having a charged off credit card on my credit report is grounds for denial then i should not have been pre approved. I have read guidelines from other banks and federal requirements, for the most part if the debt is this old it can be overlooked. Maybe the people i have dealt with so far just dont know and they are just reading what the screen says. My reviews of these message boards have been enlightening.
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  Well, today USAA contacted me after posting this to review the situation and they are not moving ahead with my mortgage. I am beside myself. One negative item on my credit report which is off my report in September of this year and they will not approve my loan. Of course I can re apply in september, which I will with another bank. The fact that we got so far into this process, with all the inspections I have paid for and time wasted by my realtor, who is a friend of mine, sickens me. 

  Shame on USAA, horrible service, irresponsible service. I'm sure someone from USAA will post a boiler plate response to this post, like they do to them all. Don't even bother, I will never finance another penny with them, and I"m young, I'm gonna make a lot of money and finance many things before I die. 

  Your loss!!!!

  

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Mineman13,

 

We appreciate you following up with your experience. According to our records, your bank point of contact (POC) is still reviewing this matter and looking into this for you. If you have any additional questions or concerns regarding this matter, please direct them to your Bank POC. Thank you. -Gus