Florida Mortgage With Collection Accounts

Florida Mortgage With Collection Accounts On Credit Report
Yes, you can purchase or refinance a home in Florida with Collection Accounts on your credit report. You can even cash out refinance and pay off collection accounts on your credit report. 

A Collection Account refers to a bad credit Florida mortgage applicant loan or debt that has been submitted to a collection agency by a creditor.  

If the cumulative outstanding collection account balances of $2,000 or greater,
The Florida bad credit mortgage lender must: 

1. Paid in Full –Verify that the debt is paid in full at the time of or prior to settlement using an acceptable source of funds; 
2. Repayment Plan –Verify that the Borrower has made payment arrangements with the creditor and include the monthly payment in the Florida mortgage applicant’s Debt-to-Income ratio (DTI); or 
3. 5% Rule – if a payment arrangement is unavailable, calculate the monthly payment using 5 percent of the outstanding balance of each collection and include the monthly payment in the Florida mortgage applicant’s DTI.  

NOTE: We Do Not Count Medical Collection Accounts.

Collection accounts of a non-borrowing spouse in a community property state must be included in the $2,000 cumulative balance and analyzed as part of the Florida mortgage applicant’s ability to pay all collection accounts, unless excluded by state law. 

Unless the lender uses 5 percent of the outstanding balance, the lender must provide the following documentation: 

• Evidence of payment in full, if paid before settlement; 
• The payoff statement, if paid at settlement, or 
• The payment arrangement with the creditor, if not paid before or at settlement.  
   

For manually underwritten loans, the bad credit mortgage lender must determine if collection accounts were a result of: 

• The Florida mortgage applicant’s disregard for financial obligations; 
• The Florida mortgage applicant’s inability to manage debt, or 
• extenuating circumstances.  
   

The Florida mortgage lender must document reasons for approving a bad credit Florida mortgage when the borrower has any collection accounts. The Florida mortgage applicant must provide a letter of explanation, which is supported by documentation, for each outstanding collection account. The explanation and supporting documentation must be consistent with other credit information in the file. 

Filing a dispute on a Collection Account

What should I do if I find information that is inaccurate on my credit report?

Federal law allows you to dispute inaccurate information on your credit report. There is no fee for filing a dispute. You may submit your dispute to the business that provided the information to the credit reporting company and/or to the credit reporting company that included the information on your credit report.

The Federal Trade Commission’s website has information about how to dispute errors on credit reports, and the Consumer Financial Protection Bureau’s website provides additional guidance about disputing information on credit reports.

How does the dispute process work?

If you submit a dispute to a nationwide consumer credit reporting company, the company may make changes to your credit report based on the documents and information you provided. Otherwise, they will contact the business reporting the disputed information, supply them all relevant information and any documents you provide with your dispute, instruct them to investigate your dispute, and:

• Review all the information you provided about your dispute.
• Verify the accuracy of the information they are reporting to the credit reporting company.
• Provide the credit reporting company with a response to your dispute, including any changes to the information reported.
• Update their records and systems as necessary
• The credit reporting company will then notify you of the results of the investigation

If you submit a dispute with a business, they will conduct an investigation and will send you the results of the investigation directly. They will notify the credit reporting companies of any changes that need to be made to the information as a result of the investigation.

If a dispute results in a change to your credit report, you will have up to 12 months to order a second free report through AnnualCreditReport.com in order to review the changes. Annualcreditreport.com is the only source for your FREE report authorized by federal law.

How do I submit my dispute?

To submit a dispute to a credit reporting company, contact the credit reporting company that has the inaccurate information on your credit report. You may submit a dispute with each of the credit reporting companies over the internet or by mail.

• Equifax – https://www.equifax.com/personal/credit-report-services/credit-dispute/
• Experian – www.experian.com/acrdispute
• TransUnion – https://dispute.transunion.com

You may also submit documents in support of your dispute. Documents may be uploaded for online disputes.

The Federal Trade Commission’s website has more information on correcting your credit report, and the Consumer Financial Protection Bureau’s website also provides additional information on disputing information on your credit report.

What information do I need to provide when submitting a collection dispute?

Types of information you should be prepared with:

• Your full name, including middle initial and suffix, such as Jr., Sr., II, III
• Social Security Number
• Date of birth
• Current address
• All addresses where you have lived during the past two years

Down Loan Collection Dispute Form

Depending on how you submit your dispute (through the internet or by mail), you may also be asked to provide the following additional information:

• Email address
• A copy of a government-issued identification card, such as a driver’s license or state ID card
• A copy of a utility bill, bank, or insurance statement

You should list each item on your credit report that you believe is inaccurate, including the creditor name, the account number, and the specific reason you feel the information is incorrect.

You may also submit documents to support your dispute. Depending on the type of information disputed, the following documents may be helpful in resolving your dispute:

• Police reports or an FTC Identity Theft Report, showing that an account was the result of identity theft
• Bankruptcy schedules showing that an account was included in or discharged in bankruptcy
• Letters from creditors showing how an account should be corrected
• Student loan disability letters showing that a student loan has been discharged due to disability
• Cancelled checks showing that a collection account has been paid
• Court documents regarding public records