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does the lender see my deficiency amount when they do a pre-approval?

by jubeeb_466_807 from Beaufort, South Carolina. Mar 14th 2013 Reply


Charlie Sparks (CharlieSparks)
#1 ranked lender in New Mexico - 399 contributions

Probably. Often the credit report will have a statement like 'settled for less than balance due' and there will be a balance showing. You can check for free at www.annualcreditreport.com. You won't get your credit scores on the free report but you'll be able to see most everything else. Even if it doesn't show now, lenders are required to pull a 2nd credit report right before closing to look for new debts, etc. It could show up then.

Mar 14th 2013
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Lorne Harvey (lorneharvey)
#80 ranked lender in Washington - 431 contributions

If you are talking about a collection account that you settled for less than the full balance, the credit report should show a zero balance, and like Charlie said, it will show settled for less than the full balance. If you are talking about a repossessed vehicle, after the bank sells the car at auction, it will show the remaining deficiency balance...hope this helps....

Mar 14th 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

Often this is the case, when the lender runs your credit. To see what is on your credit report, visit www.freecreditreport.gov. Avoid other sites tht offer free credit reports.

Mar 14th 2013
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Peter Savino (855411LEND)
#100 ranked lender in New Jersey - 332 contributions

Best thing to do is pull your credit and see whats being reported, there have been some good replys here, I agree with Charlie, www.annualcreditreport.com is a good sight to use www. HOMEMORTGAGEXPERT.com

Mar 14th 2013
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,970 contributions

We dont always see the balance, but it almost always says "Settled for less than balance due"

Mar 14th 2013
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We foreclosed 3 years ago this coming August due to financial hardship (we should have NEVER been allowed to get in that home in the first place. The realtor and his broker were doing unethical things behind our back for their good - we were buying the realtor's property who was in the midst of a divorce and was trying to dump several pieces of property. You can imagine from there...We were naive and trusted this realtor "friend" of ours) We have since gotten on our feet. We applied for a loan for a starter home. They gave the pre approval for much more than we requested. We are less than a week from closing and I found out via our attorney handling the closing that our deficiency is 122,000. We had no idea - have not heard one word about it - no one has contacted us. So...the closing process has gone smoothly, and now I am sick with worry that our lender will see that deficiency amount and the closing will fall through. Our closing date is less than a week away. They KNEW about our foreclosure before they pre-approved us - they spoke to my husband about it. Why would a lender pre approve us, knowing that in advance, only to deny us a week out from closing? I am afraid this will happen.

Mar 15th 2013
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I checked our credit score and credit report (including Public Records) at familysecure. Nothing is showing up under public records. However, our attorney found it during her search. Do I conclude that online searches are not up to date then and only lender and attorney's have the most up to date searching capabilities?

Mar 15th 2013
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Charlie Sparks (CharlieSparks)
#1 ranked lender in New Mexico - 399 contributions

Lender's reports are probably more through than a consumer report like you have obtained. Also lenders pull data from other sources to look for additional property owned as well as outstanding obligations. Since the IRS has been allowing canceled mortgage debt to be excluded from taxation it would appear that you should be ok, especially if the lender has approved you. Consult with your attorney to be sure. In the mean time here some info I found: http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation

Mar 15th 2013
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Thanks, Charlie. Our judgment has not been cancelled, however. Well, not that I know of. The bank sold the foreclosed home last summer, and the bank, nor anyone else, has ever contacted us. The only way we found out about it a couple days ago was because our closing attorney said they found it. It was HUGE news to us. I wonder if they passed on that info to our new lender, or if our lender knew about it before now - one week out from closing.

Mar 15th 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

Sorry, but the title insurance company will most likely refuse to insure your new loan, because the judgment would be in a superior postion. Since the judgment is most likely only recorded in the county where you lost the property, if it for some reason does not show up on the credit report, you MAY be able to buy a property in another county, where the abstract record of the judgment has not been filed.

Mar 15th 2013
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Dave, according to our closing attorney (I'm in SC), the lender holds the primary position on the title, not the judgement.

Mar 15th 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

True, the lender will require that they hold first (primary) position, and if the lender approves, they may allow the judgment to attach in a junior position. The fear that the lender has in that situation is, if the judgment creditor takes collection action, such as wage garnishment, you will be unable to pay the mortgage, due to reduced income. Please let all of us know how it comes out. Good luck!

Mar 15th 2013
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Dave, not in South Carolina. You'll find this of interest:http://www.sc-bankruptcy-blog.com/wage-garnishment-in-south-carolina-not/2010/04Thanks so much for the best wishes. This has been a very stressful time for me - not enjoying it at all. Looking forward to it being over with, no matter what the outcome.

Mar 15th 2013
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Update: We closed on the house today! :) We will be working with an attorney this summer to clean of the judgment, which is very important for us to do. Thanks to everyone that contributed and answered my questions.

Mar 22nd 2013
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