Will new mortgage application alert old creditors?

[RaptorBreath]

What is the name of your state (only U.S. law)? Oregon

Or family is outgrowing or house, and we're looking into a first home purchase. My wife is breathing down my neck to apply for mortgage pre-approval.

The problem is that during the recession, I lost my job and defaulted on some debts. Most are taken care of over the last several years, but upon pulling my credit report, I see an active collection for a pretty good sum - one of my many student loans that was sold and resold among private lenders and I had lost track of it in the shuffle. It is now in the hands of a debt collection law firm.

I wish I could just repay it, but it's just not possible right now. Also, I see that the six-year statute of limitations for my state is coming up in a couple months. It seems like the most prudent thing (aside from sending them all the money i don't have), is to let the debt become time-barred so that it is unenforceable in the courts.

So my question is this: In applying for a mortgage before the SOL is reached, will this alert the past creditor and put them on the offensive?

 

[LdiJ]

What is the name of your state (only U.S. law)? Oregon

Or family is outgrowing or house, and we're looking into a first home purchase. My wife is breathing down my neck to apply for mortgage pre-approval.

The problem is that during the recession, I lost my job and defaulted on some debts. Most are taken care of over the last several years, but upon pulling my credit report, I see an active collection for a pretty good sum - one of my many student loans that was sold and resold among private lenders and I had lost track of it in the shuffle. It is now in the hands of a debt collection law firm.

I wish I could just repay it, but it's just not possible right now. Also, I see that the six-year statute of limitations for my state is coming up in a couple months. It seems like the most prudent thing (aside from sending them all the money i don't have), is to let the debt become time-barred so that it is unenforceable in the courts.

So my question is this: In applying for a mortgage before the SOL is reached, will this alert the past creditor and put them on the offensive?

No, but that debt being on your credit report is not going to help you get a mortgage, at all.

 

[RaptorBreath]

No, but that debt being on your credit report is not going to help you get a mortgage, at all.

That's a given.

But as long as this doesn't tip off the creditor, then the worst that can happen is we get denied right now, and we can try again next year, after this has dropped off my credit report for being over 7.5 years old.

Thank you.

 

[OHRoadwarrior]

They will likely be on the offensive anyway. It appears the only way you can afford this new home is if you have been hiding money to avoid your creditors. Homes require down payments.

 

[RaptorBreath]

They will likely be on the offensive anyway. It appears the only way you can afford this new home is if you have been hiding money to avoid your creditors. Homes require down payments.

Not necessarily.

There are options (such as USDA loans) that require zero down, and they're are also grants and programs that, due to my wife's profession, offer up to 5%, as well as pre-closing costs

And no, I'm not "hiding money", and if you re-read the op, you will see that before now, I didn't even know I had creditors.

 

[OHRoadwarrior]

Those are not usually open to those with poor credit.

 

[RaptorBreath]

Those are not usually open to those with poor credit.

I've read the requirements for the loan we're looking at, and we meet all the qualifications, the most onerous being a 650 or higher credit score (we're both 680 or higher), and good credit history for five years (my only blemishes, including the one in question, are 6 or older).

The grants in question only require that you be in the listed profession, and that the funds be applied to a primary home purchase.