Question:
Dear Steve,
When I first started college, 18 years ago, I borrowed money from Sallie Mae/Navient.
It was a private student loan and had nothing to do with federal funds.
Life happened and I was no longer able to make payments on the accounts. They would not let me consolidate or refinance. I quit paying them.
I am now trying to buy a house and the lender I talked to told me I needed to make arrangements to pay them or else there could be a lien put on my house.
When I pull my credit report, they are listed as being a charge off. It won’t fall off my report for another 3 years and I don’t have that much time to wait to buy a house.
Should I try to make a deal with Navient? Should I call other mortgage lenders and see what they say to do?
Jaimie
Answer:
Dear Jaimie,
Thank you so much for contacting me.
I’d really like to know when you last made a payment on that student loan. It sounds like it was more than four years ago and I’m wondering if the credit reporting information might not be inaccurate.
The account should not be reported for more than seven years and 180 days from the time the last delinquent reporting period started. So, let’s say you stopped making payments ten years ago, it should no longer be on your consumer credit report. Sometimes a collector will report it using a newer date to keep it fresh and that will screwup the default date.
If you want to know if these student loans will settle, the answer is yes they will. However, you have to get into the right department inside the organization to get the best offer.
If you have the money to settle the debt for 40 percent of the balance, that is absolutely doable on the right day. Navient will also accept payments on the settlement amount but that would be over time and you are looking for a quick result.
It would not hurt you at all to call another mortgage broker and explain the situation. They don’t need to pull your credit report to talk with you about how the lenders they work with, view the situation.
Getting more information and facts is never a bad thing.
But understanding that reporting date on your credit report is really the most important step. One place you can get a free copy of all your credit reports is at AnnuanlCreditReport.com.
If you look at all three of your major bureau credit reports you might find a different default date listed on a different bureau. Creditors are not required to report debts to credit bureaus and your lender may be only looking at one credit bureau with this date problem.
Please post an update in the comments section with what you find.
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Navient says that my account went delinquent in Dec 2017 and I owe them $37,722.92.
Do you think that is an accurate date? If so, you would probably need $20,000 on hand right now to settle the balance. The balance forgiven will be reported to the IRS and if you are not insolvent you may owe income tax on the forgiven debt. Settling the debt will not remove it from your credit report, but it will close the debt.
Asked question.
Mortgage question answered.