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While some collection agencies will agree not to report medical collection accounts that are paid off immediately, others refuse to do so. And some bill collectors will use the threat of credit report damage to try to get patients to pay up, even if the bill itself is disputed.
Here are some interesting myths and facts about medical collections!
Myth: As long as I am making payments on a medical bill, it can't be sent to collections.Fact: Making payments won't necessarily keep the bill out of collections. Even if you are making regular payments, they need to be a certain amount to prevent being turned over. Of, if you are under a payment arrangement but are late (even by just a few days) your bill may go to collections. If you leave any balance unpaid, there's a good chance it will go to collections.
Myth: When it comes to credit scoring, medical accounts are treated differently than other types of collections accounts.Fact: The credit scoring formula does not distinguish between medical and non-medical collection accounts. All collection listings are derogatory and will affect your credit score the same way as other collections. Some creditors have been known to be more lenient when it comes to medical debt, even though the credit scoring formula will not.
Myth: I'll need to pay off medical collection accounts to improve my credit.Fact: Paying your bills is the responsible thing to do, but don't do it expecting drastic changes to your credit score. Collection accounts damage your credit score, paid collections aren't as detrimental but they're still negative. The negative listing can stay on your credit file for up to 7 years.
Bottom line, if you want to be ready to buy a home or refinance, call me and I'll help you with credit, loan type and walk you through it.
Prepayments, apparently spurred by the recent retreat in interest rates, soared in May. Black Knight Financial Services, in its "first look" at the month's mortgage performance data, said there was a 23 percent increase in prepayments, historically a good indicator of refinancing activity, from April to May, bringing the incidence to the highest so far in 2017, 1.06 percent.
The company said the first quarter of this year was a bad one for refinancing, with originations falling 45 percent from the fourth quarter of 2016 as interest rates took off. However, the easing of rates over the last few months may change the outlook for the second and third quarters, a projection that seems to be confirmed by the increase in prepayments.
With rates back below 4 percent, Black Knight said the number of homeowners that could benefit from refinancing is at the highest level this year, 4.4 million, an increase of 1.6 million just since mid-March. These refinancing candidates could save an average of $260 per month on their mortgage payments with 2.5 million saving between $100 and $300 each month and nearly three-quarter million realizing a reduction of $400 or more.
May data shows delinquencies reversing their April increase, declining 7.13 percent month-over-month and by 10.78 percent since May 2016. The delinquency rate is now 3.79 percent, with 1.93 million mortgages 30 or more days past due, but not in foreclosure. This is 145,000 loans fewer than in April and 226,000 fewer than a year earlier. Of the total, 562,000 are seriously delinquent, over 90 days past due but not in foreclosure.
Foreclosure starts increased in May by 5.68 percent to 55,800 loans. The foreclosure inventory, loans that are actively in foreclosure, declined by almost 3 percent from April and nearly 27 percent from May 2016 and now represents 0.83 percent of mortgage homes. The number of properties in foreclosure at the end of May was 421,000. Both the foreclosure inventory and the number of properties that were seriously delinquent hit 10-year lows during the month.
At the end of May there were 2.35 million properties that were 30 or more days past due or in foreclosure, down 379,000 from a year earlier.
The highest rate of delinquencies was in Mississippi at 10.16 percent, a -8.4 percent annual change. The state was distantly trailed by Louisiana at 8.68 percent. Just 2.12 percent of Colorado borrowers are past due on mortgage payments, the lowest rate of any state.
Black Knight will provide a more in-depth review of this data in its monthly Mortgage Monitor report, which will be published on July 10.