FHA CHANGES CREDIT REPORT REQUIREMENTS: 1. Effective tomorrow, FHA is changing how and when collections that show on a buyers credit report have to be paid. The key amount to know is $2,000. FHA will not require collection accounts to be paid off if the total balance of all collection accounts is less than $2,000. If the balance is over $2,000, then it will be up to the underwriters discretion to analyze the buyers ability to pay and make a judgment call (a non-purchasing spouses collections have to be included in this analysis). It is worth noting that some payment plans will be acceptable as long as the payment is verified and included in the borrowers debt ratio. Also, not part of the $2,000 limit are medical collections and charge-offs which dont have to be paid off and tax liens and judgments which always do. 2. Also, effective tomorrow, FHA is changing how any disputed accounts showing on a credit report must be handled. The most important criteria will be if the disputed account has had any late payments or not. The key amount to know is $1,000. FHA will allow disputed accounts to remain on a credit report if the total balance of all disputed accounts is under $1,000. If the balance is over $1,000, then the buyer must deal with the disputed accounts and have them removed from the credit report. This is handled by calling the creditor and resolving the dispute, which usually takes time and money. Worth noting, if the disputed account has never been late, is older than two years, or has a zero balance, it does not have to be included in the $1,000 limit. Same goes for medical accounts and any accounts tied to identify theft.
Posted on: Tue, 15 Oct 2013 20:33:55 +0000
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