FHA to deny mortgage backing for credit disputes above $1,000
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As of April 1, potential borrowers with ongoing credit disputes totaling more than $1,000 are no longer eligible for mortgages insured by the FHA.
Under the rule, borrowers must either pay off the outstanding balance on these collections accounts or document a payment arrangement that the lender must then submit to the FHA before closing. The payment arrangement will be counted into the debt-to-income ratio for the new home loan.
The rule excludes disputed accounts from more than two years ago, along with those related to theft. But the lender must document an identity theft or police report on the fraudulent charges.
An FHA spokesman said the rule was designed as another protection for the FHA emergency fund. The fund levels slipped to 0.2 percent of at-risk insurance last year, well below the 2 percent mandated by Congress. The FHA raised insurance premiums on April 1 as well to boost the fund by $1 billion.
Read the full story at:
http://www.housingwire.com/news/fha-deny-mortgage-backing-credit-disputes-above-1000
