n a move designed to more fairly treat borrowers whose credit reports contain collections actions and disputed debt accounts, the Federal Housing Administration has eased previous rules that would have led to large numbers of application rejections.
The agency also released guidance to lenders instructing them on how to handle “extenuating circumstances” claimed by borrowers who experienced serious economic setbacks triggered by the recession, but who are now employed, paying their bills and seeking FHA financing.
On Friday, FHA issued two mortgagee letters spelling out its new approach to widespread credit issues affecting applicants for its low down payment loans. The guidance on collections and disputed accounts (ML 2013-24) replaces controversial rules the agency first issued in early 2012.
That guidance, which required payoffs of collections or disputed accounts totaling an aggregate $1,000 or more before applicants could go to closing on an FHA loan, triggered intense criticism from lenders and community groups.
Bedford New York Real Estate | Bedford NY Homes by Robert Paul Realtor » Blog Archive » FHA eases rules for some credit-impaired applicants | Bedford Corners Real Estate.