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FHA..... Disputed Accounts & Collections. UPDATE!!!

Super Contributor

Re: FHA..... Disputed Accounts & Collections. UPDATE!!!


co791 wrote:

Keep in mind that every lender has their own set of rules......FHA is only the insurer.  Depending on the lender you still may have to pay down those collections despite the change in FHA policy.


 

This has always been the case.

If the lender require collections to be paid..... Find another lender.

 

You can ALWAYS ask up front BEFORE application if that bank requires collections to be paid. <= If they waffle at all on the topic, find another lender and apply with them. ;-)

 

Retired Lender
Message 11 of 54
Established Member

Re: FHA..... Disputed Accounts & Collections. UPDATE!!!

Is there a difference in the handling of disputed accounts and if so, what is it?

Message 12 of 54
New Contributor

Re: FHA..... Disputed Accounts & Collections. UPDATE!!!

Per FHA previous guidelines...

If the credit report reveals that the borrower is disputing any credit accounts or public records, the mortgage application must be referred to a DE underwriter for review.

 

From there it would be up to the underwriter.  To my understand they request that you remove the comment unless it is more than 2 years old. 

Message 13 of 54
Frequent Contributor

Re: FHA..... Disputed Accounts & Collections. UPDATE!!!

I guess this is great news,the lesser of 2 evils.Thanks for sharing!!

Message 14 of 54
Frequent Contributor

Re: FHA..... Disputed Accounts & Collections. UPDATE!!!

Thank you for your contribution.Can you explain some more about the roll back the proposed dispute accounts rule? We would greatly appreciate it.

Message 15 of 54
Super Contributor

Re: FHA..... Disputed Accounts & Collections. UPDATE!!!


golo wrote:

Thank you for your contribution.Can you explain some more about the roll back the proposed dispute accounts rule? We would greatly appreciate it.


old rule:

If the credit report reveals that the borrower is
disputing any credit accounts or public records,
the mortgage application must be referred to a
DE underwriter for review.

 

 

proposed rule:

If the Automated Underwriting System using the TOTAL
Mortgage Scorecard rates the mortgage loan application as an
Accept, the mortgage application will no longer be referred to a
DE underwriter for review due to disputed accounts, as long as
these accounts meet both of the following conditions:
The total outstanding balance of all disputed credit
accounts or collections are less than $1,000,and
Disputed credit accounts or collections are aged two
years from date of last activity as indicated on the most
recent credit report.

 

they rescinded the proposed rule.

not it is back to underwriter discretion.

 

my internal guidelines say that the disputes have to be 'resolved'

many banks are the same.

 

best advice? => get all of the disputes resolved before you get your credit pulled. <= this gives us a valid credit score.

 

 

also.... the bureaus might leave a 'statement' on the account saying that you dispute the acccount. this doesnt mean that the account is actually in dispute.... it means that you dont agree and are saying so with a statement.

bad news about that: underwriter cannot tell if it is an ongoing dispute or a statement.... so you will have to get the statemeent removed as well.

 

best practice with regards to disputes:  contact each bureau and have them remove ALL DISPUTES and STATEMENTS OF DISPUTES from the reports.

 

 

did that make sense?

 

Retired Lender
Message 16 of 54
Contributor

Re: FHA..... Disputed Accounts & Collections. UPDATE!!!

Thanks for taking the time to write the detailed explanation.

 

I'm assuming the "new rule" was causing make deals to fall apart, and for that reason they decided to cancel it

Message 17 of 54
Frequent Contributor

Re: FHA..... Disputed Accounts & Collections. UPDATE!!!

Thank you very much Dallas! Smiley Happy

Message 18 of 54
Highlighted
Member

Re: FHA..... Disputed Accounts & Collections. UPDATE!!!

I have 2 old car repossessions that are 3-5 years old. I have been current on all bills paid in the past 2 years a long with the car note. EX: 628, EQ;609, and TR: 621. Do you know if you can get a loan with these showing as having a balance? 

Message 19 of 54
Senior Contributor

Re: FHA..... Disputed Accounts & Collections. UPDATE!!!

If they go by DOLA - what do you do about a CA or other creditor that continues to update the account every month? There would be no way to 'age out' the two years. That's a bummer for some out there.
STARTING: 11/24/10 EQ-584 EXP-648 TU04-595
CLOSED FIRST HOME 8/19/11 EQ-630 EXP-691 TU04-653
CURRENT: EQ-701 EXP-??? TU08-720
Message 20 of 54