topic Re: FHA..... Disputed Accounts & Collections. UPDATE!!! in Mortgage Loans

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

DallasLoanGuy — Mon, 18 Jun 2012 20:44:39 GMT

http://portal.hud.gov/huddoc/12-10ml.pdf

In order to provide clarification of policies concerning Disputed Accounts and
Collection Accounts through future guidance, FHA is rescinding the new
guidance on the following topics in Mortgagee Letter (ML) 2012-3, which
was to become effective July 1, 2012:
Handling of Disputed Accounts, Public Records FHA Total User
Guide Chapter 2, and
Handbook 4155.1 4.C.2.e, Paying off Collections and Judgments.
All other guidance in ML 2012-3, which became effective April 1, 2012,
remains in effect.

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

GoodCredBen — Mon, 18 Jun 2012 20:58:32 GMT

What does this mean? I am in the middle of buying a home...

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

courtney091082 — Mon, 18 Jun 2012 21:25:36 GMT

Ok so that means they're cancelling what was to become July 1st, meaning you won't have to have collections paid that are over $1k?

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

ShanetheMortgageMan — Mon, 18 Jun 2012 21:37:39 GMT

@courtney091082 wrote:
Ok so that means they're cancelling what was to become July 1st, meaning you won't have to have collections paid that are over $1k?

Correct.

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

courtney091082 — Mon, 18 Jun 2012 21:44:01 GMT

Awesome!! That should help lots out to get a mortgage sooner

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

Anonymous — Mon, 18 Jun 2012 21:44:39 GMT

It looks like it also changes the handling of disputed accounts. What effect does it have on that?

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

DallasLoanGuy — Mon, 18 Jun 2012 21:58:04 GMT

@courtney091082 wrote:
Ok so that means they're cancelling what was to become July 1st, meaning you won't have to have collections paid that are over $1k?

exactly.

also rolling back the proposed 'disputed accounts' rule.

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

scmami — Mon, 18 Jun 2012 23:31:28 GMT

This is great news, in case USDA falls through for me! Thanks for sharing !

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

Anonymous — Tue, 19 Jun 2012 11:06:18 GMT

This is great news! I've been keeping a close eye on this, thanks for sharing

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

co791 — Tue, 19 Jun 2012 12:28:13 GMT

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.

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

DallasLoanGuy — Tue, 19 Jun 2012 13:59:35 GMT

@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. ;-)

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

Anonymous — Tue, 19 Jun 2012 16:10:21 GMT

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

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

PRC — Tue, 19 Jun 2012 19:34:16 GMT

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.

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

golo — Tue, 19 Jun 2012 20:16:46 GMT

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

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

golo — Thu, 21 Jun 2012 14:41:58 GMT

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

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

DallasLoanGuy — Fri, 22 Jun 2012 01:30:37 GMT

@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?

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

seemund — Fri, 22 Jun 2012 12:57:39 GMT

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

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

golo — Fri, 22 Jun 2012 13:26:26 GMT

Thank you very much Dallas!

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

Anonymous — Fri, 06 Jul 2012 20:25:50 GMT

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?

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

Booner72 — Fri, 06 Jul 2012 21:48:48 GMT

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.