FHA Mortgage Lenders Approval W Collection Accounts
• FHA mortgage lenders add 5% of the outstanding balance of each collection will be used as the monthly payment and will be included in the DTI .
• FHA mortgage lenders treat Repossessions as charge offs unless specifically notated that the account was sent to collections. Balances reported after repossession should be treated as collections with a 5% monthly payment considered.
Automated FHA mortgage lenders Approve/Eligible – The FHA Mortgage Lenders Approval with Collection accounts must complete a capacity analysis off collection accounts with an aggregate balance>= $2,000. Non-purchasing spouse’s or registered domestic partner’s collections are included in the combined balances for community property states. Monthly payments must be included in the DTI when cumulative balances are>= $2,000.
Manually Underwritten loans, in addition to the requirements above, the reason for approving a loan when the FHA mortgage applicants has collection accounts regardless of the amount must be documented. The FHA Mortgage Lenders Approval with Collection accounts must determine if the collection was result of disregard for financial obligations, inability to manage debt, or extenuating circumstances. The FHA mortgage must provide a letter of explanation with supporting documentation for each outstanding collection.
Outstanding Collections with aggregate $2,000 or more: Collections
• Prior to closing, the collection account is paid in full. Verification of acceptable sources of funds is required .
• Payment arrangements have been made with the creditor. The monthly payment must be included in the DTI and documentation is required.
FHA Manual Underwrite Lenders Specifications CREDIT SCORE RANGE MAXIMUM QUALIFYING RATIOS APPLICABLE GUIDELINE 500 – 579 ·31/43 ·Energy Efficient Homes may stretch ratios to 33/45 ·Max LTV 90% unless cash out (80%) ·No gifts ·No down payment assistance ·No streamlines ·One month in reserves for 1-2-unit Properties, three months in reserves for 3-4-unit properties (cannot be a…