FHA Mortgage Lenders Approval With Disputed Accounts derogatory accounts >= $1,000 cumulative must be downgraded to “Refer” manual underwrite. Medical and accounts resulting from identity and credit card theft or unauthorized use are excluded. A letter from the creditor, police report, etc. is required. Disputed non-derogatory accounts are excluded from the $1000 cumulative total which includes accounts with zero balance, accounts with late payments aged 24 months or older, or disputed accounts that are current and paid as agreed.
Minimum Payment If no payment is indicated, 5% for revolving charge accounts.
How are disputed credit accounts considered for manually underwritten loans?
• disputed medical accounts; and
• disputed derogatory credit resulting from identity theft, credit card theft or unauthorized use.
• Accounts of a non-borrowing spouse in a community property state
If a FHA mortgage applicants is disputing non-derogatory accounts, or is disputing accounts which are not indicated on the credit report as being disputed, the lender must analyze the effect of the disputed accounts on the FHA mortgage applicants ability to repay the loan. If the dispute results in the FHA mortgage applicants monthly debt payments utilized in computing the DTI ratio being less than the amount indicated on the credit report, the FHA mortgage applicants must provide documentation of the lower payments. Non-Derogatory Disputed Accounts include the following types of accounts:
• disputed accounts with zero balance;
• disputed accounts with late payments aged 24 months or greater; or
• disputed accounts that are current and paid as agreed.