Will FHA Mortgage Lenders Accept bad credit? What are the requirements for a manually underwritten mortgage?
The bad credit FHA mortgage lenders must use a traditional credit report, if available. A Residential Mortgage Credit report (RMCR) must be obtained from an independent credit reporting agency. The Bad credit FHA mortgage lenders must use the same credit report and credit scores sent to TOTAL Mortgage Scorecard. If a traditional credit report is not available, the FHA mortgage lenders must develop a non-traditional credit history for the FHA mortgage applicants.
Credit reports must obtain all information from at least two credit repositories pertaining to credit, residence history, and public records information; be in an easy to read and understandable format; and not require code translations. The credit report may not contain whiteouts, erasures, or alterations. The bad credit FHA mortgage lenders must retain copies of all credit reports.
The FHA mortgage applicants credit report must also include:
• all inquiries made within the last 90 days;
• all credit and legal information not considered obsolete under the Fair Credit Reporting Act (FCRA), including information for the last seven years, which consumer reporting agencies have reported as verified and currently accurate, regarding:
o tax liens; and
• For each FHA mortgage applicants debt listed:
o the date the account was opened;
o high credit amount;
o required monthly payment amount;
o unpaid balance; and
o payment history.
The bad credit FHA mortgage lenders must obtain an updated credit report if the underwriter identifies inconsistencies between any information in the mortgage file and the original credit report.
The bad credit FHA mortgage lenders must develop credit information separately for any open debt listed on the mortgage application but not referenced in the credit report by using the procedures for independent verification of non-traditional credit history.
For information on developing non-traditional credit history see Handbook 4000.1 II.A.5.a.ii(B).
The credit report must include:
• name of the FHA mortgage lender ordering the report;
• name, address, and telephone number of the consumer-reporting agency;
• name and Social Security Number (SSN) of each FHA mortgage applicants and
• the primary repository from which any particular information was pulled, for each account listed
A truncated SSN is acceptable provided that the mortgage application captures the full nine-digit SSN.