FHA issued clarification today regarding disputed accounts on a borrower's credit report. As you will note below, FHA requires that whenever a disputed account exists on the credit report, the file must be downgraded to a manual underwrite, unless one of the 3 exceptions listed below exist.
- This does impact pipeline loans (as they indicated this is a "clarification" and not a new guideline), so you will need to review any loans that currently have disputes on the report where you had an Approved Eligible finding.
If the credit report reveals that the borrower is disputing any credit accounts, Manual Downgrade of a TOTAL Scorecard Approve/Accept recommendation is not required if:
1. The disputed account has a zero balance
2. The disputed account is marked as "paid in full", or "resolved"
3. The disputed account is both
a. less than $500, and
b. more than 24 months old, based on the date of dispute
Keep in mind that this is specific to FHA loans. For Conventional loans you must refer to your DU findings.
Have a great weekend!
Rob
Mortgage Loan Originator/Mortgage Banker
NMLS ID# 248937
www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf
(732)223-1630 x102
Since 1987 I have been helping my clients fulfill their dream of home ownership!
Real Estate Mortgage Network Inc.
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