The NEW FHA Collection Rule has been cancelled, per HUD’s letter on 6-15. Which is awesome news for all buyers looking for a FHA Loan. Please call or email me with any questions.
It was delayed before but as of now the FHA Collection Account rule change is going into effect July 1st. Here are the specifics of the rule:
HUD announced that on all FHA loans started on July 1st and after, borrowers must have collection accounts paid off(total balance over $1000). This is a major announcement that sort of fell under the radar. But has major ramifications. What does this mean? If the borrower has a total of $1000 in collection balances then they must be paid off or proof the borrower has been in a payment plan for 3mths. This would mean a total of $1000 or more. Not just one account with a $1000 collection balance. This rule also takes into accounts that belong to a “non purchasing spouse”. So if the spouse is not on the loan but has collection(s) totaling over $1000, they must be paid.
This change goes into affect for all FHA case numbers ordered on or after July 1st. Stay tuned for any updates and if HUD decides to delay it again. This rule is not for conventional loans.
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