FHA has changed their underwriting guidelines regarding collection accounts. They instituted a new requirement earlier this year that made borrowers pay off collection accounts if the total of all collection accounts showing on a credit report was $1,000 or greater.
However, effective immediately, they have rescinded that requirement, meaning that collection accounts no longer have to be paid, regardless of how much they total.
It is important to note that just because FHA has changed their rules, it does not automatically mean that lenders have to follow those rules. Lenders are allowed to have stricter rules than FHA when they sell FHA loans. In other words, individual lenders may still require collection accounts to be paid before they will approve a loan. Always check with your lender before assuming anything.
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