Does Participating In Consumer Credit Counseling Disqualify A Borrower For A Mortgage?

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

I often am asked Does Participating In Consumer Credit Counseling Disqualify A Borrower For A Mortgage?  The answer is NO, just participating in Consumer Credit Counseling does not disqualify a borrower for a mortgage.  FHA is very clear about this, but Fannie Mae is not, in fact I could not find anything in the Fannie Mae Guidelines addressing Consumer Credit Counseling.

The problem with using the services of a Consumer Credit Counseling Service is that they many time will not make payments to Creditors on time so that they can leverage their position in trying to get the Creditor to accept less than the full amount owed.  While it is good that they are many times successful in getting Creditor to accept less than owed, it is bad for the credit of the consumer who owes the money.  By going late it creates a bad payment history, and the consumers credit scores go down.  The late payments and the low credit scores are what end up disqualifying the consumer for a mortgage, not the use of a Consumer Credit Counseling Service.

FHA does have some stipulations if a Borrower is using a Consumer Credit Counseling Service.  FHA will require the Lender that the Borrower is applying for a Mortgage with, to document that:

  • One year of the pay-out period has passed under the plan.
  • All payments to Creditors have been made on time during the one year period.
  • The Borrower has obtained written permission from the Consumer Credit Counseling Service to enter into a Mortgage transaction.

While the answer to the question Does Participating In Consumer Credit Counseling Disqualify A Borrower For A Mortgage?  Is a simple NO, the reality maybe that the Borrower will not be able to meet the three stipulations above.

 

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 Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or souto@snet.net

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Pat & Wayne Harriman 01/29/2013 08:58 PM
  2. Lanise Warrior-Johnson 01/29/2013 10:39 PM
  3. Michelle Carr-Crowe Just Call 408-252-8900 Top 1%! 01/30/2013 02:57 PM
Topic:
Lending / Financial
Location:
Connecticut
Groups:
Realtors®
Mortgages
1st Time Buyers
Real Estate Rookie
Tags:
consumer credit counseling services

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Rainmaker
315,878
Frank Laisch
1492 P&C AGENCY, LLC - Orlando, FL
"The Insurance Guy"
George, I am sure this is something that many consumers participating with a consumer credit program do not think of. This is a great post for all to read
Jan 29, 2013 08:14 PM #1
Rainmaker
1,738,881
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

George, again something I did not know and this is a great, informative read...thanks!

Jan 29, 2013 08:22 PM #2
Rainmaker
656,716
Pat & Wayne Harriman
Harriman Real Estate, LLC (203) 672-4499 - Wallingford, CT
Broker/Owners, Wallingford CT Real Estate

Thanks George, this is more good info to pass on to clients who might need it!

Jan 29, 2013 08:55 PM #3
Rainmaker
3,744,302
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

George, this is great information for those borrowers with challenging credit.    I have not had too many calls from potential buyers participating in Consumer Credit Counseling.

Jan 29, 2013 10:28 PM #4
Rainer
123,068
Lanise Warrior-Johnson
Real Estate Brokers Services, Inc. - Compton, CA
Real Estate Specialist

George this is great information.  So many people experienced financial hardship, and may have used CCC to consolidate their debt.  Definately re-blog worthy! 

Jan 29, 2013 10:36 PM #5
Rainmaker
2,170,782
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Participating with a consumer counseling service is good for some people, but not for others. Many folks don't do enough investigation on the company they be considering or understand the details of what they are signing up for.

 

Jan 29, 2013 10:47 PM #6
Ambassador
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Frank yes many times they do not realize with the Consumer Credit Counseling Service is doing, and are surprise when I look at their credit report, and tell them that they are late on payments.

Ginny glad to provide the info.

Pat and Wayne thank you.  I am always happy to pass along any info that you need.

Joan don't run into it a lot, but enough for it to be a concern.

Lanise, glad you find it worthy of re-blogging let me know if there is any other info that you need.

Joe you are right, and by the time they do realize it is many times to late.

Jan 30, 2013 02:54 AM #7
Ambassador
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Michelle Carr-Crowe Just Call 408-252-8900 Top 1%!
Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years
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