Tuesday, October 1, 2013

Kentucky FHA Collections and Disputed Accounts For A Mortgage Loan 2013 changes





 
Kentucky FHA Collections and Disputed Accounts For A Mortgage Loan
 
 
 
Collections
 
  • If the sum of the borrower's Collection Accounts total less than $2000, then payments for these accounts do not have to be analyzed.
  • If the sum of the borrower's Collection Accounts total $2000 or more, then payments for all accounts must be analyzed and included in the DTI.
  • Collection Accounts can be paid off in full to avoid including the payment in the DTI.
  • If no evidence of monthly payment can be found for a Collection Account, 5% of the outstanding balance will be considered as payment for calculating the DTI
  • Collection Accounts of a Non-Purchasing Spouse in a community property state are included in the sum total unless state law otherwise excludes it.
  • All medical collections are excluded from the sum total.
 
**Note**: All Collection Accounts on the credit report will be considered unless exempted above. Kentucky FHA loans  will continue to consider them in the $2000 calculation, even if paid off, until new credit is uploaded with the Account updated/removed.
 
Judgments
 
  • All judgments must be paid off prior to the loan closing unless there is a written agreement for a payment plan.
  • In order to accept a payment plan for a judgment, the written agreement must be provided along with evidence that at least 3 payments have been made and that all payments have been made on time.
  • Any payment plan for a judgment must have its monthly payment include in the DTI calculation.
  • Judgments of a Non-Purchasing Spouse in a community property state must be included, unless excluded by state law.
 
Disputed Accounts
 
  • Disputed Accounts are considered Derogatory in any of the following situations
    • Disputed charge-off accounts
    • Disputed collection accounts
    • Disputed accounts with any late payments in the last 24 months
  • If the cumulative amount of Derogatory Disputed Accounts is $1000 or greater, the loan is automatically downgraded to "Refer" status and is ineligible by Century Guidelines.
  • With acceptable provided evidence, the following types of Derogatory Disputed Accounts can be excluded from the $1000 limit:
    • Medical Accounts (no documentation required)
    • Identity theft
    • Credit card theft
    • Unauthorized use
    • Derogatory Disputed Accounts of non-purchasing spouses
  • Non-Derogatory Disputed Accounts will not require a downgrade to "Refer" status.
               
Joel Lobb (NMLS#57916)