December 1, 2015
Ever since the new FHA home loan rules for single-family mortgage loans were published in HUD 4000.1, we have been reviewing the new rules and publishing some of the most pertinent changes in policy, restatements of existing policies, and new FHA home loan rules.
The FHA and HUD did rewrite, revise, and change portions of the rulebook to update, improve, or clarify those sections. One area that’s important to know about HUD 4000.1 is its instructions to the lender about credit reports.
Do you know what the lender must look for, according to HUD 4000.1, in your credit report? To begin with, HUD 4000.1 instructs the lender, “Credit reports must contain all information from at least two credit repositories pertaining to credit, residence history, and public records information; be in an easy to read and understandable format; and not require code translations.”
But what about the contents of the report itself? Your lender will be looking at your credit reports for the following:
All inquiries made within the last 90 Days, plus all credit and legal information not considered obsolete under the Fair Credit Reporting Act, including information for the last seven years regarding:
–bankruptcies
–judgments
–lawsuits
–foreclosures
–tax liens
FHA loan rules add that for each borrower debt listed, the following data is required:
–the date the account was opened o high credit amount
–required payment amount
–unpaid balance
–payment history
The lender will need reports from at least “two credit repositories” according to the FHA official site. And this is required for all who will be required to pay or be legally obligated on the home loan. “The Mortgagee must obtain a credit report for each Borrower who will be obligated on the mortgage Note. The Mortgagee may obtain a joint report for individuals with joint accounts.”
Furthermore, “The Mortgagee must obtain a credit report for a non-borrowing spouse who resides in a community property state, or if the subject Property is located in a community property state.”
Community property states may have unique laws that dictate how legally married couples are able to proceed with a home loan application, so if there are questions in this area, it’s best to discuss them with the lender.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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