FHA won't deny loans over collections
Agency abandons plan to reject loans from borrowers who had more than $1,000 in disputed debt-collection accounts.
The Federal Housing Administration has reversed course and decided not to deny mortgages to borrowers who have more than $1,000 in disputed collections accounts.
The rule, which originally had been scheduled to go into effect April 1, was rescinded Friday by the Department of Housing and Urban Development.
Implementation of the new policy had been delayed for three months after opposition from homebuilders and lenders, who said such a rule would further curtail purchases by first-time homebuyers and shut out the low-income borrowers the FHA was designed to serve.
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The purpose of the rule was to cut the risk to the FHA from borrowers who defaulted on their loans. It required the borrowers to either pay off the outstanding balance or show they had made payment arrangements. This didn't leave an option for borrowers who were in collection for debts they didn't owe.
Although denying credit to people who don't pay their bills seems like a good idea, the real world
of debt collection is plagued with errors. That means that borrowers who have always paid their bills on time could end up with more than $1,000 in erroneous collections on their accounts, which would end up as disputes. The rule applied only to collections that were less than two years old and did not apply to debts related to medical bills, death, divorce or unemployment.
The FHA can still decide to deny credit to customers with accounts in collections or with disputed collections account, but the decision is now back to being made by humans who know the borrowers' circumstances rather than being automatic.
| Tags: | loans |
why did the gov't (fed) raise rates in 2007 if they did not want sanity back in the markets? so now that the gov't can see the pain sanity can cause, our gov't chooses to take the path of 'no pain' and going back to their 'anyone with a breath, gets a loan', policy.
if there were a better word for STUPID, I would chose that word for our gov't.
i have seen where someone was denied because of a $1000 credit dispute. When they pulled their credit, this amount was said to be 300 days old, yet a no letter had ever been sent to the person from the creditor. SO it does happenand yes the person came up with the $1000 on top of the other 3 % they had to put down on the house.
When they pulled their credit earlier that year this was not shown.
FHA 203k Streamline: with this loan you are able to borrow up to 35,000.00 for renovation cost; woo hooo aaaahhh and all the other stuff. BEWARE; if you go above 15,000.00 you will have to have an approved FHA consultant at ungodly rates, and these rates only go up. Origination fee’s go up, consulting fees are added on; there’s a 10% hold back to cover unexpected overages. Let me tell you from personal experience, the overages come from all the extra fees lenders are allowed to nail you with.
This is the loan I pick to go with; to me it has the most flexibility for the average person. A 5,000.00 minimum requirement is on the loan you must use, and can be used in just about any way imaginable; but here’s the catch. Depending on the lender you can have contractor or a certified contractor do all your work, so you will pay more than you have to for all the renovations, including buy appliances. Yes you may be required to show a statement of work from the company which you perchance the appliances from which states you did none of the hook ups.
There are many and I mean many things you will have to ask about or you will lose the moneys you thought you would have to complete the outstanding renovations, so beware of what the leader say to you.
BIG NOTE: For both the 203k streamline and the full blown 203k rehab, a licensed contractor must do all the work, and all the quotes must come from them spelled out with their labor cost. Another experience note have them approved from the very start, before you let the lender have your accepted bid, ask them for any forms needed for your contractor. Take them to the contractor and signed before the offer goes into the lenders hands.
203k Full Blown rehabilitation loan: If you have the stomach for it; I pray God be with you. After going down this path or gauntlet, it became more of a nightmare than it was worth. In fees alone they hit me with over 8,000.00 worth of them, with the ability of even going higher. Remember you’re going to pay on this loan for a very long time, long after they have taken their commissions and ran. Figure it out before taking this path and remember they are looking to make money off you.
VA loan: have no information on these, but do believe if lenders try to screw with vets like they do others they should be taken out and shot. They have willing gave for you; give them the respect they deserve.
A) Let’s refer to the word used in letter C debacle, use in the relationship between the realtor and the front men. We also have this kind of relationship between HUD and lenders themselves. They claim they are within the guideline of HUD, you will hear this over and over again, but you’re trying to buy a home owned by HUD but also does not meet HUD guidelines and they are not responsible to fix, but at the same time you cannot fix it ether.
You are in the middle and unless you know what you can and cannot do, you are a sheep in with a bunch of wolfs.
The government has set this up in such a way that the feeders are once again getting fat and happy. Congratulations on your well oil or lube job you have once again slipped to the people.
USDA Rural Development loans: Awesome, these are offered by the government and backed by the USDA. The only catch is there are limits to how much income you can have in the home, but if you can qualify it’s a great way to go.
Standard FHA loans: if the home needs no work and will past the rigorous inspections for this loan, it’s not a bad way to go if you don’t have the 20% down. With this loan comes PMI and MIP insurances, MIP is the new charge voted into government regulations giving them the right to charge an upfront insurance premium to you the buyer. All of these wonderful charges can be rolled into your mortgage, because of the lack of down payment. Dumb yes I agree, but paying this extortion will get you into a home. If you pick this kind of loan get ready to buckle down and work on this, it can be removed if you gain the 20% equity requirement. You will have to read your contract most have a minimum term limit you will have to pay even if you gain the 20%, this is where the extortion comment comes from.
FHA 203k Streamline: with this loan you are able to borrow up to 35,000.00 for renovation cost; woo hooo aaaahhh and all the other stuff. BEWARE; if you go above 15,000.00 you will have to have an approved FHA consultant at ungodly rates, and these rates only go up. Origination fee’s go up, consulting fees are added on; there’s a 10% hold back to cover unexpected overages. Let me tell you from personal experience, the overages come from all the extra fees lenders are allowed to nail you with.
This is the loan I pick to go with; to me it has the most flexibility for the average person. A 5,000.00 minimum requirement is on the loan you must use, and can be used in just about any way imaginable; but here’s the catch. Depending on the lender you can have contractor or a certified contractor do all your work, so you will pay more than you have to for all the renovations, including buy appliances. Yes you may be required to show a statement of work from the company which you perchance the appliances from which states you did none of the hook ups.
There are many and I mean many things you will have to ask about or you will lose the moneys you thought you would have to complete the outstanding renovations, so beware of what the leader say to you.
BIG NOTE: For both the 203k streamline and the full blown 203k rehab, a licensed contractor must do all the work, and all the quotes must come from them spelled out with their labor cost. Another experience note have them approved from the very start, before you let the lender have your accepted bid, ask them for any forms needed for your contractor. Take them to the contractor and signed before the offer goes into the lenders hands.
203k Full Blown rehabilitation loan: If you have the stomach for it; I pray God be with you. After going down this path or gauntlet, it became more of a nightmare than it was worth. In fees alone they hit me with over 8,000.00 worth of them, with the ability of even going higher. Remember you’re going to pay on this loan for a very long time, long after they have taken their commissions and ran. Figure it out before taking this path and remember they are looking to make money off you.
You are fighting a losing battle; to think for one minute you are going to get anything from the system without paying the extortion price. Our government is set up by the very people that profit from the masses loss. You will hear them say over and over again it’s all about the bottom line. Don’t take that statement so lightly, their bottom line has nothing to do with how much you go under.
Here are some pointers:
Mortgages:
Conventional: with a great credit score you will still need 20% down, closing cost and pre-paids.
Example: 150,000.00 buy @ 20 percent you will need 30,000.00 of your own money to put down. That will bring your loan down to 120,000.00, however if you don’t pay your closing cost upfront expect 10,000.00 to go back on it. So your loan is now 130,000.00 and you still have to take care of this year’s taxes and next year’s taxes, along with the insurance, figure you will need around 5,000.00 for these expenses if not more. In the end 35,000.00 out of pocket and that’s if you don’t have anything required to do to the home.
USDA Rural Development loans: Awesome, these are offered by the government and backed by the USDA. The only catch is there are limits to how much income you can have in the home, but if you can qualify it’s a great way to go.
You are fighting a losing battle; to think for one minute you are going to get anything from the system without paying the extortion price. Our government is set up by the very people that profit from the masses loss. You will hear them say over and over again it’s all about the bottom line. Don’t take that statement so lightly, their bottom line has nothing to do with how much you go under.
have either of you 2 ever had erronous information on your credit reports?! Both my husband & I have. Believe me it is NOT easy to get it removed. I had accounts on there from companies I had never heard of & my husband had someone's else's accounts. You have to dispute these to ALL 3 credit agencies then ask ALL 3 to remove the information.
IT IS A NITEMARE!
well, stupid me...common sense tells me if you can't pay off a $1,000 debt what makes me think you can afford a home which will involve monthly payments, property taxes, and home owners insurance. guess i am just not that smart and will decide to loan you money for a house. remember this...the american DREAM is home ownership. and not all dreams come true. depite what the barney franks, nancy pelosis, harry reids, and POTUS think.
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.
msn real estate is social
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