FHA Credit
Performance and Credit Problems
Before approving a loan, the lender
analyzes the integrity of the borrower's
past credit performance. Those who have a
good credit history demonstrated by a
solid track record of timely payments will
likely be eligible for a loan. Potential
borrower's whose credit history is marred
by slow payments, poor financial judgment
and delinquent accounts is not a good
candidate for loan approval.
The following is a list of items
concerning the borrower's credit.
No
Credit History
Two lines of credit are necessary to apply
for an FHA loan. However, in the event a
borrower does not have sufficient credit
on their credit report the FHA will allow
substitute forms.
Chapter
13 Bankruptcy
FHA will consider approving a borrower who
is still paying on a Chapter 13 Bankruptcy
if those payments have been satisfactorily
made and verified for a period of one
year. The court trustee's written approval
will also be needed in order to proceed
with the loan. The borrower will have to
give a full explanation of the bankruptcy
with the loan application and must also
have re-established good credit, qualify
financially and have good job stability.
Chapter
7 Bankruptcy
At least two years must have elapsed since
the discharge date of the borrower and /
or spouse's Chapter 7 Bankruptcy,
according to FHA guidelines. This is not
to be confused with the bankruptcy filing
date. A full explanation will be required
with the loan application. In order to
qualify for an FHA loan, the borrower must
qualify financially, have re-established
good credit, and have a stable job.
Late
Payments
During an underwriter analysis of borrower
credit, the overall pattern of credit
behavior is being reviewed rather than
isolated cases of slow payments. If a good
payment pattern has been maintained,
regardless of a specific period of
financial difficulty preceded it, the
borrower may escape disqualification.
Foreclosure
FHA insured mortgages are generally not
available to borrowers whose property was
foreclosed on or given a deed-in-lieu of
foreclosure within the previous three
years. However, if the foreclosure of the
borrower's main residence was the result
of extenuating circumstances, an exception
may be granted if they have since
established good credit. This does not
include the inability to sell a home when
transferring from one area to another.
Collections, Judgments, and Federal Debts
A collection is minor in nature usually
does not need to be paid off as a
condition for loan approval. It is stated
as such in FHA guidelines. Any judgments
will have to be paid in full prior to
closing. Borrowers who are delinquent on
any federal debt, such as tax liens,
student loans, etc., are not eligible.
Would you
like more information about how we can
help you?
Please
Apply Online Now complete our
Request More
Information form or you may also
call and speak directly to a Loan Specialist,
Toll-Free at 1-800-238-9202
Fax or mail to:
Financial
Services Unlimited Inc.
11950 SW 2nd St.
Suite 300
Beaverton, OR 97005
(503) 626-8910 (Fax)
Toll-Free at 1-800-238-9202
