As many of you are aware, earlier this year, FHA underwriting guidelines were changed to the extent that many borrowers with disputed collection accounts in excess of $1000 would have to resolve these accounts to be eligible for FHA financing. This rule was quickly given an exception so that borrowers could be exempted from the rule if the disputed collections account were a result of “life event,” such as a medical bill, death, divorce or loss of employment. The FHA delayed the rule a week after it went into effect and said it would take comments from the industry until July. On June 15th, FHA rescinded the rule and returned to original guidelines which basically require documentation and explanation for delinquent accounts.
This is good news for many potential home buyers and the real estate market in general. Roughly 25% of home builders in one survey the week FHA announced the revised rule anticipated either a delay or losing up to 60% of their sales. A copy of the rule change be found here.