HUD Mortgage Guidelines On Collection Accounts On FHA Loans
You can qualify for a FHA Loan with prior bad credit.
- You can qualify for a FHA Loan with unpaid collection accounts, charge offs, and even judgments
- HUD, the parent of FHA, does not require you to pay off your old collection accounts in order for you to get a loan approval and close on your mortgage loan
- There are many lenders that have lender overlays
- Lender overlays are the lender’s own guidelines that is above and beyond the minimum lending guidelines of FHA
- Most lenders do require unpaid collections be paid off prior to closing
- The reason most lenders have overlays on collections and/or charged-off accounts is because they are afraid of collection agencies may pursue judgment proceedings
- Here, we are affiliated with wholesale partner lenders with no overlays
- We only go off the minimum HUD Agency Guidelines
- All we go off are the findings of the automated underwriting system (AUS) and have zero lender overlays
If FHA says no collections need to be paid off, no collection accounts need to be paid off.