I specialize in Kentucky First Time Homebuyers FHA, VA, USDA & Rural Housing, KHC and Fannie Mae mortgage loans. I have helped over 900 Kentucky families buy their first home and refinance their current mortgage for a lower rate; Kentucky First time buyers $0 down still available with down payment assistance with KHC. Free Mortgage applications same day approvals. Web site is not endorsed by the FHA, VA, USDA govt agency. Text/call 502-905-3708 kentuckyloan@gmail.com NMLS 57916 NMLS ID 1364
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- 4 Things Required for a KY Mortgage Loan Approval
- Down Payment Assistance Kentucky 2024 Kentucky Housing Corporation KHC
- Credit Scores Required For A Kentucky Mortgage Loan Approval in 2024
- Kentucky First-time Home Buyer Programs
- Kentucky FHA Mortgage Information
- Kentucky VA Mortgage Loan Information
- USDA Rural Housing Kentucky Loan Information
- Zero Down Kentucky Mortgages
- First-time Home-buyers in Kentucky
- Documents Needed Mortgage Approval in Kentucky
- Free Credit Score Booklet
- Do's & Dont's before closing:
- Closing Costs Kentucky Mortgage
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Disputes on Credit Report and Kentucky Mortgage Loan Approval?
Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports
Consumer Reporting Agencies to Remove Most Medical Debt From Credit Reports
The three nationwide credit reporting agencies, Equifax, Experian and TransUnion, announced that effective July 1, 2022, they will no longer include medical debt that was paid after it was sent to collections on consumer credit reports.
The companies’ CEOs provided a joint statement on the decision to change their approach to medical collection debt reporting:
“Medical collection debt often arises from unforeseen medical circumstances. These changes are another step we’re taking together to help people across the United States focus on their financial and personal wellbeing,” said Mark W. Begor, CEO Equifax; Brian Cassin, CEO Experian; and Chris Cartwright, CEO TransUnion. “As an industry we remain committed to helping drive fair and affordable access to credit for all consumers.”
The time period before unpaid medical collection debt would appear on a consumer’s report will be increased from 6 months to one year, according to a press release, “giving consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file.”
In the first half of 2023, Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports.
The changes will remove nearly 70% of medical debt in collections accounts from consumer credit reports.
How do collections and charge offs on the credit report affect a Kentucky VA Mortgage Loan Approval?
In order to get approved for a Kentucky VA loan with outstanding collections and charge offs listed on
Collections & Charge Offs are two different things. Below is what VA saying about them:
Collection Accounts
Isolated collection accounts do not necessarily have to be paid off as a condition for loan approval. A credit report may show numerous satisfactory accounts and one or two unpaid medical (or other) collections. In such instances, while it would be preferable to have collections paid, it would not necessarily be a requirement for loan approval.
However, collection accounts must be considered part of the borrower's overall credit history and unpaid collection accounts should be considered open, recent credit.
Borrowers with a history of collection accounts should have re-established satisfactory credit in order to be considered a satisfactory credit risk.
While VA does not require that collection accounts be paid-off prior to closing if the borrower's overall credit is acceptable, an underwriter must address the existence of the collection account(s) with an explanation on VA Form 26-6393, Loan Analysis, for excluding the negative credit history they represent.
If the collection account is listed on the credit report with a minimum payment, then the debt should be recognized at the minimum payment amount.
Charged off Accounts
These accounts are typically collections in which the creditor is no longer pursuing collection of the account. The underwriter must address the circumstances regarding the negative credit history when reviewing the overall credit of the borrower(s).
2 different topics best if you can send me credit to review.
· Charged off accounts generally ignored
· Collection accounts on Federal debt are a big issue so we careful there
· Collections not required to be paid off unless they are extremely high
· Manual Underwrite we do require an LOE from Veteran for collections
· What happened, what they did to resolve, what are they doing in the future to either resolve or to prevent this from happening and finally if they are going to enter into a payment plan or not. Ultimately on the resolution of the collection the UW does not care but VA requires that as part of LOE.
Hope this helps send me credit for full evaluation.
The VA underwriter will want to verify the Kentucky Mortgage Veteran has the ability to pay these items or will want to know how they were paid off before closing.
Any collection or charge off showing as a judgement or lien on the VA mortgage applicant's credit report, must be paid before closing. These affect the title and must be paid before the mortgage is recorded.
Senior Loan Officer
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kentuckyloan@gmail.com
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FHA CHANGES TO HANDLING OF COLLECTIONS, JUDGEMENTS AND DISPUTED ACCOUNTS ON CREDIT REPORT
- Applicable to Manually Underwritten Loans: The lender must document reasons for approving a mortgage when the borrower has collection accounts or judgments.
- The borrower's disregard for financial obligations;
- The borrower's inability to manage debt; or
- Extenuating circumstances.
- Applicable to Loans Run Through TOTAL Mortgage Scorecard: TOTAL Mortgage Scorecard Accept/Approve - There are no documentation or letter of explanation requirements for loans with collection accounts or judgments run through TOTAL Mortgage Scorecard receiving an "Accept/Approve" despite the presence of collection accounts or judgments. These accounts have been already taken into consideration in the borrower's credit score. If TOTAL Mortgage Scorecard generates a"Refer," the lender must manually underwrite the loan in accordance with the guidance above applicable to manually underwritten loans with collection accounts and judgments.
- At the time of or prior to closing, payment in full of the collection account (verification of acceptable source of funds required).
- The borrower makes payment arrangements with the creditor. If the borrower has entered into a payment arrangement with the creditor, a credit report or letter from the creditor verifying the monthly payment is required. The monthly payment must be included in the borrower's debt-to-income ratio.
- If evidence of a payment arrangement is not available, the lender must calculate the monthly payment using 5% of the outstanding balance of each collection, and include the monthly payment in the borrower's debt-to-income ratio.
Disputed Derogatory Credit Accounts greater than or equal to $1,000
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If the cumulative outstanding balance of disputed derogatory credit accounts of all borrowers is equal to or greater than $1,000, the mortgage application must be downgraded to a"Refer" and a Direct Endorsement underwriter is required to manually underwrite the loan as described above.
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Disputed Derogatory Credit Accounts less than $1,000
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If the cumulative outstanding balance of disputed derogatory credit accounts of all borrowers is less than $1,000, a downgrade is not required.
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Excluded Accounts
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- disputed charge-off accounts,
- disputed collection accounts, and
- disputed accounts with late payments in the last 24 months.
- disputed accounts with zero balance,
- disputed accounts with late payments aged 24 months or greater, and
- disputed accounts that are current and paid as agreed.
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Can you get a Kentucky Mortgage Loan with Bad Credit or less than Perfect Credit?
Disputed accounts on credit report
Below I have listed one of the most popular programs Kentucky Home Buyers need to consider when buying a home in 2020 if they have experienced some of the credit issues mentioned above:
When it comes to getting a mortgage loan with past credit problems, FHA is probably going to be your best bet.
They're the most lenient on credit scores, down payment requirements and credit history when it comes to qualifying for a Kentucky Home Loan.
I have listed below some of the requirements you must overcome to get approved for a Kentucky FHA home loan.
The credit score requirements for Kentucky FHA home loans:
FHA says on paper in their written guidelines that they will insure a FHA loan down to 500 - 579 with a 10% down payment or 580+ with a 3.5% down payment. However, in the real world of lending in the secondary market, most lenders will not adhere to these guidelines.
Be aware there are a lot of credit scores out there, but each lender must pull their own credit report and credit scores to determine your creditworthiness. I would shop around first to see what the requirements are for each FHA lender before they pulled your credit report.
Mortgage lenders use the FICO score model below for each credit bureau when they look at your credit scores.
- Experian FICO Score 2 (also known as EX-98 or Risk Model v2)
- Transunion FICO Score 4 (also known as TU-04 or Transunion FICO Risk Score Classic 04)
- Equifax FICO Score 5 (also known as EQ-04 or Beacon 5).
Bankruptcy Requirements for Kentucky FHA Home Loans:
Collections on Credit Report Requirements for Kentucky FHA Home Loans:
- If the credit report shows a cumulative balance of $2,000 or more for collection accounts:
- The debt(s) must be paid in full prior to or at closing, or
- Payment arrangements must be made with the creditor and the monthly payment included in the DTI, or
- A monthly payment of 5% of the outstanding balances of each collection must be included in the borrower’s DTI.
- Collection accounts of non-borrowing spouses in a community property state must be included in the $2,000 cumulative balance and analyzed as part of the Borrower’s ability to pay all collection accounts. Community property states are Arizona, California, Texas, Washington, and Wisconsin
- Medical collections and charge offs are excluded from this
guidance.B. Judgments – Loans for borrowers with outstanding judgments are
generally not acceptable unless the following documentation is obtained.
a. Judgment must be on the credit report that is linked to the TOTAL
Scorecard findings and the findings must be “approve/eligible” or
“accept/accept.”
b. If the judgment will not be paid off and released prior to the
closing, evidence of a payment agreement may be considered. The
payment agreement must be in writing and provided at the time of
underwriting. Crescent will require evidence that 12 months
satisfactory payments have been made as scheduled. Borrowers
may not pre-pay scheduled payments in order to meet this
requirement. The monthly payment must be considered in the
borrower’s debt-to-income ratio for qualifying.
c. Any judgments that are discovered in the processing of the loan
that ARE NOT on the credit report linked to the TOTAL findings
require the loan to be manually downgraded to “refer” status.
Crescent does not approve loans that must be manually
downgraded.
d. A subordination agreement will be required for any judgment that
is also a lien against the borrower and/or the subject property.
C. Disputed Accounts – Because disputed accounts are not generally
considered in the borrower’s credit report FHA will now require loans of
borrowers who have derogatory disputed accounts with cumulative
balances of $1000 or more (excluding medical) to be downgraded to
“refer” findings and manually underwritten. As you are aware, Crescent
does not approve loans that require manual underwriting.
NOTE 1: Disputed derogatory credit account of a non-purchasing spouse
in a community property state are not included in the cumulative balance
for purposes of determining if the mortgage application must be
downgraded to a “refer.”
NOTE 2: Disputed medical collections are excluded from the $1000 limit
as are derogatory credit accounts resulting from identity theft, credit theft
unauthorized use, etc. However, documentation must be provided to
conclusively support the disputed status. Documentation might entail
police reports, letters from the creditor, etc.
II. ML 2013-26 – Back to Work-Extenuating Circumstances
The guidance provided in ML 13-26 requires loans to be manually
underwritten. For this reason Crescent cannot approve loans that need these
credit underwriting leniencies. III. ML 2013-29 – Application of Unused Funds from
Senior Loan Officer
CREDIT RULE CHANGES FOR KENTUCKY HOME BUYERS FOR GETTING A MORTGAGE LOAN WITH COLLECTIONS ON CREDIT REPORT
CREDIT RULE CHANGES FOR KENTUCKY HOME BUYERS FOR GETTING A MORTGAGE LOAN WITH PREVIOUS COLLECTIONS ON CREDIT REPORT
**Collections that aren’t at least 180 days old will be rejected by the 3 major credit bureaus. You will now have time to pay them off before it is even reported.
**Medical collections will no longer show on credit reports as long as it is being paid (through either you or insurance).
**Collection accounts that have not been updated in six months or more will not be factored into scores.
**Any collection that did not result from a contract or agreement to pay by the consumer, will be removed.
Mortgage Loan Officer
email: kentuckyloan@gmail.com
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How do Judgements affect a Kentucky Mortgage Loan Approval?
- All judgments must be paid off prior to the loan closing unless there is a written agreement for a payment plan.
- In order to accept a payment plan for a judgment, the written agreement must be provided along with evidence that at least 3 payments have been made and that all payments have been made on time.
- Any payment plan for a judgment must have its monthly payment include in the DTI calculation.
- Judgments of a Non-Purchasing Spouse in a community property state must be included, unless excluded by state of Kentucky
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phone: (502) 905-3708