New FHA Change may affect nearly 35% of the Kansas City Home Buyers who Obtain a FHA Mortgage

New FHA Change may affect nearly 35% of the Kansas City Home Buyers who Obtain a FHA Mortgage


A little known change that took affect this April with approving a FHA mortgage may affect home buyers buying a home in Kansas City


The change is FHA says it will no longer approve a mortgage loan application for borrowers who have an outstanding or disputed account that equals to $1,000 or more in unpaid bills.


Under its new rule, when collection items total $1,000 or more, the accounts will need to be paid off over a period of several months or be paid in full at or before the closing. For an easier approval it is recommended to have the accounts paid off prior to submitting a loan application. In cases where the collections or disputed debts are attributable to identity theft, credit card theft or unauthorized use of the applicant's credit — or when collection accounts total less than $1,000 and are at least 2 years old — the new rule may be waived. Borrowers who have encountered "life events" such as death, divorce or loss of employment may also provide documentation to their lenders to support a waiver, according to a policy clarification issued by the agency.

The recent change is expected to affect nearly 35% of the home buyers who obtain a FHA mortgage this year. 

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