Recently HUD/FHA issued three new mortgagee letters that on the surface indicates a new way that HUD/FHA is going to treat borrowers with past credit problems.
The reason for my skepticism is due to credit scoring. HUD/FHA allows a FHA borrower with 10% down with a credit score as low as 500. Borrowers with credit scores 580 and above can obtain maximum financing. The FHA allows credit scores as low as 500, however, most institutional investors have overlays that prevent FHA borrowers to obtain FHA financing with credit scores below 640 some not lower than 620.
Senior Loan Officer
Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*