HUD Guidelines on Credit Disputes on FHA Loans
This guide will cover the HUD guidelines on credit disputes on FHA loans. Strict HUD agency guidelines must be followed during the mortgage application and approval process to qualify for FHA loans with credit disputes. What is a credit dispute? Dale Elenteny, a senior commercial loan officer at Lending Network, LLC, explains credit disputes during the mortgage process:
A credit dispute is when a consumer challenges/disputes a derogatory credit item or tradeline on their credit report. They aim to correct or delete it from their consumer credit report/profile. An example of a credit dispute would be if you had a charge-off on your credit report from Chase Bank and would like it deleted from your consumer credit report.
You can get it deleted from your consumer credit report by disputing the Chase Bank derogatory mark because it is not yours, it is reported incorrectly, or the charge-off is incorrect to the three major credit reporting agencies, TransUnion, Equifax, and Experian. Countless consumers do a credit repair or hire credit reporting companies to delete derogatory items. In the following paragraphs, we will cover the HUD guidelines on credit disputes.
HUD Guidelines on Credit Disputes Versus Other Loan Programs
There are countless credit repair companies in the United States, and seemingly new ones are constantly popping up. Common sense would suggest that if there are continual credit repair start-ups and thousands of companies, credit repair must work and benefit consumers.
Like any business, there are credible, reputable credit repair companies and those that are not credible or reputable. The consumer can do almost anything a credit repair consultant can, but it will require time and patience. The professionals that do this daily understand the tricks of the trade and often have a rapport with associates within creditors.
During the 2008 meltdown, I had to negotiate some of my debt responsibility and made the necessary calls to some of my creditors. The result was frustrating, they didn’t know I was a number, and their immediate resolve was to increase the penalties and interest on my credit line, increasing the payment.
Does Credit Repair Work?
I MET WITH A PROFESSIONAL when I resolved that I did not have time to navigate the process independently. Their group had an agreement to settle my debt and stop the negative reporting with only a couple of conversations.
When I asked why it became known one of the negotiators used to work for the creditor in question and made a call on my behalf. The same holds within the credit repair side after the derogatory has been reported. Those professionals in the field know the ropes and can quickly navigate to the result of removing derogatory marks. In a few months,
I have seen credit repair remove judgments, bankruptcies, foreclosures, charge-offs, collection accounts, and even tax liens from a person’s consumer credit report. The Larry Stepp Team has seen Credit Fix Advisors remove items, and I cannot tell you how they do it, but they do. They have good reviews, and I have seen positive results.
HUD Guidelines on Credit Disputes: Medical Collection Accounts
HUD guidelines on credit disputes allow borrowers to qualify for an FHA loan with credit disputes on medical collection accounts. Medical collection accounts are treated entirely differently by HUD than non-medical accounts.
A borrower or mortgage applicant can have several credit disputes for medical collection accounts and still qualify for an FHA Mortgage Loan. The key part is disputed on unpaid MEDICAL collection items. HUD does allow credit disputes on non-medical collection accounts with zero collection balances.
HUD will allow credit disputes on unpaid collection balances up to $1,000. However, if the unpaid collection balance exceeds $1000 total, a borrower/applicant must have the credit disputes retracted from their credit report. You cannot have any credit disputes on any charge-off collection accounts. If you do, then to proceed with the mortgage application process, you must retract the dispute.
HUD Guidelines on Credit Disputes: Negative Impact of Removing Disputes
If you are considering becoming a homeowner and have open credit disputes, you may decide to retract them early. Your credit scores will drop when you retract your credit disputes from the credit reporting agencies TransUnion, Experian, and Equifax.
There are hundreds of credit repair companies, and credit repair does work. Credit collection accounts, late payments, charge-offs, bankruptcies, foreclosures, and tax liens can be removed from your consumer credit report.
Keeping this in mind before you apply for a mortgage may help you make a decision based on good information. Your credit scores dropping will not be permanent. Over time your credit scores will improve, rebounding from the retractions of your credit disputes after the disputes have been removed.
