FHA retreats on tough new credit rules for borrowers

FHA retreats on tough new credit rules for borrowers

In a policy switch that could be important to thousands of applicants seeking low-down-payment home mortgages, the Federal Housing Administration has rescinded tough new credit restrictions that had been scheduled to take effect this Sunday.

The policy change would have affected borrowers who have one or more collections or disputed-bill accounts on their national credit-bureau files, where the aggregate amounts were $1,000 or greater.

Some industry experts estimate that if the now-rescinded rules had gone into effect, as many as one in three FHA loan applicants would have had difficulty being approved.

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