As of July 1st, 2012, a new FHA rule will take into effect forcing home borrowers to pay off all their collections if the total amount equals or exceeds $1,000.

This rule also involves a "non-purchasing spouse." So if the spouse is not involved in the loan but he/she has collections totalling $1,000 or more, these collections must be paid off.

In this rule applies, the borrower(s) must have these accounts paid in full at the time of, or prior to closing or proof that the borrower has been in a payment plan for at least 3 months -with verified payments  as agreed- before closing.

Therefore having a score of 620 or even 640 may not be enough. There is still time to avoid this rule. Per FHA, if you have your case number prior to July 1 you do not have to pay the collections off. Your closing can be after July 1, but you only need to have an accepted offer by July 1.

If you have more questions, please do not hesitate to Email me or contact me at 713-589-3234 for more information.

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