The Federal Housing Administration decided to roll back a rule that makes it harder for borrowers with credit disputes on their reports to qualify for FHA-backed mortgages. The widely criticized rule shut out too many potential borrowers from qualifying for a mortgage. The new rule originally took effect April 1 but is postponed a month until July 1 as the FHA further reviews the policy change. The guideline requires borrowers to qualify for an FHA-insured mortgage to pay off credit disputes in their history of more than $1,000 and set up a documented payment plan on any unpaid collection accounts.
“FHA killing off the rule is not a surprise when you take into account the resounding objection from the housing finance community and is expected to have the greatest impact on young, first-time borrowers. The ripple effect will have a notable impact on the housing market (June 16, 2012)