Investors Take Notice

[Vincent D.]

As profiled in an article on CNN Money (http://money.cnn.com/2012/03/30/real_estate/FHA-loans/index.htm), the FHA is actually taking initiative to make it MORE DIFFICULT TO OBTAIN MORTGAGE LOANS. Even folks with perfect credit, for example, can be denied FHA support if they have a $1000+ credit charge dispute. I'm not sure how prolific this instance will be, in practice, but at the least this new imposition will tighten credit even further. This has downside implications for OO homebuyers as well as investors seeking to buy with leverage, or sell to mortgage-leveraged buyers.

In any case, it might be dangerous to ignore the matriculations and subsequent trends spawned by this new policy, active TODAY, APRIL 1, 2012. Food for thought.

Vince

[Ophelia Nicholson]

Sorry to burst your bubble Vincent but this is nothing new. We have always reviewed credit and if there is a dispute had the borrower get the dispute resolved or removed and then repulled credit.

The issue is simple when you have a dispute on your credit report it skews the report- Meaning if I have a 1k credit card with lots of lates and I have an ongoing dispute the report doesn't calculate this account as the dispute is unresolved so my score maybe higher than it normally would- This is a tactic alot of people use to make the score a little higher.

Really in the long run I don't see this as a negative effect to investors more as a positive- If my buyers were going to get mortgages with credit reports that had chargeoffs then this rule probably ensures my buyers will be more qualified as they would have paid off thier stuff and taken all accounts out of dispute before they put a contract on one of my houses.