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FHA postpones rule change for borrowers in debt disputes

Implementation now set for July 1 after additional input and guidance

Editor's note: This article is republished with permission of Builder magazine. Some references to dates have been changed. View the original article: "FHA Ban on Loans to Collections-Plagued Buyers Postponed." By TERESA BURNEY Jeremy Radack, a real estate attorney who works with Texas builders to obtain mortgages for buyers, recently got a glimpse of what a proposed FHA rule change would mean to his business. "We saw about a 30 percent to 35 percent decrease in sales," said Radack. Starting April 1, FHA implemented a new rule that prevented mortgage applicants with $1,000 or more in disputed collections accounts from getting a federally backed loan unless they pay off the debt or can show a multimonth history of paying it down.On Thursday, April 5, FHA backpedaled on the rule change that it announced in late February. It revised it to exempt unresolved collections that borrowers could show were related to "life events" like me...

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