Extenuating Circumstances: Detailed

Extenuating Circumstances: Detailed

Fannie Mae

FNMA.Selling Guide.Extenuating Circ

Fannie Mae Selling Guide: B3-5.3-08, Extenuating Circumstances for Derogatory Credit (12/16/2014)

https://www.fanniemae.com/content/guide/selling/b3/5.3/08.html

https://www.fanniemae.com/content/guide/sel121614.pdf#page=535

Extenuating Circumstances

Extenuating circumstances are nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.

If a borrower claims that derogatory information is the result of extenuating circumstances, the lender must substantiate the borrower’s claim. Examples of documentation that can be used to support extenuating circumstances include

  • documents that confirm the event
    • such as a copy of a divorce decree, medical reports or bills, notice of job layoff, job severance papers, etc.; and
  • documents that illustrate factors that contributed to the borrower’s inability to resolve the problems that resulted from the event
    • such as a copy of insurance papers or claim settlements, property listing agreements, lease agreements, tax returns (covering the periods prior to, during, and after a loss of employment), etc.

The lender must obtain a written explanation from the borrower explaining the relevance of the documentation. The written explanation must support the claims of extenuating circumstances, confirm the nature of the event that led to the bankruptcy or foreclosure-related action, and illustrate that the borrower had no reasonable options other than to default on his or her financial obligations. The written explanation may be in the form of a letter from the borrower, an email from the borrower, or some other form of written documentation provided by the borrower.

Updated Selling Guide Topics
B3-5.3-08, Extenuating Circumstances for Derogatory Credit


 Freddie Mac

FHLMC.UW Reminders.LP Caution header

Extenuating Circumstances

http://www.freddiemac.com/learn/pdfs/uw/caution_remind.pdf

Evaluating Credit Reputation

Freddie Mac considers an extenuating circumstance to be a nonrecurring or isolated circumstance, or set of circumstances that:

·         Was beyond the Borrower’s control,

·         Significantly reduced income and/or increased expenses, and

·         Rendered the Borrower unable to repay obligations as agreed, resulting in significant adverse or derogatory credit information.

In addition, if the Borrower’s credit history includes significant adverse or derogatory credit within the most recent two years, even if it was caused by extenuating circumstances, the Borrower’s credit reputation cannot be considered acceptable.

When the Seller uses extenuating circumstances to justify the Borrower’s credit reputation is acceptable despite significant adverse or derogatory information, the Seller must confirm the extenuating circumstances and that the Borrower has reestablished an acceptable credit reputation.

If the Seller cannot obtain third-party documentation confirming the extenuating circumstances and reestablishment of credit, it cannot consider the extenuating circumstance as an acceptable offset to significant adverse or derogatory credit information.

Recovery Time Periods for Reestablishing Credit

Must have reestablished an acceptable credit reputation for a period of at least:

·         36 months for a previous foreclosure*

·         24 months from the execution date of a deed- in-lieu of foreclosure*

·         24 months from the completion date of any short sale*

·         24 months after the discharge or dismissal of a bankruptcy,

·         24 months for all other significant adverse or derogatory credit information

*For a previous foreclosure, deed-in-lieu of foreclosure or short sale within the last seven years, the Mortgage must be either:

·         A purchase transaction secured by a Primary Residence with a maximum LTV/TLTV/HTLTV ratio of the lesser of 90% or the maximum LTV/TLTV/HTLTV ratio for the transaction, or

·         A “no cash-out” refinance Mortgage meeting the requirements of Guide Chapter 24.

Mortgage file must contain:

·         A written statement from the Borrower regarding the cause of the financial difficulties to outside factors beyond the Borrower’s control

·         Third-party documentation confirming that the events related by the Borrower in the explanation were an isolated occurrence and significantly reduced the Borrower’s income and/or increased expenses and rendered the Borrower unable to repay as agreed

·         Evidence on the credit report and other documentation in the Mortgage file of the length of time since completion of the significant derogatory event to the date of application and of completion of the recovery time period requirements.

Underwriting Analysis (Form 1077)

The Seller must explain on the Form 1077 (or other document in the file) the rationale supporting its determination that:

·         The events causing the financial difficulties were beyond the Borrower’s control, are not ongoing, and are unlikely to recur

·         An acceptable credit reputation has been reestablished

Freddie Mac also recommends that you provide calculations for significant qualifying data (income, assets, debts, reserves) and the reasoning for your lending decision.


Federal Housing Administration (FHA)

FHA 4155.1 / Chapter 4, Section C HUD 4155.1 4-C-12

http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4155.1/41551HSGH.pdf

2. Guidelines for Credit Report Review

4155.1 4.C.2.f/ Previous Mortgage Foreclosure

A borrower is generally not eligible for a new FHA-insured mortgage if, during the previous three years

· his/her previous principal residence or other real property was foreclosed, or

· he/she gave a deed-in-lieu of foreclosure.

Exception: The lender may grant an exception to the three-year requirement if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower, such as a serious illness or death of a wage earner, and the borrower has re-established good credit since the foreclosure.

Divorce is not considered an extenuating circumstance. An exception may, however, be granted where a borrower’s loan was current at the time of his/her divorce, the ex-spouse received the property, and the loan was later foreclosed.

Note: The inability to sell the property due to a job transfer or relocation to another area does not qualify as an extenuating circumstance.

 4155.1 4.C.2.g/ Chapter 7 Bankruptcy

A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. During this time, the borrower must have

· re-established good credit, or

· chosen not to incur new credit obligations.

An elapsed period of less than two years, but not less than 12 months, may be acceptable for an FHA-insured mortgage, if the borrower

· can show that the bankruptcy was caused by extenuating circumstances beyond his/her control, and

· has since exhibited a documented ability to manage his/her financial affairs in a responsible manner.

Note: The lender must document that the borrower’s current situation

indicates that the events which led to the bankruptcy are not likely to recur.

FHA BAck to work header

http://portal.hud.gov/hudportal/documents/huddoc?id=13-26ml.pdf

 Subject: Back to Work – Extenuating Circumstances

The purpose of this Mortgagee Letter (ML) is to:

·         provide minimum underwriting standards and criteria for evaluating borrowers who have experienced an Economic Event, as defined in this ML, that resulted in a severe reduction in income due to a job loss or other circumstances resulting in reduced Household Income;

·         describe the use of housing counseling to qualify under the provisions of this ML;

·         amend HUD Handbook 4155.1, Chapter 4, Section C to add an Economic Event to the list of examples of extenuating circumstances and instruct lenders to use the guidance for Back to Work – Extenuating Circumstances established in this ML as Chapter 6 Section G, to underwrite an applicant with an Economic Event; and,

·         revise HUD Handbook 4155.1, 4.A.7.e, to clarify the process for requesting a review of information contained in CAIVRS for borrowers seeking an FHA-insured mortgage in accordance with the provisions of this ML.

 Introduction

FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances.

As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre- foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively affected. FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.

To that end, FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that:

·         certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control;

·         the borrower has demonstrated full recovery from the event; and,

·         the borrower has completed housing counseling.

Housing counseling is an important resource for both first-time home buyers and repeat home owners. Housing counseling enables borrowers to better understand their loan options and obligations, and assists borrowers in the creation and assessment of their household budget, accessing reliable information and resources, avoiding scams, and being better prepared for future financial shocks, among other benefits to the borrower.

Effective Date

The guidance in this ML is effective for case numbers assigned on or after August 15, 2013 through September 30, 2016.

 Affected Programs

HUD 4155.1, Mortgage Credit Analysis for Mortgage Insurance

  1. Add Chapter 6 section G, “Back to Work – Extenuating Circumstances,” and the guidance in this ML in its entirety to this new section.
  2. Add to section 4.C.2.f, Previous Mortgage Foreclosure, an Economic Event to the list of examples of extenuating circumstances and instruct lenders to use alternative guidance in Chapter 6.
  3. Add to section 4.C.2.g, Chapter 7 Bankruptcy, instructions to lenders to use alternative guidance in Chapter 6 when the extenuating circumstance is a result of an Economic Event.

Note: This ML will serve as Section G until the 4155.1 Handbook can be updated.

 Applicability

The guidance in this ML is applicable to purchase money mortgages in all FHA programs with the exception of Home Equity Conversion Mortgages.

Lenders must use the provisions of this ML when considering a borrower who experienced an Economic Event, as defined in this ML, which resulted in a foreclosure, short sale, bankruptcy or other negative impact on their credit, and whose application has been issued a “Refer” recommendation by TOTAL Scorecard, or received an “Accept/Approve” but is manually downgraded.

In addition to meeting the guidelines set forth in this ML, loans originated using these criteria must meet all other applicable FHA eligibility and policy criteria. Lenders remain responsible for determining whether the borrower meets all other HUD requirements before approving the loan.

 Eligibility for Borrowers affected by an Economic Event

Borrowers that may be otherwise ineligible for an FHA-insured mortgage due to FHA’s waiting period for bankruptcies, foreclosures, deeds-in-lieu, and short sales, as well as delinquencies and/or indications of derogatory credit, including collections and judgments, may be eligible for an FHA-insured mortgage if the borrower

can document that the delinquencies and/or indications of derogatory credit are the result of an Economic Event as defined in this ML,
has completed satisfactory Housing Counseling, as described in this ML, and
meets all other HUD requirements.

 Definitions

An Economic Event is any occurrence beyond the borrower’s control that results in Loss of Employment, Loss of Income, or a combination of both, which causes a reduction in the borrower’s Household Income of twenty (20) percent or more for a period of at least six (6) months.

The Onset of an Economic Event is the month of Loss of Employment/Income.

Recovery from an Economic Event is the re-establishment of Satisfactory Credit (as defined on page 5 of this ML) for a minimum of twelve (12) months.

The term borrower includes borrowers and co-borrower.

Borrower Household Income means the gross income of the borrower and all Household Members, as defined below, for purposes of assessing loss of income. The gross income of each Household Member must be computed in accordance with FHA income requirements.

Note: Household Member, for the purpose of this ML, means an individual residing at the borrower’s primary residence at the time of the Economic Event and who was a co-borrower on the borrower’s previous mortgage.

Note:Borrower Household Income is used for the purpose of defining an Economic Event. Only the income from the borrower, not Household Income, may be used as Effective Income for the purpose of qualifying for the new loan.

 Housing Counseling, for purposes of this ML, means counseling from a HUD-approved housing counseling agency related to homeownership and residential mortgage loans that is provided in accordance with 24 C.F.R. part 214 “Housing Counseling Program” and satisfies the requirements identified in Satisfactory Housing Counseling.

 Satisfactory Credit

  1.  Satisfactory Credit: Requirements

The lender may deem a borrower to have Satisfactory Credit if:

  • the borrower’s credit history is clear of late housing or installment debt payments, and major derogatory credit issues on revolving accounts;
  • any open mortgage is current and shows twelve (12) months satisfactory payment history. Mortgages may have been brought current through loan modification, which may be “temporary” or “permanent” so long as all payments have been documented as being received in accordance with the modification agreement(s); and
  • the borrower meets the requirements of this ML.

When evaluating a borrower with non-traditional credit history, the lender may deem a borrower to have Satisfactory Credit if the borrower’s non- traditional credit history covering at least twelve (12) months in duration includes:

  • no history of delinquency on rental housing payments; and
  • no more than one thirty (30) days delinquency on payments due to other creditors; and
  • no collection accounts/court records reporting (other than medical and/or identity theft).

Refer to Handbook 4155.1 Chapter 4 Section C for more information on analyzing a borrower with non-traditional credit history.

2. Satisfactory Credit:  Required Documentation

The lender must verify and document a reduction in the borrower’s Household Income of twenty (20) percent or more for a period of at least six (6) months that resulted from the Loss of Employment, Loss of Income, or a combination of both.

A. Loss of Employment

The lender must verify and document the Loss of Employment by obtaining:

A written Verification of Employment (VOE) evidencing the termination date or in cases where the prior employer is no longer in business:

  • a written termination notice, or
  • other publicly available documentation of the business closure, and
  • documentation of receipt of unemployment income.

B. Loss of Income

The lender must verify and document the Borrower’s Household Income prior to Loss of Income by obtaining:

    • a written VOE evidencing prior income; or

 signed tax returns or W-2s evidencing prior income.For a Loss of Income based on seasonal employment, the lender must verify and document a two year history of seasonal employment in the same field just prior to the Loss of Income, in addition to meeting the documentation requirement above.For a Loss of Income based on part-time employment, the lender must verify and document a two year history of continuous part-time employment just prior to the Loss of Income in addition to meeting the documentation requirement above.

 C.  Post Economic Event Income

The lender must verify and document the Borrower’s Household Income after the onset of the Economic Event in accordance with the guidance in Handbook 4155.1 Chapter 4 sections D and E (pgs 184-222) and ML 12-3.

 3. Satisfactory Credit: Analysis

The lender must then analyze the documentation to determine the Loss of Employment and/or Loss of Income resulted in a minimum twenty (20) percent reduction in income for a minimum of six (6) months.

Note: Even if the Household Member (as defined in this ML) is not an applicant on the current loan, the lender is responsible for obtaining the necessary authorizations to verify Household Members employment or income as part of the requirement to document reduction in household income at the time of the event.

Analysis of Economic Event-Related Payments or Credit Deficiencies

The lender must first analyze and document (1) all delinquent accounts and all indications of derogatory credit, including collections and judgments, bankruptcies, foreclosures, deeds-in-lieu, short sales, and other credit problems, to determine whether associated late payment, credit deficiencies or other credit problems were the result of an Economic Event, or an inability to manage debt or a general disregard for managing financial obligations.

To establish that borrower’s derogatory credit was the result of an Economic Event, the lender must review the credit report and determine that:

    •  the borrower exhibited Satisfactory Credit prior to the Economic Event Onset;
    •  the borrower’s derogatory credit occurred after the Economic Event Onset, and

 the borrower has re-established Satisfactory Credit for a minimum of twelve (12) months.

Required Documentation

 A. Economic Event-Related Collections and Judgments

The lender must verify and document all collections and judgments were the result of the Economic Event.

For borrowers with open collection accounts or judgments, the lender must also meet the requirements of Handbook 4155.1, Section 4.C.2.e, Analysis of Collections and Judgments. (pg. 171).

 B. Economic Event-Related Mortgage Foreclosure

The lender must verify and document that:

  • a minimum of twelve (12) months have elapsed since the date of foreclosure or deed-in-lieu; and
  •  the foreclosure or deed-in-lieu was the result of the Economic Event.

C. Economic Event-Related Short Sale

The lender must verify and document that:

  • a minimum of (12) months have elapsed since the date of sale; and
  •  the short sale was the result of the Economic Event.

D. Economic Event-Related Chapter 7 Bankruptcy

The lender must verify and document that:

  • a minimum of twelve (12) months have elapsed since the date of discharge of the bankruptcy; and
  • the bankruptcy was the result of the Economic Event.

E. Economic Event-Related Chapter 13 Bankruptcy

The lender must verify and document that:

  • the Chapter 13 Bankruptcy was discharged prior to loan application and all required bankruptcy payments were made on-time, or a minimum of twelve (12) months of the pay-out period under the bankruptcy has elapsed and all required bankruptcy payments were made on time; and
  • the bankruptcy was the result of the Economic Event.

If the Chapter 13 Bankruptcy was not discharged prior to loan application, the lender must also verify and document that the borrower has received written permission from the Bankruptcy Court to enter into the subject mortgage transaction.

Economic Event-Related Factor – Housing Counseling

 Housing Counseling

1. Satisfactory Housing Counseling: Requirements

To qualify for purposes of establishing Satisfactory Credit following an Economic Event, participants in this FHA initiative must:

  • receive homeownership counseling or a combination of homeownership education and counseling provided that each participant receives, at a minimum, one hour of one-on-one counseling from HUD-approved housing counseling agencies, as defined at 24 C.F.R. §214.100. The counseling must address the cause of the economic event and the actions taken to overcome the economic event and reduce the likelihood of reoccurrence. The housing education may be provided by HUD-approved housing counseling agencies, state housing finance agencies, approved intermediaries or their sub-grantees, or through an on-line course, and
  • be completed a minimum of thirty (30) days but no more than six (6) months prior to submitting a loan application to a lender, as application is defined in Regulation X, implementing the Real Estate Settlement Procedures Act, 24 C.F.R. §3500.2(b).

Housing counseling may be conducted in person, via telephone, via internet, or other methods approved by HUD, and mutually agreed upon by the borrower and housing counseling agency, as provided for in the regulations at 24 CFR §214.300 and in the Housing Counseling Handbook.
A list of agencies can be obtained online at http://www.hud.gov/ or by calling 1 (800) 569-4287.

B. Housing Counseling Fees

Housing Counseling provided to potential borrowers who experienced an Economic Event may be funded through any means permitted by the HUD Housing Counseling Program, see 24 C.F.R. Part 214 and Handbook 7610.1, Rev-5.

(http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh/7610.1). However, any housing counseling fee must be charged in accordance with 24 C.F.R. §214.313, and must be reasonable, affordable, customary and commensurate with the services provided.

C. Required Disclosures

Housing counseling agencies must provide the following disclosures to all clients:

  • An explicit description of any financial relationships between the agency and any lender;
  • A statement that the borrower is not obligated to pursue a loan with a lender; and
  • A statement that “Completion of this housing counseling program and receipt of a letter of completion of counseling do not qualify {you/the borrower} for an FHA loan. A lender will have to determine if {you/the borrower} qualify for a loan. You understand that you may not be approved for a loan.”

Furthermore, the agency must provide information on alternative services, programs and products that are available.

2. Housing Counseling: Required Documentation

The lender must verify and document that:

  • the borrower has completed the required pre-purchase housing counseling by obtaining a letter from the borrower issued by the Participating Housing Counseling Agency on agency letterhead and that includes the agency’s Tax Identification Number (TIN).  The letter must state:  the borrower’s name, the counselor’s name, that counseling was delivered in accordance with ML 2013-26 requirements, the date upon which counseling was completed, borrower’s signature and the signature of an authorized official of the counseling agency providing the counseling, and
  • the borrower received the proper disclosures (C. Required Disclosures) from the housing counseling agency.

The lender must place the letter evidencing completion of the pre-purchase housing counseling and copies of the housing counseling agency disclosures in the FHA Case Binder immediately after the borrower’s credit report.

Insurance Application Process and more for lender can be found at http://portal.hud.gov/hudportal/documents/huddoc?id=13-26ml.pdf.

Further explanation in 4155.1 HUD manual that may require additional documentation:

4155.1 4.C.2.f Previous Mortgage Foreclosure

A borrower is generally not eligible for a new FHA-insured mortgage if, during the previous three years

· his/her previous principal residence or other real property was foreclosed, or

· he/she gave a deed-in-lieu of foreclosure.

Exception: The lender may grant an exception to the three-year requirement if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower, such as a serious illness or death of a wage earner, and the borrower has re-established good credit since the foreclosure.

Divorce is not considered an extenuating circumstance. An exception may,however, be granted where a borrower’s loan was current at the time of his/her divorce, the ex-spouse received the property, and the loan was later foreclosed.

Note: The inability to sell the property due to a job transfer or relocation to another area does not qualify as an extenuating circumstance.

4155.1 4.C.2.g Chapter 7 Bankruptcy

A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. During this time, the borrower must have · re-established good credit, or chosen not to incur new credit obligations.

An elapsed period of less than two years, but not less than 12 months, may be acceptable for an FHA-insured mortgage, if the borrower · can show that the bankruptcy was caused by extenuating circumstances beyond his/her control, and

· has since exhibited a documented ability to manage his/her financial affairs in a responsible manner.

Note: The lender must document that the borrower’s current situation indicates that the events which led to the bankruptcy are not likely to recur.


Veterans Administration (VA)

VA Lenders Handbook – VA Pamphlet 26-7

Chapter 4 / Credit Underwriting

http://benefits.va.gov/WARMS/docs/admin26/pamphlet/pam26_7/ch04.doc

e. Bankruptcy
The fact that a bankruptcy exists in an applicant’s (or spouse’s) credit history does not in itself disqualify the loan.  Develop complete information on the facts and circumstances of the bankruptcy.  Consider the reasons for the bankruptcy and the type of bankruptcy filing.

Bankruptcy Filed Under the Straight Liquidation and Discharge Provisions of the Bankruptcy Law

You may disregard a bankruptcy discharged more than 2 years ago.

If the  bankruptcy was discharged within the last 1 to 2 years, it is probably not possible to determine that the applicant or spouse is a satisfactory credit risk unless both of the following requirements are met:

·   the applicant or spouse has obtained consumer items on credit subsequent to the bankruptcy and has satisfactorily made the payments over a continued period, and

·   the bankruptcy was caused by circumstances beyond the control of the applicant or spouse such as unemployment, prolonged strikes, medical bills not covered by insurance, and so on, and the circumstances are verified.  Divorce is not generally viewed as beyond the control of the borrower and/or spouse.
e. Bankruptcy (continued)
If the bankruptcy was caused by failure of the business of a self-employed applicant, it may be possible to determine that the applicant is a satisfactory credit risk if

–    the applicant obtained a permanent position after the business failed,

–    there is no derogatory credit information prior to self-employment,

–    there is no derogatory credit information subsequent to the bankruptcy, and

–    failure of the business was not due to the applicant’s misconduct.

If a borrower or spouse has been discharged in bankruptcy within the past 12 months, it will not generally be possible to determine that the borrower or spouse is a satisfactory credit risk.

Petition Under Chapter 13 of the Bankruptcy Code

This type of filing indicates an effort to pay creditors.  Regular payments are made to a court-appointed trustee over a 2 to 3 year period or, in some cases, up to 5 years, to pay off scaled down or entire debts.

If the applicant has finished making all payments satisfactorily, the lender may conclude that the applicant has reestablished satisfactory credit.

If the applicant has satisfactorily made at least 12 months worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit, the lender may give favorable consideration.

f. Foreclosures

The fact that a home loan foreclosure (or deed-in-lieu of foreclosure) exists in an applicant’s (or spouse’s) credit history does not in itself disqualify the loan.

·   Develop complete information on the facts and circumstances of the foreclosure.

·   Apply the guidelines provided for bankruptcies filed under the straight liquidation and discharge provisions of the bankruptcy law.  See the preceding heading entitled “Bankruptcy.”

If the foreclosure was on a VA loan, the applicant may not have full entitlement available for the new loan.  Ensure that the applicant’s Certificate of Eligibility reflects sufficient entitlement to meet any secondary marketing requirements of the lender.


USDA

 UNDERWRITING GUIDELINES

(Credit Requirements) Guaranteed Rural Housing Loan Program

http://www.rd.usda.gov/files/CA-SFHUnderwritingGuide.pdf

United States Department of Agriculture Rural Development
Credit History

Applicants must have a credit history that indicates a reasonable ability and willingness to meet obligations as they become due. A credit history reflecting any or all of the following is considered unacceptable credit history:

 More than one 30-day late within the past 12 months.

 Bankruptcy or foreclosure discharged less than 36 months

 Outstanding judgments within the past 12 months

 Two or more rent payments 30 days late within the past 3 years.

 Outstanding collection accounts with no payment arrangements

 Outstanding tax liens or delinquent federal debt with no payment arrangements

 Accounts converted to collections in the past 12 months.

 Mitigating Factors to Unacceptable Credit:

Adverse credit waivers may be granted for mitigating factors to establish the applicant’s intent to good credit. Lenders must document these circumstances which were beyond the borrower’s control and have been removed: 
Circumstances for adverse credit were temporary in nature, beyond the applicant’s control and have been removed. Examples: increased expenses due to illness and/or medical expenses, injury, death, etc.

Tri-merge credit reports are required and must be no more than 90 days old at the time the Conditional Commitment is issued

 Applicants must not be delinquent on any debts owed to the Federal Government

 CAIVRs must be checked and documented in the loan submission package.