FHA Disputed Derogatory Credit
When reviewing your borrower’s credit report for an FHA loan, we need to assess any delinquent derogatory trade lines.
If a borrower has $1000 or more collectively in Disputed Derogatory credit amounts, we are required to manually downgrade the loan that receives or received a AUS Approval recommendation. This refers to disputed charge-off accounts, collections accounts, and disputed accounts with late payments in the last 24 months.
Exclusions from the cumulative balance include the following
- Disputed medical accounts; and
- Disputed derogatory credit resulting from identity theft, credit card theft, or unauthorized use. To exclude these balances, include a copy of the police report or other documentation from the creditor to support the status of the accounts.