FHA Issues Guidelines for Considering Lease Payment History | PC Weiner Brodsky Kider
The FHA recently released Letter to mortgagee 2022-17 (the ML), which provides guidance on considering a first-time homebuyer’s positive rental history under Title II term purchase programs assessed by the TOTAL Mortgage Scorecard ( TOTAL) from the FHA. Updates included in the ML can be implemented for TOTAL scoring events taking place on or after October 30, 2022, for case numbers assigned on or after September 20, 2021.
The FHA’s position is that the use of rental payment history promotes “a more complete credit score” than is currently reflected in credit reporting data. Accordingly, in accordance with the guidelines set out in the ML, lenders are permitted to submit a purchase transaction to TOTAL showing a positive rental payment history provided that at least one borrower is identified as a “first-time buyer”. home” (as that term is defined in the guidance), the minimum decision credit score is 620 or higher, and at least one borrower has a positive lease payment history with on-time monthly payments of $300 or more in the previous 12 months. FHA Connection and TOTAL are updated to allow lenders to make such an indication. The guidelines also explain that lenders should verify the borrower’s rental payment history by obtaining a copy of the signed rental or lease agreement and obtaining one of four additional types of documents.