What credit reports must be submitted with a lender approval application?

A Nonsupervised or Investing Mortgagee must demonstrate that it is a creditworthy institution, and its Principal Owners and Corporate Officers are creditworthy individuals.

A Creditworthy Institution is a Mortgagee with a credit background for the seven-year period preceding the FHA Mortgagee approval application that:

  •   reflects no delinquent accounts or collections and no legal actions; or
  •   reflects legal actions that have been adequately resolved, and/or delinquent accounts or collections that have been adequately resolved or that have an acceptable explanation.

A Creditworthy Individual is a person whose credit background for the seven-year period preceding the FHA Mortgagee approval application:

  •   reflects no delinquent accounts or collections, and reflects no legal actions that would impair the individual’s credit, such as a foreclosure action, judgment, lien, or bankruptcy; or
  •   reflects legal actions that have been adequately resolved, and/or delinquent accounts or collections that have been adequately resolved or that have an acceptable explanation.
  • A Nonsupervised or Investing Mortgagee must submit:
  •   A commercial credit report not more than 90 Days old with its application and a written explanation for all negative items disclosed on the credit report.
  •   A personal credit report for each of its Principal Owners and Corporate Officers with its application. The personal credit report must be a Residential Mortgage Credit Report (RMCR) or a Tri-Merged Credit Report (TRMCR) not more than 90 Days old.  A written explanation must be provided from the relevant Principal Owner or Corporate Officer for any negative item disclosed on the credit report.

For additional information see Handbook 4000.1 I.A.3.c.v. at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh.