Texas Mortgage Approvals With Repossession!

Texas Mortgage Approvals With Repossession!

The Texas bad credit mortgage applicant with a repossession is not eligible for FHA-insured financing if the Minimum Decision Texas bad credit Score with a repossession(middle Texas bad credit score with repossession ) is  500. Texas Repossession repossession collections – FHA does not require repossession collection accounts to be paid off as a condition of mortgage approval. However, FHA does recognize that repossession collection efforts by the creditor for unpaid Repossession repossession collections could affect the borrower’s ability to repay the mortgage. To mitigate this risk, FHA is requiring a capacity analysis of repossession collection accounts with an aggregate balance equal to or greater than $2,000, as described.
If the total outstanding balance of all repossession collection accounts for all borrowers is equal to or greater than $2,000, the lender must perform a capacity analysis as detailed. If evidence of a repossession payment arrangement is not available, the Texas mortgage lender must calculate the monthly payment using 5% of the outstanding balance of each repossession collection, and include the monthly payment in the borrower’s debt-to-income ratio. 

• Example 20,000 car repossession the lender must x 5% = $1000 payment back to the debt to income ratio!
• Example 10,000 car repossession the lender must x 5% = $500 payment back to the debt to income ratio!

Unless excluded under state law, repossession collection accounts of a non-purchasing spouse in a community property state are included in the cumulative balance.
All  Repossession repossession collections and charge off accounts are excluded from this guidance and do not require resolution. The capacity analysis includes any of the following actions:
 At the time of or prior to closing, payment in full of the repossession collection account (verification of the acceptable source of funds required).
 The mortgage applicant makes payment arrangements with the creditor. If the Texas mortgage applicant has entered into a payment arrangement with the creditor, a credit report or letter from the creditor verifying the monthly payment is required. The monthly payment must be included in the borrower’s debt-to-income ratio.
 If evidence of a payment arrangement is not available, the lender must calculate the monthly payment using 5% of the outstanding balance of each repossession collection, and include the monthly payment in the borrower’s debt-to-income ratio.

The maximum allowable qualifying ratios for borrowers with minimum decision credit scores of 580 or more provided they meet two of the compensating factors specified below are as follows:
Lowest Minimum Decision Credit Score Maximum Qualifying Ratios (%)
Acceptable Compensating factors 500-579 or Nontraditional/ Insufficient Credit
31/43 Not applicable. Texas mortgage applicant with minimum decision credit scores below 580, or with Non-traditional or Insufficient Credit may not exceed 31/43 ratios.
33/45. total monthly FHA / VA mortgage payment may not exceed 40% of gross effective monthly income; and
 total monthly fixed payment may not exceed 50% of gross effective FHA / VA monthly income. Acceptable compensating factors are limited to the following:
 Verified and documented cash reserves that equal or exceed three total monthly FHA / VA mortgage payments (one and two units) or that equal or exceed six total monthly mortgage payments (three and four units);
 New total FHA / VA  monthly mortgage payment is not more than $100 or 5% higher than previous total monthly housing payment, whichever is less, and there is a documented twelve-month housing payment history with no more than one 30 day late payment. In cash-out transactions, all payments on the mortgage being refinanced must have been made within the month due for
the previous twelve months.
 Verified and documented significant additional income that is not considered effective income; and
A minimal increase in housing payment may be cited as a
compensating factor subject to the following requirements:
 the new total monthly mortgage payment does not exceed the current total monthly housing payment by
more than $100 or 5%, whichever is less; and
 there is a documented twelve-month housing payment history with no more than one 30 day late payment. In cash-out transactions, all payments on the mortgage being refinanced must have been made within the month due for the previous 12 months.
 If the Texas mortgage applicant has no current housing payment mortgagees may not cite this compensating factor.