The Bad credit mortgage lenders must examine the mortgage applicant’s overall pattern of credit behavior, not just isolated unsatisfactory or slow payments, to determine the mortgage applicant’s creditworthiness.
The Bad credit mortgage lenders must evaluate the mortgage applicant’s payment histories in the following order:
(1) Previous rental and mortgage payments including utilities;
(2) Installment debts for example car payments.
(3) Revolving accounts for example credit cards.
- The Bad credit mortgage lenders may consider mortgage applicants to have an acceptable payment history if the mortgage applicant has made all housing and installment debt payments on time for the previous 12 months and no more than (2) two 30-day late mortgage or installment payments in the previous 24 months.
- The Bad credit mortgage lenders may approve the mortgage applicant with an acceptable payment history if the mortgage applicant has no major derogatory credit on revolving accounts in the previous 12 months. Major derogatory credit on revolving accounts must include any payments made more than 1 X 90 Days after the due date, or (3) three or more payments more than 60 Days after the due date.
- If a mortgage applicant’s credit history does not reflect satisfactory credit as stated above, the mortgage applicant’s payment history requires additional analysis. The Mortgage Lender must analyze the mortgage applicant’s delinquent accounts to determine whether late payments were based on a disregard for financial obligations, an inability to manage debt, or extenuating circumstances.The Mortgage Lender must document this analysis in the mortgage file. Any explanation or documentation of delinquent accounts must be consistent with other information in the file. A Bad credit mortgage lenders may approve a mortgage applicant with a credit history that doesn’t meet the satisfactory credit history described above, only if the delinquency was related to extenuating circumstances.