NEW YORK ( MainStreet) -- The Federal Housing Administration has delayed, and will likely revamp a rule that says consumers with more than $1,000 in "collections debt" cannot get a federally backed mortgage. The FHA has put the rule on ice until July and is weighing changes to it as well, the agency reports.
Scores of potential homeowners may be hanging on to a decision that they hope breaks in their favor.
|A minor debt load had previously disqualified many potential homeowners from getting a federally backed loan.|
After all, the FHA is the largest insurer of mortgages, not just in the U.S., but in the world. Since its inception in 1934, the FHA has insured 34 million home mortgages, and currently has 4.8 million insured mortgages in-house, the agency reports.
Many of those insured mortgages benefit new homeowners, a slice of the American consumer base that often has steep debt in the form of college and graduate school loans. Employment is down for younger Americans - a recent Pew Research survey says the unemployment rate for Americans age 16-24 is 16.3%, and 10.3% for Americans age 25-34.The FHA is aware of those statistics, and wants to give debt-ridden homeowners a square deal, but not so much that it guarantees mortgages for risky homeowners at the drop of a hat. Here's the back story. According to a notice released by the agency Friday, a rule that stops mortgage borrowers with a disputed collection of more than $1,000 from getting an FHA-backed loan will be placed on the back burner for further review. Under an earlier FHA rule, borrowers who even had good credit could be rejected for an FHA-backed loan if they owed $1,000 to a creditor. That rule had some exceptions: