4.25% 30-year fixed rate FHA mortgage with several UNPAID collections

A client in WA closed last week with two reported UNPAID collections for about $15,000. Additionally, his most recently tax lien (now released) was just filed last December and he had several settled collections and judgments.  I’m so happy we didn’t have to settle with LVNV.

Wife’s FICO scores were around 800 with obviously perfect credit, his scores on the mortgage report were 656, 669 and 668 (when we started his TU was 502 and Equifax 623.)

Excellent income, $150k/year salaried.

FHA, 4.25% 30 yr fixed.

I’ve occasionally seen mortgage approvals with old and SMALL unpaid collections, but this is the first time I’ve seen a purchase close with large unpaid collections and recent derogs such as the tax lien.

What happened to underwriting guidelines requiring that ALL collections have to show paid and that you can’t have ANY derogs in the last 2 years?  Were the wife’s perfect credit and the high income compensating factors?  Are we finally back to COMMON SENSE underwriting?

If there are any brokers/lenders closing these types of loans in California and other states, please contact me.

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