Credit reports submitted with each loan must contain all credit available in the accessed repositories. They also must provide an account of all credit, residence history, and public records information available in the credit repositories of each borrower responsible for the mortgage debt. The minimum credit report required by FHA is a ''three repository merged'' credit report (TRMCR). A Residential Mortgage Credit Report (RMCR) from an independent consumer-reporting agency also may be used.
While the TRMCR should prove sufficient for processing most loan applications, the following circumstances require an RMCR:
a. The borrower(s) disputes the ownership of accounts on the TRMCR; or
b. The borrower(s) claims that collections, judgments, or liens listed as open on the TRMCR have been paid and cannot provide separate documentation supporting this claim; or
c. The borrower claims that certain debts shown on the TRMCR have different balances and/or payments and cannot provide current statements (less than 30 days old) attesting to this claim; or
d. The lender's underwriter determines that it would be prudent to use an RMCR in lieu of a TRMCR to underwrite the loan properly.
RMCRs must access at least two named repositories and meet all the requirements for the TRMCR, plus the following:
a. Provide a detailed account of the borrower's employment history.
b. Verify each borrower's current employment and income (if obtainable). It also must include a statement attesting to certification of employment and date verified. If this information is not obtained through an interview with the employer, the credit reporting agency must state why this action was not taken.
c. Each account with a balance must have been checked with the creditor within 90 days of the credit report.
A Non-Traditional Mortgage Credit Report (NTMCR) is designed to assess the credit history of a borrower without the types of trade references normally appearing on a traditional credit report. It can be used either as a substitute for a TRMCR or an RMCR for a borrower without a credit history with traditional credit grantors or as a supplement to a traditional credit report having an insufficient number of trade items reported.
A NTMCR may not, however, be used to enhance the credit history of a borrower with a poor payment record or to manufacture a credit report for a borrower without a verifiable credit history. It also may not be used to offset derogatory references found in the borrower's traditional credit, such as collections and judgments.
If the information obtained through the standard credit report is not sufficient for the lender to make a prudent underwriting decision, the lenders may use a NTMCR developed by a credit-reporting agency that documents all non-traditional credit references.
Otherwise, the lender must develop its own non-traditional credit history that is consistent with the requirements for credit reporting agencies described in HUD Handbook 4155.1 .
The credit-reporting agency should consider only the types of credit that require the mortgage applicant to make periodic payments on a regular basis. These types of credit include:
- rental housing;
- utilities (if not included in the rental payment);
- telephone service;
- cable television service;
- insurance payments (excluding those paid through payroll deductions), such as medical, automobile, life, household, and renter's insurance;
- payments to child care providers;
- school tuition; payments to local stores;
- payments for the uninsured portion of any medical bills; etc.