10.12 AUTHORIZED USER TRADE LINES (03/09/16)

Owned by Kacey Olson
Nov 17, 2018
1 min read

© RHS HB-1-3555 SFH Guaranteed Loan Program Technical Handbook

The lender must review credit report trade lines in which the applicant has been designated as an authorized user in order to ensure that any open trade lines are an accurate reflection of the applicant's credit history. Closed authorized trade lines require no consideration. An authorized user account that is classified as “terminated” on the credit report is equal to a closed trade line.

Manually underwritten loans. Lenders must ensure open authorized user tradelines reported on the credit report are an accurate reflection of the applicant's independent approach to credit repayment and credit history.

Automated Underwriting System – GUS “Accept”. For loans underwritten with the assistance of GUS that receive an underwriting recommendation of “Accept” and are supported by credit reports that designate the applicant on an open authorized user of trade lines, the lender will obtain evidence of one the following:

  • The trade line(s) in question is owned by another applicant on the mortgage loan application.
  • The owner of the trade line is the spouse of an applicant.
  • The applicant has made payments on the account for the previous 12 months prior to application.
  • There are two or more other tradelines listed on the credit report, which are not authorized user accounts, with at least 12 months of payment history listed to validate the credit score.

In the event one of the conditions cannot be met, an underwriting recommendation of “Accept” must be downgraded to a “Refer” and the file must be manually underwritten.