10.13 RENT HISTORY (03/09/16)

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

Manually underwritten loans. Some first time homebuyers do not have a verifiable housing or rent payment history. In such cases, a rent history is not required. If the applicant's and co-applicant's credit score is under 680 and the applicant(s)/co- applicant(s) has a rent payment history, the lender should obtain a rent payment reference either as part of credit report, or directly from the landlord, or through cancelled checks covering the most recent 12 months prior to the loan application. When a private individual is the applicant's present landlord, 12 months' worth of cancelled checks indicating a satisfactory rent payment history is preferred. Written verifications by independent management companies and private landowners may be accepted in lieu of canceled checks or money order receipts. If the applicant does not have a full 12 month history, verify any previous payment made in the last 12 months. Written verification must include creditor name, date of the rental agreement or when the contract began and the monthly payment due. Payment history must be reported in 0x30, 0x60, 0x90 day format. Statements such as “satisfactory” or “acceptable” are not valid.

It remains the lender's responsibility to confirm the applicant's history of payment towards housing expense is acceptable. One rent or mortgage payment paid 30 or more days late within the last 12 months is an indicator of unacceptable credit unless the new mortgage loan request will reduce shelter costs significantly and contribute to improved repayment ability. Lenders may consider extenuating circumstances surrounding late rent payments under Paragraph 10.8 of this Chapter.

Lender's should carefully underwrite loan applicants who live rent free or do not have a recent 12-month history of paying rent.

Applicants with credit scores of 680 and above are not subject to verification of rent or housing history.

Automated Underwriting System – GUS “Accept”. Loans underwritten with GUS that receive an “Accept” underwriting recommendation are not subject to verification of rent or housing history. Lenders who enter the rent payment under current housing expense on the Combined Monthly Housing Expense section of the Income and Expenses page of GUS are not subject to rental verification if an “Accept” underwriting recommendation is received. If a loan is manually down-graded to a Refer and requires a manual underwrite; the applicant pays rent; and the credit score is below 680, rental verification will be required.