Fannie Mae-No Politics (FNMA)

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FHA lifts long-standing hurdle for 'rejected' borrowers

By Bonnie Sinnock - September 11, 2023, 3:39 p.m. EDT

The Federal Housing Administration is doing away with a requirement that's been challenging mortgage borrowers and lenders since 1990 in an apparent response to extraordinary affordability concerns and recently renewed calls for an end to the policy.

Changes to FHA procedures and technology effective Monday are aimed at removing the Mortgage Credit Reject requirement, which had been a hurdle for some first-time homebuyers with lower incomes.

The Department of Housing and Urban Development affiliate's revisions specifically remove a warning flag that gets temporarily assigned to borrowers after any lender offering FHA-insured loans denies them.