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Credit Scores/HUD REO Repair Escrows  

To: VHDA Originating Agents
Date: October 26, 2009

Re: Minimum Credit Scores
HUD REO Repair Escrows, EEM’s and FHA Loans with Financed Repairs

Minimum Credit Scores:

Effective with new reservations beginning December 1, 2009, VHDA will require a minimum credit score of 620 for all borrowers for all VHDA loan programs. This credit score requirement will now apply to VHDA’s FHA, VA, Rural Housing and Conventional programs as well as the FHA Plus and Homebuyer Tax Credit Plus programs. All borrowers must have a minimum credit score (middle score) of 620 or higher.  If a borrower(s) does not have sufficient credit to obtain a credit score then the loan must be manually underwritten to the applicable insurers’ guidelines regardless of the existence of an AUS approval. In addition, a complete credit package with underwriter recommendation must be submitted to VHDA for review prior to loan commitment. Questions regarding these loans should be submitted to the VHDA Underwriting department by the underwriter.

HUD REO Repair Escrows, Energy Efficient Mortgages and Financed Repairs

VHDA does not allow HUD REO Repair Escrow, EEM’s, or any required repairs to be included in the loan with VHDA’s FHA Plus and Homebuyer Tax Credit Plus programs. 

VHDA will consider requests for approval for these programs with our standard FHA program.  Request for approval must be submitted to VHDA in advance of loan approval.   VHDA will require a written quote from contractors for the work to be performed.  If the appraisal was performed without electric and/or water service, a separate inspection report providing testing of the electrical and plumbing systems will be required.  VHDA may deny the request for any post closing repairs based on the type of repair and potential impact on the mechanical systems or structural soundness of the property.

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