Participating in a consumer credit counseling program does not disqualify a Borrower from obtaining an FHA-insured mortgage.
For manually underwritten loans the lender must document that:
• one year of the pay-out period has elapsed under the plan;
• the Borrower’s payment performance has been satisfactory and all required payments have been made on time; and
• the Borrower has received written permission from the counseling agency to enter into the mortgage transaction.
When processing an application through TOTAL Scorecard, participation in a consumer credit counseling program does not require a downgrade to manual underwriting, and no explanation or other documentation is needed.
For additional information see Handbook 4000.1 II.A.4.b.iii(J); II.A.5.a.iii(K) at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh