If the loan meets the requirements of the FHA mortgage insurance program, the FHA underwriter can approve the loan for the lender and certify the loan as qualified for FHA insurance.
The underwriter may ignore any current accounts in collection if the applicant's credit history is good and if the amount owed in the accounts is not significant or the applicant will have to agree to pay the collections prior to closing.
Frequently this explanation may be enough to convince the underwriter that the past credit problems were due to circumstances at the time and that they don't reflect any poor financial management by the applicant.
The FHA underwriter is knowledgeable in using the information provided about the applicant and the property to determine if the loan falls within the underwriting guidelines and can be approved.
Since most mortgage companies - including Fifth Third Bank - utilize computer programs to approve or deny mortgage applications, a human underwriter is utilized as a safeguard.