After talking with the loan officer on this one (she knew the Reg. B requirement very well), I can see why she didn't mark anything else - or struggled with what to mark. She really wanted to make the loan, and you can justify making it, but with the scores, she knows she can't get the PMI. His high score was 735, middle 640, and low 635. Co-applicant's scores were all in the 700s.
On his report, there was only one paid medical collection for $90. Everything else was paid as agreed, and debt ratio is fine (28%). It does appear that his balances to credit limits/high credit are high (not all report credit limits, so it's hard to tell for sure). It could be the number of revolving accounts, but this was not listed in the factors that go into the score. The factors that go into the score said accounts too new, but in looking at the report, that's not true. We've seen much worse reports than this with better scores.