FHA Program Guidefiles.ctctcdn.com/a0cdc468001/1adb6b47-ec3d-4251... · FHA was formed in 1934, to...
Transcript of FHA Program Guidefiles.ctctcdn.com/a0cdc468001/1adb6b47-ec3d-4251... · FHA was formed in 1934, to...
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
FHA Program Guide November 2013
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
FHA was formed in 1934, to bring back the housing market after post 1929 stock market crash, by assisting homebuyers with low down payment
The Federal Housing Administration is a Federal Agency within the Department of Housing and Urban Development (HUD)
FHA does not provide the funds to borrowers for home loans
FHA provides mortgage insurance on loans made by FHA-Approved lenders throughout the US, as protection against default by borrowers
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History of FHA
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
• Down Payment 3.5%
• Up to 85% cash out refinance
• All funds may come from a gift
• Seller can pay up to 6% toward all closing costs
• Non-Occupant Co-Borrowers are allowed with true blended ratios
• No Cash Reserves (1 and 2 unit properties)
• Credit Leniency – BK 2 years, Foreclosures 3 years, Short Sales 3 years
• Streamline Refinances
• Fully Assumable (credit qualifying only)
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WHY FHA?
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
• HUD/FHA
• Direct Endorsement (DE)
• CAIVRs
• LDP
• GSA
• MIP (Upfront & Annual)
• Base Loan Amount
• Total Loan Amount
• URLA vs. 1003
• 203(b), 234 (c )
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Common FHA Terms
• 92900 A (Addendum to the URLA)
• 92900 LT vs. 1008
• Case #
• ADP Code
• FHAC (FHA Connection)
• HOC (Home Ownership Center)
• DELRAP/HRAP Condo Approvals
• HECM (Reverse)
• Mortgagee Letter
• 203k rehabilitation loan
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Purchase or Refinance of 1-4 unit primary residence - FHA 203b
• Fixed Products
• 15 and 30 Year for standard loan amounts and
• 30 year only on high balance loan amounts
• Arm Products
• 5/1 ARMs on standard loan amounts
• 5/1 ARMs on high balance loan amounts
• 1/1/5 caps, 2.00% Margin, Index is one year US Treasury
• Not available for streamline refinances
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FHA Products
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Each FHA loan is assigned an individual 10 digit loan number, called a Case Number. PCM will obtain this through the FHAC
As a sponsored broker you will not have access to the FHAC (FHA Connection)
Upon submitting your online request for case number
• PCM will email you the new case number and Refinance Authorization (if applicable)
All FHA loans must have a case number assignment to be insured
• Case numbers are ordered in FHA Connection by PCM
• Case numbers are assigned to the subject property
• Case number must be reflected on all HUD documents
• Case number printout is required with loan submission
• Streamline Refinances need previously assigned case number
• Must be ordered PRIOR to ordering an FHA Appraisal
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FHA Case Numbers requested online
www.pcmplatinum.com
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
CAIVRs Credit Alert Interactive Voice Response System checks for delinquent federal debt, should be on Case Number Printout
• PCM will access CAIVRS through the FHAC
• CAIVRS checks for delinquent/defaulted government debt
• This is informational only to you as a sponsored broker
• Must be ordered on all borrowers
• Any delinquency must be cleared, or not eligible for FHA loan
• Should a delinquency or issued be uncovered by PCM you will be promptly notified
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CAIVRs through FHA Connection PCM will do this piece of processing
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
All parties to the transaction must be cleared in both databases (Government lists of bad players)
LDP Limited Denial of Participation
• Database can be accessed at http://portal.hud.gov/portal/page/portal/HUD/topics/limited_denials_of_participation
GSA (Excluded Parties List Service, General Services Admin)
• Database can be accessed at https://www.epls.gov/
Use PCM LDP/GSA Workflow and Participants List
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LDP & GSA Databases
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
For Case Number Assignments on or after 1/1/2009
Purchase No Cash Out/Streamline Refi Cash Out Refinance
96.50% 97.75% 85%
FHA Mortgage Limits
Region 1 Unit 2 Units 3 Units 4 Units
Low Cost Areas $271,050 $347,000 $419,400 $521,250
High Cost Areas $729,750 $934,200 $1,129,250 $1,403,400
Alaska & Hawaii $1,094,625 $1,401,300 $1,693,875 $2,105,100
A complete schedule of FHA mortgage limits for all areas is available at: https://entp.hud.gov/idapp/html/hicostlook.cfm
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Maximum LTV’s – BASE Loan Amount
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013 Maximum Loan Amount
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High Balance Loan Amounts - PCM High Balance pricing applies when base loan amount is over $417,000 Continental US or $625,500 in Hawaii
Maximum Mortgage Calculation - Purchase
• 96.5% of the lesser of sales price or appraised value (base loan amount)
• Does not include Up Front MIP (UFMIP)
• Borrower must have minimum of 3.5% down payment (Can be gift)
• Closing costs may not be used in minimum 3.5% calculation
• Seller Concessions maximum 6%
Maximum Mortgage Calculation – Refinance
• No Cash Out and Streamline Refinances with appraisal 97.75% of appraised value
(base loan amount)
• Cash out Refinances - 85% of appraised value
FHA loan limits are set by HUD, and vary from county to county. Current loan amount limits can be found online at
https://entp.hud.gov/idapp/html/hicostlook.cfm
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
In addition to standard guidelines:
Appraisal Requirements
• Loan amounts > $1,000,000 require 1 FHA appraisal w/ data verification or enhanced desk review w/data certification
• The lesser of the appraised value, review value or PP will be used
Credit
• High Balance Cash Out transactions: Foreclosure or BK not allowed in most recent 7 years
Credit Score
• Cash Out FHA High Balance require minimum 660 score
• All other loan amounts require 640
• Borrowers with NO credit scores are ineligible
DTI
50% max DTI if score is < 680 or subordinate financing exists
55% max DTI if score is >=680 and no subordinate financing exists
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High Balance Guides
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Up Front MIP (UFMIP) the FHA mortgage insurance premium is paid at closing in the form of cash, or financed in the loan amount.
UFMIP must be 100% financed or 100% paid in cash, no partial financing
Annual MIP is collected in monthly payments and calculated in ratios
Upfront Premiums are refunded ONLY to borrowers refinancing to another FHA insured mortgage within a 3 year time period. The refund will be calculated in FHA connection when case number is ordered.
Premiums vary, see next two pages for factors.
Refer to Mortgage Insurance Amounts grid for MIP cancellation info
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FHA Mortgage Insurance Premium (MIP)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
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FHA Mortgage Insurance Premium (MIP)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
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FHA Mortgage Insurance Premium (MIP)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
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FHA Mortgage Insurance Premium (MIP)
Upfront MIP in Box #3 on 2010 GFE
Upfront MIP $6,750 $6,750
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Borrower may upgrade their home by installing energy efficient improvements and incorporate the cost into the mortgage.
100% of improvements may be financed into the loan. Purchase and regular rate and term refinances only, not allowed on cash out refinances or streamlines
Central Heat and Air, dual-pane windows, attic/wall insulation, water heater, sunscreens and more
Existing 1-2 unit properties, purchase or refinance
Maximum amount of EEM is lesser of 5% of
• The value of the property, or
• 115% of the median area price of a single family dwelling, or
• 150% of conforming Freddie Mac limit
Weatherization may be added in addition to EEM improvements
No appraisal requirement of improvements
Must have Home Energy Ratings System (HERS) report, the cost may be financed in the loan.
Energy Efficient Mortgage, aka, EEM’s
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*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
The Borrower may not receive any cash back through a purchase, other than an amount representing:
• A reimbursement for the Borrower’s overpayment of fees
• Costs paid by the Borrower in advance; earnest money deposit, appraisal or credit report fees; or
• A legitimate real estate tax credit in locales where real estate taxes are paid in arrears
• If the Borrower receives an allowable amount of cash back, the minimum Borrower contribution must be met and verified
See Loan Amount Calculation Worksheet
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FHA Purchases
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
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FHA Purchase Loan Calculation
Base Loan Amount
A $ X 96.5% =
Lesser of Sales Price or Appraised Value
Max LTV Base Loan Amount
Minimum Down Payment
B $ - $ = $
Sales Price Max Base Loan Amount Min Down Payment
Up Front MIP
C $ X 1.75 = $
Base Loan Amount Up Front MIP
Total Loan Amount
D $ + $ = $
Base Loan Amount Up Front MIP Total Loan Amount
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Single Family, Owner Occupied Primary Residence
Maximum mortgage is the LOWER of 97.75% of appraisal or Existing Debt Calculation
• Existing Debt includes payoff of existing 1st, PM 2nd, jr. lien over 12 months, closing costs, prepaid expenses, borrower paid repairs, and discount points less existing MIP refund
• If any portion of funds of equity line in excess of $1000 in last 12 months, for purposes other than repairs and rehab. of property the line of credit may not be included.
Property owned less than 12 months, must use lesser of original purchase price + expenditures for repairs, or current appraised value unless existing loan is FHA & insured then appraised value can be used
Modified/Restructured loans are okay to be paid off, as long as the loan is not delinquent and no late payments in past 12 months, unless AUS decision is Approve/Eligible. Current lender must supply letter that they will not file deficiency
Proceeds to buy out ex-spouse are okay
Borrower may not receive more than $500 at closing
Non-Occupant Co-Borrower may be added
2nd Liens may subordinate, up to 97.75% (case numbers as of 9/7/2010) • Terms of subordinate lien must not have a balloon or prepayment penalty • Payments are calculated in qualifying
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No Cash Out Refinance/Regular Refinance
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
LTV Factor Method
A $ X 97.75% =
Appraised Value Max Mortgage #1 not to exceed current county
limit
Existing Debt Method
B $ + $ = $
Payoff 1st , PM 2nd or seasoned Jr. Lien – If paying off FHA MIP
refund to be subtracted
Closing Costs -non-recurring, prepaids and
discount points
Max Mortgage #2 not to exceed current county
limit
Up Front MIP
C $ X 1.75 = $
Lower of Max #1 and Max #2 not to exceed current county
limit
Up Front MIP
Total Loan Amount
D $ + $ = $
Lower of Max #1 and Max #2 Up Front MIP And EEM upgrades if any
Total Loan Amount 20
No Cash Out Refinance Worksheet
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
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LTV Factor Method
A $ X 97.75% =
Appraised Value Max Mortgage #1 not to exceed current county
limit
Existing Debt Method
B $ + $ = $
Payoff 1st , PM 2nd or seasoned Jr. Lien – If paying off FHA MIP
refund to be subtracted
Closing Costs -non-recurring, prepaids and
discount points
Max Mortgage #2 not to exceed current county
limit
Up Front MIP
C $ X 1.75 = $
Lower of Max #1 and Max #2 not to exceed current county
limit
Up Front MIP
Total Loan Amount
D $ + $ = $
Lower of Max #1 and Max #2 Up Front MIP And EEM upgrades if any
Total Loan Amount
No Cash Out Refinance Worksheet
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
FHA will insure a cash out refinance, up to 85% of appraised value with the following requirements:
• Properties owned 12 months or more, use current appraised value
• Properties owned less than 12 months use lesser of purchase price or appraised value
• All Borrowers must hold title to property for at least six months
• Modified/Restructured loans are not eligible for a cash out refinance
• Borrowers whose loans are delinquent or in arrears are not eligible
• Non-Occupant Borrowers may not be added to qualify.
• Existing or new subordinate financing to a maximum CLTV of 85%
• Modified subordinate financing is acceptable to a maximum CLTV of 85%
• 1 -4 units - 3-4 unit properties must pass self-sufficiency test & requires 3 months reserves
• Properties owned free and clear may be financed as cash-out transactions
• Listing agreements on subject property must have been cancelled 6 mos. prior to loan application or subject to max 70% LTV/CLTV
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Cash Out Refinance
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Max LTV Calculation
A $ X 85% =
Appraised Value Base Loan Amount – may not exceed county loan limit
Up Front MIP
C $ X 1.75 = $
Base Loan Amount – may not exceed county loan
limit
Up Front MIP
Total Loan Amount
D $ + $ = $
Base Loan Amount – may not exceed county loan
limit
Up Front MIP Total Loan Amount
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Cash Out Refinance Worksheet
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Loan must be an FHA insured loan, not delinquent, 6 months old (212 days) or case number will not be assigned until the 7th month
Fixed Rate Only, no new ARM loans
Net Tangible Benefit - The refinance must result in an immediate payment reduction (Reducing the term of the mortgage is NOT a net tangible benefit, by itself)
• Lowering the borrower’s monthly P&I payment, plus the annual MIP, by at least 5% OR • Refinancing from an ARM to a Fixed • The table below defines permissible minimum thresholds:
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FHA Streamline Refinance
From To Fixed
Fixed Rate Reduction of at least 5% of P&I and MIP
One-Year ARM New interest rate no greater than 2% above the current interest rate of the ARM
Hybrid ARM, during fixed period Reduction of at least 5% of P&I and MIP
Hybrid ARM, during adjustable period New interest rate no greater than 2% above the current interest rate of the Hybrid ARM
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
LTV/CLTV – Regardless of property state or value
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FHA Streamline Refinance
Type of Transaction Max LTV1 Max CLTV2
Credit Qualifying w/Appraisal4 97.75%3 100%
Credit Qualifying w/out Appraisal5 115%3 100%
Non-Credit Qualifying w/Appraisal4 115%3 100%
Non-Credit Qualifying w/out Appraisal5 115%3 100%
1 - The loan must meet maximum insurable mortgage guides
2 - The max CLTV may vary depending on the type of subordinate financing
3 - Refer to the AVM notes coming up.
4 - Streamlines with appraisals, CLTV is based on the new appraised value
5 - Streamlines without appraisals (AVM only) CLTV is based on the ORIGINAL appraised value of the property
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Maximum Insurable Mortgage Amount - Streamline Refinance WITH Appraisal
• Credit Qualifying – Max insurable mortgage is the lower of
The outstanding principal balance minus the applicable refund of UFMIP, plus closing costs, prepaid items to establish the escrow account and the new UFMIP. OR
97.75% of appraised value of the property, plus the new UFMIP
• Non-Credit Qualifying – Max insurable mortgage cannot exceed:
The outstanding principal balance minus the applicable refund of the UFMIP, PLUS the new UFMIP
An appraisal may not be used to increase the insurable mortgage balance beyond the sum of the outstanding principal balance and the new UFMIP. The new loan balance may NOT include closing costs, prepaid items or other financing
The outstanding principal balance may include interest charged by the servicing lender when the payoff is not received on the first day of the month, but may NOT include delinquent interest, late charges or escrow shortages.
Discount points may not be included the new mortgage.
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FHA Streamline Refinance
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Maximum Insurable Mortgage - Streamline Refinance WITHOUT Appraisal
• At the time of case number, the “original value” must be obtained from FHA Connection
• The maximum insurable mortgage cannot exceed:
The outstanding principal bal. minus the applicable refund of the UFMIP, plus the new UFMIP
The outstanding principal balance may include interest charged by the servicing lender when the payoff is not received on the first day of the month, but may not include delinquent interest, late charges or escrow shortages
Condo project approval is not required
Recently listed properties
• Listing must be cancelled at least 1 day prior to the date of the loan application
• A letter of intent to occupy from the borrower is required
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FHA Streamline Refinance
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
AVM is required on all Streamlines without appraisal Max LTV is 115%
• A CoreLogic RealQuest AVM must be obtained by PCM
• AVM estimated value is < 100%, Forecast Standard Deviation (FSD) may be disregarded
• If AVM Estimated Value is 100% to 115%, FSD is > than 20, the loan is not eligible, unless exterior-only or full appraisal is obtained and must support LTV < = 115%
• AVM estimated value is > 115%, loan is ineligible. Appraisal that supports 115% is ok.
• When AVM is unavailable, a 2055 exterior appraisal is acceptable
• AVM may not exceed 90 days from the date the note is signed
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FHA Streamline Refinance
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Order new case number on our website, will need old case number, select streamline refinance.
Need LDP and GSA run for all parties to transaction, include in submission
CAIVRS NOT required on streamlines
Minimum Credit Score is 640
Credit Report – Score Only, Mortgage Rating Only Report. Mortgage lates in
past 12 months on subject or ANY other property is unacceptable. Please submit credentials for THIS type of report in order for PCM to import it properly. The incorrect credentials may result in a FULL report.
1003 application to be complete in its entirety, No INCOME is to be listed
Income/Employment documentation: • Salaried – all employment info on 1003, including phone number • Self Employed – Business license, CPA letter or other 3rd party verification of business. (411.com or
similar does not meet requirement) DO NOT submit tax returns • Other income types, see PCM guidelines (retirement, SSI, etc.)
PCM will perform Lender Certification for Employment/Income
Do not run AUS – Manual underwrite only
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FHA Streamline Refinance (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Assets - 2 months bank statements, if assets needed to close
Copy of Hazard Insurance is required at submission
Unused MIP refinance authorization is calculated in FHA Connection
No cash may be taken out $500 max at closing
Subordinate financing may remain in place subject to re-subordination, MAX CLTV is 100%
New individuals may be added to title without credit review
Removing individuals from title - original loan must credit qualify, with employment, income and assets
Partial Claims, modified loans, are NOT allowed in Streamline Program
Tax Impounds: Use amount shown on Prelim or proof from county of new tax amount.
Refer to FHA MIP / Case Number Chart for appropriate MIP
FHA Streamline Refinance (continued)
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*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
PCM Submission Form Case Number Assignment Printout 92900-LT Loan Transmittal FHA Refinance Worksheet Net Tangible Benefit Worksheet 1003 – Initial and typed, all sections to be completed HUD 92900-A , pages 1 and 2 completed and signed by borrower LDP/GSA Worksheet and Printouts for all parties verified Credit Report, score only (min 640), plus mortgage rating no mortgage lates Copy of Social Security Card and/or SS Authorization Form signed by borrower Hazard Insurance, coverage at least at or above loan amount Copy of Original Note, reflecting old case number
Copy of current Pay off Demand, good through end of month Secondary financing documentation, if applicable Employment/Income documentation, if applicable Asset documentation if needed to close, 2 months bank statements, and source of all non-payroll deposits Preliminary Title Report Appraisal, if applicable Good Faith Estimate Borrower’s Signed Credit Auth Important Notice to Homebuyer FHA Disclosure/Notice to Homeowner/Assumption Notice Informed Consumer Choice Disclosure ARM Disclosure if applicable
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Streamline Document Checklist
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
$ _____________ Unpaid principal balance* of existing FHA loan
- _____________ The LESSER of: $ ____________ Unearned UFMIP (from FHA Refinance
Authorization or appropriate MIP Refund Schedule)
OR $ ____________ New Estimated UFMIP = _____________ Maximum Base Loan Amount before UFMIP
+ _____________ New UFMIP
= _____________ Total New Loan Amount including UFMIP
*May include interest charged when payoff is not received on the first day of the month.
Cannot include delinquent interest, late charges or escrow shortages or MIP.
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FHA Streamline Refinance Maximum Mortgage Calculation WITHOUT Appraisal
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Calculation A:
$ ______________ Outstanding Principal Balance*
- (______________) The LESSER of: $ ____________ Unearned UFMIP (from FHA Refinance Auth. or appropriate MIP Refund Schedule)
OR $ ____________ New Estimated UFMIP + ______________ Closing costs**
+ ______________ Prepaids (includes per diem interest to end of month on new loan, hazard insurance and real estate tax deposits needed to establish escrow account)
- _______________ Lender Credit for Closing Costs and Prepaid Items
= _______________ Total A
Calculation B:
$ _______________ Total B = Appraised Value x 97.75%
Calculation C:
$ _______________ Total C = Max County Limit
New Mortgage Amount:
$ _______________ Maximum Base Mortgage (Lowest of Totals A, B and C)
+ _______________ New UFMIP (If financed)
$ _______________ Total New Mortgage Amount
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*Outstanding Principal Balance May include Interest, but not delinquent interest, late charges or escrow shortages **Discount points may not be included in the loan amount, must be paid from borrowers funds.
FHA Streamline Refinance Maximum Mortgage Calculation WITH Appraisal
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
U.S. Citizen
Permanent Resident Aliens
Non-Permanent Resident Aliens
All Borrowers must have a valid Social Security Number
Title must be held in individual names only
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Eligible Borrowers
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Owner Occupied Principal Residence
FHA limits borrowers to one FHA loan at a time. The following are potential exceptions:
• Borrower relocating a reasonable distance away from prior home (100 + miles)
• Family size increased/decreased
• Vacating jointly-owned property (Divorce)
• Non-occupant Co-Borrower
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Occupancy
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Identity of Interest– Family or business relationships - Limited to 85% LTV with the following exceptions:
• Family member purchases another family member’s primary residence
Note: If property is seller’s investment property, max mortgage is lesser of either 85%
of appraised value or the appropriate LTV ratio percentage applied to sales price, plus or minus required adjustments. The 85% limit may be waived if family member has been tenant in subject property for at least 6 months
• An employee of builder purchasing builder’s new home as primary
• A tenant purchases rented property, lease or other documentation evidencing at least 6 months as tenant immediately predating the sales contract
• A corporation transfers an employee, purchases that employee’s home, then sells home to another employee
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Transactions Affecting Maximum Mortgage
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Non-Occupant Co-Borrowers
• Permitted for purchases, no cash out refinances - all LTVs, and cash out refinances (must be on title, cannot add) up to 85%
• 2-4 units max LTV is 75%
• Must be immediate family member (others, case by case) or max LTV is 75%
• Housing and obligations are included in the DTI ratios. Credit, income and assets must be verified
• Must sign Note and Security Instrument and all other closing documents
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Transactions Affecting Maximum Mortgage
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
3 and 4 unit properties The maximum mortgage is limited so that
the ratio of the monthly mortgage payment divided by the monthly net rental income does not exceed 100%
• Monthly payment is principal, interest, taxes, insurance, mortgage insurance and any HOA dues.
• Net rental income is appraiser’s estimate of fair market rent from ALL units, incl. borrower’s own unit, less the appraiser’s estimate for vacancies, or 15%*, whichever is greater (Santa Ana HOC)
• The above calculations are only to determine max loan amount, borrower must still qualify as usual, and projected rent may only be used as gross income and not to offset mortgage payment
• Borrower must have 3 months PITI reserves, reserves cannot be a gift. Gift ok for down payment
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Transactions Affecting Maximum Mortgage
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Properties under Construction or Existing less than one Year Limited to 90% LTV, with the following exceptions:
• Construction completed more than one year preceding borrower’s signature on HUD92900-A
• Building permit w/ 3 inspections issued prior to start of construction
• Local jurisdiction issued BOTH a building permit AND a Certificate of Occupancy or equivalent
• The dwelling is covered by a builder’s ten-year warranty plan acceptable to HUD
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Transactions Affecting Maximum Mortgage
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
At this time, Condo projects must be approved projects, and will either appear under the HRAP/DELRAP (HUD Review Approval Process)
DELRAP (DE Lender Review Approval Process)
• DE (Direct Endorsement) lender reviews the Condo Documents
• Not available through PCM at present time
Pre-HRAP/DELRAP Project Approvals
• These are any project approvals approved prior to the inception of the HRAP/DELRAP process (December 7th 2009)
HO-6 or “Walls In” insurance is required on all Condos
$2 Million Liability per occurrence insurance required
Fidelity insurance equal to 3 months aggregate HOA plus reserve fund
HOA certification 40
Condo Project Approvals:
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Property flipping is when properties are purchased and resold in a short period of time for a considerable profit
Only owners of record may sell properties that will be financed using FHA insured mortgages. No sales or assignment of contract.
Any resale of a property may not occur 90 or fewer days from the last sale to be eligible for financing – Exceptions to follow
Effective with all fully executed contracts of sale dated February 1, 2010 and after until December 31, 2014, FHA has revised their policies on exception to the FHA Flipping Rule (Where the Seller is owner-of-record 90 days or fewer). Refer to the HUD Waiver of Requirement of 24 CFR 203.37a(b)(2) for the complete FHA Flipping Rule exception policy.
Re-sales between 91 and 180 days where the new sales price exceeds previous price by 100% or more, additional appraisal will be required
PCM may require additional documentation to support resale value of property sold more than 90 days and up to 12 months
Restrictions do not apply to a builder selling a newly built home
Appraisers are required to analyze prior sales of subject property
PCM will require documentation to support increased value including any rehabilitation or remodeling, to possibly include a second appraisal
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FHA Property Flipping
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013 FHA Property Flipping (continued)
Resales Occurring 90 days or less - Exception
If the owner sells a property within 90 days after the recorded date of acquisition, it is not eligible, unless it falls into one of the following exceptions:
• Sales by HUD of REO’s
• Sales by other US Government entities
• Sales by nonprofits approved by HUD
• Sales acquired by inheritance
• Sales by employers or relocation agencies
• Sales by mortgage companies, their subsidiaries and any vendors hired by these exempt entities
• Sales by State and Federally chartered financial institutions and Government sponsored enterprises (Fannie Mae and Freddie Mac)
• Sales by local and state government agencies
• Sales of properties within Presidentially-Declared Disaster Areas
Please Note: Properties acquired by individuals, investment groups, REO property-re-sellers or others whose intent is the purchase, repair and reselling of the property are not exempt from the 90-day resale restriction
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*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Must be completed by an FHA approved appraiser
CASE NUMBER Must be ordered PRIOR to appraisal being ordered
Termite Reports/Clearances not mandatory, but may be required if on contract or with underwriter’s discretion
Well/Septic not required unless appraiser or purchase contract notes issues
Appraisals are valid up to 120 days. If appraisal expires, the case # must be canceled and a new case # assigned
NOTE: Need at least 2 comps dated within 90 days of appraisal, and two current pending sales or active listings. 1004 MC addendum required.
43
Appraisals/Property Requirements
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Appraisals may not be reused after the mortgage for which the appraisal was ordered has closed.
The appraisal must state that the property is average or above condition
Appraiser must follow HUD standards
Mechanical Certifications must be made by appraiser, including ; electrical, plumbing and heating certifications
Head and Shoulder inspections must be made on all attics
FHA Case number must be on all pages of appraisal
C02 detector required on all floors
44
Appraisals/Property Requirements (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Effective with Case numbers ordered on or after September 19, 2008, ML 2008-25, rental income on current primary residence being vacated, may not be considered, with the following exclusions (this applies solely to a
principal residence being vacated in favor of another principal residence):
• Relocations – Homebuyer is relocating with new employer or transferring with current employer
Properly executed lease agreement of at least one year
Evidence of security deposit and/or
Evidence of first month’s rent paid to homeowner
• Sufficient Equity in Vacated property
25% equity, determined by a current appraisal, less than 6 months old
• Rental income may NOT be derived from a family member
45
Conversion of Primary Residence to Rental
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Automated Approval (DO/LP) ratios per findings (see DTI restrictions under high balance loan amount section)
Manual underwrite
• Maximum ratios are 31%/43%
• Higher ratios may be acceptable only if the borrower has at least 3 very strong compensating factors and at underwriter’s discretion
Housing ratio is computed as PITI plus MI, HOA fees, ground rent, special assessments and payments on secondary financing to income.
46
Qualifying Ratios
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Minimum Credit Score 640 (regardless of AUS findings)
All borrowers must have a credit score
Credit will be closely examined over past 12 – 24 months, with greater emphasis on past 12 months
Borrower’s housing payment history is very important
Student loans deferred over 12 months are not considered
Payoff of Debt to Qualify
• is allowed if the account is paid in full prior to closing, with a credit supplement showing a zero balance. Revolving debt cannot be paid through escrow
• Gift funds for deb payoff is acceptable
Open 30 day charge accounts, require balance to be paid in full each month. If assets to cover unpaid balance in addition to funds needed to close transaction, and are verified and submitted to AUS, the debt may be excluded. If sufficient assets are not verified, entire balance is included in ratios
47
Credit Evaluation
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
CAIVRS
• All Borrower’s need to be checked through FHA’s CAIVRs system
• The system checks for delinquent federal debt
• Any issues will need to be cleared
Non-purchasing spouse’s credit must be pulled separately, in community property states
• Credit score is not to be considered, but
• Debts will be considered in payments/monthly obligation
• Negative credit that may impact title on subject property, may be required to be paid
Verify previous/current housing obligations Follow AUS, or for manually underwritten loans the following applies:
Rental verification: Credit report, management service or 12 months cancelled checks. Note: if the borrower is renting from a private party PCM will require 12 months cancelled checks.
Mortgage Verification Credit Report, Verification of Mortgage or 12 months cancelled checks. Note: if the borrower has privately held mortgage, PCM will require 12 months cancelled checks.
48
Credit Evaluation (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Consumer Credit Counseling
• Acceptable with 12 months payments made on time
• Need approval of CCC organization
Late Payments and Delinquent credit Items
• Any Mortgage tradeline, including lines of credit, during the most recent 12 months consisting of more than one 30 day late:
If risk decision was accept and the items above appeared on the CR & considered by AUS, manual downgrading and further documentation are not required
For manual underwrites, if any of the above items appeared on the CR, the loan is ineligible
Mortgage Credit Reject
• Underwriter must address on the 92900-LT
• May not be deleted or disregarded
• Second signature from PCM Management is required 49
Credit Evaluation (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Collections, Disputed Accounts & Judgments
The following guidance for Collections, Disputed Accounts and Judgments must be followed for all case numbers assigned BEFORE October 15, 2013:
Disputed Tradelines:
If a credit report reveals that the borrower is disputing any credit accounts, Manual Downgrade of a TOTAL Scorecard Approve/Accept recommendation to a Manual Underwrite is not required if:
The disputed account has a zero balance OR
The disputed account is marked as "paid in full" or "resolved“ OR
The disputed account is both:
less than $500 AND
More than 24 months old, based on the date of the dispute
Collection Accounts and Judgments :
Collections are not required to be paid off as a condition of the mortgage approval
Court-ordered judgments must be paid off.
50
Credit Evaluation (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
51
Credit Evaluation (continued)
The following guidance for Collections, Disputed Accounts and Judgments must be followed for all case numbers assigned ON OR AFTER October 15, 2013
Collections:
Collection accounts of a non-purchasing spouse in a community property state are included in the cumulative balance, unless excluded by state law.
All medical collections and charge off accounts are excluded from this guidance and do not require resolution
A capacity analysis of collection accounts with an aggregate balance equal to or greater than $2,000 is required. Capacity analysis includes any of the following actions:
At the time of or prior to closing, payment in full of the collection account (verification of acceptable source of funds required).
• The borrower makes payment arrangements with the creditor. If the borrower has entered into a payment arrangement with the creditor, a credit report or letter from the creditor verifying the monthly payment is required. The monthly payment must be included in the borrower’s debt-to-income ratio.
• If evidence of a payment arrangement is not available, the Underwriter must calculate the monthly payment using 5% of the outstanding balance of each collection, and include the monthly payment in the borrower’s debt-to-income ratio.
Regardless of the Accept/Approve/Refer recommendation by TOTAL Mortgage Scorecard, the Underwriter must include the payment amount in the calculation of the borrower’s debt-to-income ratio.
Documentation requirements for Manual Underwrite:
• The Underwriter must document reasons for approving a mortgage when the borrower has collection accounts.
• Regardless of the amount of outstanding collection accounts, the Underwriter must determine if the collection account was a result of:
The borrower’s disregard for financial obligations OR The borrower’s inability to manage debt OR Extenuating circumstances
• The borrower must provide a letter of explanation with supporting documentation for each outstanding collection account. The explanation and supporting documentation must be consistent with other credit information in the file.
• Automated (TOTAL) Underwrite:
There are no documentation or letter of explanation requirements for loans with collection accounts run through TOTAL Mortgage Scorecard receiving an “Accept/Approve” despite the presence of collection accounts. These accounts have been already taken into consideration in the borrower’s credit score. If TOTAL Mortgage Scorecard generates a “Refer,” the lender must manually underwrite the loan in accordance with the guidance above applicable to manually underwritten loans with collection accounts.
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Disputed accounts:
Disputed derogatory credit accounts are defined as follows: Disputed charge-off accounts, Disputed collection accounts, and Disputed accounts with late payments in the last 24 months
Disputed Derogatory Accounts Indicated on the Credit Report: If the credit report utilized by TOTAL Mortgage Scorecard indicates that the borrower is disputing derogatory credit accounts, the borrower must provide a letter of explanation and documentation supporting the basis of the dispute. The lender must analyze the documentation provided for consistency with other credit information in the file to determine if the derogatory credit account should be considered in the underwriting analysis. Guidance for TOTAL Mortgage Scorecard Accept/Approve loans with disputed accounts:
Disputed Derogatory Credit Accounts greater than or equal to $1,000: If the cumulative outstanding balance of disputed derogatory credit accounts of all borrowers is equal to or greater than $1,000, the mortgage application must be downgraded to a “Refer” and a DE underwriter is required to manually underwrite the loan as described above. Disputed Derogatory Credit Accounts less than $1,000: If the cumulative outstanding balance of disputed derogatory credit accounts of all borrowers is less than $1,000, a downgrade is not required.
Excluded Accounts: Disputed medical accounts are excluded from the $1,000 limit and do not require documentation, Disputed derogatory credit accounts resulting from identity theft, credit card theft, or unauthorized use are also excluded from the $1,000 limit. However, the lender must provide in the case binder a credit report, letter from the creditor, or other appropriate documentation to support the dispute, such as a police report disputing the fraudulent charges
Non-Derogatory Disputed Accounts and Disputed Accounts Not Indicated on the Credit Report.
• Non-derogatory disputed accounts include the following types of accounts: Disputed accounts with zero balance, Disputed accounts with late payments aged 24 months or greater, and Disputed accounts that are current and paid as agreed
If a borrower is disputing non-derogatory accounts, or is disputing accounts which are not indicated on the credit report as being disputed, the lender is not required to downgrade the application to a “Refer.” However, the lender must analyze the effect of the disputed accounts on the borrower’s ability to repay the loan. If the dispute results in the borrower’s monthly debt payments utilized in computing the debt-to-income ratio being less than the amount indicated on the credit report, the borrower must provide documentation of the lower payments.
Non-derogatory disputed accounts are excluded from the $1,000 cumulative total.
Disputed derogatory credit accounts of a non-purchasing spouse in a community property state are not included in the cumulative balance for determining if the mortgage application is downgraded to a “Refer”.
52
Credit Evaluation (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Judgments:
Judgements must be paid off. An exception to the payoff of a court ordered judgment may be made if the borrower has an agreement with the creditor to make regular and timely payments. The borrower must provide a copy of the agreement and evidence that payments were made on time in accordance with the agreement, and a minimum of three months of scheduled payments have been made prior to credit approval.
Borrowers are not allowed to prepay scheduled payments in order to meet the required minimum of three months of payments. Furthermore, lenders are instructed to include the payment amount in the agreement in the calculation of the borrower’s debt-to-income ratio.
FHA requires judgments of a non-purchasing spouse in a community property state to be paid in full, or meet the exception guidance for judgments above, unless excluded by state law.
Documentation requirements:
• Manual Underwrite:
The Underwriter must document reasons for approving a mortgage when the borrower has judgments.
Regardless of the amount of outstanding judgments, the Underwriter must determine if the collection account or judgment was a result of:
• The borrower’s disregard for financial obligations OR
• The borrower’s inability to manage debt OR
• Extenuating circumstances
The borrower must provide a letter of explanation with supporting documentation for each outstanding judgment. The explanation and supporting documentation must be consistent with other credit information in the file.
Automated (TOTAL) Underwrite:
If TOTAL Mortgage Scorecard generates a “Refer,” the lender must manually underwrite the loan in accordance with the guidance above applicable to manually underwritten loans with collection accounts and judgments.
53
Credit Evaluation (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Short Sale
• Borrower is not eligible if short sale on previous residence was to:
Take advantage of declining market conditions, and
Purchase similar or superior property within a reasonable commuting distance at a reduced price as compared to current market value
• Borrower current at time of short sale is considered eligible for a new FHA
mortgage if, from the date of application:
All mortgage payments on the prior mortgage were made within the month due for the 12 months preceding the short sale AND
Installment debt payments for the same time period were on time
• Borrower in default at time of short sale
Not eligible for 3 years from the date of the pre-foreclosure sale
Exceptions may be made to the three years for isolated cases only
• Default was due to circumstances beyond the borrower’s control AND • Credit was satisfactory prior to the circumstances that led to default
Loans with borrowers in default must be manually underwritten
54
Credit Evaluation (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Short Sale
• Seasoning requirements for short sales may only be waived if all lien holders have accepted the short sale as payment in full. There can be no deficiency balance nor can any portion of any lien be converted to consumer debt.
• If the short sale was greater than 3 years prior to the date of the application and AUS is an Accept, no need to manual downgrade
• The credit report must reflect a zero balance on mortgage liens included in the short sale OR documentation must be obtained to support no further obligation
55
Credit Evaluation (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Bankruptcy • Credit report must accurately reflect bankruptcy with the correct code, or the loan
must be downgraded to a manual underwrite. The code is commonly a 7 (CoreLogic, Credco and Old Republic), but may vary depending on the credit vendor. If the loan does not meet manual guidelines, the credit report must be corrected and the loan re-run through the AUS.
• The 1003 Loan Application must reflect a “yes” response to the bankruptcy question if the borrower filed within the past 7 years.
• AUS Findings must be reviewed to determine if finding is present for the BK. If not present, but credit report and 1003 reflects the BK accurately, an assumption may be made the BK was correctly read by the AUS. However, when the finding is present, but the code is not accurate, it cannot be assumed that the BK was correctly read by the AUS.
• Chapter 7 must have been discharged for at least 2 years, if less, an exception may be made if over 12 months, and reason was due to documented extenuation circumstances.
• Chapter 13 acceptable with minimum 12 payments made on time, and court approval for new financing. If Chapter 13 hasn’t been discharged for 2 yrs, manual downgrade required
• High Balance Cash Out Transactions – no BK in past 7 years 56
Credit Evaluation (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Foreclosure/Deed in Lieu • Generally, 3 years must have elapsed prior to initial application date to qualify for a
new home loan. If foreclosed mtg was government, seasoning is from date claim paid
• High Balance Cash Out, no foreclosures in past 7 years
• Foreclosures with Accept from AUS, and greater than 3 years prior to the date of the loan application do not require manual downgrade
• Credit Report must reflect zero balance on mortgage liens, OR documentation must be obtained to support no further obligation
• Credit report must reflect the correct code for AUS to read foreclosure accurately, or the loan will require a manual downgrade. The code is generally an 8 (CoreLogic, Credco and Old Republic), but may vary depending on the credit vendor. If the loan does not meet manual underwriting guidelines, the credit report must be corrected and the loan must be re-run through AUS.
• 1003 Loan Application must reflect a “yes” response to the foreclosure question
• AUS Findings must be reviewed to determine if a finding is present for foreclosure. If not present, but the credit report and the 1003 reflect the foreclosure accurately, an assumption may be made that the foreclosure was correctly read by the AUS. In cases where the finding is present but the code is not accurate, it cannot be assumed that
the foreclosure was correctly read by the AUS. 57
Credit Evaluation (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Verification of Borrower’s employment history for previous 2 years required. Gaps of over 30 days must be explained. If borrower has a gap of employment for more than 6 months in past 2 yrs the loan must be manually downgraded (regardless of AUS findings)
Salaried borrowers,
• VOE covering 2 year period and most recent paystub; or
• 2 years W2’s, plus paystub, plus verbal VOE
• Back to Work Force, with 6 months on current job, and prior 2 year work history (ex, someone who took time off to raise children)
• Part time, second job, seasonal, overtime and bonus income may be used for qualification if the income has been received for at least 2 years, and it’s continuance is likely. Income is averaged for 2 years.
Commission income must have 2 year history, document with 2 years tax returns (subtract 2106 expense)
58
Employment and Income
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Self-employment income:
• Borrower with a 25 percent or greater ownership interest in a business is considered self-employed
• Signed and dated individual tax returns (1040’s), plus all applicable schedules, for the most recent two years.
• YTD P&L and balance sheet required if more than a calendar quarter has elapsed since most recent tax return
• Signed copies of federal business income tax returns for the last two years, with all applicable schedules, if the business is a corporation, an "S" corporation, or a partnership.
• A business showing a significant decline in income over the period analyzed is not acceptable and will not qualify for FHA financing
• Copy of business license for 2 yrs or CPA letter for independent verification of business
59
Employment and Income (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Other Types of Income
Alimony and Child Support AUS loans may follow automated underwriting and documentation requirements
Retirement, disability, social security income must have evidence that 3 years continuance is likely. Document with awards letters or other documentation.
Disability income, public assistance income, military allowances and social security income are not subject to federal income taxes, and may be “grossed up” by 25%
Any Non Taxable Income may be grossed up by 25%
60
Employment and Income (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Rental Income received for properties owned is acceptable if the borrower can document rental income is stable.
The following documentation may be considered:
• Current lease or rental agreement if property obtained since last tax period ONLY. 85% of rental income is used to qualify borrower
• Tax returns for previous 2 years
Boarder income is acceptable only if the parties are related by blood, marriage or law, and income is on filed previous year’s tax returns
61
Employment and Income (continued)
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Borrower’s own funds
• Checking and Savings
Most recent 2 months bank statements OR
Computer generated VOD, with 2 month average balance AND
One month bank statement with prior and current balance
ANY recent large increase (non payroll deposits) and new accounts must be explained and documented
• Loans secured by 401K
• Sale of personal asset, etc
Gifts are acceptable from:
• Relatives, including gifts of equity, close friend with defined interest in borrower, borrower's employer or labor union, charitable organization, real estate agents who are relatives
• Government agency or public entity program that provides homeownership assistance to low and moderate-income families or first-time homebuyers.
Grant funds from HUD approved entity
62
Assets
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Gift Letter – The following is required • The dollar amount
• The donor’s name, address, telephone number
• The Borrower must be named
• The donor’s relationship to the Borrower
• The donor’s signature
• A statement that no repayment is required
• Must contain language asserting that the funds given were not made to the donor from any person with an interest in the sale of the property.
See PCM Gift Letter sample.
63
Gift Funds
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Evidence of the source and transfer of funds is also required
• If the funds are in the Borrower’s account, a copy of the cancelled check or withdrawal slip showing that withdrawal is from the donor’s account. A copy of the deposit slip or bank statement showing the deposit of the funds into the Borrower’s account is also required.
• If the funds are to be provided at closing, documentation must be provided to verify that the funds were withdrawn from the donor’s account. (i.e. cashiers check, or bank wire must have name and account number of donor, and bank statement or other documentation to show the donors’ account number, etc).
64
Document source of Gift Funds
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
A transaction with an interested party contribution has the following (additional) appraisal requirements.
• The appraisal must indicate the amount of the contribution
• The appraiser must comment on the impact the contribution has to the final value of the property
• The appraiser must demonstrate the effect this has on final value
• The comparable sales must be adjusted by the value of the contributions as recognized by the market, in the appraiser’s opinion, not just dollar for dollar amount of the contribution
• Any comparables sold with financing and/or sales concessions must reflect the difference between what the comparables actually sold for with and without concessions
• Positive adjustments for sales or financing concessions are not acceptable
• Max 6%
65
Seller/Interested Party Contribution
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
66
Forms, Disclosures and Processing Tips
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
67
What’s different from Conventional?
FHA Specific Disclosures – More about this next
Loan Transmittal Summary (LT) vs. FNMA 1008
URLA (Uniform Residential Loan Application) vs. FNMA 1003
Addendum to the URLA (HUD-92900-A)
Conditional Commitment DE Statement of Appraised Value (HUD-92800-5B)-PCM will supply & complete this form
Case #s -Broker to request on PCM website
CAIVRS Database Search-PCM will complete this task
LDP & GSA Database Search-Broker to complete
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
1) Important Notice to Homebuyer (HUD 92900-B)
2) For your Protection: Get a Home Inspection
3) Informed Consumer Choice Disclosure
4) Amendatory Clause/Real Estate Certification
5) Notice to Homebuyer (Assumption of HUD/FHA Mortgages)
6) Arm Disclosure (if applicable)
68
Specific FHA Disclosures
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
69
HUD 92900-B
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
Important Notice to Homebuyers, page 2
70
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
71
Form HUD-92564-CN
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
72
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
Top of Amendatory Clause and Real Estate Certification
73
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
Bottom of Amendatory Clause and Real Estate Certification
74
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.* 75
Notice to Homeowner/Assumption Notice
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
Forms – Who Signs and When
76
FORM WHO SIGNS WHEN TO SIGN
Initial HUD/VA Addendum 92900a page 1 (09/2010) Loan officer Application
Initial HUD/VA Addendum 92900a page 2 (09/2010) Borrower 2x application
Final HUD/VA addendum 92900a pg 1 (09/2010) Lender Prior to closing
Final HUD/VA addendum 92900a pg 2 (09/2010) Borrower 2x At closing
Final HUD/VA addendum 92900a pg 3 (09/2010) Underwriter Approval
Final HUD/VA addendum 92900a pg 4 (09/2010) Borrowers & lender At closing and Post closing
FHA/VA Amendatory clause and RE cert Borrowers, seller, realtors At purchase agreement
For your protection: get a home insp. 92564cn (6/06) Borrowers- sig not mand no later than application
Important Notice to homebuyer 92900b (12/04) Borrowers At application
Informed Consumer Choice Disclosure Borrowers At application
Loan Transmittal Summary 92900-LT (5/08) Underwriter Approval/Denial
FHA ARM disclosure Borrower At application, if applicable
4506t Borrower At application
Notice to homeowner (assumption of FHA loans) Borrower At closing
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
77
Case Number Requests and AVM requests online at www.pcmplatinum.com
As a sponsored broker you will not have access to the FHAC (FHA Connection)
Upon submitting your online request for Case #-PCM will email your case number and Refinance Authorization (if applicable)
All FHA loans must have a case number assignment to be insured
• Case numbers are ordered in FHA Connection by PCM
• Case numbers are assigned to the subject property
• Case number must be reflected on all HUD documents
• Case number printout is required with loan submission
• Streamline Refinances need previously assigned case number
AVM Requests may be made at this time. Use the Lender Notes to state you need the AVM ordered.
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
78
Ordering your Case Number
Log on to www.pcmplatinum.com
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.* 79
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
ADP – Automated Data Processing Code
80
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
Streamline Refinance Type
81
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
Program ID – Select Default Setting
82
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
All parties to the transaction must be cleared in both databases to check for individuals that have been denied participation in FHA’s insurance programs OR other government contracts or programs because of wrong doing
LDP (Limited Denial of Participation
• Database can be accessed at http://portal.hud.gov/portal/page/portal/HUD/topics/limited_denials_of_participation
GSA - Government Services Administration (ELPS - Excluded Parties List Service)
• Database can be accessed at https://www.epls.gov/
Use PCM LDP/GSA Workflow and Participants Form
83
LDP and GSA Databases
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
CAIVRs Credit Alert Interactive Voice Response System checks for delinquent federal debt, should be on Case Number Printout
• PCM will access CAIVRS through the FHAC
• This is informational only to you as a sponsored broker
• Must be ordered on all borrowers
• Any delinquency must be cleared, or not eligible for FHA loan
• Should a delinquency or issued be uncovered by PCM you will be promptly notified
84
CAIVRS – PCM will process this through FHA Connection
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
Checking for Condo Project Approval
85
Search on HUD’s website at this location: https://entp.hud.gov/idapp/html/condlook.cfm
STEP ONE: Search for a HRAP/DELRAP Condo by inputting MINIMAL DATA •State
•City
•Status: Approved
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
Condo Project Approval Print out and submit with package
86
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
Checking Pre-HRAP/DELRAP, Step 2
87
**TIP** If the Condo name was missing from the initial approval the Tract Number will be listed as
‘Condo Name’. You can find this in the legal description for your property.
STEP TWO: Review the results and search for possible matches
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
HUD Training Events http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/events/events
ABCs of FHA Lending www.fha-training.com or 619-977-7900
FHA Online University www.fhatraining.org or 1-800-665-0249
Diehl & Associates www.fhamortgagetraining.com or 317-272-7600
AllRegs Academy www.allregs.com/academy
88
Additional Training
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
89
Processor Resources
NAMP (National Association of Mortgage Processors)
• Visit them at www.mortgageprocessor.org Check out the blogs written by DE Underwriters for good tips
Subscribe to FHA’s Single Family Housing Industry Email List
• www.hud.gov/offices/hsg/sfh/ref/hsgregst.cfm
Subscribe to MRI Quick Reference Guide Mortgage References, Inc. Quarterly reference guides on FHA
• Call them at (763) 878-2919
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Pinnacle Sponsor ID 14993-00449
Pinnacle LDP/GSA Participants + Workflow
FHA Loan Underwriting and Transmittal Summary HUD 92900-LT
HUD Addendum to URLA – 92900-A (9/2010)
FHA Streamline Refinance Worksheet
FHA Disclosure/Notice to Homeowner/Assumption
Important Notice to Homebuyer, HUD 92900-B
Amendatory Clause/Real Estate Certification
For Your Protection: Get a Home Inspection, HUD-92564-CN
Informed Consumer Choice Disclosure Notice
Gift Letter
Arm Disclosure (Sample)
EEM Fact Sheet
Hotel and Transient Use of Property , HUD-92561 (2 to 4 unit properties)
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Forms and Extras
*This information is intended for mortgage professionals only and is not an advertisement to extend credit.*
November 2013
Easy to navigate FHA Site: www.fha.gov
4155 Online – Mortgage Credit Analysis for Mortgage Insurance: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh/4155.1
HUD FAQs http://portal.hud.gov/hudportal/HUD?src=/FHAFAQ
HUD Lenders Page http://www.hud.gov/groups/lenders.cfm
HUD Condo Lookup https://entp.hud.gov/idapp/html/condlook.cfm
HUD Condo Mortgage Insurance (Project Approval Guidance) http://www.hud.gov/offices/hsg/sfh/condo/
HUD Loan Limits https://entp.hud.gov/idapp/html/hicostlook.cfm
HUD Mortgagee Letters http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/
Santa Ana HOC Center http://www.hud.gov/offices/hsg/sfh/talk/addr_sna.cfm
Subscribe to HUD Single Family Email Update List http://www.hud.gov/offices/hsg/sfh/ref/hsgregst.cfm
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FHA and more Links