Item Changing

Current Rules

New Rules effective with Case Numbers starting 4/9/12

Up Front Mortgage Insurance Premium (UFMIP)

1.00% of the loan amount, rolled into the new loan

1.75% of the loan amount, rolled into the new loan. 
This increase represents ~ $10/month on a $200k home purchase with a 3.5% down payment

> 15yr Term

Annual MIP

(paid Monthly with Mortgage Payment)

·         1.15% with < 5.00% down payment

·         1.10% with > 5.00% down payment

·         1.25% with  < 5.00% down payment

·         1.20% with  > 5.00% down payment

This increase represents ~ $16/month on a $200k home purchase with a 3.5% down payment

< 15yr Term

Annual MIP

(paid Monthly with Mortgage Payment)

·         0.50% with < 10.00% down payment

·         0.25% with >  10.00% down payment

·         > 22.00% down payment has no Annual MIP

·         0.60% with < 10.00% down payment

·         0.35% with > 10.00% down payment

·         > 22.00% down payment has no Annual MIP

This increase represents ~ $16/month on a $200k home purchase with a 3.5% down payment

Handling of Disputed accounts

Disputed accounts must be reviewed by an FHA underwriter to ensure they do not affect the borrower’s ability to repay the mortgage.

An FHA underwriter no longer needs to review disputed accounts if BOTH of these are true:

·         The total outstanding balance of all disputed credit accounts or collections are less than $1,000, AND

·         Disputed credit accounts or collections are aged two years from date of last activity as indicated on the most recent credit report.

Handling of Collections

Collection accounts do not need to be paid off.

If the total outstanding balance of all collection accounts is equal to or greater than $1,000 the borrower must resolve the accounts (e.g. entered into payment arrangements with minimum a

three months verified payments- paid as agreed) or paid in full at the time of, or prior to closing. – THIS INCLUDES MEDICAL COLLECTIONS.

Note: Paying “down” of balances on disputed accounts and collections to reduce the singular or cumulative balance to below $1,000, is not an acceptable resolution of accounts.

Handling of Judgments

Judgments must be paid off before the mortgage loan is eligible for FHA Insurance

 

EXCEPTION: If the borrower has a payment agreement with creditor with a minimum of three months verified payments paid as agreed.

NO CHANGE

Self Employed Borrowers

A P&L and Balance Sheet are not required unless income used to qualify the borrower exceeds the two-year average of the tax returns; then either

an audited P&L statement or quarterly tax returns are required to support the greater income stream used to qualify.

P&L and Balance Sheet ARE required if more than ONE calendar quarter (3 months) has elapsed since date of most recent calendar or fiscal year end tax return was filed by the borrower – with no exceptions.

Additionally, if income used to qualify the borrower exceeds the two year average of tax returns, an audited P&L or signed quarterly tax returns obtained from IRS are required.