FHA Closes Loophole for Student Debt in Revamped Lender Handbook

Posted by Krista Sabol on Nov 20, 2015 in FHA, FHA/VA The sweeping overhaul of the Federal Housing Administration’s single-family handbook offers lenders long-sought clarity on acceptable underwriting practices. But that added certainty comes at the expense of flexibility to get loans qualified, including a popular workaround for borrowers with deferred student loan debt. “It tightens certain underwriting guidelines that were on the...
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FHA MIP Refi Boom Caution Points!

Posted by Krista Sabol on Jan 26, 2015 in FHA, FHA/VA, IMU Blog By Alice Alvey The FHA reduction in the MIP is the perfect opportunity to fill lackluster post-holiday pipelines. Every borrower who purchased a home in the last 1-3 years using FHA financing is a potential candidate to save money, if they plan to stay in the house long enough. It is important to consider all of the financial calculations to ensure the borrower doesn’t end up spending more...
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VA Residual Income Guideline Not A QM Solution

Posted by Krista Sabol on Aug 4, 2014 in IMU Blog, VA VA Residual Income Guideline Is Not A QM Solution For Community Banks By: Alice Alvey, CMB August 4, 2014 As community based lenders look to develop their non QM products, compensating factors become the central focus when considering credit policy that permits a Debt To Income (DTI) ratio above 43%. For borrowers with years of monthly payments in reserves, the question still becomes how...
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FHA Seller Concession Rules Proposal Issued

Posted by Krista Sabol on Mar 1, 2012 in FHA, IMU Blog, Origination, Processing, Proposed Rules, Rules Watch, Underwriting The long awaited details of the proposed rule to limit seller concessions is finally back in the federal register. A re-proposal requesting comments was published yesterday, Feb. 23 with a comment period open until March 26th. The new proposal combines a percentage cap with a dollar limitation and works like this (of course it isn’t just a straight forward policy!): The seller is permitted...
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Excessive Ratios On FHA’s

Posted by Krista Sabol on Jan 27, 2012 in FHA, FHA/VA, IMU Blog, VA In a recent article highlighting the changes in the FHA Total Scorecard Guide (TSG), it was noted that FHA added a bullet point on page 13 under the review rules for Total. The term ‘excessive ratios’ is now a bullet point and requires a DE underwriter to manually underwrite the file when this rule is triggered. Our team did a little digging and found Mortgagee Letter 08-22 that...
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New FHA Total Scorecard Guide Summary

Posted by Krista Sabol on Jan 9, 2012 in Appraisals, FHA, FHA/VA, IMU Blog, Operations, Origination, Processing, Quality Control / Audit, Underwriting What do I need to know about the new FHA Total Scorecard Guide? Download Copy Of The FHA Total Scorecard Guide 2011 As you may know FHA released a new FHA Total Scorecard Guide (TSG) with some pretty significant changes. Our team sat down and scrubbed the new TSG to identify and relay the changes to you on our blog. The details will most certainly be incorporated into our FHA Practical...
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FHA Mortgagee Approval Clarification

Posted by Krista Sabol on Aug 10, 2011 in FHA, FHA/VA, IMU Blog, Operations Many lenders are still trying to understand the new FHA approval requirements. As an industry, we have ML 09-31, ML 10-03, ML 10-20 (the main mortgagee letter), ML 10-38 and ML 11-25, along with the FHA Handbook 4060.1 rev.2, FHA’s website and FAQ’s as reference documents to determine FHA approval policies. Over the last few months I have been fortunate to conduct training programs at HUD on...
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2011 Bills We’re Watching

Posted by Krista Sabol on Feb 15, 2011 in Dodd Frank Act, Legislative Watch, Regulations, VA H 363: Forced Refinance Provisions For Fannie/Freddie Status: Introduced 1/20/11 The formal name of the bill is ‘Housing Opportunity and Mortgage Equity Act of 2011”. The bill would require Fannie/Freddie to create a     program for qualified mortgages where an appraisal is not required. The servicing fee will be restricted to a maximum of $1,000. H 330:  First Time Homebuyer...
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Underwriting FHA in 2011

Posted by Krista Sabol on Jan 27, 2011 in FHA, FHA/VA, Operations, Underwriting The current shortage of underwriters has made FHA Direct Endorsed (DE) underwriters a hot commodity as lenders continually seek for underwriters with a CHUMS ID #. Why are DE underwriters so sought after in today’s mortgage market? Here are some of the key reason that the CHUMS ID # has become good as gold: 1) The underwriter has prior FHA experience 2) Only DE underwriters can review...
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Mortgage U To Conduct FHA Training For HUD

Posted by Krista Sabol on Jan 20, 2011 in Fannie Mae / Freddie Mac, FHA, FHA/VA, Origination, Underwriting Indecomm-Mortgage U is proud to announce that we have been selected by Campus MBA, the education division of the Mortgage Bankers Association to conduct FHA training for a team of employees from the Department of Housing and Urban Development. The training will cover an overview of FHA residential, senior housing and hospital programs including renovation lending, reverse mortgages as well as...
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Vicki Bott Speaks to MBA Committee

Posted by Krista Sabol on Oct 25, 2010 in FHA The MBA Residential Loan Production committee meeting was held yesterday at the MBA Convention in Atlanta. Vicki Bott, Deputy Assistant Secretary of Single Family Housing Programs spoke at the meeting and provided an important update. FHA’s main focus in 2011 will be oversight of its business partners the DE lenders. Bott said they will be “looking harder and smarter” at the quality of...
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What do FHA approval and LO compensation have in common?

Posted by Krista Sabol on Oct 20, 2010 in FHA, FHA/VA We are seeing a pattern in the way regulators are communicating their policies to the industry. First let’s look at the FHA lender approval changes. FHA has said that wholesalers are responsible for monitoring that all ‘sponsored correspondents’ (the new term for non-FHA approved companies) are in compliance with FHA requirements. This is a very broad statement and every wholesaler is...
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FHA Fine Print Reduces Allowable Lender Contributions

Posted by Krista Sabol on Aug 6, 2010 in FHA, Processing, Proposed Rules, Underwriting FHA published a proposal on July 15th announcing changes to important underwriting requirements. Lenders and brokers must be aware of a problem in the fine print and respond to FHA immediately! FHA is not only changing the maximum seller contribution from 6% down to 3% they have changed the definition of ‘interested third party’ in a footnote at the bottom of page 41220. FHA’s 4155.1...
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FHA’S New Lender Approval World

Posted by Krista Sabol on Jun 29, 2010 in FHA, Origination, Quality Control / Audit, Underwriting FHA ML 10-20 outlined the provisions for HUD’s reform of the lender approval process. Effective May 20th 2011 most lenders must possess a net worth of at least $1m (20% must be liquid assets). The only exception is for small lenders as defined by the Small Business Administration: o mortgage & non mortgage brokers with $7million or less in gross receipts; o Banks, Savings institutions...
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Pros and Cons of FHA Lending

Posted by Krista Sabol on Jun 3, 2010 in FHA, FHA/VA, Lender Approval Pros and Cons of FHA Lending This is Q&A hosted by Alice Alvey President, CMB of Indecomm-Mortgage U for a large group to provide a forum to discuss the pros and cons of FHA Lending. If you haven’t heard of Alice, she is a Master CMB and a well known industry speaker who talks about FHA lending about as much as she talks about her wonderful children. She is the author of many training...
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FHA Condominium Approval Panel Discussion

Posted by Krista Sabol on Jun 1, 2010 in Condo Approval, FHA The FHA condominium approval process has undergone major changes in the last several months. To help lenders understand the nuances of the new HUD Review and Approval Process (HRAP) and Direct Endorsement Lender Approval Process (DELRAP) I assembled a panel of experts for the event: Angelo Rea, First VP at Flagstar Bank. Angelo is very involved in government lending policies at Flagstar...
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FHA Lender Approval Announcement – April 5, 2010

Posted by Krista Sabol on Apr 12, 2010 in FHA FHA announced on April 5th more details about the elimination of broker approval and the increasing net worth requirement for FHA DE lenders. There are many problems with the announcement. 1) Commissioner Stevens likes to get the word out before the final word is issued. In other words we don’t have an actual final rule to work with yet, only two different press releases. These are just the...
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HR 4811 Summary

Posted by Krista Sabol on Apr 12, 2010 in FHA, House Bills HR 4811 – FHA Safety and Soundness and Taxpayer Protection Act of 2010 Introduced March 10, 2010 • Formalizes a Deputy Assistant Secretary for Risk Management • Ability to enter contracts with private companies to analyze credit risk • Increase annual premium up to 1.75% on the remaining insured principal balance • Implements a ‘flexible risk based premium pilot program’...
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Faxes, eSign and Disclosures for FHA

Posted by Krista Sabol on Mar 15, 2010 in FHA, FHA/VA, Operations, Processing Yes it still says in the FHA Handbook (4155.1 1.3e) “include in the loan file a certification stating that original documents were examined” and a lender should include a document that makes this certification. The guide also states that lenders may use fax documents as long as the fax header of the document supports an acceptable source. As we move faster and faster into using more...
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FHA Minimum Investment

Posted by Krista Sabol on Mar 15, 2010 in FHA, FHA/VA, RESPA, RESPA 2010 Every day it seems someone finds a loophole that has to be closed or confirmed and today is no exception. In the new world of RESPA and tolerance requirements a lender may be faced with providing a refund of closing costs to the borrower at the time of closing if the fees were under stated by more than 10%. The consequence may lead to the borrower receiving cash back at closing and/or appearing...
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Excessive Fees on FHA Loans

Posted by Krista Sabol on Mar 15, 2010 in FHA The FHA Home Ownership Centers have been requiring lenders to refund unreasonable fees to borrowers for years but this practice has increased over the last year. In many cases the company has charged a broker fee in addition to a 1% origination fee. In other cases the lender has charged a processing, underwriting, administrative and broker fee and FHA has required a refund of fees that were...
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Brokers Can Not Order FHA Appraisals

Posted by Krista Sabol on Mar 15, 2010 in FHA DE lenders need to be very careful when accepting appraisal from other companies on FHA loans. FHA ML 09-28 prohibits a mortgage broker from ordering an FHA appraisal. FHA defines a broker to be a loan correspondent/‘mini eagle’ company. The definition of a broker for ML 09_28 is not solely or directly related to which entity is funding the loan, as for other regulations. The Appraisal FAQ...
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FHA Approval

Posted by Krista Sabol on Jan 28, 2010 in FHA FHA correspondent lenders across the country are taking a look at their options for moving forward under HUD’s new lender approval criteria. As we talk with banks, credit unions, lenders and broker we are hearing a variety of opinions that range from ‘great I can’t wait to stop the audited financials’ to ‘how do I elevate my operation to handle DE authority’. The most aggressive...
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