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					  FAIRWAY 

  Wholesale                      Lending
  A Division of Fairway Independent Mortgage Corporation




        FHA Loan Origination




FHA Loan Origination
203(b) and 234 (c) Program




                                                           1
Why choose an FHA loan?

        Many homebuyers today either do not have sufficient cash-to-close or they
        do not meet the qualifying guidelines for conventional financing. FHA is
        more lenient and forgiving when a borrower has credit issues. They also
        allow the borrower to have more acceptable sources of down payment and
        monthly income, as well as higher qualifying ratios.


        HUD was created to help low-moderate income families. It has evolved
        today for:
              First-time home buyers
              Borrowers with minimum established credit
              Families who have had some credit problems but have overcome their problems and
              are now credit-worthy




Fairway's FHA sponsorship requirements

        No audited financial statements required for 2010 and beyond

!II 	   Self prepared financial statements acceptable

!II 	   Only a $25,000 minimum net worth required or state requirement, whichever is greater

II 	    Sole Proprietors and Partnerships and LLC's with one owner/member

        Home office allowed

iii 	   A four (4) hour "FHA Loan Origination" training course is required for broker/partners 

        with little or no FHA lending experience 





                                                                                                   2
Definitions
Lender   =Broker
4155.1
   Discusses the types of transactions and properties eligible for
   mortgage insurance, and FHA's requirements for determining the
   borrower's ability and willingness to repay the debt. These underwriting
   guidelines apply to mortgages insured under Sections 203(b) and 234(c) of
   the National Housing Act, and are generally applicable to other single-family
   mortgage insurance programs.


Mortgage References, Inc (MRI Quick Reference Guide)
  This publication is designed to provide, only, a "user friendly" reference for
  the everyday questions and issues that arise in the work of originating,
  processing, and underwriting one to four-family FHA-insured mortgages




Definitions
Direct Endorsement (DE)
  Direct Endorsement (DE) is the mechanism that enables HUD-Federal
  Housing Administration (FHA)-approved lenders to consider single-family
  mortgage applications without first submitting paperwork to HUD. The
  purpose of the DE program is to simplify and expedite the process by which
  lenders can obtain mortgage insurance endorsements from HUD. Under
  FHA's Direct Endorsement (DE) program, approved Lenders may
  underwrite and close mortgage loans without prior FHA review or approval.
  The *Iender assumes responsibility for the obligation of the mortgage loan
  without prior HUD review. This includes all aspects of the mortgage loan
  application, the property analysis and borrower underwriting.


  *Note: This assumes that the lender is a DE lender with unconditional 

  approval 





                                                                                   3
 Definitions
       Technology Open To Approved Lenders (TOTAL) Mortgage Scorecard
        FHA's TOTAL Mortgage Scorecard evaluates the overall creditworthiness
       of the applicants based on a number of credit variables and, when
       combined with the functionalities of the Automated Underwriting Systems
       (AUS), indicates a recommended level of underwriting and documentation
       to determine a loan's eligibility for insurance by FHA. Taken together,
       TOTAL and AUS either conclude that the borrowers' credit and capacity for
       repayment of the mortgage are acceptable or will refer the loan application
       to a Direct Endorsement (DE) underwriter for further consideration and
       review. It is FHA's policy that no borrower be denied a FHA-insured
       mortgage solely on the basis of a risk assessment generated by the TOTAL
       mortgage scorecard.




Eligible Borrowers


      Borrower(s) meeting minimum age per state requirements
      Non-occupant co-borrower(s)
      CJ   Limited to one unit property only
      CJ   Non-occupant co-borrower(s) may NOT be allowed on a Cash-Out
           refinance
      CJ   "Kiddie Condos" are also eligible (owned by parents)
II    Non-purchasing spouse
      Military Personal
III   Permanent resident alien
III   Non-permanent resident alien




                                                                                     4
   N on Occupying Borrowers aka "I<iddie Condo"

• 	 Borrower(s) related by blood, marriage, or law, such as
    1:1 	 spouses
    1:1 	 parent-child
    1:1 	 siblings
    1:1 	 stepchildren
    1:1 	 aunts-uncles
    1:1 	 nieces-nephews, or


       Unrelated individuals that can document evidence of a family-!ype, longstanding
       and substantial relationship not arising out of the loan transactIon.

           Refer to Section 603.02 pages 88-89 in the MRI Quick Reference Guide

 See Attachment #1 - Guidelines from the HUD 4155.1 Chapter 2, Section B.3.a




 Citizenship and Immigration Status

        Lawful permanent resident alien - FHA insures mortgages using the same
        terms and conditions as those for U.S. citizens. The mortgage file must
        o 	 include evidence of the permanent residency, and
        o 	 indicate that the borrower is a lawful permanent resident alien on the Uniform
            Residential Loan Application (1003) 

 III    Non-permanent resident alien - FHA insures mortgage made to non­

        permanent resident aliens provided that the 

        o 	 property will be the borrower's principal residence
        o 	 borrower has a valid SSN, and
        o 	 borrower is eligible to work in the U.S., as evidenced by an Employment
            Authorization Document (EAD) issued by the U.S. Citizenship and Immigration
            Services (USCIS)


           Refer to Section 601.02 page 75 in the MRI Quick Reference Guide

   See Attachment #2 - Guidelines from the HUD 4155.1 Chapter 4, Section A.3.a




                                                                                             5
  FHA Maximum LTV Quick Summary Matrix



             Transaction Type                                       Maximum LTV

 III    Purchase                                        II    96.5% (3.5% down payment) 

 III    Rate and Term Refinance                         III   97.75% 

 III   Streamline Refinance WITH                        III   Lower of 97.75% or max loan 

       Appraisal                                              amount calculation
       Streamline Refinance WITHOUT                           N/A - Max loan amount 

       Appraisal                                              calculation applies 

       Cash-Out Refinance                                     85.0% 

       Second Home                                            Ineligible 

       Investment Property                                    Ineligible 


            FHA allows One-Io-Four Family Living UnHs




Down Payment Requirements


            The FHA down payment requirement is 3.5%
       CJ      Borrower(s) own funds
       CJ      100% gift from a family member, relative etc. (see Gift
               slide)
       CJ      Secured borrowed funds (see Secondary Financing slide)
III         Sale Price X 96.5% = Base Loan Amount
            Sales Price X 3.5% = Minimum Down Payment




                                                                                              6
 Down Payment Requirements


                     Assuming a $100,000 sale price

 1. 	   What is the down payment?
 2. 	   What is the minimum amount the borrower must have in the
        transaction? 

        If the seller is willing to contribute $1,500 towards closing 

        costs, and closing costs are $2,800, what is the borrower's 

        cash to close without prepaid expenses? 





Down Payment Requirements


            Assuming a $100,000 sale price answers

1. 	    What is the down payment? $3,500
2. 	    What is the minimum amount the borrower must
        have in the transaction? $3,500
3. 	    If the seller is willing to contribute $1,500 towards
        closing costs, and closing costs are $2,800, what is
        the borrower's cash to close without prepaid
        expenses? $4,800
         Down payment ($3,500) + Closing Costs ($2,800) - Seller
                                =
         Contribution ($1,500) $4,800




                                                                          7
An outright gift of cash investment is acceptable if the donor is:
   The borrower's relative
   The borrower's employer or labor union
   A charitable organization
   A government or public agency that has a program providing ownership
   assistance to:
   o   Low and moderate income families or
   o First-time homebuyers
  A close friend with a clearly defined and documented interest in the
  borrower


       Refer to Section 302.03 and 302.04 in MRI Quick Reference Guide




Secondary Financing - Family J\lember


  FHA permits lending from family members on a secured or unsecured
  basis, up to 100% of the borrower's required funds to close. This may
  include the down payment, closing costs, prepaid expenses and discount
  points. If the loan from the family member, whether borrowed from an
  acceptable source or the family member's own savings, is secured by the
  subject property, only the family member provider may be the note holder.
  FHA will not approve any form of securitization of the note that results in
  any entity other than the family member being the note holder, whether at
  settlement or at any time during the mortgage life cycle.



  Refer to Section 303.04 pages 50-51 in the MRI Quick Reference Guide




                                                                                8
FHA Refinances
   Benefits of FHA Refinances
   Q   streamline with or without an appraisal
   Q   higher LTV limits on RatefTerm refinance (up to 97.75%)
   Q   higher LTV limits on Cash out refinance
   Q   allows for higher Oebt-to-Income ratios
   Q   liberal credit requirements

   New FHA Refinance Transactions guidelines per Mortgage 

   Letter 2011-11. See Attachment # 3. 


   FAQ's on Mortgagee Letter 2011-11. See Attachment #4. 





FHA Refinances
UFMIP Refunds
As of December 8, 2004, on FHA loans where an UFMIP was paid are no
longer
eligible for refunds. The only exception is that refunds of UFMIP
premiums
available to borrowers refinancing to another FHA-insured mortgage
(streamline)
within a tl          UI)front Mortgage mlnnce Premiun Refund Percentages

                                             Month of Year

           Year   1    2    3           4                5             6               1   8    9    10   11   12

            1     80   78   76         74               72             70          68      66   64   62   60   58
            2     56   54   52         50               48             48          44      42   40   38   36   34
            3     32   30   28         26               24            22           20      18   16   14   12   10
                                -   - - ..._.....   ~-.".-.   ,­   _ _.-.
                                                                    ...     __...'-­                           ___   eo_




                                                                                                                           9
      FHA Refinances

  Maximum CLTV for Refinances



  Rate and Tenn (or No Cash·Out)                                                                                    97.75%


  Refinances to borrowers in Negative Equity Position'"    (Not eligible for Fairway Wholesale Lending)              115%


 FHA·to-FHA Streamline with or without appraisal          (Not eligible for Fairway Wholesale Lending)               125%



 Cash-Out                                                                                                             85%



                                               * This refinance option is only available through December 31,2012




FHA Maximum Mortgage Limits


       Mortgage limit for any given area shall be set at 115% of the median house
       price in that area set by HUD


III    Minimum FHA loan limit:                            =$271,050 

       (Conforming limit of $417,000 X 65% = $271,050) 




                                           See Attachment # 5 - List for Illinois


                                             Available at HUD website
                                    https:/Ientp.hud.gov/idapp/html/hicost1.cfm




                                                                                                                             10
FHA Mortgage Insurance Premiums

     On all FHA loans, Mortgage Insurance Premium (MIP) is required.

  upfront mortgage insurance premium (UFMIP), and
  annual insurance premium, which is collected in monthly installments

  Upfront MIP (UFMIP): Effective for loans with case numbers assigned on
  or after 10/4/2010, FHA has lowered its upfront MIP to 1% for:
  purchase money transactions, and
  refinance transactions, including
  :J FHA-to-FHA credit qualifying refinances, and
  :J non-credit qualifying streamlined refinanced transactions. (Fairway
     requires a 640 minimum FICO score)
                                                  =
                Base Loan Amount X factor (1%) Upfront MIP

     See Attachment # 6 for FHA Mortgage Insurance Premiums Matrix




FHA Mortgage Insurance Premiums



 Annual Insurance Premiums: An annual premium, as shown in basis
 pOints on Attachment #4 , to be remitted on a monthly basis, will be charged
 based on the initial LTV ratio and length of the mortgage term as shown on
 Attachment #4
                                                      =
         Base Loan Amount X factor divided by 12 Monthly MIP

 The Upfront MIP and Monthly MIP are always calculated on the base loan
 amount after the down payment. The Upfront MIP (UFMIP) can be
 financed back into the base loan amount, rounded down to the nearest $1.

     See Attachment # 6 for FHA Mortgage Insurance Premiums Matrix




                                                                                11
            Mortgage Insurance Premiums 


 For Mortgages with ...                   The annual MIP is ...
terms more than 15 years                  cancelled when the LTV ratio
                                            reaches
                                          78%, provided the borrower
                                            has paid
terms 15 years and less and LTV
ratios of 90% and greater                the annual MIP for at least five
                                           years

terms 15 years and less and LTV          cancelled when the LTV ratio
ratios of 89.99% and less                  reaches
                                         78%, regardless of the length




            Mortgage Insurance Premiums


FHA determines when a borrower has reached 78% LTV ratio based on the
lesser of the
   Sales price, or
   Appraised value at origination (new appraised values will not be
   considered)


Example: If the lesser of the sales price or appraised value is $100,000, when
the loan amount reaches $78,000 FHA no longer collects an annual MIP on
the loan.




                                                                                 12
  FHA Mortgage Insurance Premiums



         Assuming a $100,000 sales price with a minimum down payment

       What is the Base Loan Amount?

       What is the UFMIP?

       What is the Monthly MIP?




FHA Mortgage Insurance Premiums


       Assuming a $100,000 sales price with a minimum down payment and a
       30 year fixed rate product.

       What is the Base Loan Amount? $100,000 X 96.5%   =$96,500
       What is the UFMIP? $96,500 X 1%   =$965.00
3. 	   What is the Monthly MIP? $96,500 X .90% divided by 12   =$72.38 (Do
       NOT drop the cents)

                 Base Loan Amount + UFMIP     =Total Loan Amount
                                  =
                 $96,500 + $965 $97,465




                                                                             13
 Closing Costs and Seller Contribution Limit

        Closing Costs
 III    Closing costs must be "reasonable" for services provided
 III    Cannot charge the borrower a "Tax Service" fee (it must be paid by seller or
        lender)
 ill    Can only charge ACTUAL third-party fees
        Seller Contribution
 III    Allows 6% for interested third parties such as Sellers, Real Estate Agents,
        Builders, Developers or a combination of parties
       May contribute up to 6% of the property's sales price toward the buyer's
       actual closing costs, prepaid expenses, discount points, Buy-down fees,
       Upfront MIP, 1st year advance payments of property taxes, HOA dues, all
       escrow items (taxes, hazard insurance, flood insurance) and other financing
       concessions




Closing Costs and Seller Contribution Limit

Assume a $100,000 sales price a minimum down payment, 30 year fixed at
4.75% interest and a seller contribution of $2,000 towards closing costs.
Closing costs are $3,200. Real Estates taxes are 1.5% of sales price.
Homeowners insurance is $480 annually. Prepaids are calculated at 1% of
sales price. Remember to round down the base loan amount to the nearest $1.
Base Loan Amount              $ 96,500       Total Loan Amount        $97,465

P&I                             508.42       Down payment             $ 3,500
RE taxes                        125.00       Closing Costs              3,200
HOI                              40.00       Prepaids                   1,000
Monthly MIP                      72.38       Discount pOints            __  0
                                             Total Cash to Close      $ 7,700
PITI:                       $ 745.80         Minus Seller Contribution
                                                 2,000
                                             Borrower Cash to Close $ 5,700




                                                                                       14
   Qualifying Ratios



  II 	   Standard qualifying ratios are PITI to Income of 31% (front) and Total Debt to
         Income of 43% (back)

  II 	   Fairway Overlay - up to 55% (back) with AUS "Accept/Approve"

         Energy Efficient Homes (EEH) - 33% (front) and 45% (back) when borrower is
         purchasing or refinancing an EEH (Fairway does not allow for EEH)




Cash Reserves




II 	     No cash reserves required for 1-2 units properties



iii 	    Three (3) months PITI reserves required for 3-4 unit properties
         o 	 Cash reserves may come from gift and secondary financing




                                                                                          15
Credit
                                      Fairway Overlays

III   Requires a minimum of two reported credit scores for each borrower
III   640 is the minimum FICO score requirement, including all streamline refinances
•     Non-traditional credit is not eligible
III   Foreclosure
      o 	 If foreclosure was due to documented/proven hardship, then: 

          ,. If seasoned> 36 months but = < 84 months, maximum LTV is 90% 

          ,. If seasoned> or = 84 months, standard down payment policies apply 

      o 	 If foreclosure was due to financial mismanagement, borrower must have a
          minimum of 84 months seasoning and re-establish credit
      Judgments must be paid in full or evidence of a satisfactory repayment plan must be
      verified for a minimum period of 12 months.
      Collections do not require payoff unless it is determined that the first lien position
      could be potentially affected by future legal action. Analysis of credit history to be
      determined by the DE Underwriter

              See Attachment # 7 - HUD 4155.1 Chapter 4, Section C.2.d-e. 

            Refer to Section 402 pages 55-56 in the MRI Quick Reference Guide 





Compensating Factors


      Documentation: Compensating factors that are used to justify approval of
      mortgage loans with ratios that exceed benchmark guidelines must be recorded
      on the Underwriter Comments section of form HUD-92900-LT, FHA Loan
      Underwriting and Transmittal Summary. Any compensating factor used to
      justify mortgage approval must be supported by documentation.

      Total Scorecard Accept Recommendation. The TOTAL Scorecard Accept
      recommendation does not require documented compensating factors, even if
      qualifying ratios have exceeded FHA benchmark guidelines.

      Benchmark Guidelines: Attachment # 8 (HUD 4155.1 Chapter 4, Section
      F.3.b) describes the compensating factors that may be used to justify approval
      of mortgage loans with ratios that exceed FHA benchmark guidelines.

      Refer to Section 405.02 pages 62-63 in the MRI Quick Reference Guide




                                                                                               16
Bankruptcy and Credit Counseling
Page 1 of2



• 	 Chapter 7 Bankruptcy does not disqualify a borrower 'from obtaining an
    FHA-insured mortgage, if at least two years have elapsed since the date of
    the discharge of the bankruptcy. During this time, the borrower must:
    Q  Have re-established good credit (no derogatory credit) or
    Q  Chosen not to incur new credit obligations
                See attached HUD 4155.1 Chapter 4, Section C.2.g


   Chapter 13 Bankruptcy does not disqualify a borrower from obtaining an
   FHA-insured mortgage, provided that the lender document that:
   u One year of the pay-out under bankruptcy has elapsed and
   u The borrower's payment performance has been satisfactory
   u And all required payments have been made on time
   Note: The borrower must receive written permission 'from the court to enter
     into the mortgage transaction




Bankruptcy and Credit Counseling
Page 1 of2



Total Scorecard Accept Recommendation - Lender documentation must show
two years from the discharge date of a Chapter 13 bankruptcy. If the Chapter
13 bankruptcy has not been discharged for a minimum period of 2 years, the
loan must be downgraded to a Refer and be evaluated by a Direct
Endorsement (DE) underwriter


For more information on the TOTAL Scorecard recommendations, see the
TOTAL Mortgage Scorecard User Guide.


             See   Attachment # 9 - HUD 4155.1 Chapter 4, Section C.2.h

      Refer to Section 402 pages 56-57 in the MRI Quick Reference Guide




                                                                                 17
Bankruptcy and Credit Counseling
Page 2 of2




   Credit Counseling does not disqualify a borrower from obtaining an FHA-insured
   mortgage, provided that the lender document that:
   o 	 One year of the pay-out under the plan has elapsed and
   o 	 The borrower's payment performance has been satisfactory and all required
       payments have been made on time
   Note: The borrower must receive written permission from the credit counseling
       agency to enter into the mortgage transaction

                See   Attachment # 9 -   HUD 4155.1 Chapter 4, Section C.2.i

             Refer to Section 402 pages 56-57 in the MRI Quick Reference Guide




Bankruptcy and Credit Counseling
Page 2 of2




   Credit Counseling does not disqualify a borrower from obtaining an FHA-insured
   mortgage, provided that the lender document that:
   o 	 One year of the pay-out under the plan has elapsed and
   o 	 The borrower's payment performance has been satisfactory and all required
       payments have been made on time
   Note: The borrower must receive written permission from the credit counseling
       agency to enter into the mortgage transaction

                                 Continued on next page




                                                                                    18
 Bankruptcy and Credit Counseling
 Page 2 of2



 Total Scorecard Accept Recommendation - The borrower's decision to
 participate in credit counseling does not trigger a requirement for
 additional documentation since the credit scores already reflect the
 degradation in credit history. The borrower's credit history, not voluntary
 participation in consumer credit counseling, is the important variable in
 scoring the mortgage and, thus, no explanation or other documentation
 is needed.

For more information on the TOTAL Scorecard recommendations, see the
TOTAL Mortgage Scorecard User Guide.

              See Attachment # 9- HUD4155.1 Chapter 4, SectionC.2.i

         Refer to Section 402 pages 56-57 in the MRI Quick Reference Guide




              Loans




II   Debt payments scheduled to begin or come due within 12 months of the
     mortgage closing, must be included by the lender as antiCipated monthly
     obligations during the underwriting analysis

     Debt payments do not have to be classi·fied as projected obligations if the
     borrower provides written evidence that the debt will be deferred to a period
     outside the 12-month timeframe

         Refer to Section 404.03 pages 60-61 in MRI Quick Reference Guide




                                                                                     19
 "Lenders may pay the borrower's allowable closing costs and/or prepaid items by 

      premium pricing. Costs paid in this manner need not be included as part of the 6% 

      seller contribution limit." The funds derived from a premium priced mortgage: 

 • 	 May never be used to pay any of the borrower's down payment
• 	 Must be disclosed on the HUD-1 Settlement Statement. The HUD-1 must include a
      itemized statement indicating which items are being paid on the borrower's behalf;
      disclosing a lump sum is not acceptable. Also, the amount paid on the borrower's
      behalf for each item may not exceed the allowable fee permitted by the jurisdictional
      HOC.
lI! 	 Must be used to reduce principal if the premium pricing agreement establishes a
      specific dollar amount for closing costs and prepaid expenses with any remaining
      funds, in excess of actual costs, reverting to the borrower
• 	 May not be used for payment of debts, collection accounts, escrow shortages or
      missed mortgage payments or judgments


             See Attachment # 10 - HUD 4155.1 Chapter 5, Section A.2.i




Origination and Tax Service Fee



  Lenders may charge and collect from the borrowers those
  customary and reasonable costs necessary to close the
  mortgage. With the exception that a "Tax Service Fee"
  cannot be charged to a borrower, there are no more "Non­
  Allowable" fees and charges as long as fees are
  customary and reasonable and comply with Federal and
  State disclosure laws and other applicable laws and
  regulations

  FHA no longer limits the origination fee to 1% of the 

  mortgage amount for its standard mortgage insurance 

  programs 





                                                                                              20
Property Inspection Requirements

              FHA no longer mandates automatic inspections for the following items and/or
              conditions in existing properties:

   IJ 	       Wood Destroying Insects/Organisms: Inspections required only if evidence of
              active infestation, mandated by the state or local jurisdiction, if customary to area
              or at lender's discretion or if requested in the Purchase and Sales Agreement

   o	         Well (individual water system): Test or inspection required if mandated by state
              or local jurisdiction; if there is knowledge that the well water may be contaminated;
              when water supply relies upon water purification system due to presence of
              contaminants.

   IJ 	       Septic: Test or inspection required only if (1) evidence of system failure, (2) if
              mandated by the state or local jurisdiction, (3) if customary to the area, or (4) at
              lender's discretion. If home has been unoccupied for more than 30 days (and
              does not meet one of the conditions noted above) the lender's underwriter must
              decide if an inspection of the system is necessary.




Prohibition on Property Flipping
Page 1 of 4
  Property Flipping - refers to the practice whereby recently acquired property is
  resold for a considerable profit with an artificially inflated value, often abetted by
  a lender's collusion with an appraiser
  To be eligible for a mortgage insured by FHA 

  IJ      a property must be purchased from the owner of record 

  o 	 the transaction may not involve any sale or assignment of the sales contract, and
  o 	 the lender must obtain, and submit in the case binder to HUD, documentation 

          verifying that the seller is the owner of record. 

  Such documentation may include, but not limited to 

  IJ  a property sales history report 

  o 	 a copy of the recorded deed from the seller, or
  o 	 Other documentation, such as a copy of the property tax bill, title commitment, or
     binder, demonstrating the seller(s)/owner(s) ownership of the property and the dates
     it was acquired.
  Note: This requirement applies to all FHA purchase money mortgages, regardless of the
         time between re-sales.




                                                                                                      21
    I Prohibiti~n on Property Flipping
     Page 2 of 4

        If a property is re-sold 90 days or fewer following the date of acquisition by the
        seller, the property is not eligible for a mortgage insured by FHA.
        FHA defines the
       o 	 seller's date of acquisition as the date of settlement on the seller's purchase of that
           property, and
       o 	 resale date as the date of execution of the sales contract by a buyer intending to
           finance the property with an FHA-insured loan 

       A lender must obtain a second appraisal by another appraiser if 

       o 	 The resale date of the property is between 91 and 180 days following the acquisition
           of the property by the seller, and
       o 	 The resale price is 100 percent or more over the price paid by the seller when the
           property was acquired
       Note: The cost of the second appraisal may NOT be charged to the borrower.




                                                                   --------_._-­
,   Prohibitio;~n Proper~ Flipping
i   Page 3 of 4
       FHA reserves the right to require additional documentation from a lender to
       support the resale value of the property if:
       (J The resale date is more than 90 days after the date of acquisition by the seller, but
          before the end of the twelfth month following the date of acquisition, and
       (J The resale price is 5 percent or greater than the lowest sale price of the property
          during the preceding 12 months.
       At FHA's discretion, such documentation may include, but not limited to, an appraisal
          from another appraiser.

       The only exceptions to the 90 day resale restriction are for
       o 	 properties acquired by an employer or relocation agency in connection with the
           relocation of an employee
       (J  re-sales by HUD under the Real Estate Owned (REO) program
       (J  sales by other United States Government agencies of single family properties
           pursuant to programs operated by these agencies




                                                                                                     22
Prohibition on Property Flipping
Page 4 of 4

  D    sales of properties by nonpro-fits approved to purchase HUD owned single family
       properties at a discount with the resale restrictions
  D    sales of properties that are acquired by the seller by inheritance
  D    sales of properties by state and federally-chartered financial institutions and
       government sponsored enterprises
  D    sale of properties by local and state government agencies, and
  D    sales of properties within Presidentially Declared Disaster Areas

  Any subsequent re-sales of the properties described above must meet the 90 day
  threshold in order for the mortgage to be eligible as security for FHA insurance.

             Refer to Section 105 pages 15-17 in MRI Quick Reference Guide

                  See Attachment # 11- HUD 4155.2, Section 4.7.a-h




How do I stay informed and
Get the Answers I need

      You can subscribe to Mortgage References, Inc. (MRI) "Quick
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      http://www.hud.gov/offices/hsg/sfh/ref/hsgregst.cfm Here you can
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      questions and answers in the FHA online knowledge base from the
      very basic eligibility questions to technical underwriting and appraisal
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                                                                                         23
     How do I stay informed and
     Get the Answers I need

            http://www.allregs.com/ We recommend subscribing to Allregs FREE email alert
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            www.adfinet.com We highly recommend this FREE regulations search engine.
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            Email: jerrold.h.mayer@hud.gov "How do you sign up yourself as well as your entire
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         You can send one email or thousands. Email your list to: jerrold.h.mayer@hud.gov




  How do I stay informed and
  Get the Answers I need

           http://portal.hud.gov/portal/page/portaI/HUD/groups/lenders FHA's "Lender
           Partner" Resource Center. Please see Attachment # 12 - Screen shot.

           http://www.hud.gov/offices/adm/hudclips/ Search site for Handbooks, Forms
           and Mortgagee Letters. Please see Attachment # 12 - Screen shot

 III 	     http://www.hud.gov/offices/hsg/keywords.cfm Keyword Search Index. Please
           see Attachment # 12 - Screen shot

.111 	     http://www.hud.gov/assistlsiteindex.cfm Site Search Index. Please see
           Attachment # 12 - Screen shot




                                                                                                 24
       do I stay informed and
  Get the Answers I need
      http://wwwfhaoutreach.gov/FHAHandbook/prod/index.asp FHA Online Handbooks. Please
      see Attachment # 12 - Screen shot.


      Email: info@fhaoutreach.com You can email the FHA Resource Center for answers to
      many questions you may have.


      Call (800) CALL-FHA or (800) 225-5342 FHA Resource Center available Monday-Friday, 8
      AM to 8 PM Eastern Time


      http://www.hud.gov/officesladm/hudclips/handbooks/hsgh/4155.1 141551 HSGH.pdf The
      4155.1 is the official 406 page Mortgage Credit Analysis Handbook for FHA.


      For quicker access to FHA questions, the MRI Quick Reference Guide is a better
      alternative. See Attachment # 12 for order form.




How do I stay informed and
Get the Answers I need



      FHA TOTAL Mortgage Scorecard User Guide - Please see
      Attachment # 13 for a copy.

III   FHA TOTAL Mortgage Scorecard FAQ's - Please see
      Attachment # 14 for a copy.




                                                                                             25
I FHA-Documentation Checklist, FHA For~s and
 Fairway Specific Forms

 I!iI 	   FHA Documentation Checklist (for training purposes
          only) and copy of Loan Submission Form. Please see
          Attachment # 15 for documents.


          FHA Mortgage Insurance Premiums - Please see
          Attachment # 6.

          FHA Specific Forms, Product Guidelines and Matrices
          - Please see Attachment # 16.




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