FHA Changes, Post September 14 (Continued)

  • Donor requirements, gift documentation – more restrictive policy. Donor’s bank statement is required in all cases, either prior to closing o at closing.
  • Reserves, total scorecard – a more defined policy with the policy staying the same as the previous and that all assets must be submitted to AUS – with it being documented and verified.
  • Occupancy, active duty – not only a more restrictive, but also more defined policy. Someone on active duty is till considered an owner occupant if a family member will occupy the subject property as their primary residence, or the borrower intends to occupy the subject property upon discharge. The following are required, if applicable: (1) A letter from the borrower stating their intent to occupy the subject property upon discharge from military service of a family member will not occupy the subject property as their principal residence; (2) a copy of the borrower’s military orders evidencing the borrower’s active duty status and that the duty station is more than 100 miles from the subject property.
  • Age of credit documents – More restrictive policy. 120 days for both existing homes and new construction.
  • Boarder income – This is both more relaxed and a more defined policy. Boarder income┬ácan be defined s the borrower’s dwelling unit. This type of income can only be considered if the borrower has a two-year history of receiving income from boarders – shown on their most recent tax returns – and the borrower is currently receiving the income. Following are the requirements: (1) Obtain the most recent two years tax returns, evidencing the income; (2) copy of the current boarder lease; (3) the income is calculated by using the lesser of the two year average or the current boarder lease.
  • Swimming pools – more restrictive policy in where a lender must confirm all swimming pools meet local ordinances.
  • Inquiries – more defined policy. All inquired within the past 90- days must be reviewed to ensure that all debts, including any new debt payments resulting from material inquired listed on the credit report, are used to calculate the debt ratios. If nay inquire results in a debt, regardless of the amount of time passed since the inquiry was made, the payment must be included and the loan must be manually downgraded. If t he credit report contains inquired beyond 90 days, those must be reviewed an considered. Also, the underwriter must determine that nay recent debts were not incurred to obtain any part of the borrower’s required funds to close the subject property.
  • Energy efficient mortgages – both relaxed and more defined. In regards to this policy, the maximum amount of the financeable energy package is the lesser of: (1) the dollar amount of the cost-effective energy package as determined by the home energy audit, or (2) the lesser of 5% of the adjusted value, 115% of the median area price of a single family dwelling, or 150% of the national conforming mortgage limit.
  • Self-employed borrowers, manually underwritten – a more restrictive policy due to there needing to be a completed signed business tax returns for most recent two years and a business credit report is required.

To be continued………