Showing posts with label FHA Guidelines for Loan in Kentucky on a home. Show all posts
Showing posts with label FHA Guidelines for Loan in Kentucky on a home. Show all posts

FHA CHANGES TO HANDLING OF COLLECTIONS, JUDGEMENTS AND DISPUTED ACCOUNTS ON CREDIT REPORT


FHA CHANGES TO HANDLING OF COLLECTIONS
AND DISPUTED ACCOUNTS




FHA recently released Mortgagee Letters 2013-24 and 2013-25, to amend guidance on collections and disputed accounts and to clarify guidance on judgments. These changes will become effective for all case numbers assigned on or after October 15, 2013. This will apply to all FHA programs, with the exception of non-credit qualifying streamline refinances and Home Equity Conversion Mortgages. The changes are found below. Should you have any questions, please contact your Account Manager.
1.           Credit Analysis of Collections and Judgments. Collections and judgments may indicate a borrower's disregard for credit obligations and must be considered in the creditworthiness analysis. The guidance below applies to loans with collection accounts and all judgments. Medical collections and charge off accounts are excluded from this guidance.
  • Applicable to Manually Underwritten Loans: The lender must document reasons for approving a mortgage when the borrower has collection accounts or judgments.
Regardless of the amount of outstanding collection accounts or judgments, the lender must determine if the collection account or judgment was a result of:
    • The borrower's disregard for financial obligations;
    •  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 and judgment. The explanation and supporting documentation must be consistent with other credit information in the file.
  • Applicable to Loans Run Through TOTAL Mortgage Scorecard: TOTAL Mortgage Scorecard Accept/Approve - There are no documentation or letter of explanation requirements for loans with collection accounts or judgments run through TOTAL Mortgage Scorecard receiving an "Accept/Approve" despite the presence of collection accounts or judgments. 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 and judgments. 
All medical collections and charge off accounts are excluded from this guidance and do not require resolution.
2.           Capacity Analysis of Collections and Judgments.
Collections - FHA does not require collection accounts to be paid off as a condition of mortgage approval. However, FHA does recognize that collection efforts by the creditor for unpaid collections could affect the borrower's ability to repay the mortgage. To mitigate this risk, FHA is requiring a capacity analysis of collection accounts with an aggregate balance equal to or greater than $2,000, as described below.
If the total outstanding balance of all collection accounts for all borrowers is equal to or greater than $2,000, the lender must perform a capacity analysis as detailed below. Unless excluded under state law, collection accounts of a non-purchasing spouse in a community property state are included in the cumulative balance.
All medical collections and charge off accounts are excluded from this guidance and do not require resolution.
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 lender 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.
TOTAL Mortgage Scorecard Accept/Approve/Refer - Regardless of the Accept/Approve/Refer recommendation by TOTAL Mortgage Scorecard, the lender must include the payment amount in the calculation of the borrower's debt-to-income ratio.
               Judgments - FHA requires judgments to be paid off before the mortgage loan is eligible for FHA insurance. 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.
    3.           Handling of Disputed Accounts - The existence of potentially inaccurate information on a borrower's credit report resulting in a dispute must be reviewed by an underwriter. Accounts that appear as disputed on the borrower's credit report are not considered in the credit score utilized by TOTAL Mortgage Scorecard in rating the application. Therefore, FHA requires the lender to consider them in the underwriting analysis as described below.
With this ML, FHA is revising policy on manual downgrades for applications with disputed accounts to reflect the risk associated with derogatory and non-derogatory disputed accounts for factors such as age and size of outstanding balance.
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 Direct Endorsement 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.
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 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".
Non-derogatory disputed accounts are excluded from the $1,000 cumulative total.
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.
If you have loans pending that these changes will affect, be sure to order the FHA case number prior to October 15, 2013.

Disputed Accounts On Credit Report and how it effects FHA Loans







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-- 
Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
kentuckyloan@gmail.com

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Mortgage Loans In Kentucky for Conventional, FHA, and VA Mortgages for 2020

Mortgage Loans In Kentucky 
Kentucky Conventional Mortgages – These mortgages are not insured by the government, but they do conform to the government standards known as Freddie Mac and Fannie Mae. One thing to note about a conventional mortgage is that they require mortgage insurance unless you can put down at least 20%; once the loan’s principal balance drops below 78% of the home’s value, you no longer have to pay mortgage insurance.
  • Qualifying credit: 620-740
  • Loan terms: 15 or 30 years
  • 3% Down Payment minimum
Kentucky FHA Loans – An FHA loan is insured by the Federal Housing Administration, who guarantees a portion of the loan should the borrower default. This minimizes the lender’s risk and allows them to expand their borrowing parameters to the benefit of first-time homebuyers who might not have large savings or strong credit. Keep in mind that closing costs will be much higher for this type of mortgage and the home must meet rigorous appraisal standards.
  • Qualifying credit: 500 minimum with 10% down payment and 580 score higher 3.5% down payment 
Kentucky VA Loans If you are an active duty military personnel (or veteran in California and Hawaii), you may be eligible for this mortgage plan backed by the Dept. of Veteran Affairs. Income and credit requirements are significantly lower than other loans, making the approval process much easier, but be prepared to face longer closing periods than you would experience through a private lender.
  • Qualifying credit: No minimum Credit score for va loans
  • Outstanding debt---debt ratios usually around 45% on the backend 
  • Credit background-----looking at last 2-4 years mostly in regards to bankruptcies, foreclosures, short-sales,
  • Employment history--2 year work history not really the same job but same line of work and pay being consistent. 

Condo Requirements for a Kentucky FHA Mortgage Loan Approval in 2016


How Do Changes to the FHA Condo Loan Rules Help You?
FHA has recently provided new guidance on its rules for certifying condo buildings. Watch this video to learn why the FHA made these changes.
Posted by Home Ownership Matters on Wednesday, February 3, 2016
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Kentucky FHA Mortgage Changes to take effect September 14, 2015

Kentucky FHA Mortgage Major Changes:


Effective September September 14, 2015 FHA has instituted new Kentucky FHA Mortgage Underwriting guidelines. I have highlighted the ones in yellow that are considered major and could adversely effect a FHA Mortgage loan approval in Kentucky  going forward with the new changes.

    • The Borrower has $1,000 or more collectively in Disputed Derogatory Credit Accounts
    • The date of the Borrower's bankruptcy discharge as reflected on bankruptcy documents is within two years from the date of case number assignment (both Chapter 7 and Chapter 13)
    • The case number assignment date is within three years of the date of the transfer of title through a Pre-Foreclosure Sale (Short Sale), a foreclosure sale, or a Deed-in-Lieu of foreclosure (NOTE: these are only eligible under Manual Underwrite if the borrower meets previous FHA Back to Work standards)
    • The Mortgage Payment history within the last 12 months meets any of the following
      • 3 x 30 late payments
      • 1 x 60 and 1 x 30 late payments
      • 1 x 90 late payment
      • Any delinquency on a cash-out
    • Business income shows a greater than 20 percent decline over the analysis period

  • Student loans are now classified as either Deferred Obligations or Installment Loans. If deferred and the actual payment is $0 or not available, 2% of the outstanding balance will be used to calculate payment.
  • Borrower does not have to explain and reestablish employment after a Gap in Employment unless it was at least 6 months in length.
  • Expected income (i.e. new job, performance raise, retirement, etc.) can be used for qualifying if it is guaranteed in writing to begin within 60 days of closing.
  • Financing of unrecorded Land Contracts will be treated as a purchase transaction, whereas recorded Land Contracts can still be refinanced.
  • When grossing-up Non-Taxable Income, the amount added cannot exceed the greater of 15% or the appropriate tax rate based on the previous year's income. If no tax returns are filed for the previous year, 15% is used.
  • 30-Day Accounts, those where the borrower pays off the outstanding balance each month, do not have to be included in the DTI as long as the below requirements are met. Otherwise 5% of the outstanding balance must be used.
    • The account has a 12 month history of being paid off with no late payments; AND
    • The borrower has excess assets available to pay off the balance once all require loan funds and reserves are taken into account
  • Borrowers currently on short-term disability or other temporary leave will be able to use pre-leave income if they can document that they will return to work before the loan closes. Otherwise current income will be used, though it can be supplemented by surplus liquid assets.
  • Earnest money deposits must be sourced if they exceed 1% of the sales price or are deemed excessive by the underwriter based on the borrower's history of savings.
  • Appraisers will be required to note all appliances present in the home at the time of inspection and indicate whether each appliance is Personal or Real property. All conveyed appliances must be tested, with any inoperable appliances being reported as a deficiency.
  • Appraisers must verify that any existing sump pump is in working order




Overtime and Bonus Income

 A two year average using Federal Tax Returns/VOE/W2s must be used for qualifying unless
the income decreases by 20 percent or more from the previous year – then the mortgagee
must use current year’s income.

Commission Income

 Commission income may be considered effective income if received for at least one year in
the same or similar line of work (job) and it is documented that it is likely to continue. See
full guidelines for specific calculation and documentation requirements.
Part Time/Second Job Income
 Part-Time employment refers to employment that is NOT the borrower’s primary
employment and generally is less than 40 hours per week. It may be considered effective if
the borrower has worked a part-time job uninterrupted for the prior two years and
continuance is likely. Calculation: Income must be averaged over the previous 2 years. If an
increase in pay rate can be documented a 12 month average of hours at the current pay rate
may be used.

Seasonal Employment Income


 Seasonal employment refers to employment that is not year round and is not dependent on
the number of hours per week the borrower works on the job. In order to be considered
effective, the seasonal income must have been received for the prior 2 years and
continuance is likely. Calculation: Income must be averaged over the previous 2 full years. 




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2013 Louisville Kentucky FHA Streamline Refinance Guidelines

2013 Louisville Kentucky FHA Streamline Refinance Guidelines






Louisville Kentucky FHA Streamline Refinances are FHA-to-FHA rate/term refinances designed to reduce the borrower’s principal and interest payments.  FHA offers the following types of processing:

• Streamline with Appraisal
• Streamline without Appraisal
.
Mortgage Payment History
The mortgage history must be 0X30 in the last 12 months, regardless of the AUS decision.
Net Tangible Benefit

The lender must determine that there is a net tangible benefit as a result of the streamline refinance transaction,
with or without an appraisal.  Net tangible benefit is defined as:
• reduction in the total
• refinancing from an adjustable rate mortgage (ARM) to a fixed rate mortgage,
mortgage payment (principal, interest, taxes and insurances, homeowners’
association fees, ground rents, special assessments and all subordinate liens),
OR
• reduction in the term of the mortgage.

Reduction in Total Mortgage Payment:  The new total mortgage payment is 5 percent lower than the
total mortgage payment for the mortgage being refinanced.

Items that can be included in a Louisville Kentucky FHA  Streamline Refinance are:
• The existing unpaid balance
• Interest due for the current month on the FHA loan being paid off
• A credit for excess funds in the borrower’s escrow account
• A charge for escrow shortages or negative escrow balance due
Items that cannot be included in the streamline refinance payoff:
• Fax fees or other miscellaneous fees shown on the payoff
• Any other debt including seasoned subordinate liens or money due an ex-spouse
• The new loan may not include any delinquent interest accrued from late payments
Current FHA loan must be  FHA insured in the state of Kentucky .

LOUISVILLE KY FHA REFINANCE-STREAMLINE WITH APPRAISAL

• Existing second liens may be subordinated, max CLTV is 125%.
• Mortgage must be current at time of closing and be 0X30 in the last 12 months.
• Loan amount may exceed original mortgage amount if supported by current appraised value.
• Incidental cash back at closing limited to a maximum $500.

Kentucky FHA Streamline Guidelines
Maximum Loan Amount
The maximum loan amount is the lower of:
1)  97.75% of the appraised value of the property plus the new UFMIP that will be charged on the refinance
-OR-
2) Outstanding principal balance minus the applicable refund of UFMIP, plus closing costs, prepaid items to
establish the escrow account and the new UFMIP that will be charged on the refinance.

• Current FHA loan must be FHA insured.
REFINANCE-STREAMLINE WITHOUT APPRAISAL
• Mortgage must be current at time of closing and be 0X30 in the last 12 months.
• Incidental cash back at closing limited to a maximum $500.
• Eligible on 203(b).
Maximum Loan Amount
To determine the maximum loan amount, use the outstanding principal balance minus the applicable refund
of the UFMIP plus the new UFMIP that will be charged on the refinance.
For other guidelines not listed in this manual, refer to general FHA (Federal Housing
Authority) guidelines located at:  www.hud.gov or www.hudclips.org



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FHA Guidelines for Loan in Kentucky on a home

FHA Guidelines for Loan in Kentucky on a home



By Kristine Tucker, eHow Contributor .updated: December 12, 2010



Guidelines for an FHA loan in Kentucky.Getting a Federal Housing Authority (FHA) sponsored loan in Kentucky requires several criteria to be met before an applicant can receive mortgage funds. Since the FHA is a federal agency, the qualification requirements for a mortgage loan are similar in most states. However, depending upon relevant financial considerations and cost of living indexes, the maximum FHA loan limit fluctuates from state to state and within regions of a state. Each FHA home loan application is considered on an individual basis.



FHA Loan Limits



In order to qualify for an FHA loan in Kentucky, the final negotiated selling price of the home an applicant is interested in buying must fall below the state’s FHA loan limits. According to FHA Home Loan Mortgage and Lender 411, in most counties in Kentucky, the FHA loan limit as of 2010 is $271,050. In the Louisville area including Bullitt, Henry, Jefferson, Meade, Nelson, Oldham, Shelby and Trimble counties, the FHA loan limit is $302,500. Additionally, in the Cincinnati area including Boone, Bracken, Cambell, Gallatin, Kenton and Pendleton counties, the FHA loan limit is $337,500.





Judgements Must be Paid



One of the guidelines to get an FHA loan in Kentucky is that there can not be any outstanding monetary judgments in the applicant’s name. According to 1st Continental Mortgage, judgments must be paid off before an FHA mortgage loan is eligible for insurance. 1st Continental Mortgage also states that exceptions can be made if an applicant has shown a strong payment history on his judgment and has been making his payments on time. Documents proving these acceptable payments and a creditor’s willingness to subordinate the judgment to the insured mortgage are necessary in this case.





Previous Foreclosure



In order to meet the FHA guidelines for a loan in Kentucky, a borrower does not qualify if she has had a recent foreclosure on another property. According to 1st Continental Mortgage, an applicant who has a real estate property that was foreclosed on within the past three years, or an applicant who was given a deed-in-lieu of foreclosure within the previous three years, is not generally eligible. Once again, exceptions can be made on an individual application basis if there are extenuating documented circumstances that a loan officer feels were beyond the applicant’s control.



Bankruptcy



In Kentucky, bankruptcy does not automatically disqualify an an applicant from receiving an FHA mortgage loan. 1st Continental Mortgage states that with a Chapter 7 Bankruptcy, an FHA applicant will not be disqualified if at least two years have passed since the bankruptcy was discharged. In the case of a Chapter 13 Bankruptcy, a borrower may qualify for an FHA loan if at least one year of the pay-out period has been completed and the applicant can show a satisfactory payment history during that one year timeframe.





Down Payment



The guidelines for an FHA loan in Kentucky require a minimum down-payment of about 3.5 percent of the price of the home. Gifts from family and financial assistance from acceptable outside resources can satisfy the down-payment amount if an applicant does not have the cash on hand. According toMortgage, the seller can not pay the down payment, but he can pay up to 6 percent of the price of the home in closing costs.





Pest Inspection



A home inspection is not required to borrow money in the form of an FHA loan in Kentucky, even though it is a positive home buying practice. However, the FHA’s guidelines do require an acceptable pest inspection before the property can be purchased. , a termite inspection is required for all existing properties.



Read more: Guidelines to Get an FHA Loan in Kentucky

eHow.com http://www.ehow.com/list_7486590_guidelines-fha-loan-kentucky.html#ixzz1BoqYjxJL





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