Showing posts with label FHA. Show all posts
Showing posts with label FHA. Show all posts

FHA Mortgage Manual Underwriting Video Guidelines




We have the expertise to manually underwrite even the most difficult Kentucky  FHA Mortgage loans. Whether it’s purchase or refi—we work hard to approve what other lenders won’t. 

 

Did you know over 50% of our Kentucky  FHA loans are manual underwrites?

 

Kentucky FHA will consider the borrower’s entire story, including extenuating circumstances and compensating factors, to justify loan approvals. If your borrower falls under any of these conditions, they may benefit from manual underwriting:

  • Non-traditional credit / lack of credit
  • True extenuating circumstances affecting credit or income history
  • Lack of seasoning on a Chapter 13
  • Disputed accounts over $1,000
  • Frequent job changes in the last 12 months

If you think your borrower could benefit from  manual underwriting call us to learn more about manual underwriting or submit your scenario today.

Lowest Minimum Decision Credit Score Maximum Qualifying Ratios (%) Acceptable Compensating Factors
All manual underwritten loans require a VOR.
If the borrower does not pay rent a letter of explanation from borrower stating where living rent free.
620 & Above
31/43
• No compensating factors required.
• Energy Efficient Homes may have stretch ratios of 33/45.
620 & Above
37/47
One of the following:
• Verified & documented cash reserves equal to at least three total monthly mortgage payments.
• New total monthly mortgage payment is not more than $100 or 5% higher than previous total monthly housing payment, whichever is less; and there is a documented twelve-month housing payment history with no more than one thirty-day late payment.
• Residual Income per VA chart.
620 & Above
40/40
• Borrower has established credit lines in his/her own name (open for at least six months) but carries no discretionary debt (monthly total housing payment is only open installment account and borrower can document that revolving credit has been paid off in full monthly for at least the past six months).
620 & Above
40/50
Two of the following:
• Verified & documented cash reserves equal to at least three total monthly mortgage payments.
• New total monthly mortgage payment is not more than $100 or 5% higher than previous total monthly housing payment, whichever is less; and there is a documented twelve-month housing payment history with no more than one thirty-day late payment.
• Verified and documented significant additional income that is not considered effective income and likely to continue (part-time or seasonal income verified for more than 1 year but less than 2 years). The income if it were included in gross effective income is sufficient to reduce the qualifying ratios to not more than 37/47.
• Residual Income per VA chart.

Residual Income
Calculating Residual Income
Residual income is calculated in accordance with the following:
• Calculate the total gross monthly income of all occupying borrowers
• Deduct from the gross monthly income the following items:
➢ State income taxes
➢ Federal income taxes
➢ Municipal or other income taxes
➢ Retirement or Social Security
➢ Proposed total monthly fixed mortgage payment
➢ All recurring monthly debt obligations
➢ Estimated maintenance and utilities ($0.14 x sq. ft.)
➢ Job related expenses (e.g., child care)
• The difference between the gross monthly income and the deductions above is the residual income
Compensating Factors
Using Residual Income as a Compensating Factor
Count all members of the household of the occupying borrowers without regard to the nature of their relationship and without regard to whether they are joining on title or the note.
Exception: As stated in the VA Guidelines, the mortgagee may omit any individuals from “family size” who are fully supported from a source of verified income which is not included in the effective income in the loan analysis. These Individuals must voluntarily provide sufficient documentation to verify their income to qualify for this exemption.
From the table below, select the applicable loan amount and household size. If residual income equals or exceeds the corresponding amount on the table, it may be cited as a compensating factor.

Kentucky FHA Mortgage  Manual Undewriting Guidelines for FHA Mortgage Refer Eligible or Manual Downgrades








Accept Risk Class required downgrade to Manual Underwriting


The Mortgagee must downgrade and manually underwrite any mortgage that received an accept or approve/eligible recommendation if:
• The mortgage file contains information or documentation that cannot be evaluated by TOTAL.
• Additional information, not considered in the AUS recommendation affects the overall insurability of the mortgage.
• 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 the case number assignment.
• The case number assignment date is within three years of the date of the transfer of title through a Pre-Foreclosure Sale (Short Sale).
• The case number assignment date is within three years of the date of the transfer of title through a foreclosure sale.
• The case number assignment date is within three years of the date of the transfer of title through a Deed-in-Lieu (DIL) of foreclosure.
• The Mortgage Payment history, for any mortgage trade line reported on the credit report used to score the application, requires a downgrade as defined in Housing Obligations/Mortgage Payment History.
• The Borrower has undisclosed mortgage debt that requires a downgrade.
• Business income shows a greater than 20 percent decline over the analysis period.

• Per AUS Findings.
FHA FAQ link
ML 2014 – 02 on Manual Underwriting was incorporated into the HUD Handbook 4000.1. Additional source for questions will be the FAQ’s. Use “manual underwriting and compensating factors” to searcH







Kentucky FHA Mortgage Loans

Kentucky FHA Loan Requirements For 2022 How to Qualify for a Kentucky FHA Mortgage Loan with a lender?

Kentucky Mortgage Approval Underwriting Myths Debunked for FHA, VA, USDA and Fannie Mae

 Mortgage Approval Underwriting Myths Debunked


Getting approved for a loan is not as hard as some make it. The 3C approach breaks it down in its simplest form so no need to overthink or complicate with “what if’s” or variable situations and these factors are the same in every state. They all have to line up for your loan to be approved but here there are in order of significance

Capacity - No matter if your credit is in 800’s the ability to afford a loan (capacity aka DTI) is the MOST important C and why most applications either get denied or reduced. Income is EVERYTHING.

To get a conforming (FHA / VA / Conventional) loan you need 2yrs of verifiable Full time income even if it’s pieced together with different employers with 2yrs W2’s and your most recent paystub if you’re an employee and OT and/or bonus cannot be used if you’ve been with your employer for less than 2yrs.

If you have part time employment as well that income cannot be used unless you’ve worked both jobs for at least 2yrs UNLESS your P/T job is the exact same as your F/T job and your hours are not variable then in most cases you can get an exception if you’ve been there for at least 1yr. If you’re self employed 2 most recent tax returns with positive income on line 31 of your schedule C.

If homeownership is your goal, then don’t be cheap and have a certified tax preparer prepare your taxes because it’s likely you’ll need certain docs to get approved only they can provide. Also DO NOT write off all your income to avoid paying the IRS taxes because this will disqualify you from a loan and you’ll have to get a more expensive loan with a bigger down payment.


Credit - many people think this is the most important but it’s not but it is important. With a high enough capacity (low DTI) I’ve seen clients with minimum scores get approved. FHA requires 580, VA does not have a minimum score requirement and while some lenders can do down in the 500’s generally most lenders do not go below 580, and conventional requires 620.

Having said all that just because you meet the minimum score does not mean you’ll get an approval before credit profile (positive tradeline history, collection activity, credit usage) is what matters most. I’ve seen applicants with 680+ get denied for conventional loans because they have a poor credit profile or low capacity (higher DTI).

FHA is a little more forgiving which is why they are easier loans to get than conventional. Obviously the higher the score, the better the chances are for approval but high scores aren’t needed if capacity and collateral are strong.

Collateral - aka down payment. Underwriters request either 1 bank statement for FHA or 2 bank statements for conventional and all they are looking for is verification of cash to close, large deposit (FHA more than 1% of loan amount deposited in 1 deposit) activity and reserves if needed, not spending habits. Large purchases are irrelevant and NSF’s can be explained with an explanation letter. The higher the down payment in percentages (3.5 or 5%, 10%, 15%, 20% etc…) not dollars ($2000 or $5000 more than required) then the lower the risk and higher chance of approval especially for conventional loans. Plus dollars don’t noticeably reduce your monthly payment but percentages do.

Overlays - additional restrictions some lenders have in addition to standard mortgage guidelines. If your lender is telling you anything more is required than what’s posted above it’s because they have overlays which make it more difficult to get approved with them.
Example - Veteran’s United will not take credit scores under 620 = OVERLAY



If you want a personalized answer for your unique situation call, text, or email me or visit my website below:




Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916


American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364



Text/call: 502-905-3708

email: kentuckyloan@gmail.com

https://kentuckyloan.blogspot.com/

CONFIDENTIALITY NOTICE: This message is covered by the Electronic Communications Privacy Act, Title 18, United States Code, §§ 2510-2521. This e-mail and any attached files are deemed privileged and confidential, and are intended solely for the use of the individual(s) or entity to whom this e-mail is addressed. If you are not one of the named recipient(s) or believe that you have received this message in error, please delete this e-mail and any attached files from all locations in your computer, server, network, etc., and notify the sender IMMEDIATELY at 502-327-9770. Any other use, re-creation, dissemination, forwarding, or copying of this e-mail and any attached files is strictly prohibited and may be unlawful. Receipt by anyone other than the named recipient(s) is not a waiver of any attorney-client, work product, or other applicable privilege. E-mail is an informal method of communication and is subject to possible data corruption, either accidentally or intentionally. Therefore, it is normally inappropriate to rely on legal advice contained in an e-mail without obtaining further confirmation of said advice.





Kentucky FHA Loans Are Offering New Flexibilities for Borrowers Previously Affected by Covid-19


FHA Offering New Flexibilities for Borrowers Previously Affected by Covid-19

FHA has announced that the guidelines are being updated when calculating effective income after a reduction or loss of income for borrowers affected by the COVID-19 pandemic. These changes are effective for all case numbers on or after 09/05/2022, but may be implemented immediately.


ML 2022-09 reflects policies that will be incorporated into the 4000.1, providing updates for the following:


Additional Required Analysis of Stability of Employment Income
Additionally, flexibility when calculating income for borrowers who experienced a gap in employment and/or a reduction of loss of income due to the COVID-19 pandemic has been updated allowing a borrower to be employed in the same line of work for at least six months at the time of case assignment.

https://www.hud.gov/press/press_releases_media_advisories/HUD_No_22_129

Kentucky First Time Home Buyer Programs to Consider for 2022 Kentucky Homebuyers.

First Time Home Buyer Programs to Consider for 2022 Kentucky Homebuyers.



First Time Home Buyer Programs to Consider for 2022 Kentucky Homebuyers.





Zero Down Mortgage Loans in Kentucky

The Kentucky VA and the Kentucky USDA Home Loan Program both offer a zero down loan program for individuals and/or properties that meet their criteria.

If you need down payment assistance, KHC offers up to $7,500 for assistance to buy your Kentucky home if you are lacking the down payment requirements for FHA or Fannie Mae below.


Three Percent Down Mortgage Loans in Kentucky

Fannie Mae/Freddie Mac conventional loans are available with down payments as low as 3% on single-family homes, including eligible condos, co-ops, and some manufactured homes. Fixed-rate mortgages with up to 30-year terms and ARMs are available.

Three and 1/2 Percent Down Mortgage Loans in Kentucky

The Federal Housing Administration (or FHA) loan program can allow as little as 3.5% down, and it is more lenient than most other programs on minimum credit scores and other factors. he FHA loan program allows as little as 3.5% down, and it is more lenient than most other programs on minimum credit scores.
Are you surprised at how low you may be able to go? While many believe a 20% down payment is required, you can see now that it’s far from the only option.
Whether you’ve saved a little or a lot, reach out today, and we’ll work on finding a loan that works for you.
  • Kentucky Federal Housing Administration (FHA) loans: “With a 3.5% down payment, Kentucky homebuyers may be able to get an FHA loan with a 580 credit score or higher. If you can manage a 10% down payment, though, that minimum goes as low as 500.”
  • Kentucky Conventional loans: “The most popular loan type typically comes with a 620 minimum credit score.”
  • US. Department of Agriculture (USDA) loans: “In general, lenders require a minimum credit score of 620-640 for a USDA loan, though some may go as low as 580.”
  • US. Department of Veterans Affairs (VA) loans: VA loans don’t technically have a minimum credit score, but lenders will typically require between 580 and 620.”

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Joel Lobb (NMLS#57916)
Senior  Loan Officer
 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

I

Kentucky FHA loans vs Kentucky USDA Loans for Kentucky Home buyers.





Criteria
Loan Type

FHA
USDA
  1. Down Payment
3.5%
0% – None
  1. PMI
.85%
0.35%
  1. Funding Fee *
1.75
1.0
  1. Limits (loan)
Per County
None
  1. Limits (income)
None
YES -per county,etc
  1. Restricted location
None
YES
  1. Credit score
580 down to 3.5%
500 score with 10% down payment
no minimum score
There are a few other points that put the Kentucky USDA loan at an advantage over the Kentucky FHA mortgage program such as the appraisal value. USDA appraisal value is normally higher than the selling price. If the appraisal value is more than the purchase price, this becomes an additional advantage for borrowers as the USDA will permit you to roll in closing costs.
Essentially the only issues that could be considered as drawbacks of the USDA loan are the restriction of location and the USDA RD income limits. The location must be in a designated rural area with a total population of 20,000. This can be a setback for those who do not want to drive farther to get to work in the city. But buyers should check their location in detail, please click here for the USDA housing map. Many populated locations just outside of the big cities are USDA rural housing approved - locations just outside of Louisville, Ky, Lexington Kentucky, and Northern Kentucky Counties..
Additionally, the USDA ‘s income limit imposed on would-be borrowers is currently set at 115% of the median or average income of the area where your home is to be situated. That means for those who have a higher income than the average in town would have to opt for mortgage loans under the FHA or through a conventional lender if they so decide to live in a rural area.
Regarding the rates as well as the guidelines in qualifying potential borrowers, the FHA and USDA are just about equally matched, and they are currently at historic low rates. However, the USDA, unlike the FHA, allows borrowers to finance the whole purchase price and include any closing expenses as well into the loan.
Lastly, all USDA guaranteed loans have a 30-year fixed rate term. This can be very advantageous mainly when the homeowner eventually starts earning more than the required 115% median, the rate is fixed and even after 10 years only, will practically be insignificant compared to other monthly expenses at this time.
The funding fee in both governments backed programs are incorporated (rolled into) into the overall loan.

Apply for FREE Below for your Kentucky FHA Mortgage loan or USDA Loan:



Joel Lobb (NMLS#57916)Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax




Fill out my form!

Gift Funds & Gift of Equity for Kentucky FHA Mortgage Loan Approval Requirements

 Kentucky FHA Gift of Equity and Gift Funds for Down Payment Requirements

Kentucky FHA Gift of Equity and Gift Funds for Down Payment Requirements



Gifts may be provided by:

•  Borrower's family member*;
•  the borrower's employer or labor union;
•  a close friend with a clearly defined and documented interest in the borrower;
•  a charitable organization;
•  a governmental agency or public entity that has a program providing homeownership assistance to:
•      low or moderate income families; or
•      first-time homebuyers.

*Family member defined as:
•  child, foster child, parent, or grandparent; spouse or domestic partner;
•  legally adopted son or daughter, including a child who is placed with the borrower by an
authorized agency for legal adoption;
•  brother, stepbrother, sister, stepsister;
•  uncle or aunt
•  son-in-law, daughter-in­ law, father-in-law, mother­ in-law, brother-in-law, or sister-in-law of
the borrower.

Guidelines -  Personal Gift Funds

•      Primary residence 1-4 unit only
•     Funds may not be used to fulfill mandatory reserve requirements for manually underwritten
files.
•      No borrower funds are required for down payment.
•      Cash on hand is not an acceptable source of donor funds.


Documentation  - Personal Gift Funds

•      Gift letter - See Requirements in "Notable Agency Differences" Above
•      If the gift funds have been verified in the borrower's account, obtain the donor's bank
statement showing the withdrawal and evidence of the deposit into the borrower's account.
•      If the gift funds are not verified in the borrower's account, obtain the certified check or
money order or cashier's check or wire transfer or other official check, and a bank statement
showing the withdrawal from the donor's account.
•      If the gift funds are paid directly to the settlement agent, verify that the settlement
agent received the funds from the donor for the amount of the gift, and that the funds were from an
acceptable source.
•      If the gift funds are being borrowed by the donor and documentation  from the bank or other
savings account is not available, have the donor provide written evidence that the funds were
borrowed from an acceptable source, not from a party to the transaction.
Regardless  of when gift funds are made available to a borrower, the lender must be able to make a
reasonable determination that the gift funds were not provided by an unacceptable source.  This
usually requires a copy of the donor's bank statement.

Guidelines -  Gift of Equity

•     Family member is ONLY eligible donor for gifts of equity
•      Limited to 85% LTV unless:
o      residence is currently selling-family member's primary residence or
purchasing family member has been renting residence 6 months prior to sales contract date.


Documentation -  Gift of Equity

Gift Letter -  See Requirements in "Notable Agency Differences" Above

Mortgage Overlays Explained

Overlays Explained


Kentucky Mortgage Overlays




What’s an Overlay? An Overlay is a mortgage industry term that highlights an additional qualifying requirement(s) beyond what the guidelines issued by Fannie Mae and Freddie Mac. FHA, VA and USDA loans can also have overlays. These guidelines are set forth for several reasons, but one is to provide lenders with mortgage program stability as well as allowing lenders to sell loans, either individually or ‘in bulk.

Think about that for a moment. If there were no secondary market at some point the mortgage company would run out of money to lend. When a lender makes a loan, it draws down some money from its credit line and replenishes that credit line once the loan(s) is sold. This process occurs over and over again.

Overlays can also be used to target a specific type or class of borrower. To reduce risk, a lender might ask for a greater down payment than is originally required. Let’s look at credit scores as an example. While Fannie might ask for a minimum credit score to be 680 a lender might decide to up the ante a bit and set the minimum score at 700.

Catering to different groups means catering to a particular market or class of borrower. One lender may continue to stand firm with a 680 score while another decides 700 is better. Many borrowers may not know about this dynamic. This can mean applying for a mortgage at a mortgage company, getting declined and thinking that all lenders are the same and stop their search for a new home. All they really needed to do was to continue shopping for a lender who would approve the very same loan, just without the harsher overlays.

If a lender asks for a 680 score your loan officer will know where to send a loan with a sub-700 FICO. These overlays can be placed on both conventional as well as government-backed mortgages. The government-backed mortgages are those underwritten to FHA, VA and USDA program guidelines.

Overlays can come and go over time. A lender might set forth a new overlay and then a year later remove it or even enhance it. It’s completely up to the individual lender as long as the loan is approved using established guidelines. What lenders can’t do is weaken guidelines. There are no overlays to drop the minimum score requirement from 680 to 650, for example. Doing so would mean the mortgage didn’t meet program guidelines and the loan could no longer be sold. Overlays help protect the lender while at the same time providing borrowers with additional choices.

Finally, lenders can’t dilute loan program requirements. In other words, lenders can’t apply an overlay to lessen the requirements. Reducing approval requirements means the loan won’t have the minimum features that secondary markets require. If a lender does in fact reduce the requirements the loan can still be made, it’s just that the lender can expect to keep the loan in its own possession for the life of the loan.


One important concept you should familiarize yourself with is the “lender overlay,” which is essentially an expanded guideline (or set of guidelines) on top of what Fannie Mae, Freddie Mac, or the FHA/VA will allow.

Think of it as a second coat of paint, applied after the primer. The primer is the bare minimum necessary, but you don’t see people driving around too often without that second coat.

The same goes for mortgages. Fannie Mae, Freddie Mac, and the FHA/VA all set underwriting guidelines for residential mortgages, but they don’t actually lend directly to consumers.

Their job is to purchase and/or securitize the home loans that fit their guidelines, which is why they exist to begin with. Essentially, to keep the mortgage market liquid.

By doing so, lenders are able to sell their loans more easily, knowing they fit certain pre-determined criteria, which allows them to originate more loans via that increased liquidity.


Written by David Reed for www.RealtyTimes.com Copyright © 2022 Realty Times All Rights Reserved. Reed is from Austin, Texas and is the author of The Real Estate Investor’s Guide to Financing, Your Guide to VA Loans and Decoding the New Mortgage Market. A Senior Loan Officer and Mortgage Executive for more than 20 years, he has also appeared on CNN, CNBC, Fox Business, Fox and Friends and the Today In New York show.

Kentucky Mortgage Forbearance Guidelines

Kentucky First Time Home Buyer Programs For Home Mortgage Loans: Kentucky Mortgage Forbearance Guidelines for Fanni...


Conventional Mortgage Loans by Fannie Mae



Mortgage credit history for any mortgage which the borrower is obligated as borrower, co-borrower, or co-signer may be
considered acceptable if it meets one of the following:
 The borrower has made all payments due on time, prior to subject loan Note date, even though the loan was in
forbearance, or
 The borrower has not made one or more payments due, and the late payments or forbearance has been resolved
per one of these acceptable resolution plans:
Resolution Plans* Eligibility Requirements
Reinstatement ▪ Any missed payments must be made

▪ Funds to reinstate after application must be documented from eligible source
▪ Funds from the current transaction may not be used to reinstate mortgage
Repayment Plan ▪ Must have made 3 timely** payments under the repayment plan, or

▪ Repayment plan has been completed
▪ Funds from the current transaction may satisfy the existing mortgage in full
Payment Deferral ▪ Must have made 3 timely** payments after executing the deferral agreement
▪ Funds from the current transaction may satisfy the existing mortgage in full

Modification ▪ Must have made 3 timely** payments under trial modification

▪ Funds from the current transaction may satisfy the existing mortgage in full
Any Other Loss Mitigation Option ▪ Must have completed successfully or made a minimum of 3 timely payments
▪ Funds from the current transaction may satisfy the existing mortgage in full
*If loan was in forbearance, provide documentation from servicer showing the exit from forbearance into one of the
acceptable resolution plans.
** Payments cannot be made in advance to meet the 3 required payments.
 For purposes of determining acceptable mortgage payment history, missed payments under a COVID-19 forbearance
are not considered late payments.
 The above guidance does not apply to Freddie Mac Enhanced Refinance or Fannie Mae High LTV Refinance
transactions.





VA ELIGIBILITY


 Borrowers must provide a Letter of Explanation (LOE) stating the circumstances behind the forbearance.
Documentation will be required to verify the items listed in the LOE have been resolved.
 If the forbearance was on a non-subject property, the forbearance must be resolved, and new payment (if
applicable) must be included in the DTI.
 A Veteran who was granted a forbearance and continues to make payments as agreed under the terms of original
note is not considered delinquent or late and will be treated as if not in forbearance status, provided that the
forbearance plan is terminated prior to closing.


Cash-Out Refinances


 Refinance of mortgages that are in a current forbearance status, where mortgage payments are not being made,
including mortgages under the CARES Act forbearance protection program, are not eligible. The forbearance plan
must be completed/terminated prior to closing.
 Borrower in forbearance with missed payments- Borrower must have made 6 consecutive months’ timely payments
post-forbearance, regardless of method of resolution of the forbearance.
 Missed payments due to COVID-19 forbearance cannot count toward seasoning. Borrower must have made six
consecutive monthly payments prior to the CARES Act forbearance or six consecutive payments will be required post
forbearance. In addition, loans that have been modified must meet seasoning requirements based on the modified
note first payment date. The new note date must be on or after the later of: The date that is 210 days after the date
on which the first modified monthly payment was due on the mortgage being refinanced, and the date on which 6
modified payments have been made on the mortgage being refinanced.

IRRRL Refinances

 Borrowers must be current at time of application (any skipped payments under a COVID-19 forbearance have since
been made).
 Borrower in forbearance with no missed payments- standard underwriting applies.
 Borrower in forbearance with missed payments- Borrower must have made 6 consecutive months’ timely payments
post-forbearance.
 Loans must still meet loan seasoning, fee recoupment, discount points, and net tangible benefit requirements.
 Missed payments due to COVID-19 forbearance cannot count toward seasoning. Borrower must have made six
consecutive monthly payments prior to the CARES Act forbearance or will need to make six consecutive payments
post forbearance. In addition, loans that have been modified must meet seasoning requirements based on the
modified note first payment date. The new note date must be on or after the later of: The date that is 210 days after
the date on which the first modified monthly payment was due on the mortgage being refinanced, and the date on
which 6 modified payments have been made on the mortgage being refinanced.



FHA ELIGIBILITY


*NOTE: FHA Guidance is permanent, not temporary, and applies where a Forbearance Plan was granted due to COVID-19, Presidentially Declared major
disaster or other hardship. This new guidance has been included in the updated 4000.1 Handbook.
Payment
History
Documentation

When any mortgage reflects payments under a Modification or Forbearance Plan within 12 months prior to case number
assignment, obtain:
 Copy of Modification or Forbearance Plan* and
 Evidence the payment amount and the date of payments during the agreement
* A copy of Forbearance Plan due to the COVID-19 National Emergency is not required. Must be able to determine the reason for
forbearance.


Borrowers that are or were in Forbearance


Maximum base loan amount for a Streamline of an owner-occupied primary residence and HUD-approved second home is
the lesser of:
 The outstanding principal balance of the existing mortgage (including suspended payments from forbearance) as of
the month prior to mortgage disbursement; plus:
o Interest due on the existing mortgage
o Late charges and escrow shortages
o MIP due on existing mortgage; or
 The original principal balance of the existing mortgage (including financed UFMIP)
 Less any refund of UFMIP

New FHA Insured Mortgage Eligibility


 Any active forbearance plan must be terminated.
 Borrowers granted forbearance but who continued to make all payments as agreed under the terms of original Note
are not considered delinquent. No additional payment seasoning post forbearance required.
 Borrowers granted forbearance but who did not continue to make payments require additional mortgage payment
seasoning post-forbearance that document satisfactory, consecutive monthly payments. See chart below for details:
Transaction Additional Requirements
Purchase Must make three consecutive payments* post-forbearance or

▪ If home sold prior to making three payments, must be manually underwritten

Cash-Out Refinance Must make 12 consecutive payments* post-forbearance

GNMA Seasoning: Loans that have been modified must meet seasoning
requirements based on the modified note first payment date.



No Cash Out Refinance Must make three consecutive payments* post-forbearance (six payments if

mortgage was modified after forbearance)

Simple Refinance Must make three consecutive payments* post-forbearance
*NOTE: The consecutive payments must be documented on the credit report and read by AUS to follow AUS approval.
Streamline Refinance  Missed payments under forbearance do not count toward mortgage

seasoning requirements
 If mortgage modified after forbearance, six payments under
modification required.
Non-Credit Qualifying
 At time of case number assignment, borrower has made three post
forbearance payments.
Credit Qualifying
 At time of case number assignment, borrower is still in mortgage
payment forbearance or has made less than three monthly payments,
and
 Has made all mortgage payments due within the month due for the six
months prior to forbearance
***ALL Streamlines: GNMA Seasoning: Loans that have been modified must
meet seasoning requirements based on the modified note first payment date.

References FHA Mortgagee Letter 2020-30:


USDA ELIGIBILITY




 For each open mortgage, confirm the forbearance status and payment history.
 Borrowers who have a current mortgage that was placed in COVID-19 forbearance, but continued to make all
payments as scheduled, are not subject to additional seasoning.
 Purchases: Borrowers who missed any payments as allowed under the forbearance plan must have resumed
repayment of their mortgage loan for a period of at least 3 months prior to applying for a new loan.
 Refinances: the loan must have closed at least 12 months prior to the request to refinance, borrower must have
resumed making payments for a period of at least 3 months and have a total 180-day period of satisfactory
payments, excluding the time the loan was in forbearance.




LOANS MADE TO BORROWERS POST-FORBEARANCE


The guidance herein is based on Agency and Investor eligibility. The below is a summary and not all-inclusive of Agency announcements. For full

Agency guidance see the Resources section under each program section below.


IN ALL CASES THE FOLLOWING REQUIREMENTS APPLY:


 BORROWER MAY NOT BE IN FORBEARANCE ON THE SUBJECT PROPERTY MORTGAGE OR ANY OTHER NON-SUBJECT PROPERTY
MORTGAGES AT THE TIME OF LOAN CLOSING.
 Explanation from Borrower(s) for forbearance reason and how any hardship has been overcome is required. If borrower faced hardship,
documentation supporting resolution is required. (e.g. borrower was furloughed for a time and is now back to work and employer
documentation supports).
 Payment history required for most recent 12-months to see payment made dates to determine if borrower skipped any payments.
 Documentation from servicer that forbearance has ended.
 Asset sourcing to document funds for any lump-sum payments made to reinstate/bring mortgage current- 2 months consecutive
statements required.
 If borrower entered into modification/work out plan rather than reinstating the forbearance, a copy of plan must be obtained. See
applicable Agency guidance for eligibility in this case.


Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.

Text/call:      502-905-3708
fax:            502-327-9119
email:
          kentuckyloan@gmail.com

 


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