FHA Guidelines

The Wizard · Joined: 02 Apr 2006 Posts: 48 Location: So. Cal

Would someone direct the Old Wizard to the best link to gather information on processing an FHA loan according to the newest guidelines?

This old cat has not touched an FHA loan in over 5 years so the mind is really foggey.

Thanks Folks!

chow · Posted: Wed May 03, 2006 1:27 am Post subject:

I would love to ignore this question, but the data base of Q&A came out in a mortgagee letter. (the cat is out of the bag so to speak.)

http://www.hudclips.org/sub_nonhud/cgi/nph-brs.cgi?d=MLET&s1=06-$[no]&op1=AND&SECT1=TXTHLB&SECT5=MLET&u=./hudclips.cgi&p=1&r=1&f=G

and to answer your specific question, here is part of the letter.

On May 1, FHA will make the knowledge base available online to answer
general and technical questions about underwriting, appraisal, and processing
issues. This information will be fully searchable and will include specific
reference information. The knowledge base will be accessible from the main
HUD web site and will be available 24 hours a day, seven days a week.

Access to the knowledge base will be made via a public website
http://answers.hud.gov Basic access to the knowledge base will be
available to everyone. In order for lenders and other members of the housing
industry to access the full knowledge base, they will need to log in. New users
may log in by clicking on the “My Stuff” tab and then select the “Create New
Account” button. By completing the required information and selecting any of
the “Industry” client types, the new user will be able to see all of the public
knowledge base articles. HUD will add articles to the knowledge base under a
strict review process. No information will be included until it has gone through
a stringent verification process to ensure that the policy is consistent nationally
and adheres to all existing documented policy. From the answers.hud.gov site,
users will also be able to initiate a chat session with a CSR in the FHA
Resource Center (available June 1, 2006), as well as initiate an on-line service
request, check the status of an ongoing service request, or review previously
completed service requests.

Haplo · Joined: 20 Jan 2005 Posts: 2406 Location: Springfield, IL

I try to keep as much of it in my head and then I go back and double check things as they change. But then again, I'm doing them monthly :)

chow · Posted: Wed May 03, 2006 1:35 pm Post subject:

I hope you got a big brain because this animal called FHA is updating it's information fast this year!

The Wizard · Joined: 02 Apr 2006 Posts: 48 Location: So. Cal

Thank you Chow,

Since most of my clients are in California, FHA financing has not been used here in 5 yrs for the most part and I used to have a tech guy at the last place I worked that made shortcuts to everything for me.

I appericate your help. :D

Haplo · Joined: 20 Jan 2005 Posts: 2406 Location: Springfield, IL

Yeah, I wish I had your problem ;)

Chow I do, and I've been keeping as updated as possible. That being said, I still have to check constantly to see what else is new.

chow · Posted: Thu May 04, 2006 4:02 am Post subject:

Yes, I know about the west coast. Not much FHA action there, but it looks like it could increase. HUD's been running some ad work for reverse mortgages and first time homebuyers. Over the last few weeks, our evening calls have increased.

Heck in the last three days-they have tripled! A few weeks ago they ran an ad on a Friday night. I swear we talked to every one in TX!

I'm doing more snail mail out that way too.

The Wizard · Joined: 02 Apr 2006 Posts: 48 Location: So. Cal

Yeah, it is really sad when a family have to make $116,000 combined income to buy a started home.

The cost of living here is outrageous.

dsouthr · Joined: 24 Jun 2006 Posts: 15 Location: Columbia SC

Guys, I have just made the change from wholesale to retail. I have decided to make FHA a strong focus point for my business and have linked up with a major net branch to allow myself to do FHA. I am taking a FHA online class thru capstone (manuals should arive tomorrow and will knock it out by end of the week, 14hrs quals as continuing ed so 2 birds with 1 capstone).

My question for you seasoned FHA vets, first do you feel it smart for me to gear my head toward FHA in such a big way? IN SC, there are very few shops doing FHA and it seems most that do tend to do a poor job.

Secondly, what is there that I really need to know up front, meaning what snakes are lying in that FHA grass, that I need to be aware of, before I load down my pipeline with these deals?

Your help will be greatly appreciated!

Haplo · Joined: 20 Jan 2005 Posts: 2406 Location: Springfield, IL

Quote: My question for you seasoned FHA vets, first do you feel it smart for me to gear my head toward FHA in such a big way? IN SC, there are very few shops doing FHA and it seems most that do tend to do a poor job.

Up until I started doing renovation loans 95% of my business has been FHA. This is a great mid-credit response for consumers if you have manual underwriting available. I have found that for the 580-680 range FHA can be quite good but you can get a lot of refers. If someone has cleaned up their credit, but had some issues, go for it. I have gotten a 522 80% cashout refi auto approved through FHA.

Quote: Secondly, what is there that I really need to know up front, meaning what snakes are lying in that FHA grass, that I need to be aware of, before I load down my pipeline with these deals?

1) Lots of work. There are a lot of very different guidelines for FHA than conventional, or other types of loans. Non-arms length transactions for example.
2) Study your guidelines. This is true of any product, but because FHA has such un-structured guidelines, you need to know what to look for.
3) If it makes sense (and you have manual underwriting available) it can probably happen. FHA does not look at credit scores at all. They look at 2 years of history. 2 years BK, 3 years FC, and LoX's are the big parts of FHA.
4) 3% investment requirement. You can currently use a DAP or Gift as the investment, but it essentially has to come from the borrowers own funds. Seasoned, sourced, and all that jazz. Depending on your loan size and state will determine the amount required for down payment (anywhere from 1.25% in a low cost under 50k loan on up to 2.85%) which means that part of the investment may go towards closing costs.
5) FHA appraisals. FHA may be great for borrowers, but there are always times where something about the house won't meet an FHA guideline but would conventional.
6) Time. You're going to need more time to process them. There is more verification involved with FHA loans, whether for you or your processer. Don't expect to close this in a week.
7) Loan limits. Your loan is capped at a certain amount, which can be as little as $200,160 on up depending on the county.

Those are some of the things to consider.

chow · Posted: Mon Jun 26, 2006 9:08 am Post subject:

FHA appraisals aren't any different than conventional now. HUD even dropped the VC sheets. ML 05-34

http://www.hudclips.org/sub_nonhud/cgi/nph-brs.cgi?d=MLET&s1=land+contract&op1=AND&l=100&SECT1=TXT_HITS&SECT5=MLET&u=./hudclips.cgi&p=1&r=2&f=G