March 28th, 2012 by Melissa Hill
April 1, 2012 FHA is making a few changes. It is more important than ever to begin your home buying process with a reputable lender. A skilled loan representative will be able to guide you in the right direction so that your dream of owning a home can be within reach.
Collections and Judgments:
If a borrower has singular or cumulative disputed accounts and/or collections that are greater than $1,000, the accounts must be resolved. Resolved meaning paid in full or payment arrangements with a minimum of 3 months verified on time payments. Payment arrangements must be included in the borrowers ratios. Borrowers must provide documentation showing the payment arrangements have been set up with the creditor and paid on time such as bank statements or cancelled checks.
If the borrower has accounts greater than $1,000 as a result of Identity Theft, they must provide a copy of the police report and other satisfactory documentation supporting the identity theft and then these accounts will not need to be paid or counted in their ratios.
Judgments need to be paid in full unless the borrower has set up satisfactory payment agreements with the creditor and has paid a minimum of 3 on time payments.
The borrower cannot pay down collections/judgments or disputed accounts to under $1,000 to avoid having to pay them off or make payment arrangements.
Identity of Interest :
Added definition of a family member now includes: step children, step siblings, aunt uncle, step grandparents.
Self Employed Borrowers:
P&L and Balance Sheets must now be provided.
Up front MIP (mortgage insurance premium) is increasing from 1% currently to 1.75% (can be financed).
Annual MIP (monthly payment) is increasing .1% per year. For example: on a $100,000 loan amount, these changes will cost the borrower an added $11.81 per month.