FHA Guidelines

FHA case number assignments on or after 7/14/08, FHA will implement “risk based” MIP Premiums on 1 to 4 unit mortgages?



Some of the highlights regarding FHA’s Risk-Based Premiums are:



UFMIP will range from 1.25 percent of the loan amount (currently 1.50%) for lower risk borrowers, to 2.25% percent for higher risk borrowers.
No borrower who qualifies for a FHA/HUD insured mortgage will pay more that 2.25% on the UFMIP and .55% for the annual premium.
Borrowers with credit bureau scores must be risk-classified by FHA TOTAL Mortgage Scorecard (AUS).
Borrowers with no credit scores will need to be manually underwritten, and the premium will be determined by the LTV.


So what if your borrowers don’t have 3 credit scores….what then?



3 scores…the middle score is used.
2 scores…the lower of the two is used.
1 score…..that score is used.


What if there are multiple borrowers?



If more than one person is applying for the loan, you use the lower of all borrowers.



What if there are multiple borrowers, and one doesn’t have a credit score?



The borrower representing the greatest risk will determine the MIP factor to be used. Example:



If one borrower has a 620 and the other borrower has no FICO score, then the factor to be used would be the “Non-Traditional” factor.



First Time Homebuyers



HUD has always “suggested” that a FTHB complete a pre-purchase counseling course. Now, if they do, they will benefit from a lower UFMIP factor……BE CAREFUL!!!! HUD requires that this class is a one on one, face to face class that has to be completed BEFORE a purchase contract is executed. HUD wants to make sure that the borrowers understand:



Budgeting and Credit
Assessing Homeownership Readiness
Financing a Home
Shopping for a home…including the professionals involved in the process
Maintaining a home

Source: Mortgagee Letter 2008-16 addresses