Mortgage Processor Blog :

Always Another Reason

noreply@blogger.com (Editor in Chief) — Fri, 21 Nov 2008 17:02:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

It seems to me that each day I find another reason to practice prudent underwriting principals. I mean old school stuff that reaches beyond the world of automated underwriting. As we all know, we have the ability to reduce documentation requirements when we have the Approve/Eligible or the Accept and in some cases it makes sense but I find more and more that I keep reaching back to documentation requirements of the past. I always seem to discover something further about the case when I do that, sometimes good, sometimes bad but always something useful.

Useful it the key word here and I will tell you why. For those of you out there who have been underwriting the FHA stuff a while this will be old news but for all of the new FHA DE underwriters, this is valuable information that you might want to consider each time you underwrite a case be it an Approve/Eligible or refer.

Recently, I received notification from HUD that a particular case that I had underwritten had been deemed deficient during a post endorsement technical review. Some insight, a post endorsement technical review is something that all FHA DE underwriters are subject to. In short, FHA will audit about ten percent of all cases underwritten annually by any institution and if you are the only underwriter, that means they will all be yours.

During this audit, they will determine what, if anything, you missed. These deficient items can be as minor as a date on the initial 92900a or as major as an undisclosed debt or the auditor’s opinion that you did not calculate income correctly. If the deficiency is severe enough, the case will be determined as unacceptable in its defect and your institution could be subject to loan indemnification to further protect the department from losses that may result from loan default. Now indemnification is always bad because it costs your employer money. In short, FHA may require a lump sum payment of say $8000.00 to indemnify the case. Trust me this is NOT a conversation you want to have with your manager.

I was recently subject to such an audit and the particular underwriter that audited the case had deemed the case unacceptable because she felt that I had not sufficiently sourced several large deposits appearing on the borrowers bank statements. Lucky for me that I did not just think that the borrower did not need any funds to close so I would not further document this. As it turned out I had conditioned for certain documentation as to how the borrower was paid, letters from employers, so on and so forth and ultimately when I responded to the findings, which you have 30 days to do, I had sufficient additional documentation in the file to further support that the multiple large deposits where in fact payroll deposits based on the way the borrower was paid. I responded to the audit, included the supporting documentation and the case was cleared from unacceptable to conforming status. In short, I was good to go. If I would not have collected that additional information, I may have had an indemnification on my hands.

So I will now always suggest that from an underwriting standpoint you cover yourself so that if you need to respond to such inquiry you are prepared. My particular instance was on a case that received an approve/eligible and was in fact a refinance where the borrower needed no money for closing, so all instances are subject to such scrutiny. Due diligence is the phase of the week. As always happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

New Rules under RESPA

noreply@blogger.com (Editor in Chief) — Fri, 14 Nov 2008 18:12:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

Just when you think you got it nailed, they go and change everything. For those of you who have no idea what I am talking about, I am talking about RESPA. I recently experienced what I would call a deep satisfaction while thinking that I had the concept of RESPA down to art, but it was short lived.

As of January, 2009 the changes as proposed by HUD will take effect and we can all begin the re-learning process.

I will agree that clearer disclosure of settlement charges has been long needed, I was just hoping we all had time to adjust to the new lending mentality before we had to embrace the new disclosure mentality. At any rate, it appears that the GFE as we knew it, like the MCAW before it, will become a thing of the past. The new rule will implement the use of a clearer form of disclosure among other things which will also include the HUD I settlement statement. Included in the changes will also be additional guidance on charges that lenders can and can not charge.

I have compiled the highlights of the changes as indicated on HUD’s website, along with a PDF of the final rule. The highlights are as follows:

• For the first time ever, HUD will require mortgage lenders and brokers to provide borrowers with an easy-to-read standard Good Faith Estimate (GFE) that will clearly answer the key questions they have when applying for a mortgage including:

o What's the term of the loan?
o Is the interest rate fixed or can it change?
o Is there a pre-payment penalty should the borrower choose to refinance at a later date?
o Is there a balloon payment?
o What are total closing costs?

Good%20Faith%20Estimate.pdf

• HUD estimates that by improving upfront disclosures on the GFE, and limiting the amount estimated charges can change, consumers will save nearly $700 in total closing costs.

• Based on substantial public comment, HUD withdrew a proposed requirement that closing agents read and provide a ‘closing script.' Instead, to borrowers in favor of a new page on the HUD-1 Settlement Statement that allows consumers to easily compare their final closing costs and loan terms with those listed on the GFE.

HUD-1.pdf

• HUD's new Good Faith Estimate has been reduced from four to three pages; including an instructional page to help borrowers better understand their loan offer. In addition, the GFE will consolidate closing costs into major categories to prevent junk fees and display total estimated settlement charges prominently on the first page so the consumer can easily compare loan offers. HUD will specify the closing costs that can and cannot change at settlement. If a fee changes, HUD will limit the amount it can change.

• To help borrowers compare their Good Faith Estimate with their HUD-1 Settlement Statement, each designated line on the final HUD-1 will now include a reference to the relevant line from the GFE. Borrowers will now be able to easily compare their estimated and actual costs in the same manner many commenter’s suggested.

• HUD will require lender payments to mortgage brokers (often called Yield Spread Premiums) to be disclosed in a more meaningful way. These payments are directly dependent on the interest rates that consumers agree to. To ensure that HUD's new requirement will not create a consumer bias against brokers, the Department did rigorous consumer testing and found the new Good Faith Estimate helped consumers to select the lowest cost loan nine-out-of-10 times, regardless of whether the loan was originated by a lender or a broker.

• Loan originators will be required to provide borrowers their Good Faith Estimate three days after the loan originator's receipt of all necessary information. To facilitate shopping, loan originators could not require verification of GFE information (tax returns etc.) until after the applicant makes the decision to proceed.

• HUD will allow lenders and settlement service providers to correct potential violations of RESPA's new disclosure and tolerance requirements. Lenders and settlement service providers will now have 30 days from the date of closing to correct errors or violations and repay consumers any overcharges.

• The new, standardized GFE and revised HUD-1 will not be required until January 1, 2010.

For more information on the final rule, you may go to www.hud.gov/respa.

RESPA%20Final%20Rule.pdf

Good luck and as always, happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Lets Process

noreply@blogger.com (Editor in Chief) — Fri, 07 Nov 2008 17:38:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

I was recently hosting a seminar and during a question and answer session, I had an individual ask me what was the greatest deficiency I was seeing in files submitted for underwriting. At the time my answer was incorrect loan amounts due to the changing of rules where the UFMIP was concerned. But after several days of underwriting files, I have changed my mind. The correct answer should have been that the files are simply not processed.

Baring a few exceptions, it seems that the new rule for processing is as soon as the case is turned in, the file must be sent to the investor for underwriting. Based on what I have seen this week, this is occurring without even a cursory review by processing. I am all for submitting a case subject to an appraisal but I have seen several cases that simply were not approvable.
Forget the fact that there were no submission documents and I mean no final typed 1003, no 92900LT or 92900a, it was clearly obvious that the case was not even reviewed. When a file is submitted with 8,000 in monthly income and at time of underwriting it is determined that the borrowers income is actually 4,000, it is clearly obvious that no one, loan officer, or any other employee looked at the paystubs.

So with that said, I want to talk about processing a mortgage application. I realize that there are several people out there that know how to do this but I want to hit a few finer points. Before we start I would like to mention reputation. If a processor takes pride in their work, they will see that before a file is submitted to underwriting they have reviewed it and collected most everything an underwriter will need in order to make a credit decision.

If your Suspense comes back with 21 conditions, you know the underwriter more than likely does not think you have any idea what you are doing. So aside from earning a reputation in the business as being the best, you need to consider processing the file practice for future responsibilities, responsibilities like underwriting perhaps. Think about it, if you can’t calculate income now, how will you progress to the point of actually underwriting the file.

No body is saying the case needs to be perfect but an initial review should be completed and the processor should spend enough time with case to determine what is missing and request the information from the borrower. Additionally, they should review the credit report to make sure that an explanation of credit is not needed and if so requested. Look for public records to determine if you need evidence of satisfaction of judgments or bankruptcy papers. Add the borrower’s monthly payments to determine if your DTI is in line. Don’t assume that your LOS will do it for you.

Look at the borrower’s paystubs. Determine if the YTD earnings are line and calculate the borrower’s monthly income. Check out the deductions to determine if there are wage garnishments like child support. If there is, have the borrower provide the necessary documentation. Review the bank statements for large deposits and evidence of sufficient funds to close if you are working on a purchase. Make sure the Contract of Sale is executed. For your FHA files, make sure you have your case number assignment and LDP and GSA prints, you are going to need them before closing so collect them.

Doing just these things will enable you to determine if you have a loan. Why waste time and money on a case that will ultimately not close. Additionally, you will become familiar with the case so when presented with questions, you can actually answer them. It all comes down to ownership. Good luck and happy processing.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

FHA Cash Out Refinance

noreply@blogger.com (Editor in Chief) — Fri, 31 Oct 2008 17:58:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

I have recently had some questions regarding maximum Loan to Value guidelines where FHA cash out refinances are concerned. It seems that most people believe that 95% is the rule regardless of the loan parameters so I thought today would be a good day to set the record straight. I would also like to mention that all should take these current guidelines in stride as the current rumor is that FHA plans to again reduce the maximum LTV on all cash out refinances to 85% which was the limit until 2005.

Under most circumstances a borrower can go to a 95% LTV where cash out refinances are concerned however there are some exceptions to this rule, and in these cases the maximum Loan to Value is limited to 85%. The following are the exceptions to the 95% rule and as stated, if your application falls into these parameters, then your base loan amount will be limited to an 85% LTV under HUD guidelines.

1. If the borrower has owned the subject property for less than one year, then the LTV may not exceed 85% and you must use the original contract sales price or appraised value must be used.

2. If there will be a non owner occupant co borrower on the loan application, then the maximum LTV will be 85% for cash out refinance transactions.

3. If the borrower has made any late mortgage payments on their present mortgage within the most recent 12 months, then the LTV will be limited to 85% regardless of total scorecard findings.

4. If the borrowers base loan amount will be greater than $417,000, then the maximum LTV for the case will be 85%.

5. If the subject property has greater than 2 living units, then the maximum LTV is limited to 85%.

Other than the above circumstances, you are still presently allowed to lend to a
Maximum LTV of 95% on cash out refinance transactions which guidelines were set forth in Mortgagee Letter 2005-43 until further notice.

I would also like to mention a few things on rate/term refinances while we are on the subject. Firstly, remember that on full credit qualifying refinances, skipped payments are not allowed, so when reviewing the payoff statement be sure to make sure that the mortgage has been paid for the month due, otherwise you will need to verify sufficient funds to pay it and have the borrower bring the funds to the settlement table.

Lastly, remember to run the rate/term refinances through Total Scorecard as no cash out refinances and be sure that the borrower receives no more then $500.00 in loan proceeds at time of closing, any more then this must be applied back to the principal balance. As always, happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Tricks with FHA Connection

noreply@blogger.com (Editor in Chief) — Fri, 24 Oct 2008 17:53:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

As FHA volume has increased (ours to about 90% of total originations), there seems to be more and more games being played with FHA Connection, particularly where wholesale originations are concerned. Don’t get me wrong, I love my brokers, I have a great relationship with most of them, but there are a few that have really learned to manipulate FHA’s system.

So I thought this a good time to discuss what I have been seeing in terms of how brokers are slipping around the system. With that said I would say that this week’s blog is most certainly geared for the lenders, so I will start by apologizing to all of the brokers out there.

One of the big things that I see, which I have been dealing with for quite some time, is case number assignment to the sponsor. It seems that some brokers out there will actually wait to get a case number until underwriting is complete to eliminate the lender/sponsor ability to reject the loan in FHA Connection. Think about it, if the case number has not been assigned in the system, you can not reject it in the system.

Taking it a step further, every now and again I will get a case submitted into the wholesale division which contains an FHA case number on both the application as well as the appraisal but there will be no FHA case number assignment. I used to underwrite the case and condition for the case number only to find out in the situations where the case was being rejected, that the case number was never assigned to my company under sponsorship in the first place. End result, my company does not have access to the case and can not reject the loan in FHA connection or perform any other functions for that matter.

After seeing quite a bit of that, I decided that we would not underwrite a loan until I had a case number assignment print out from FHA connection, listing my company as the sponsor. This was a disaster also. If I rejected the case and faxed the declination prior to rejecting the loan in FHA connection, the broker simply went into FHA connection right away and reassigned the case to another sponsor. Again, no access to the case.

This week has brought new information where playing with sponsor information in FHA Connection is concerned. It turns out that a few of our brokers are ordering a case number using a particular sponsor. Once the case number assignment is printed and placed in one copy package, they are going into FHA Connection and reassigning the sponsor and printing this case number assignment and putting it in a second copy package.

In some cases, brokers are doing this three or four times and submitting the loans to three or four investors at once, all of which think they are indicated as the sponsor where the case number is concerned in FHA Connection.

My suggestion is this. Make sure once you begin underwriting a case in which your company is acting as sponsor, go into FHA Connection and make sure that the case has not been updated to list another investor as the sponsor.

If it has, perhaps suspend the loan until you can validate that your company is listed as the sponsor in FHA Connection. If you are going to reject something, reject in FHA Connection before you fax or email the declination and if you have brokers that are really abusive with this kind of thing, you can always contact them and explain that if it continues to happen, you will worsen their pricing by .25 to cover all of the fall out (this by the way worked for us). As always, happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Test Cases

noreply@blogger.com (Editor in Chief) — Fri, 17 Oct 2008 16:43:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

Recently I have had several questions from mortgage lenders as well as banks that are beginning their FHA test cases. Everyone seems to want to know the procedure, what to expect and what FHA will be looking hardest for when reviewing the test cases. As a result of these questions, I thought today would be a good day to give everyone some insight into what to expect once you start sending your test cases to HUD for review.

To start, I want to mention that every newly approved FHA lender must complete 15 test cases which will be reviewed by HUD. These cases will be re underwritten by the girls and guys at your local HOC to determine if the newly approved lender understands not only the principals of FHA underwriting but also all of the technical pieces that go hand in hand with FHA lending as a whole.

Of these 15 cases, 10 must be manually underwritten by the FHA Direct Endorsement lender. This means that only 5 of the prospective cases may include automated underwriting findings which indicate that the loan has been approved by Total Scorecard.

In addition, these 5 cases may also include FHA streamline refinance transactions. The other 10 cases must be full manual underwrites which adhere to FHA standard documentation requirements where manual underwriting is concerned. These standards include credit and inquiry explanation, evidence of liquidation of funds to close, bankruptcy papers, divorce decrees etc. In other words, documentation, documentation, and more documentation.

In my experience with test cases which I have completed on at least 4 occasions, including 203K test cases, I would like to say that there is not such thing as to much documentation.

Secondly, I would suggest underwriting them twice, you can not be to careful. Make sure that every document contains the correct information and the underwriting approval documents are all signed and dated appropriately. Watch your compliance items carefully. Make sure that the 92900 dates match the dates on the initial 1003 and that all required FHA disclosures have been signed and dated by the borrowers.

Your credit documentation must be supportive of the overall loan file and any indication of additional circumstances that may result from standard documentation must be addressed and fully documented. An example would be multiple deposits appearing on borrower’s bank statements where the borrower’s may have direct deposit. Even if the deposits are small, say $150.00, ask the borrower to provide an explanation as to the source of funds for the deposits.

Next, remember the technical piece. FHA also wants to see that the lender has an understanding of their responsibilities where FHA connection is concerned. FHA case number assignment needs to be in the file and include evidence of validation of borrowers social security numbers, LDP and GSA must be printed and included in the file and finally, make sure to complete the Appraisal Logging screens in FHA connection and print this information and put it in the file. If appraisal logging is not complete, FHA will send the file back with an NOR.

Finally, remember to use the colored FHA case binders that were provided to your office by your local HOC. Note on the top of the case binder, Pre Closing Review in large letters, perhaps use a black marker. This is really important as to make sure the case does not end up in the insuring department with several thousand other case binders, it takes days and possibly weeks to find them.

Also, remember that FHA is currently reviewing test cases for several lenders so give yourself plenty of time of pre closing review particularly where the purchase transactions are concerned. It will take a week or more in some instances to get your firm commitment from HUD. If you want to check the status of the case while it is at the HOC, log into case query on FHA connection, it will tell you if the FC or Firm Commitment has been issued. If it has, simply print it from FHA connection and you are good to close. If you have further questions, contact your local HOC before proceeding, the last thing anyone needs is an uninsured loan on their books. As always, happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Finding Grant Programs

noreply@blogger.com (Editor in Chief) — Fri, 10 Oct 2008 17:16:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

As we have seen the end of seller funding down payment assistance, I thought today would be a good day to discuss other available grant programs that might be of use to potential borrowers. Based on what I have found, most appear to be geared to first time homebuyers, which seems to be where the greatest need it.

I would like to start by saying that FHA is still allowing acceptable grant programs in conjunction with FHA financing and it appears that there are several which are administered by both state and federal agencies where the first time homebuyers are concerned. These grant programs usually seem to be soft seconds that are forgiven over a period of years and some do have income restrictions.

The first one I would like to discuss is ADDI or the American Dream Down Payment Initiative which is actually administered by HUD. It is designed for first time homebuyers and is a 10,000 which can be used for down payment and closing cost expenses and is recorded as a soft second and ultimately forgiven at a rate of 20% per year. There are income restrictions associated with the program based on the number of family members in the home.

Federal funds for this grant are distributed nationwide and the fund is usually administered by state agencies as well as county and city agencies. Direct links to these agencies can be found on HUD’s website at www.hud.gov, click on the grants link on the left side of the page and you will see the information for ADDI on the right side of the next page. By clicking on this link you should be above to follow the links to determine which agencies in your area are administering the grant as well as income limits etc.

I have also found several grant programs through state and local agencies that are acceptable to HUD. If you log on the websites for your local city department of housing and community development as well as your states department of housing and community development there are links for homebuyer assistance that includes grant and gift information available for homebuyers in these areas.

An example would be Baltimore City, Maryland which has a Trolley Car grant. If potential homebuyers take a Trolley Car ride to view properties located in certain city neighborhoods and contract one of these properties within 90 days of the ride, the City of Baltimore will give these individuals a grant for 3,000 towards closing costs. They also have another grant, called Live where you work, which provides similar grant funds for individuals employed and purchasing properties in Baltimore City.

As you can see there are still several options available to homebuyers in addition to the no longer allowed seller funded grant programs. All that is required is a little research and most originators should be able to come up with quite a few options for potential borrowers.

In addition, these options are also great sales tools where real estate agents as business partners are concerned. Processors and underwriters can also research the programs and access the information on the grant provider’s websites. Most of the programs are really user friendly from and underwriting standpoint as well so take a time out and do a little research to see what your company can now offer as an alternative option to seller funding DPA.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

H4H

noreply@blogger.com (Editor in Chief) — Fri, 03 Oct 2008 16:20:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

It’s here all, the Hope for Homeownership program. Mortgagee letter 2008-29 issued October 1, 2008 has set forth all of the guidance that we as lenders need in order to successfully administer this program. Please do not confuse it as an extension to FHA Secure because it is definitely not.

This program is quite different in more than a few respects, both from an origination standpoint and servicing standpoint. From appraisal age being reduced to 3 months to closing characteristics including additional security instruments, I strongly recommend that everyone deciding to participate fully understand program requirements before administering the program.

The program highlights are as follows:

1. The program is designed for borrowers at risk of foreclosure and provides the borrower the ability to refinance into a 30 year fixed rate mortgage that will be insured by FHA at a more affordable interest rate.

2. The program begins October 1, 2008 and ends September 30, 2011.

3. In order to be eligible the home in jeopardy must be the borrower’s primary residence and the borrower may have no other ownership interest in any other property, the current mortgage must have been originated prior to January 1, 2008 and the borrower has made at least 6 payments. The borrower is unable to pay their current mortgage. As of 03/01/08 the borrowers total PITI was greater then 31% and the borrower can provide documentation to demonstrate so and the borrower certifies that they have not been convicted of mortgage fraud in the most recent 10 years.

4. Maximum LTV 90% and the new mortgage will eliminate all current mortgage debt on the borrowers.

5. Origination, processing and underwriting requirements are different including additional disclosure regarding the borrower which must be provided at least 1 day prior to initial loan application as well as shortened life of property appraisal to 3 months.

6. Borrower validation in FHA connection will include evidence that the borrower has not been convicted of fraud within the most recent 10 years and determine that the borrower owns no other real estate.

7. Only 1 unit properties are eligible including Condo’s and manufactured homes.

8. Only 30 year terms are available and the UFMIP is 3.00% and monthly MI is 1.5%.

9. Standard FHA closing costs policy remains in affect however the maximum fee charged by the lender is 1% origination fee. No additional fees are permitted.

Underwriting guidelines are significantly different including trail modifications should borrowers ratio’s exceed 31/43 but not exceed 38/50. Underwriters read the mortgagee letter carefully, as I said requirements are significantly different. Underwriters will also be responsible for executing additional certification which can be found attached to the mortgagee letter.

Closers and post closers also need to be aware of changes where security instruments are concerned for this program. Additional security instruments are required as are further instructions which can be found in Mortgagee Letter 2008-30 for closers as well as program servicing. As always happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Lets Talk Compliance

noreply@blogger.com (Editor in Chief) — Fri, 26 Sep 2008 19:15:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

As we see a shift towards a more conservative attitude towards mortgage lending, not to mention a greater involvement of federal agencies, I thought today would be a good time to talk compliance. For those of us who grew up originating, processing and underwriting for banks and thrifts, compliance is second nature, something you handle when requesting a 2nd pay stub from the borrower. For others who came into the business via the way of mortgage broker and lender, the concept is not so familiar.

It has always seemed to me that compliance has never been a big issue for brokers and lenders who are regulated by state agencies, however for institutions that have federal oversight, these concepts are a major consideration on a day to day basis.

Most underwriters underwriting for federally monitored institutions underwrite for compliance due to such oversight as opposed to a lighter approach to these things in lender shops. Recently, I have had quite a few underwriters who have moved from lender shops to banks call me with lots of questions regarding compliance because the banks and thrifts they are working for take it so seriously.

Quite frankly I have never met a Compliance Officer who couldn’t find at least 1 thing wrong.

So in this spirit, I thought I would give those of you who could use a little help in this area a few tips or insight into the more important things to look for when you are underwriting your cases.

First and most important because this will drive how you look at all of your disclosures is to determine that the loan officer has appropriately checked how he or she has taken the application. There seems to be a lot of confusion between mail applications and applications taken over the phone. For the record, if the loan officer has taken enough information from the application to pull credit, then the application is a phone application. Just because he or she mailed it for signature does not mean it was by mail. In order for an application to be a mail application, the application must be mailed blank to the borrower for completion.

Next, check the date of your credit report, because this is the day that your three day clock starts to tick. Again, if the loan officer pulled credit, then he or she now has sufficient information to make a credit decision so you know have an application. At this point either the borrower must be disclosed within 3 business days or the case must be rejected in order to comply with any non disclosure rules. Make sure the date on your GFE, TIL and Servicing Transfer Disclosure is within the 3 business day mark of the credit report and make sure that the loan officer has dated the 1003 correctly. If it is a FHA or VA case then the addendum to the application must also be dated the same date. In other words the application can be dated before the credit report where the loan officer signature is concerned but not after.

Remember also where the GFE and TIL is concerned, anytime there is a change to the terms of the loan application, the borrower must be provided revised disclosure. This does not mean that they need to be signed but the revisions must state clearly that they have at least been mailed to the borrower and on what date. Check the terms of the initial application to that of the submission forms to determine that you have evidence of appropriate re disclosure.

If you are underwriting for a lender, it is also important that all lender fees be disclosed to your borrowers. If you must have your brokers issue revised disclosures indicating all of these fees along with any earned YSP. Do not forget standard federally required disclosures such as ECOA, Privacy, Patriot Act and so on. In addition to these you want any program specific disclosures say for Adjustable rate mortgages as well as FHA and VA disclosures as applicable.

As with anything you are unsure of, compliance issues can be a little daunting when getting used to the concepts but the more you review the information, the comfortable you become with it. Keep in mind it is important, even at a state level if your company would be audited. There are several other rules that you might need to brush up on, things like when a commitment fee is acceptable under FHA guidelines and so on, so do what ever research you can to make sure you are underwriting so that your cases are compliant.

No one wants to refund fees to the borrower due to simple errors that could be easily avoided. As always, happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Dumbing Down FHA

noreply@blogger.com (Editor in Chief) — Fri, 19 Sep 2008 17:49:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

As we are all aware, FHA has seen many changes this year regarding the overall program. Much of these changes were implemented to assist with the ongoing housing crisis and have actually been quite effective, however, the overall changes to the program have not been designed to elevate the newest credit crunch, but to revamp the overall program.

These changes which began for the most part in 2005 have included doing away with non-allowable closing costs to an extent and modifying appraisal protocol to resemble that of FNMA among other things. Most recently we have seen FHA move away from the Mortgage Credit Analysis to the 92900LT, which will be mandatory for use beginning October 1, 2008 along with the multitude of other changes which will be begin on this date as a result of the passage of The Housing and Economic Recovery Act of 2008.

For as much as many industry professionals, particularly those with extensive experience where the government programs are concerned, have deemed these changes as a dumbing down of the program, I am here to say that this is not the case at all. As one of those professionals who would state that their expertise lies in government lending, I see these changes as not only a way to boost the housing industry overall, but to make the FHA program less cumbersome overall.

As we all know, many industry professionals moved away from FHA in the late 1990’s due to the cumbersome nature of the program. Many property sellers did not want to participate in government contracts due to the appraisal protocol and sometimes lengthy repair items that would result during the property appraisal piece of processing. As a result many FHA qualified borrowers turned to less favorable mortgage products such as sub prime and higher interest rate Alternative mortgage products which most recently contributed to the current problems plaguing the mortgage industry and have more often then not, has had a huge impact on low to moderate income borrowers who seem to have suffered the most.

To say that FHA is dumbing down the program is far from correct. I will agree that with minor alterations to the program they have simply made it more accessible to the masses due to it now less cumbersome nature and the average lenders new willingness to participate in the program. For those of you thinking, “What about down payment simplification”, I will remind you now of the Acquisition method, 97/95/90 calculation and so on.

When FHA went to the 97.75/97.15 LTV calculations we all applauded and were able to increase underwriting production by 30% (yes it took that long just to calculate the loan amount). At any rate, remember the program changes will benefit the borrowers in long run while making it just a little easier for production staff.

As a normal course of business the LT will be far less work to complete and calculating loan amount will now be more standard making our life just a little easier. Keep in mind however the program overall remains unchanged and although loan amount calculations have gotten a little easier, we are not underwriting FNMA programs. The guidelines are still the guidelines and they are somewhat different that those of conforming products.

Also, there is still the premise of manual underwriting which will always set FHA underwriting apart from Conventional underwriting. To say that any mortgage program that allows an underwriter the ability to make the final loan decision is elementary is a huge mistake not to mention an understatement of the true nature of assessing financial risk.

With that said, I suggest that we not become complacent as the nature of the program changes because our responsibilities as underwriters have not. As always, happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Getting it Straight

noreply@blogger.com (Editor in Chief) — Fri, 12 Sep 2008 22:33:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

We have all been made aware that many new changes will take effect beginning October 1, 2008 where the FHA mortgage insurance program is concerned. There were several pieces of new legislation that was signed into law in July, 2008 which will have a large impact on how we now do business where the FHA stuff is concerned.

Beginning very recently, we have seen a change in how we calculate the UFMIP when FHA went to the Risk Based pricing principal. This information was outlined in Mortgagee Letter 2008-16. Further changes have since been anticipated including the changes to required down payment on the buyers behalf and the elimination of seller funded down payment assistance as a result of the new law. These changes have recently been published in Mortgagee Letters 2008-22 & 2008-23 with some unexpected twist.

First and quite simply, ML 2008-22 rescinds ML 2008-16 where the risk based premiums are concerned, implementing a flat across the board UFMIP and monthly MIP factors which are as follows:

Upfront Premiums: FHA will charge an upfront premium in an amount equal to the following percentages of the mortgage:

• Purchase Money Mortgages and Full-Credit Qualifying Refinances = 1.75 Percent

• Streamline Refinances (all types) = 1.50 Percent

• FHASecure (Delinquent Mortgagors) = 3.00 Percent.

Annual Premiums: An annual premium, shown in basis points below, to be remitted on a monthly basis, will also be charged based on the initial loan-to-value ratio and length of the mortgage (except for FHASecure delinquent mortgages) according to the following schedule:

• Purchase Money Mortgages, Full-Qualifying Refinances, and Streamline Refinances:

If the LTV is <95 the Annual for Loans >15 years is 50, the LTV is <90 and the Annual for Loans < 15 years is None.

If the LTV is >95 the Annual for Loans >15 years is 55, the LTV is >90 and the Annual for Loans < 15 years is 25.

• FHASecure (delinquent mortgagors):

If the LTV is <95 the Annual (all loan terms) is 50

If the LTV is >95 the Annual (all loan terms) is 50

Next, ML letter 2008-23 implements the revised down payment and maximum mortgage requirements where FHA mortgage insurance is concerned. FHA will now require a minimum down payment of 3.5% from all borrowers on all transaction types (see information for specialty programs such as the 203k which may vary) without consideration to borrower closing costs or varying LTV’s. That’s right, forget all that you know about calculating the maximum mortgage.

Additionally, refinance transactions will now be limited to 100% LTV including the UFMIP which for the most part will allow a 98.25% LTV where the base loan amount is concerned (FHA Secure has different requirements). Keep in mind however that depending on the UFMIP for each product the LTV where the base loan is concerned may vary. Lets also not forget about using the new 92900LT.

For most seasoned DE underwriters the changes will be embraces as they always have, as a normal course of business. But for new DE’s and support staff alike, the new changes will cause even greater confusion when considering that they may still be in a learning curve. My suggestion, be careful and review you work twice.

I would also like to mention the fact that new legislation is scheduled for mark up this week by the House Financial Services Committee which will continue to allow seller funded DPA and possibly rescind mortgagee letter 2008-22, again allowing Risk Based Premiums where the UFMIP and Monthly MIP is concerned (see HR 6694 for more information). So its possible to see changes to new changes as well.

For those of you that are having difficulty interpreting the changes, I strongly suggest training. FHA Online U will have all of the changes effective in class materials beginning October 1, 2008 and will allow ample time for discussion of the changes with each training course to decipher the new policies. Again everyone, keep your eye out for new mortgagee letters because as I stated above, the new guidelines seem to keep coming not to mention changing. Happy Underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

The Principals of Mortgage Underwriting

noreply@blogger.com (Editor in Chief) — Sat, 06 Sep 2008 20:06:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

As a normal course of business, I regularly have conservations with originators, mortgage brokers and processors regarding application scenarios. The case is usually less than perfect and more often than not, the originator is looking for a way to get it done. Before I get the phone call and/or subsequent visit from the originator, they have usually assessed the case and determined that either the credit score is less than 600 which case a refer in the AUS used or the borrowers ratios exceed guidelines.

It is usually at this point when I get the phone call and the Loan Originator begins to tell me about the deal. When they describe what they have it usually goes something like this, “ I have a cash out refinance on my desk that got referred in DU. The borrowers credit score is 592 and after we pay off some debt at closing, their DTI will be about 47%. Do you think we can get this done”. That’s it, no explanation for the derogatory credit, no explanation as to if the transaction will improve the borrowers financial position and so on.

I can’t tell you how often I get these kinds of phone calls and I just want to take this opportunity to remind everyone that underwriting is not just simply LTV’s, ratio’s and credit scores. These are simply guidelines, a definition of words if you will. The basic principals of mortgage credit underwriting provide for a complete assessment of the borrowers overall financial situation in an attempt to determine not only ability to repay debt, willingness to repay debt but also the assessment of collateral.

An underwriter can not assess all of these factors by simply determining a LTV or calculating a ratio and a credit score might reflect the borrowers current credit history but has no bearing at all on the borrowers overall track record where maintaining an overall acceptable credit history is concerned.

As we underwrite our cases, we need to remember to not limit ourselves to the reflection of the case alone, and by that I mean, small factors that demonstrate that the loan meets product guidelines. Underwriting the case requires far more than that and responsibility in underwriting decision is a returning trend. It’s important to remember that as we validate our findings as provided by AUS, that we also assess the overall financial strength of the borrower, including past financial performance as well anticipated future performance.

A current credit score may be considered when considering the borrowers present performance where debt accumulation and repayment is concerned, but the borrowers overall credit performance cannot be truly assessed without determining the length of the borrowers credit history, overall long term performance and the borrowers propensity to amass debt. For example a borrower that has completed 3 cash out refinance transaction in the most recent 5 years may present a considerable risk particularly if they have used most of their equity over that period of time. It is also quite possible that this particular borrower could have an excellent credit score as debts have been paid timely as they were amassed and simply paid in full through multiple refinances before they became more than the borrower could handle.

In short, this is a borrower who may demonstrate a timely repayment history however their excessive spending and inability to manage their financing without incurring significant debt is a concern when considering the long term financial performance of the borrower.

As with examining the borrower’s credit, HTI and DIT ratios alone do not necessarily signify or guarantee the borrowers ability to repay debt. An example of this might be a borrower who based on their present employment makes a monthly income that is sufficient to demonstrate an acceptable DIT/HTI. However, if the borrowers overall employment history is unacceptable due to multiple job changes and significant gaps then it would be prudent to place more of an underwriting emphasis on the borrowers overall employment history than current monthly income.

Collateral issues to can be very deceiving. A property located in a declining market that has been compared to comparable sales that are 6-8 months old can give an unrealistic or inflated value for the collateral. Current listings are not particularly helpful either as they to can demonstrate a property seller’s unrealistic expectation as to what their property is presently worth. My home is worth $1,000,000 to me, the wall paper rocks, but my neighbor wouldn’t give me anymore then $300,000 and that’s if I remove the wall paper.

As underwriters, remember to assess the overall case file. As a rule, when I open a file and begin to underwrite it, the information that I NEVER view first is the HTI/DTI, LTV or Credit Scores. Those I look at last to make sure that the case meets investor/FHA/Conv guidelines. That is the only time I consider them. As for the rest of the case, I use all of the information in the file to determine that ultimately I will have a performing asset. As always, happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Credit Denials

noreply@blogger.com (Editor in Chief) — Fri, 29 Aug 2008 16:26:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

If your office looks anything like mine does, then you have a stack of files about 2 feet high that you have recently rejected. In this day of ultra conservative mortgage credit underwriting, I think all of us, as underwriters, are practicing prudence when making underwriting decisions these days and with no creative financing alternatives available, it seems that what would have been deemed sub-prime quality two years ago, is now FHA quality.

With that in mind, I thought it might be a good idea to discuss mortgage credit rejects where FHA was concerned as well as some of the misconceptions that surround them.

I would like to start by saying that as underwriters, we should make every effort possible to approve the mortgage applications submitted to us for underwriting. Our primary responsibility as DE underwriters is to assist HUD in expanding homeownership opportunities for Americans and other eligible individuals. So with this in mind, exhaust every available option for your borrowers before rejecting the case.

If however, it is just not feasible to approve the case or the borrower(s) present an undue risk to HUD from a mortgage insurance standpoint then by all means reject the case and provide the borrower with the property disclosure of such as per HUD’s guidelines. This disclosure would be an adverse action letter dated within 30 days of the actual mortgage credit reject which contains any and all necessary repository information.

In addition to providing the borrower with accurate and fair disclosure as to why the case has been rejected it is also the underwriter’s responsibility to complete the Mortgage Credit Analysis Worksheet with the reasons for the mortgage credit reject as well as complete the Mortgage Credit Reject information screens within FHA Connection. This information will remain in FHA Connection and be tied to both the property address as well as to the borrower using their Social Security number.

Any subsequent lender can add, delete or view borrower mortgage credit reject information on a non-endorsed case depending on their authorization in FHA connection. If a borrower, at a later date, would apply to another FHA approved lender for a mortgage, the mortgage credit reject would be referenced on any new attempted case number pull.

Now, for the misconception. It is believed by many DE underwriters that if a case was rejected by one DE underwriter on some previous date in the recent past, that another DE underwriter can not overturn the mortgage credit denial. This is untrue. FHA will allow another DE underwriter, if he or she is provided with new or updated information where the borrower is concerned that results in a significant material change in the case file, to overturn the rejection of another DE underwriter.

It is important that the approving DE underwriter, print the information contained in the mortgage credit reject screens in FHA connection and upon approval of the case, disclose on the Mortgage Credit Analysis what new information was provided and how it enabled the approving DE’s ability to approve the application. Comparative analysis between the old documentation and the new documentation is strongly encouraged. Also keep in mind that any previously rejected loan that are approved by another lender after rejection will undergo a very detailed underwriting review by HUD during any post closing technical review so be sure to address all of the reasons that from an underwriting standpoint that the case is now approvable under FHA guidelines. If the explanations make sense, then the case should be insured by HUD.

I will say that in the past, I have overturned mortgage credit rejects on limited occasion. Generally I will contact an underwriter at my local HOC and discuss the case before I overturn the reject just to get a second opinion. I will also tell you that in each instance, the case was insured by HUD. Keep in mind there are several reasons that a case could be rejected during underwriting including reasons that are not necessarily prohibited under FHA guidelines. Analyze the data provided in cases carefully to determine if the case is approvable and if it is, then by all means approve the loan if it is in the borrower’s best interest to do so. As always, happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

How to Become a FHA Direct Endorsement DE Underwriter

noreply@blogger.com (Editor in Chief) — Fri, 22 Aug 2008 21:03:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

Over the past several months, I have had several individuals ask me what it takes to become a Direct Endorsement or DE Underwriter for HUD. Many of the individuals who were asking for information were either conventional or sub-prime underwriters that were currently unemployed or just realized that they needed to make the transition from conventional to government underwriting due to current market demand.

I will say that presently, DE underwriters seem to be few and far between. Most of them went the way of Alt A and sub-prime seven or so years ago when the market turned more towards non-traditional financing. Even those who have had their DE for years are having a hard time making the transition due to large number of changes in the FHA program overall. In the past 3 years alone, FHA has adopted completely different appraisal protocol, they have all but done away with Non-allowable closing costs and as we are all aware, are even doing away with the use of the Mortgage Credit Analysis Worksheet.

Additionally, it seems that every mortgage broker and lender nationwide have also made the jump to government lending because of the limited financing options available in today’s market and as a result, individuals with FHA experience are in high demand and there seems to be quite a shortage of experienced personnel.

A lot of individuals who are Direct Endorsement underwriters have taken some training classes and have had their DE reinstated by HUD, however there are a lot of really good underwriters in the industry that need to make the transition to DE underwriter in order to be marketable. From what I have gathered from peers in the industry, not to mention some of my own students who are actively seeking employment, brokers and lenders are actually requesting potential employees to take tests where the FHA stuff is concerned or if they are aware that the employee has taken FHA training courses are asking for the Certificate of Completion. I actually had one former student ask me if I could provide a class outline for the DE Underwriting course that I teach because a potential employer wanted to review the content of the course before accepting the certificate of completion. This seems to be the norm for underwriters who wish to become DE underwriters.

So how exactly does an individual become a DE underwriter seems to be a pretty common question these days. There really is limited information on the subject, this has to do with the fact that FHA no longer approves individual underwriters, they haven’t since 1996. As discussed in Mortgagee Letter 96-10 the underwriter approval process was replaced with Underwriter Registration using the Underwriting registry. Per the mortgagee letter:

“UNDERWRITER APPROVAL PROCESS REPLACED WITH REGISTRATION. Effective February 26, 1996, FHA will no longer approve individual underwriters to participate in the Direct Endorsement (DE) program. The approval process previously employed has been replaced by a DE Underwriter Registry. All DE underwriters must be registered with FHA. Failure to do so may delay issuance of mortgage insurance certificates on loans underwritten by non-registered underwriters. Underwriters with valid CHUMS identification numbers and currently shown as working for an FHA-
approved lender need not re-register. We will continue to check all underwriters against the Credit Alert Interactive Voice Response System (CAIVRS) file and we reserve the right to remove underwriters from the registry upon imposition of sanctions taken by local FHA offices or Headquarters.

Lenders must update underwriter information whenever a DE underwriter is hired or when an underwriter has achieved the necessary qualifications to underwrite FHA-insured mortgages for the company. Lenders may add, update, or delete underwriter
information in the registry through CLAS (CHUMS Lender Access System). CLAS has been expanded to maintain the necessary information under the heading the heading
"Underwriter Registry," which is a new option on the CLAS Add/Update Request menu (CLAS Version 8.0 is required). After the information has been processed by CHUMS, CLAS will return an Underwriter Update report to the lender verifying the information
provided as well as the underwriter's CHUMS identification number. Lenders may also obtain a listing of all its underwriters on the registry through CLAS through a written request.

III. COMMUNICATIONS AND LENDER TRAINING. Since we will no longer review underwriter qualifications and will rely on lenders to assure that its underwriters are fully qualified, it becomes even more important to provide adequate training to underwriters as well as production personnel. As our policies and procedures evolve over time, it is imperative that we communicate with the lending community and keep it informed of those changes designed to expand homeownership opportunities.”

What all of this means for the individual that wants to become a DE Underwriter is that there is no company on the planet that can sell you a DE or guarantee that you will be a DE once you have completed their training course. The only way to become a DE underwriter is through lender nomination. In other words, your current employer or future employer must determine that you have the knowledge and experience to underwrite mortgages to guidelines and principals as set forth by the U.S Department of Housing and Urban Development where the FHA mortgage insurance program is concerned.

I want to say first that there is definitely a difference between conventional underwriters and government underwriters and it’s not the Chums ID number. Program guidelines are different no doubt but the overall mentality is different. Forget FHA Connection, case number assignments and LDP and GSA lists, the overall underwriting mentality embraces more of what I would call old school underwriting than the underwrite by software mentality. Manual underwrites live on in the world of FHA.

If one was interested in becoming a DE underwriter, I would first suggest training. Remember, ultimately you are going to need to impress your current or future employer with your knowledge of the program to the extent that they feel comfortable nominating as a DE.

There are several training options available to those individuals who would like to pursue further training. Fhatraining.org is a great website for information on FHA/VA underwriting training classes. Additionally, this course will also provide a FHA DE Underwriting certification stating that the training was completed and will provide sufficient information so that any FHA DE underwriting candidate will be able to complete all of the underwriting responsibilities associated with being a DE Underwriter.

Once the underwriter has sufficient knowledge then it will be up to their current employer to nominate them as a DE underwriter. It is at this point that the individual will then have their DE which will remain with them for as long as they wish to continue to remain in the mortgage industry.

Remember, there are still a lot of great opportunities out there in the mortgage industry for processors and underwriters; However, the best ones are going to the people with FHA experience or at least a sufficient amount of verifiable training. If you have been unable to locate anything once you have completed some training, try www.fhajobs.com and see if you can find anything there. As always, happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Housekeeping

noreply@blogger.com (Editor in Chief) — Fri, 15 Aug 2008 19:29:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

Mortgage lending as a whole consists of several areas of expertise. Most of us are extremely familiar with the front room or production functions of the business such as origination, processing and underwriting and somewhat familiar with back room functions such as closing, post closing and insuring. However, there are several other aspects of mortgage lending that are addressed on a daily basis by individuals that do not directly participate in production or servicing functions however are directly effected by the work that we do performing the production or servicing pieces of the operation.

HMDA and compliance for instance. Most of us dread our compliance officers and their whips but without them, the regulators, both state and federal would shut us down. Housekeeping, as one of my processors likes to call it, is a very real consideration for any mortgage lender as well as broker and just as the word itself implies, it carries with it several small and large areas that we need to keep site of each day.

When we consider all of the applications that need to be completed from start to finish where origination, processing and underwriting are concerned, we always keep in mind the common things, such as Regulation Z and 3 day disclosure. For underwriters, it might be completing HMDA information screens within the LOS or making sure that the information contained in the screens is accurate.

The insuring department will always focus on getting the UFMIP remitted to HUD within 10 days and even perhaps remitting the monthly MIP should the loan be purchased by the investor as of the 2nd payment. But there are a lot of other little items, housekeeping items that we need to keep in mind each day.

One item of importance for production is FHA Connection. As processors and underwriters we consistently think of the tools that we utilize each day within the system such as case number assignment, LDP, GSA and other such items that we need in order to complete the process. But there are other functions in FHA Connection that need to be addressed as well.

Managers, particularly underwriting managers, may want to regularly access Underwriter Activity within FHA Connection. This function allows each institution to have hands on information as to the quality of the underwriting of each mortgage application insured by FHA. Not only that, as deficiencies are found with these report cards, they can act as valuable training tools for the rest of the underwriting staff.

Neighborhood Watch is also an area that each institution should regularly utilize. This system will allow each lender an in depth look at the quality of mortgage they are approving and closing including conclusive information on current loan defaults where FHA insured mortgages that have been originated by a particular lender is concerned as well as overall compare ratios which will allow a lender to compare their overall loan quality and performance to that of their peers both locally and nationally.

Lenders are also required to report in Neighborhood Watch Single Lender information any findings on a particular case from an audit or underwriting stand point, that might indicate fraud or possibly lax underwriting performance. Again, very useful stuff as it allows lenders and brokers to monitor internally their overall performance from a production standpoint.

Housekeeping in the mortgage industry is comprised of several areas which we as lenders and brokers need to keep a watchful eye on. To do so will only benefit us in the long run. There are many tools available to manage this piece of the business, including FHA Connection, compliance software and the like and I strongly recommend that each individual responsible for the long term performance of their particular areas research the best tools available. As always, good luck and happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Manufactured Housing

noreply@blogger.com (Editor in Chief) — Fri, 08 Aug 2008 20:45:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

Due to the increase in the number of questions I am now fielding regarding manufactured housing, I thought this week would be a good time to discuss the guidelines for such properties when applying for financing using FHA insured mortgage programs. FHA actually has a very nice program set up to financing manufactured homes under the 203b program as well as other programs available for the same under Title I programs, however, today I am going to discuss financing under the 203b program.

FHA will allow financing for manufactured homes under the standard 203b program with few exceptions or program deviations. When origination a mortgage on a manufactured home the same standard forms and disclosures are required from an origination standpoint.

Additionally, LTV guidelines and credit criteria remain the same. Appraisal requirements vary slightly as the appraiser must include additional information where the unit is concerned; however, for the most part there is no real significant difference. Case number assignment requirements, appraisal logging requirements remain the same as do required submission documents including the Conditional Commitment.

With that covered lets talk about the additional requirements for manufactured housing. To be eligible for FHA mortgage insurance, all manufactured housing must meet the following requirements:

1. Have a floor area of not less then 400 square feet.

2. Be constructed after June 15, 1976, in conformance with the federal manufactured home construction and safety standards as is evidenced on the affixed certification label (HUD tag). The HUD tag must still be intact on the unit and the appraiser should provide a photograph.

3. Be classified and taxed as real property and located on a lot that is conveyed as real property.

4. The mortgage must cover both the manufactured home and site and have a term of not more then 30 years.

5. The manufacture home must be built and remain on a permanent chassis.

6. It must be designed to be used as a dwelling with a permanent foundation.

7. The lender must obtain a certification of foundation from an engineer prior to loan closing for both purchase and refinance transactions.

Other criteria as set forth for any standard 203b mortgage to be insured under the FHA mortgage insurance program applies with respect to ratio guidelines, employment criteria and the like.

Additionally, UFMIP and monthly MIP premiums amounts are the same as with any 203b program. Further information regarding this property type can be found on FHA Connection.

Keep in mind FHA will insure them when underwritten to their guidelines but investors in the secondary market have implemented some instruction of their own or have opted not to purchase them at all. Make sure to check with your investors to determine where these mortgages can be sold. As always, happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Remembering Fiduciary Responsibility

noreply@blogger.com (Editor in Chief) — Fri, 01 Aug 2008 19:08:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

As we watch the mortgage market continue to evolve each week, we take note of increased foreclosure activity, tightening of credit requirements, new legislation and ironically the attempted resurgence of sub-prime lending. Granted there are not many sub-prime lenders in the current market and guidelines have been improved but the bottom line is it is sub-prime.

As I do a great deal of Third Party Originations, needless to say many of my brokers are quite interested in the program simply because they can get loans closed fast and as they say “make more money”. The sub-prime lenders that we have relationships with do underwrite their own business so nothing is underwritten in house, but even given this, quite a few of my brokers still insist that for them it is the best way to go and I am sure that given the profit margin for the broker, it is. The bigger question here however is what about the borrower. Is it really the best option for them?

Over the past week, I have received three Pre-qualifications from my sub-prime manager. The cases were faxed to him for the purpose of pre-qualification and after review, he felt that the borrower would be done a much greater service if the cases were originated and closed using FHA. When he brought the cases to me, he said it looked like they would qualify and the interest rate we could provide would be at least 3% less then any sub-prime rate he could provide. I looked at each case and he was correct, 2 of the 3 where FHA approvable with far better interest rates then they would have received going sub-prime. I completed the pre-qualifications and faxed them to the brokers just to have one of the brokers call us to state that he still wanted the case to go sub-prime, like I said easier and he would make more money. What a shame for the borrower.

After 22 years in the mortgage industry, 20 of them underwriting I have decided that there are two kinds of mortgage professionals. The individuals who unbeknownst to them are really only here for the short term, will make as much as they can and will be ultimately selling cars in five years and the other mortgage professionals who believe that they not only have a fiduciary responsibility to the company that employs them, but also to the borrowers for which they provide a service to.

Fiduciary responsibility is defined “a relationship imposed by law where someone has voluntarily agreed to act in the capacity of a caretaker of another’s rights, assets and/or well being.” In short, the fiduciary owes an obligation to carry out these responsibilities with the utmost degree of “good faith, honesty, integrity, loyalty and undivided service of the beneficiaries’ interest.” While I agree that one’s employer could be defined as the beneficiary of such actions, I will also assert that I believe in the case of mortgage lending, the borrower could also be defined as such a beneficiary.

As we have seen the ultimate outcome of placing otherwise deserving borrowers into mortgage programs that they could not afford, I think it is time that we remember that we do have a fiduciary responsibility to our clients. I will agree that I think all loan originators or brokers do deserve to be paid a fair fee for their services, I also think that they need to look at the long term consequences of unconscionable lending practices which quite frankly we now face each day. Declining property values, spiking foreclosure rates and the collapse of financial institutions will not serve any mortgage professional in the long term, not even the individuals who feel no responsibility towards their employers, their clients or the industry as a whole. Without ethics in lending the mortgage industry will continue in the state that it is currently in.

Remember, the best compliment any loan originator or broker can receive is a referral and that will not be received if a borrower feels financially raped after closing. With that said, I say that we all work to treat our clients with the financial respect they deserve and behave in the capacity that we have been in trusted with. This will promote future business opportunities for all of us as well as more stability within the mortgage market as a whole.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Providing A Service

noreply@blogger.com (Editor in Chief) — Fri, 25 Jul 2008 16:24:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

As we know, the mortgage lending industry is a service related industry. Ultimately, we as mortgage professionals profit when the service we provide exceeds that of our peers. Outstanding service determines both the quality and quantity of business that we generate. Now the question: What exactly constitutes outstanding service?

Very recently my supervisor met with our staff and insisted that the quality of service that we were providing our broker clients was less than excellent; in fact, he thought it was less than satisfactory. In his opinion, service with a smile was not enough to maintain our current business partner base as well as expand it. Of course we all think he is not only unreasonable but way off base, after all, we service our business partners very well as far as we are concerned and there lies the problem. Defining quality service is very subjective and defined completely by opinion; there is no black and white rule.

Last week I was on vacation. I spent the week with my family in Ocean City, Maryland, a nice little beach resort complete with boardwalk and the Atlantic Ocean. As part of the tradition we always go to the boardwalk first so the kids can get on the rides, eat Thrashers French fries and buy junk trinkets and true to tradition, that’s where our vacation began.

During the week we spend there each year, I always purchase beach shots of all my children, the OC beach photographers walk the beach all day each day and take the pictures which usually end of in scopes or on key chains and on my desk of course. This year was no different, I fully anticipated having those pictures taken, however, when I was on the boardwalk I passed an old time photo studio and decided it would be fun to have a photo of all of them dressed up as gangsters or something.

So we decided that before we left the boardwalk that afternoon we would have that photo taken as well. Well as you can imagine, the kids are teenagers now and have a tendency to wander off and by the end of the afternoon when it was time to have the picture taken I had collected all but one of them, my son, who decided to do the Zipper one more time. The rest of the kids and I were at the photo studio and my son called from his cell phone saying that he was on his way, and would be there in just a few minutes.

The rest of the kids got dressed in the gangster get ups and when my son arrived, the photographer told me that it was too late to include him because he had another group waiting. He had not yet taken the photograph and quite frankly my youngest son was still getting his costume on. The photographer said that didn’t matter, he wasn’t waiting and regardless of if I wanted the photo or not, I still had to pay for it because he had already spent enough time getting the others ready. As I stared at him in disbelief, he took the photo and told me that the photo would be $39.99. I was mad. The service was horrible and that was just the beginning.

The next night we ended up at a restaurant, waiting for ½ hour for someone to come over and at least take a drink order from us. When the waitress walked up to the table next to us and asked if they needed anything and then walked away again without taking our order we left thinking the service was horrible. We actually ended up at the restaurant next door to the one we left, they seated us right away, we had beers in 3 minutes flat and the staff was a blast, friendly and courteous. The food was excellent and due to the great service they provided we ended up not only having a great time but very appreciative of how welcome they made us feel.

When I left the restaurant I began to think about the conference room conversation the week before with old Atilla and decided he was right. Adequate is simply not enough because my definition of adequate may not be the same as that of my brokers or borrowers.

Ok, so what is point am I trying to make? Underwriting is pretty much the end all - catch all of every mortgage operation. Without us loans do not get approved and if they don’t get approved they don’t close. If they don’t close, the company makes no money; the borrowers do not own homes and so on and so forth. It’s sometimes hard for underwriters to identify themselves with the individuals in the company that are on the front line of customer service and by this I mean the originators and processors.

After all they are the people that talk to the clients, the real estate agents and business partners so therefore should be the people responsible for making sure that the company image stays untarnished right? Wrong. Without the support of the underwriting staff, quick and expeditious turn times and availability, the front room support staff cannot provide any type of service let alone quality service. We as underwriters need to make ourselves available to our support staff and provide to them the kind of quality service that we ourselves would expect if we were apply for a mortgage or purchasing any other type of service. We need to muster all of the self control we have (YES, sometimes it takes that) to answer all of the questions quickly and accurately and get the loans turned around as fast as possible so that the guys and girls on the front lines can provide service above and beyond that of their peers and then we all win.

Now with that said, if anyone will spending time on the east coast this summer and want some outstanding steamed crabs done only like they do it on the Chesapeake Bay, try Outriggers in Fenwick Island DE, they rock!

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

Assessing Financial Behavior

noreply@blogger.com (Editor in Chief) — Fri, 18 Jul 2008 20:59:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor
(previously posted January 23, 2008)

Over the course of the most recent few years, underwriting guidelines have steered away from the more traditional assessment of financial risk to the product matrix. If the loan application met all the criteria as set forth in product matrix then the case was approvable for the most part. It seemed that allowing higher debt ratio’s if the loan to value was low enough off set the financial risk to the lender. Additionally, the ever-rapid appreciation in the market of the last years seemed to be diminishing the overall assessment of credit risk where the mortgage applicant was concerned.

As underwriters, it appears that we were given the opportunity to close our eyes to our fiduciary responsibility to both the mortgage applicant as well as the lending institutions that employ us as long as the loan fit the product matrix or if the case was accepted by an Automated Underwriting System. Looking back, this was probably not the most prudent way to underwrite mortgage applications.

Considering the current market, it is safe to assume that the days of the product matrix is a thing of the past. As mortgage professionals we are seeing a return to the days of traditional lending practices even if enhanced with additional tools such as Automated Underwriting Systems as well as credit scores and AVM’s. But it is important that we remember that these items are just tools and that as underwriters it is important to assess overall credit risk of the applicant to not only protect the institutions that we are employed by, but to safeguard American homebuyers ensuring that the homes they are purchasing are affordable to them.

The current credit crunch, as it has recently been defined, makes this a more daunting task for mortgage professionals. However, several programs are still available for the average American home purchaser. FNMA and FHLMC still provide programs that assist first time homebuyers as well as low to moderate home purchasers programs for which to purchase or refinance affordable housing. FHA was designed to assist the low to moderate income borrower not to mention other underserved populations. These programs in themselves serve a great number of Americans who in the most recent years were placed in subprime programs that were less than affordable and contributed to the growing number of foreclosures as well as overall market instability. But underwriting these borrowers can be a little more complicated based on manual underwriting practices and the inability of an underwriter to look at a product matrix to determine if the loan is approvable.

This is what assessing overall financial behavior is about. For the most part, it is easy to approve a loan that has been accepted by an automated underwriting system. However, it isn’t very easy approving the one that hasn’t. But this in itself does not deem the borrower unworthy of a mortgage. It is important to assess overall financial risk of the case but just as important to assess the financial behavior of the borrower. In some cases, it may appear that a particular borrower is a less then fair credit risk however further research can demonstrate that a borrower has a very acceptable credit explanation and an overall solid financial reputation. Late payments on a borrowers credit report does not in itself demonstrate an unacceptable risk. Borrowers who have demonstrated an acceptable credit reputation but have incurred significant consumer debt while saving little or no money for future unacceptable expenditures can present a larger risk the borrower who lives modestly while saving a small portion of their income, even if they have made some late payments due to extenuating circumstances.

From an underwriting standpoint, it is important that we evaluate all aspects of the borrowers’ financial behavior. Reviewing a borrowers’ bank statements for regular monthly expenditures is a good way to determine what a borrower does with their money. For instance, a borrower who has refinanced, receiving cash out 3 times in the most recent 24 months presents a more significant financial risk than a borrower who has not but has made 1 late payment on their mortgage. The borrower with multiple refinances may be living off of the equity in their home vs. managing their finances in a manner that allows them to, for the most part, pay their debts timely, based on their regular monthly income.

Feeling like a financial psychologist yet? Great, because you are. It might not be as cut and dry as it was in the past but it is more interesting. Contrary to what we as mortgage professionals are assuming about the current market, there still are a lot of worthy borrowers out there and as mortgage professionals we will continue to sound financing options for them. All we need to do is give it some thought.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

The VA Home Loan Program

noreply@blogger.com (Editor in Chief) — Fri, 11 Jul 2008 21:38:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

This year has been a big year for the FHA home loan program. Not only have we seen a considerable rise of FHA mortgage originations, but we have also seen several major changes to the program itself. From increases in the statutory loan limits under stimulus, the abolition of the MCAW to the current reforms which have not yet been signed into law, FHA has come into the 21st century.

No longer alternative to sub-prime, FHA is again a major player in the mortgage industry very unlike its sister program, The VA Home Loan Mortgage Program. That’s right, the other government program.

Now as things go, a government loan is a government loan and yes VA just like FHA provides mortgage insurance for loans granted under the provisions of the VA Home Loan program, it is just simply designated for eligible veterans. Several years ago it too was a player where available mortgage programs were concerned but it is only recently that we are too seeing its revival.

With the elections ahead of us and the looming Iraq issue, we are beginning to see a rise in eligible veterans and they want to use their VA benefits. The VA Home Loan Mortgage Guarantee program is the most efficient way to do this. Providing mortgage insurance for eligible veterans while guaranteeing loans with 100% financing is nothing to sneeze at. Currently this is the 100% program available. Additionally, when you consider that there is no monthly MI on this program and flexible credit guidelines, well its actually a very beneficial mortgage program to offer.

The program works like this. Any eligible veteran may apply for a mortgage under the VA Home Loan Mortgage Guarantee program, which will provide for 100% financing, unlimited seller paid closing costs where non-recurring closing costs are concerned and allow DTI up to 41%. There are processing and underwriting difference that must be followed such as determining the balance available for family support is sufficient to meet VA guidelines but overall the program itself is pretty easy to manage. Credit guidelines also allow for more flexibility than FHA or Conventional.

As we are all aware, the average military homebuyer faces additional challenges that individuals in the civilian world do not face, particularly when they are deployed. These factors are usually taken into consideration when underwriting hence forth, no minimum credit score requirements under the program and for the most part with existing investors which are purchasing these mortgages. Programs are available for purchase, refinance, cash out refinance and EEM mortgage types so you can do pretty much the same things with them as you can the FHA mortgage types.

Now with that said, I will advise for all mortgage professionals to look to the future and hopefully the safe return of all of our military service personal which will most surely result in an increase in demand for the VA Home Loan. The current market supports the need for the program so I suggest checking into it. For those of you interested in more information, you can access VA’s website at www.va.gov.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

The Paperwork Reduction Act

noreply@blogger.com (Editor in Chief) — Thu, 03 Jul 2008 22:46:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

As we are all aware, there are several pieces that effect FHA mortgage lending. Origination, Processing and Underwriting are all pieces that the production staff are very familiar with. HUD has set many standards which influence how we go about managing these pieces of the processes, from adhering to underwriting guidelines to completing functions such as appraisal logging in FHA Connection, we all comply with these standards in the same manner.

However, there are other pieces to the FHA mortgage insurance process that we as the production staff do not regularly consider and these functions directly effect not only the salability of a case but ultimately the insurance process. Further they can effect how an underwriter is graded during a post closing audit which is a direct effect on all Direct Endorsement Underwriters.

I am talking about the closing and post closing pieces of the FHA mortgage insurance program and that it entails. Closers not only have the responsibility to insure that a lien on the proposed collateral is perfected but to also determine that the borrower has met their minimum required investment by reviewing the HUD I and advising title companies as to what closing costs the borrowers must pay and so on.

This is an obvious point to the closing process which would effect underwriting. Needless to say, if the borrower has not met their minimum required investment, these case could be uninsurable and the responsibility would fall back to the underwriter. If certain closing conditions were not collected and the post closer did not pursue them then the file would contain material deficiencies which could also be viewed as production errors. These are the obvious things however there are some very important items that we are not aware of that and may even be doing correctly that could get the underwriting staff into some trouble, a double edged sword of sorts.

I am talking about the post-closing function of shipping a file to HUD for insuring. The process of shipping the case binder in itself is pretty easy. All information required including the shipping order of the case binder is set forth in HUD Handbook 4165 which tells the post closer how to handle remitting the UFMIP, Insurance Application and ultimately the stacking order of the documents where the case binder is concerned. Better still, the Paperwork Reduction Act of 1995 has made the case binder staking piece even easier, doing away with several pieces of information that a broker or lender would collect to complete the underwriting process.

Under the Act, the post closing is only required to forward in the case binder certain necessary documents that HUD will need in order to determine insurability of the case. These items pretty much consist of copies of the Appraisal, Contract of Sale, Condition Commitment and any other valuation documentation such as a termite inspection and so on and for the credit side, the Mortgage Credit Analysis Worksheet, AUS Findings, Note, Deed of Trust, 1003, 92900a and credit report. Some FHA disclosures are required such as the For Your Protection Get a Home Inspection but not all of them. Sounds pretty great for post closers, you know less is more but the principal is not so great for the underwriter.

A few years back I was reviewing some of my report cards from HUD, you know those lovely things they give DE Underwriters when they audit our cases at the HOC level. Audits are completed on about 10% of files underwritten per lender per year. As I was reviewing them I noticed that I was consistently being written up for material deficiencies that there is no way I could have missed. Things like credit explanations, evidence of sufficient cash to close, VOE etc. As I reviewed the findings on each case I noticed that this stuff was consistently noted as missing on just about all of them. Needless to say I started pulling the cases and sure enough the copy packages contained all of the documentation that the HUD auditors were stating was missing. So I called my HOC and explained that I did not understand how I was being written up for missing items that were clearly in the file.

The individual that I spoke to asked me if the documentation had been included in the case binder and I thought why wouldn’t it have been. The answer: Paperwork Reduction Act. The HUD employee explained to me that other than the credit report the information that I was speaking of was no longer required in the case binder as a matter of insuring and that the Paperwork Reduction Act had done away with the need of most of this stuff so therefore the post closers were no longer required to ship the credit information as part of the post closing insurance process. What this means for the underwriter, however, is that when and if the case is audited, there is no employment, asset or supporting credit documentation in the file which results in serious material deficiencies and not so great report cards.

I checked with my closer and sure enough she was not including this stuff as she was not required to. After several meeting it was determined that although our institution was doing nothing wrong from a post closing standpoint, adhering to the Paperwork Reduction Act was causing problems from an audit standpoint and that the post closers would now include all collected credit, employment and asset information in the file when shipping to HUD for insurance purposes and that policy continues today.

Now some advice for the underwriters out there who are not sure what is going to HUD in the case binders, GO ASK! Sit down with your managers and make them aware of the fallout that can result for not including all documentation collected during the processing and underwriting phase of the mortgage cycle in the case binder when it goes to FHA for insuring. Poor audits not only make the underwriter look bad but makes the institution whom which they are employed by look irresponsible. As usual, happy underwriting.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.

The Checklist

noreply@blogger.com (Editor in Chief) — Fri, 27 Jun 2008 20:26:00 +0000

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

Over the past few months I have had several individuals ask me if I had some sort of underwriting checklist that could be used while underwriting FHA mortgages. I promised to create something that new DE underwriters could use while underwriting so that nothing was forgotten and true to my word, here it is.

FHA Underwriting Checklist

Borrower:_____________________ Transaction Type:_______________
Co: Borrower:__________________ LTV/CLTV:___________________
Property Address:_______________ Total Scorecard Results:__________
City, State, Zip:_________________ DPA: ____yes_____no
Base Loan Amount:______________ Purchase Price:________________
UFMIP:_______________________ Minimum Req’d Investment:_____
Total Loan Amount:_____________ Seller Contribution:_____________

Maximum Allowable Mortgage: $_______________________

Required Underwriting Submission Documents

o Underwriting Checklist
o Lock Conformation
o 92900-LT or MCAW
o Maximum Mortgage Worksheet
o Final typed 1003, 2900a pgs 1-4
o Initial 1003, 92900a
o Total Scorecard Findings
o Credit Report & Supporting Documentation
o Payoff Statement (Refinance Transactions)
o Evidence
o Income Documentation
o W-2’s two most recent years, 1 month of paystubs documenting YTD earnings, Verbal VOE
o Verification of Assets, Earnest Money Deposit, Evidence of sufficient funds to close
o 60 days most recent bank statements or VOD and 30 days most recent bank statements
o Purchase agreement/Contract of Sale with all applicable Addenda including FHA Amendatory Clause and Real Estate Certification, Lead based paint disclosure and For Your Protection Get a Home Inspection
o FHA Appraisal report indicating the FHA case number on all pages
o Evidence that the Condo is approved, 51% Owner Occupancy Certification
o Conditional Commitment pages 1-6
o Appraisal Logging Information
o FHA Case Number Assignment, LDP, GSA and Clear CAIVRS
o Refinance Authorization for Streamline Transactions
o Good Faith Estimate
o Truth In Lending
o State Required Disclosures
o Servicing Transfer Disclosure
o ECOA, Fair Lending, Right To Receive an Appraisal
o FHA Assumption Policy
o Informed Consumer Choice Disclosure
o Important Notice to the Homebuyer
o FHA DE Disclosure
o For Your Protection Get A Home Inspection
o Additional Federally required Disclosures

Remember that all circumstances are not addressed on the checklist so make sure you determine what if any additional documentation is needed. Examples would be Divorce Decree, evidence that child support will continue for at least 3 years and so on. For those of you looking for maximum mortgage worksheets you can find them on FHA Connection. Enjoy Underwriting!

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.