FHA Loans are assumable DO you know how to work with the assumptor?

Written By: Glenn Michaels, Op-Ed Writer

All FHA mortgage loans are assumable. All underwriters must know the rules to either approve or deny the assumptor of the mortgage loan being assumed.

All assumptors must be underwritten in accordance with Origination to Post Closing / Endorsement except for the following sections:
•    Ordering Case numbers
•    Ordering Appraisal
•    Transferring Existing appraisal
•    Ordering Second appraisal
•    Ordering an update to to an appraisal
•    Property Eligibility  and acceptability criteria
•    National Housing Act limits
•    Nationwide Mortgage limits
•    Underwriting the property
•    Underwriting the borrower using TOTAL Score Card

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Exception in Case of transfer by devise or descent: The mortgagee may process an assumption without credit review of the assumptors credit. 

Exception to the minimum investment:. The assuming borrower is not required to come up with the minimum required investment.

Responsivities’ of the FHA DE Underwriter:  
•    Contract with a DE Mortgage to the review : or
•    Have an authorized agent to perform the review.

Use of The TOTAL Mortgage Scorecard for Assumptions: The TOTAL Mortgage Scorecard  must not be used for assumptions. The DE underwriter must nanually underwrite the assumption.

Allowable Fees and other costs:  Mortgagees may charge the assuming borrower a maximum fee of $500.00 for the processing of an assumption  in addition to the actual costs incurred for the for credit reports and other expense.

Interested Party Contributions: The seller or other Interested parties may make contribution toward the assuming borrower’s actual closing costs consistent with the requirements in Interested  third party contributions.

About The Author
Glenn Michaels - As an op-ed writer, Glenn Michaels is a mortgage underwriting instructor for CampusUnderwriter (www.MortgageUnderwriter.org). As a BBA & FHA DE Underwriter, Glenn is a Pace University graduate who also graduated from New York University’s School of Mortgage Finance. Glenn has conducted numerous training classes and has worked in the mortgage banking industry for 38 years. 

Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.