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FHA Guidelines Update: 7 Changes You Need to Know
A
Special Business Tip from FHA Expert
Jeff Mifsud
The FHA
recently updated its guidelines again, but
don't worry. Jeff Mifsud, LTB's resident FHA
expert, has analyzed the changes and
summarized what you need to know.
The following is an excerpt from an article
that will be available on Jeff Mifsud's
website
www.mseminars.com , where he also offers
one-of-a-kind FHA training to mortgage
professionals. Let's take a closer look:
1. A second appraisal
is required only when all three of these
factors exist:
The loan amount exceeds $417,000, and
the LTV, excluding up-front MIP, equals or
exceeds 95%, and
the property is determined as being in a
declining market.
2. A declining market
is defined by the appraiser and the lender:
The appraiser is required to indicate if the
property is located in a declining area in
both the neighborhood section of the
appropriate appraisal form as well as in the
housing trend section, and/or determine if
there is an "over-supply" of properties.
The lender may determine, through services
such the S&P/Case-Schiller Index, Office of
Federal Housing Enterprise Oversight (OFHEO)
Index or National Association of Realtors (NAR)
statistics, or through an automated
underwriting system, e.g., Fannie Mae’s
Desktop Underwriter or Freddie Mac’s Loan
Prospector, that the property is located in
a declining market area.
3. The second
appraisal guidelines are:
An FHA appraiser selected by the lender
underwriting the loan must complete the
second appraisal.
A second case number is not ordered.
The fee for the appraisal may be passed onto
the borrower as any other closing cost.
Reminder a second appraisal is only for loan
amounts that exceed $417,000
4. If the second
appraisal is 5% lower than the original
appraisal, the maximum loan amount is based
upon the lower of the two appraised values.
5. Lenders must include the second appraisal
in the insurance binder when sent to FHA.
6. In line with the
other agency moves to tighten appraisals up
across the country FHA states:
A lender may not choose an appraiser that
has any interest, direct or indirect, in the
property being appraised.
A lender may not choose an appraiser that is
employed by an appraisal company that owns,
is owned by, is affiliated with or has any
financial interest in the builder or seller
of the property.
Instances of undue pressure or influence on
an appraiser reported to FHA will result in
appropriate disciplinary actions against the
lender involved.
7. If the loan amount
(without UFMIP) will exceed $417,000, a
cash-out refinance is limited to an 85% LTV.
Conclusion
Are you one
of the many that suffer from insurmountable
debt and wonder if bankruptcy is an option?
Give us a call at (203) 924-6700 or
contact us.
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