fha ppt slides
DESCRIPTION
For the students of Jillayne Schlicke's SAFE Mortgage LO Pre-Licensing Class.TRANSCRIPT
FHA
For use during Section 2 of the SAFE 20 Hr Pre-licensing and Exam Prep Course
HUD v. FHA (page 9 in the course packet) U.S. Department of Housing and Urban
Development was created through the US Housing Act of 1937
FHA provides mortgage insurance on loans made by FHA-approved lenders
What does HUD do?
Provides opportunities for homeownership
Provides housing assistance for low income persons
Helps to rehabilitate and maintain affordable housing
Enforces Fair Housing laws Helps the homeless Spurs economic growth in distressed
neighborhoods
Insuring and Endorsement
When an FHA loan closes, the lender collects and remits an up front MIP directly to HUD via wire transfer.
Then the lender sends the original loan file (aka case binder) to the FHA HOC for review.
If the paperwork is in order, HUD transmits an electronic MIC (mortgage insurance certificate.)
GNMA
Government National Mortgage Association
Ginnie Mae is not a lender nor does it buy or sell mortgages. GNMA guarantees Residential Mortgage Backed Securities that are backed by pools of FHA and VA loans
GNMAs are backed by the federal government
Advantages of FHA Financing Only an FHA-approved lender can
originate FHA loans
Property Types: 1 to 4 unit properties Purchases up to 96.5% LTV
Borrower Contributions 3.5% cash investment
100% gift acceptable
Advantages of FHA Financing Reserves are not required on 1 & 2 unit
properties FHA loans are fully assumable No income limitations
FHA Loans are only to owner occupied borrowers
Exceptions: HUD owned property
Non-owner occupied purchase at 85% LTV
FHA Home Mortgage Insurance Programs
203b Single Family 234c Condo 203h Disaster Victims 255 HECM 203k Rehab EEM Energy Efficient Mortgage
Single Family 203b
Single Family Owner occupied 1 to 4 units PUDs (Planned Unit Developments) Manufactured Homes
The FHA Mortgage Insurance Fund is running out of money….
$3.5 billion left after transferring $9.8 billion to cover possible losses on its loan portfolio.
This means higher mortgage insurance premiums
FHA LOAN PROCESSING
Roles
Loan originator satisfies the processor Processor satisfies the underwriter Underwriter satisfies management Management satisfies FHA Role of the underwriter is to build a
defensible position FHA satisfies minimum risk for FHA Lenders set minimum risk for themselves FHA might say yes but your lender might
say no.
Social Security Number SSN
Handbook 4155.1 paragraph 3-1C
HUD/FHA require all lenders to ensure that each FHA borrower has their own valid Social Security Number as issued by the Social Security Administration
Verification also through FHA Connection
U.S. Citizenship Not Required FHA will insure mortgages made to lawful
permanent and non-permanent resident aliens
Permanent resident alien: Must have evidence of permanent resident status Have a valid social security number
Non-permanent resident alien Property must be their principal residence Must be eligible to work in the U.S. Have a valid social security number Have likelihood of continued lawful status
Social Security Number Verif Acceptable verification includes:
Paystub Valid tax return Copy of SSN card Driver’s license Medical information Service provider with access to SSA
INTRO TO FHA UNDERWRITING
Total Scorecard Factors
Credit FICO score Monthly housing expense ratio Number of monthly payments in reserve Loan to value ratio Loan term
These are the five biggest risk factors and the only things TOTAL looks at.
Accept or Refer
Intro to Manual Underwriting What must an FHA borrower possess? Decent and reasonable credit history
Perfect credit is not a requirement. Stable, reliable, and sufficient income Verified funds to close Sufficient security for the loan
THE FOUR CS OF UNDERWRITING
Any guesses as to what they are?
The Four Cs of Underwriting
Character Credit
Capacity Income
Collateral Value
Capital Liquid assets
• Does the borrower have the ability and willingness to repay the loan?