Issue: Q&A – February 25, 2019

USDA – Disputed Accounts: If there are disputed accounts showing up on the credit report, but all accounts are showed as paid and satisfied, what will USDA require?

Answer: Disputed accounts on an applicant’s credit report are not considered in the credit score. Manually underwritten loans. For manually underwritten loans, all disputed accounts with outstanding balances/payments must have a letter of explanation and documentation supporting the basis of the dispute. Those debts that have been excluded from the debt ratios must have evidence […]

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FHA – ITIN Status: Is someone with an ITIN# eligible for an FHA loan? [MC -Visa Status Chart]

Answer: FHA requires each borrower to have a Social Security Number (see the guideline below) so borrowers with an ITIN are not eligible. Permanent resident aliens refer to someone who has a permit titled a Lawful Permanent Resident Card, otherwise known as a Green Card.  A visa holder is a non-permanent resident alien. Reference: 4000.1  II.A.1.b […]

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FHA & USDA – Chapter 7 – Mortgage Included: If the Buyer filed chapter 7 and included a home mortgage, does the waiting period start from the Chapter 7 discharge date or the Deed transfer date? [NEW MTP – Credit Issues – Am I Ready to Buy?]

Answer – FHA: FHA does not directly address this scenario in their guidance. My answer is based on verbal instruction I have been given by the HOC.  Of course, you will be subject to your underwriter’s determination. FHA has a very different view than Fannie/Freddie when it comes to mortgages that are included in a bankruptcy. Again, I have […]

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VA – Identity of Interest – Second Appraisal: Does VA follow the same identity of interest rules as FHA in which they require a second appraisal?

Answer: VA does not have the same identity of interest rules as FHA and does not provide any guidance regarding non-arm’s length transactions.  VA would not require any type of second appraisal if a seller is related to a buyer and is paying closing costs. That said, be sure to verify that you don’t have […]

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Freddie Mac & FHA – Wedding Gifts: Can wedding gifts be used for either conventional or FHA and if so, how do I document that? [MC Chart – Gift Funds & Gift of Equity]

Answer: FHA The short answer is that you are going to have to talk directly with your internal underwriting management or the underwriting department of whoever you are sending this loan to.  You’ve got to find out if they will even allow wedding gifts to be used.  FHA is silent on this topic in the […]

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