Issue: Q&A – January 25, 2020

USDA Condominium Approvals

Question: How does USDA handle approving condominiums for financing? Answer: USDA simply states that the condominium project must be in compliance with HUD/FHA, VA, Fannie Mae, or Freddie Mac regulations. They leave it up to the lender to make that determination and provide that certification. Reference: USDA Condo Guidelines – HB-1-3555 Chapter 5 Supporting Resource: […]

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Financing the VA Funding Fee

Question: Is it true that VA is no longer allowing the Funding Fee to be added to the base loan amount? Answer: I assure you that is not the case. The funding fee can still be added into the loan.  Reference: Chapter 8 – Section 7a. For all types of VA loans, the loan amount […]

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FHA New Construction 1004D and Increased Property Value

Question: When a new construction appraisal is completed subject to “the completion of construction,” is it acceptable for an appraiser to revise/increase) the value on the 1004D due to updated sales data? If so, would they have to update the 1004, or would we just use the value and the date of the 1004D? Answer: The […]

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Excess Seller Contributions Applied to Paying Off Debt

Question: If I have excessive seller contributions, can they be used toward borrower debt being paid off at closing? Answer: Unfortunately, not. Only VA allows a seller to pay off a borrower’s debts. Reference: 4000.1 II.A.4.d.iii.(H) and II.A.5.c.iii.(H)  Inducements to Purchase are treated the same way for both TOTAL and Manual underwriting.  Inducements to Purchase […]

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Adding Back Car Expenses for Car Service Drivers

Question: Will Fannie Mae allow car expenses [located on Line 9 of the Schedule C] to be added back to income for a sole proprietor? Answer: Unfortunately, you cannot.  You can also use form 1084 which specifically identifies how to calculate income for a Schedule C business. We have posted this link in the supporting […]

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