Issue: Q&A – July 25, 2019

If the appraisal fee was disclosed to the VA borrower before the appraisal was ordered and the borrower did not close, can we bill the borrower for the appraisal?

Answer: Yes. You can bill the veteran for the appraisal fee. Note that if another veteran borrower ends up using that same appraisal with your company, they cannot be billed for it if the previous prospective buyer already paid for it. See the guidelines below. Reference: VA Lenders Handbook – Chapter 8 Appraisal and Compliance […]

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If a Veteran is due to retire, but has not done so yet, does a VA borrower need to actually receive retirement and disability before we can count it as income?

Answer: With the revision of Chapter 4 of the Lenders Handbook, VA added some new details regarding disability and pension income where previously they had offered no guidance on several issues. If your borrower is simply receiving the ‘normal’ service-connected disability common to new retirees and military retirement, then there wasn’t really anything new. VA […]

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Does FHA now allow private flood insurance?

Answer: No. The FHA policy requiring an NFIP coverage has not changed. See the official statement from FHA below from their FHA FAQ Database. Reference: FHA FAQ Database Can I purchase private flood insurance instead of an NFIP policy? No, private flood insurance will not satisfy FHA’s National Flood Insurance Program (NFIP) flood insurance coverage […]

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If a borrower has a new job, but does not have a non-contingent contract, will Fannie or Freddie allow that income?

Answer: Both Fannie and Freddie allow for this, but your company has to hold the loan before selling to Fannie or Freddie until AFTER the borrower starts employment and you get first paystub. A lot of lenders don’t like to take that risk.  So the agencies offer two options, one that I explained above, and […]

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If a home is zoned as a 2-Unit, but the appraiser states its “best use” is a single-family, will FHA accept that?

Answer: While FHA requires that a property either conform to the land zoning or be considered ‘legally non-conforming’ (see guideline below) so that it can be rebuilt if destroyed, I believe there’s some confusion here regarding ‘zoning’ vs ‘property type’.  While a residential area (one lot or many lots) can be zoned for a certain […]

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