Issue: Q&A - June 25, 2018

FHA – 203K Refinance-Rental Unit: Can a 203K rate/term refinance be used to renovate a unit of a 2-4 unit property, and can this rental income be counted to qualify?

Answer: FHA does not have any special provisions for calculating rental income on a 203K loan. The standard guidelines will apply and the rental income can be used per the policies below. Reference: (I) Rental Income (TOTAL) (1) Definition: Rental Income refers to income received or to be received from the subject Property or other real estate […]

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FHA – Second Appraisal: Is the lender allowed to charge the borrower for a second appraisal if the underwriter finds the first one deficient?

Answer: Your underwriter has made their determination regarding the deficiency of the appraisal so a new appraisal must be ordered. This is not going to be an expense for your borrower. FHA prohibits charging the borrower for the second appraisal. The lender must pay for it. Reference: 4000.1 Section II.A.1.a.iii.(B)(9)(a) A second appraisal may only be […]

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Fannie Mae & FHA – VA – Realtor Credit: Does a $500 credit from a Realtor commission to the borrower affect the LTV as an IPC (Interested Party Contribution)? [MC Chart-Interested Party Contributions-All Agencies]

Answer-Fannie Mae: For Fannie Mae, an IPC does not need to be subtracted from the purchase price UNLESS you exceed the cap on IPC’s (grid below) for occupancy type and LTV. Reference-Fannie Mae Financing Concessions Financing concessions that are paid on the borrower’s behalf are subject to Fannie Mae’s IPC limits. Financing concessions are: financial […]

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Fannie Mae – Offer Letter as Income: If a borrower has an offer letter with contingencies, can they close before they start their new job?

Answer: Fannie Mae offers two options. Option One requires the lender to hold the loan until the borrower’s first paycheck is received. This leaves the lender at risk, but you could close with contingencies if the lender wants that kind of risk, but they would not be able to deliver the loan to Fannie Mae […]

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Fannie Mae & Freddie Mac – Property Titled to LLC: Can a borrower transfer a loan (title) from their name into the name of an LLC?

Answer: Fannie and Freddie only provide loans to individuals, not entities/corporations like an LLC. You would have to check with the loan servicer to see if they would allow the title (after loan is closed) to be changed to an LLC. When you are originating a loan to be sold to Fannie or Freddie, the title […]

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