Q&A – November 25, 2018

FHA – Authorized Used Obligation: Am I required to count debt if my applicant is an authorized user but is not responsible for the payment of the account?

Answer: FHA requires that payments made by the primary account holder be documented for the last 12 months to disregard the monthly debt.  A credit supplement should not be necessary. Reference: 4000.1, II, A, 4, b, iv, (A) Accounts for which the Borrower is an authorized user must be included in a Borrower’s DTI ratio [...]

2018-11-25T20:38:11-05:00November 25th, 2018|

FHA – Tip Income Calculation: What are the guidelines for calculating Tip income for an FHA loan?

Answer: FHA does not have a specific Tip Income guideline, I’ll be answering your question based on my personal experience rather than providing a definitive “tip income” guideline.  Your underwriter will make the final determination on how to calculate the qualifying income. In my experience, Tip Income would follow the same documentation and calculation income [...]

2018-11-25T20:34:23-05:00November 25th, 2018|

Compliance – Ability to Repay – Guarantor: Can you advise if the non-occupant’s income can be included in the ATR-Residual calculation?

Answer: As a guarantor, that party is not considered a consumer for ability to repay. So, their income should not be included. Reference: RESPA – 1026.2(a)(11) [Article Published in Question & Answer Issue – November 25, 2018] Copyright © 2018 – Mortgage Currentcy – All Rights Reserved A subscription is required to access this content—please [...]

2018-11-25T20:13:24-05:00November 25th, 2018|

VA – Length of Employment – Active Military: Our underwriter is requiring a letter from our active military applicant that they intend to re-enlist for 3 years. Does VA require this?

Answer: VA only asks for confirmation of re-enlistment when an ETS is within 12 months.  It would have made more sense if the underwriter asked for an LOE stating that the veteran intended to remain in service for the next 12 months, not 3 years.  Not sure why the underwriter is applying the “3-year rule” [...]

2018-11-25T21:05:24-05:00November 25th, 2018|