FHA PPT slides

FHA PPT slides

• 1.
  FHA  For use during Section 2 of the SAFE 20 Hr Pre-licensing and Exam Prep Course
• 2.
  HUD v. FHA(page 9 in the course packet)  U.S. Department of Housing and Urban Development was created through the US Housing Act of 1937  FHA provides mortgage insurance on loans made by FHA-approved lenders
• 3.
  What does HUDdo?  Provides opportunities for homeownership  Provides housing assistance for low income persons  Helps to rehabilitate and maintain affordable housing  Enforces Fair Housing laws  Helps the homeless  Spurs economic growth in distressed neighborhoods
• 4.
  Insuring and Endorsement  When an FHA loan closes, the lender collects and remits an up front MIP directly to HUD via wire transfer.  Then the lender sends the original loan file (aka case binder) to the FHA HOC for review.  If the paperwork is in order, HUD transmits an electronic MIC (mortgage insurance certificate.)
• 5.
  GNMA  Government National Mortgage Association  Ginnie Mae is not a lender nor does it buy or sell mortgages. GNMA guarantees Residential Mortgage Backed Securities that are backed by pools of FHA and VA loans  GNMAs are backed by the federal government
• 6.
  Advantages of FHAFinancing  Only an FHA-approved lender can originate FHA loans  Property Types: 1 to 4 unit properties  Purchases up to 96.5% LTV  Borrower Contributions  3.5% cash investment  100% gift acceptable
• 7.
  Advantages of FHAFinancing  Reserves are not required on 1 & 2 unit properties  FHA loans are fully assumable  No income limitations  FHA Loans are only to owner occupied borrowers  Exceptions:  HUD owned property  Non-owner occupied purchase at 85% LTV
• 8.
  FHA Home Mortgage InsurancePrograms  203b Single Family  234c Condo  203h Disaster Victims  255 HECM  203k Rehab  EEM Energy Efficient Mortgage
• 9.
  Single Family 203b  Single Family  Owner occupied  1 to 4 units  PUDs (Planned Unit Developments)  Manufactured Homes The FHA Mortgage Insurance Fund is running out of money…. $3.5 billion left after transferring $9.8 billion to cover possible losses on its loan portfolio.  This means higher mortgage insurance premiums
• 10.
  FHA LOAN PROCESSING
• 11.
  Roles  Loan originator satisfies the processor  Processor satisfies the underwriter  Underwriter satisfies management  Management satisfies FHA  Role of the underwriter is to build a defensible position  FHA satisfies minimum risk for FHA  Lenders set minimum risk for themselves  FHA might say yes but your lender might say no.
• 12.
  Social Security NumberSSN  Handbook 4155.1 paragraph 3-1C  HUD/FHA require all lenders to ensure that each FHA borrower has their own valid Social Security Number as issued by the Social Security Administration  Verification also through FHA Connection
• 13.
  U.S. Citizenship NotRequired  FHA will insure mortgages made to lawful permanent and non-permanent resident aliens  Permanent resident alien:  Must have evidence of permanent resident status  Have a valid social security number  Non-permanent resident alien  Property must be their principal residence  Must be eligible to work in the U.S.  Have a valid social security number  Have likelihood of continued lawful status
• 14.
  Social Security NumberVerif  Acceptable verification includes:  Paystub  Valid tax return  Copy of SSN card  Driver’s license  Medical information  Service provider with access to SSA
• 15.
  INTRO TO FHA UNDERWRITING
• 16.
  Total Scorecard Factors  Credit FICO score  Monthly housing expense ratio  Number of monthly payments in reserve  Loan to value ratio  Loan term  These are the five biggest risk factors and the only things TOTAL looks at.  Accept or Refer
• 17.
  Intro to ManualUnderwriting  What must an FHA borrower possess?  Decent and reasonable credit history  Perfect credit is not a requirement.  Stable, reliable, and sufficient income  Verified funds to close  Sufficient security for the loan
• 18.
  THE FOUR CSOF UNDERWRITING Any guesses as to what they are?
• 19.
  The Four Csof Underwriting  Character  Credit • Does the  Capacity borrower have  Income the ability and  Collateral willingness to  Value repay the loan?  Capital  Liquid assets