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Bob H
300 Posts |
 Posted - 05/15/2008 : 10:12:52 AM
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I am working on a crazy tight FHA deal. The borrowers only qualify through AUS @ a 5% rate so I locked the loan with Chase on a 5/1 FHA ARM. The LTV is very close to 95 and it is a cash-out deal. I have to add the son (who has lived in the house for many years)to get enough income to qualify. The underwriter @ Chase is telling me that since the son has not been on title for at least 12 months, the maximum LTV is 85%. This will kill my deal. My back ratio is already 55% @ 95 LTV because I am paying off 2 accounts to get a DU approval. Scores are in the 700's. Borrower is in an ARM that is adjusting on June 1st.
Is the 85ltv restriction a HUD guideline or is it a Chase guideline? It looks like I need to send this deal elsewhere. Who has the best 5/1 FHA pricing other than Chase? |
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jpulcano
273 Posts |
Posted - 05/15/2008 : 10:58:48 AM
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This must be a Chase guideline. HUD Mortgagee letter ML 2005-43 Revised Refinance Transactions states that FHA will insure a cash out refi up to 95% "Any co-borrower or cosigner being added to the note must be an occupant of the property. Non-occupant owners may not be added in order to meet the FHA's credit underwriting guidelines"
Good luck with your deal. |
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mdmtg
16 Posts |
Posted - 05/15/2008 : 10:59:26 AM
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| i'm pretty sure this is a HUD guideline. i had a similar scenario and was capped at 85ltv. |
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ML
3019 Posts |
Posted - 05/15/2008 : 11:22:06 AM
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| Chase U/W is correct, must be in title 12 months. |
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the Loanarranger
6 Posts |
Posted - 05/15/2008 : 11:40:34 AM
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| The underwriter is refering to needing to own property for 12 previous months to go cashout. Tech. speaking the added co-borrower hasn't. Some underwriters would overlook this possibly. I can't find where they would allow 85% cashout. in this case. |
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Bob H
300 Posts |
Posted - 05/15/2008 : 12:08:44 PM
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| I'm still a little confused on this. My company recently closed a 90ltv cashout deal and added a family member to title and loan. Maybe it was just luck. I have been reading the 4155 and can't find specific language. I'll keep looking.... |
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BB
989 Posts |
Posted - 05/15/2008 : 3:11:52 PM
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Read Mortgagee Letter 2008-13 – while it specifically deals with FHA Secure you will find on page 8 the heading II. Clarification on Cash-out Refinance Transactions
If read in total I think that it clearly says that an occupant co-borrower can be added for maximum cash out financing (95%).
Then click on the Attachment and under 95% cash out you will find the following on page 2.
FHA First Mortgage
• Borrower must have owned property for 12 months AND if encumbered by a mortgage made payments for the last 12 months within the month due. Otherwise limited to 85% LTV.
• Standard 31/43 ratios, may be exceeded with compensating factor(s).
Non-occupant co-borrowers may not be added for 95% cash-out refinance transactions but are permissible for those limited to 85% LTV
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BB
989 Posts |
Posted - 05/15/2008 : 3:16:00 PM
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Also read MORTGAGEE LETTER 2005-43 and it says
Summary of Changes
Cash-Out Refinances: Under the terms and conditions described below, FHA will insure a cash-out refinance of up to 95% of the appraiser’s estimate of value. The eligibility conditions that must be met include:
• The subject property must have been owned by the borrower as his or her principal residence for at least 12 months preceding the date of the loan application.
• If said property is encumbered by a mortgage, the borrower must have made all of his/her mortgage payments within the month due for the previous 12 months, i.e., no payment may have been more than 30 days late and is current for the month due.
• The property that is security for the refinanced mortgage must be a 1- or 2-unit dwelling.
• Subordinate financing may remain in place, but subordinate to the FHA insured first mortgage, regardless of the total indebtedness or combined loan-to-value ratio, provided the homeowner qualifies for making scheduled payments on all liens.
• Any co-borrower or co-signer being added to the note must be an occupant of the property. Non-occupant owners may not be added in order to meet FHA’s credit underwriting guidelines for the mortgage.
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