FHA reverse mortgage Servicing Guidelines

A reverse mortgage provides a

In late February, HUD released Mortgagee Letter 2012-3 with tougher guidelines for self-employed borrowers, disputed accounts and collections. Over the weekend, HUD amended the guidelines to have the disputed accounts and collections go into effect on July 1, 2012. However the new guidelines for self employed borrowers went into effect for case numbers as of April 1, 2012.

Here is a quick(?) 4-1-1 of the new guidelines:

Income documentation requirements for self-employed borrowers:

A P&L and Balance Sheet is required if more than a calendar quarter has elapsed since the date of most recent calendar or fiscal-year end tax return was filed by the borrower with no exceptions.

If income used to qualify the borrower exceeds the two year average of tax returns, an audited P&L or signed quarterly tax returns obtained from the IRS are required.

NOTE: This is in addition to providing two years your most recent complete (all schedules) personal and business tax returns. Borrowers who are doing an FHA non-credit qualifying streamline refi may be exempt.

Disputed accounts on your credit report:

When an account on your credit report shows as being disputed, the application will be referred to a DE underwriter for review unless:

  • The TOTAL oustanding balance of all disputed credit accounts or collections are less than $1000; and
  • Disputed credit accounts or collections are aged two years from the date of the last activity as indicated on the most recent credit report.

Disputed credit accounts or collections resulting from identity theft, credit card theft, or unathorized use, etc., will be excluded from the $1000 limit provided acceptable supporting documentation can be provided, such as a police report.

Disputes on authorized user accounts are also factored into the $1000 limit.

Collections:

If the total outstanding balance of all collection accounts is equal to or greater than $1000 the borrower must resolve the accounts (e.g. enter into payment arrangements with minimum three months verified payments) or paid off in full at time of or prior to closing.


FHA backing away from Reverse Mortgages....

2009-09-22 15:05:48 by Apprsr

FHA Looking to Decrease Its Exposure to Reverse Mortgages
Reverse mortgage lenders are learning that the Federal Housing Administration is moving quickly to implement a reduction in the loan proceeds that seniors can receive from a FHA-insured Home Equity Conversion Mortgage.
Mortgagedailynews.com

Declining home values squeeze reverse mortgages

2009-10-04 22:05:18 by Apprsr

Kenneth Harney
Sunday, October 4, 2009
(10-04) 04:00 PDT Washington - --
Declining home values have put a serious squeeze on one of the mortgage market's most popular and fastest-growing financing concepts: the Federal Housing Administration's reverse mortgage program for seniors 62 and older.
In a letter to reverse mortgage lenders Sept. 23, FHA Commissioner David Stevens said his agency must reduce the maximum amounts seniors can receive on reverse mortgages because of a $798 million estimated deficit in the program in the coming fiscal year

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  • Avatar janelle p Can someone get a reverse mortgage if they own more than one property?
    Jun 26, 2011 by janelle p | Posted in Renting & Real Estate

    Can someone get a reverse mortgage on the property they live in but still collect rent from others they have? I don t want to call one of these places because they are all 800 numbers, and I don t want to be bothered by them until I m more clear how these things work.

    • Reverse mortgages are not for people with assets. If you own rental property, why would you want a reverse mortgage?