FHA Guideline Changes Impacting Your Business 2015

good afternoon everyone my name is Pam cypher I want to welcome you to remin wholesales went on the upcoming FHA changes that take fact with kiss assignments on and after depth ember 14 2015 there’s a lot of information to cover in the next 45 minutes so we’re not going to be able to have a Q&A session however we will be collecting questions during the webinar so feel free to piss any questions you may have in the webinar offs on the one our panel and we will post these two ww RN wholesale com we will also be sent a copy of the webinar to all participants so where we begin we have a couple poll questions for you so let me launch the first one our first one is we want to know who is with us today and I’m just going to take just a couple moments before we close it out okay i have over sixty percent of the people loaded i’m just going to wait another few seconds and close it out now so the next poll questions open and if you don’t mind answering this question too how familiar are you with in New FAA guidelines the new handbook the 4000 point 1 i’m going to wait a few more seconds before we close out the poll question and i’ll share results with everyone so look like we have one percent is an expert and then rest are mix between they’ve attend to some webinar so they aren’t familiar and some people know enough to be dangerous though they need a little bit more information and we even have some people that this may be their first eben or don’t welcome so without further ado at this time I’d like to introduce Carl Marvin who is national sales manager for rent holes that huh thank you very much Pam thank you very much for everyone to attend this will be a very hot topic today because our second webinar and as a second record breaker with the amount of people that are on this webinar and that’s why Penn stated earlier that will not gonna answer any questions to day but leather sending out a human a along with a copy of this presentation please make sure you’re sending in your questions because you want to make sure that we answer as many of them as possible but without further ado I’m going to introduce race through our senior vice president and chief credit officer to present all the FHA’s things that are about to hit up thank you thanks Carl and welcome everybody so here we go we’re a week away from the FHA changes and for many of you feel I like this young lady in the picture doze actually as we were putting together organizing session that’s kind of our conference replied but you know there are really a number of changes this is quite frankly most significant change that FAA has made up to their handbook probably since their inception on the malady is they not consolidated over 450 or four handles all of their mortgagee letters on the new manual alone is 806 ages at turn around and try and everyone changes just not realistic so we are going to hit the highlights for you any of us you turn the full 155 that’s been the go-to document for underwriting standards of years well as of next Monday it is rehired on the fourth 4155 is one of the handbook that has been solid in schambach 4000 point month that is the new standard now the good thing is what HUD has said is as they make changes to the handbook be mortgagee letters which you all we have to have your 4155 and your organs you let aside by stop it the mortgagee letters are even to be gone they’ll make an announcement but they’re going to put it right in the handbook so hopefully go forward it’s going to be a lot easier to keep on top of these changes now we are very close but even so you cannot use the case changes anything that’s positive until next week anything that is more restrictive will in fact be effective for kiss numbers eating on Erector Set September 14 and one thing I want to caution everybody on this call may have a fire may be an older father that’s been kicking around for months and and you’re trying to put it together um FHA these numbers are good for six ons and unless they are properly updated in FA de connection to show they are an active loan um that case number will expire and FHA will not reinstate it this is it’s been the way

forever but with the new hast numbers coming to a Fed new requirement this really has taken on a very significant approach that we have to have so if you have an older case that’s more than six months old or approaching the Sigma number you want to make sure that case number check with you know certainly we hope you’re only doing visit with our office I you want to check with your lender to verify that that case number is still active because a file possibly now no longer qualify that case never expires and not be restated there are cool bottoms pending clarification from NHA so we’ll keep updating you as things occur but the reality is look knowledge is power and they’re real are some very very very big dangers head um in honor of Stephen Colbert starting the late night tonight we’ll have top 10 list and and clearly here are the some some of the most important changes number one student loan considerations probably no significant change we’ll get some new refinance definitions that you might be want to be aware of other grossing up of non taxable income is a change and that’s something that you want to be aware of we’re going to talk about something called hundred-mile radius and that in past several guidelines for authorized user accounts has taken on different qualification guidelines streamline refinances has a big change cash out refinance is another big change as well help employee borrowers on offer letters or predicted increases and the definition of a family member so clearly why do you need to know about this this invention business every single aid including refinances that you’d be working someone the other thing you want to be very careful of is any pre-approved letters that you issued after September 14th those loans may no longer qualify she really want to work with customers that during this week maybe you had a pre-approved letter they had not secured a shed or had decided to pull the trigger on refinancing you may want to pick up the phone and call them this week and tell them they need to secure that case number because after next we may not qualify on the top of the screen we’re now going to show you in red underwear this information available is where you get your FHA changes actually get the handbook you’ll be able to see that so what you are talking about the actual changes um one of the changes they made changes to dual employment previously that was completely prohibited now Hut is saying they will allow dual employment between the real estate industry and the mortgage industry however are on a sink on a single transaction you cannot represent both or be compensated both so if your Realtor that holds an mo a license or vice versa um you’re going to have to decide which side you’re representing how you’re going to be calm dated on the transaction now keep in mind this is fake Jays opinion individual state restrictions may be more restrictive the course you have to follow a state restrictions but the state guideline or less restrictive than a che then a minimum you’re gonna have to meet that they tight so now let’s look at our time of the transaction types good good news a purchase transaction no lawyer has a combined loan-to-value limit however you still subject to the County limits of mortgage amount similarly what this accommodate is you can never over the CAD limit let’s say somebody has a approved community second that they can do so it has a lower rate of interest than an FHA so as leisure combined financing doesn’t exceed the county limit you have no vine loan value limit aw that was a change in the refinance world there were three types of refinance transactions I cash out no kid out and a streamline and really streamline is under no cash out but for purposes today I’ll separate that now on a no cash out usually that’s the existing lien is not an FHA loan but it can be they have a new term called simple refinance and that’s an FHA to an FHA pretty much replaced the old streamlined credit qualifying with a new raizle but they now call that a simple refinance obviously it has to be an FHA to fak transaction it’s fully qualified you can take you can’t pay off any June liens so in fact study has an existing page a first and they also want to pay off a second which is obviously not a second fhm you don’t have to use rate term guidance you’re not going to be able to use a simple recants guidelines in the cave the no cat out definition while you’re going traditional rate and term or you’re doing simple red ants both can be used under reducing total score card or manual Andre streamline refinances had the biggest change in that will clear with only FHA to FHA but now an appraisal is never required so that whole qualification of streamlined with an appraisal dreamline with an appraisal is on if you’re calling something to streamline you’re never the order of an appraisal loan-to-value

limits on apply there’s no co ltd limits you still do have credit qualifying or non-credit qualified but the only reason to do by the koala is it for dropping a borrower so if it’s an existing fa de l’eau if you need to find the answer closing costs then you’re going to have to go simple refinance okay that’s a full qualifying with an appraisal if it’s an existing fake a loan and you don’t have to pay up junior liens and you can let credit the clothes cost so you don’t have to finding the closing bus then you’re going to want to do streamline refinance you’re not going to get an appraisal the only time you’d even have to credit qualify them if you try to drop a borrower now in the case streamlining advances you never even a credit qualified or not try to provide there always a manual under right and you’re never using total score art we provide this grit on the reef and comparative because we know if you get a little bit tricky so what you see in the red is that there are the different categories and finances will talk about ownership requirements existing means things of that nature so you can see here an example on a chart for both definitions of a no cash out whether it’s a rate endure more streamlined on there is no seasoning for ownership but if you own less than 12 month value is going to be the less of the car praise value or the documented purchase price plus doc document acquisition in the case of a cash out there is a seasoning requirement it must be owned and occupied as a bar was primary residence for 12 months but FHA’s not going to remit anymore is somebody that had an investment property they move in so they can say their owner occupied and they want to cash out they believe that that’s been a problem for them so they’re turning around saying if you want to cash out and use h a financing we want to make sure it’s an unoccupied property mean you’ve been living that house for at least 12 months otherwise you’re not eligible streamlines have no ownership requirements we talked about existing when we type and this only the simple refinance or the stream ones would be an FHA Tornetta J everything is owner occupy um except obviously streamlines do allow for an accession on investment investment properties the other thing about a borrower restriction is on cash out refinance if there’s a non occupant khobar on the transaction you cannot you their income to qualify so they really don’t bring any to the table again I did not want people doing equity cash out and qualifying Bay with people not on finding the subject property again give you guidance on whether you can run it through total score card and annual which is very important when we talk about the manual underwriting restrictions in the near future I’m talking about Max loan-to-value a critical factor on maximum loan-to-value you’ll see on the chart in the case of a no cash out eight in turn be financed if the borrower is not the owner occupying the property for 12 months then obviously you are leading to an eighty-five percent OTV same restriction that we talked about on the cash out otherwise you can go to the 97 degree quarters we talked about the amount of cash shocked that you’re allowed to get how you calculate your maximum mortgage and your mortgage payment history now one thing I will point out on cash out previously if you had any derogatory zhan any mortgage during the past 12 months you were ineligible for FHA cash out FHS change that they’ve said it allow um you can have a link w’en see on a cash out the only difference is that you have to meet the extenuating circumstance I’d line so therefore what’s the happen is later on you’ll see how we define attenuating how we hugged defines extenuating circumstance and if you don’t meet that you cannot have any delinquency you’re going to have to wait for all of them we just have zero time 30 within 12 months in order to eligible for a cash out all now another thing they put some restrictions on is they’re really getting very particular on making sure you know the documents do not ask through the hands of an interest RT or unknown parties there were the lender has to verify any document we can see the document came electronically IRA fax transmission email URL head or something like that we a lender have to go through and read document where the form aim from to ensure that it didn’t pass through the hands of an uninterested party of an interested party I apologize a barber social security requirements so basically for a non purchasing spouse we do need their consent an authorization we have verified their social security number either in a community property state of course you have to turn around and hit the borrower with the payment of the numbering cells from unity RB state only they also want verification of the non purchasing bounces social security number yeah they had turned around and they don’t mean to say if they don’t have a Social Security number that alone is eligible you just need to run a credit report off you

can’t their social security number of f5 you just their name date of birth address for the past two years but there are some unique requirements for non purchasing spouses in a community property tape any inconsistencies or multiple social security numbers have to be resolved during processing which loved me going into Social Security and verifying the difference so a lot of times sometimes unfortunately through identity that sometimes it’s people purchased of a social security number and they come into the country alili and then they get a legal number you have to reconcile all of those differences with Social Security directly before the lung can be approved another major changes the contracts Allen who can do entitled try my use coal mortgage or but basically it’s a situation where you have somebody that wants to be on Title only and not on the note this can happen sometimes with a spouse and be the spouse and lower FICO score or has too much debts you don’t want to put them alone but they’ve want to be untied okay that will work as long as the person we’re talking about is a family member but let’s say you have two people that are not family members so can maybe maybe individuals who are engaged a fiancee is not a family member in the Unison so it’s a fiancee and one of the parties has really bad credit but they want to be on the contract of sale because the intention is to be married and they want to own the house together if you’re not a family member they cannot be on the title and not on the note so the only people basically everybody that’s on title has to be on the note the only exception is if it’s a family member which will do the definition in a couple of slides that’s the only acceptable Co mortgage or on you can use an addendum you don’t need to draw a new contract if you to correct that and then again all of the standard FHA addendums and mandatory clauses real estate certification all of us notices supply to the contract of sale FHA case number that I alluded to earlier in the presentation you really want to sure it’s not expired you have to secure case numbers but this Friday take advantage of the current more lean underwriting guidelines unfortunate you cannot preorder case numbers you can simple i think i’m gonna buy this house you know i think they’re going to refinance let me secure the case number it doesn’t work way you have to have legit an application otherwise you’d be in violation about guidelines so then this would be a good time to call people who are a fence and they may not pull the trigger because they could be excluded from home ownership if they don’t if you don’t get that case number by and we’re sayings Friday I amelie don’t know if connection is going to be up and working over the wheel so the new rules go into effect money case numbs issued honor after Monday September 14th if connection is available in working over the weekend that’s great personally I can count it I must secure my keys number by Friday you try over the weekend but I just don’t know what’s going to have and again what we talked about making sure that you extend properly than any case number four it expires after inactivity fistic months because FHA will not reinstate his numbers now so interesting borrower eligibility changes okay so the first thing an active deployed military personnel if you’re if somebody’s deployed more than a hundred miles of the subject property it only because in an owner-occupied if a family member will reside in the property as we all know huh designed for owner-occupied primary residences what they become increasingly concerned out is individuals that a they’ve deployed and while they have old intention to occupy it once they come back to the states while they’re deployed they were looking now at the property and so hot is totally saying that’s not the programs out so if somebody is deployed you have to get an annoyed more than hundred miles away it can only be considered an owner-occupied property if a family member will be fine okay um now where was the other thing we’re going to talk about is even with that if a family I was um I’m sorry I mean let me skip that for right now because I want to check something on that bullet Barb’s doing federal non-tax um if they have non tax debt including deficiencies or that’s associated pat FHA mortgage they are ineligible until that delinquency is resolved now I result it doesn’t necessarily mean paid in full the words if it’s that if thats been written or charged or you know that in fact resolved but if it’s a non tax federal debt it has to be resolved and we have to contact the creditor and not just rely on the cave system to determine the status alone so if you have a borrower and whether you see a non credit report title when we run capers if they have a delinquent non tax debt that has to be rectified before in fact it can become an eligible borrower they’re currently doing on any existing FHA Android mortgage they are ineligible now if a borrower is delinquent on a federal tax debt so they they with the

IRS um they are eligible until i go into aland repay plan now a valid repent land mean they have executed in agreement with my RS and they’ve made at least three payments and you not painted van to achieve that repayment we’re waiting cleric ation on timing what the three months until we get to clarify it we have take the more obstructive and use case number issuance date so that means they would have had to have made three payments in successfully not three payments in one shot before we get a case number if we get how to clarify it will be closing date that it could take the militia but in the absence of their depth their guidance we have to use case number now AXA lien is only type of leaning IRS tax lien that can remain in a fat um when doing FHA financing any other type of vegt ovum have to of course be satisfied but if they’re in an acceptable repayment plan their current they’ve made the timely payments FHA Bulow that IRS tax lien course it has to be subordinated but the lien Camarena back we’ve owned this chart that would show you where we’ve clarified the types of borrowers and what they how they how they were involved in the trade action so clearly if it’s a borrower they some everything that ownership you use all their income and assets and they have occupied the properties their primary residence unless to streamline refinance the situation of a cosigner which somebody who’s only liable to debt and not on title is permitted and you can you there methods to qualify so somebody’s living the property but they’re not going to be on Idol that’s fine but they have to be a US citizen or have a personal residence in the united states otherwise it cannot be cosine an occupying whole borrower is on everything but no one they have to be US citizen or have a principal residence in the United States and you can only use that income to qualify and a purchase or a ring term refinance or streamline where they’re currently on loan otherwise you cannot use a non-locking cobarde income if it’s a cash out or it’s they’re not currently on the streamline you cannot use the ring on your also mid-to 7510 ltd unless you one of these exceptions okay but a single family it’s a situation we have a family member not selling to another family member if it’s 2-2 family property the subject property is a tutor for family and they 19 online khobar were involved in the transaction you are limited to a 75-percent ltd the other thing is a non keeping khobar was not elbow if the occupying borrower or Cobra has no sore so again as intention here look very concerned about non-compliant co bars and are they really going to be actively involved in making the payments so I’m putting this the in a didn’t they put in those instant ship restrictions but on a 22 for family they’re saying no it’s too high of a risk about it we’re limited a 75-percent if you need a non on keep and cobahr to qualify for loan we’re not interested in letting add somebody on 12 fiber cat out and buy way if you’re occupy borrower nor Cobra has no press corps we’re not interested in you throwing a non-occupant co-borrower just to me to FICO score requirements so these are really very important and i said before last one is our home mortgage or and they are not liable the debt they haven’t applied there only on idle and the only one that can occur is if in fact they are a family member another thing FHA did was currently you’re only able to have one FHA mortgage unless you meet some a one of the four exemptions now exemptions have stayed the same okay I’ll work in reverse order maybe you were a non occupant Cora were on a property and now you’re buying your own primary residence so that your let’s have to FHA mortgages in that situation if you’re vacating at Wrigley own property and the other bar will remain so maybe you have a husband and white I got divorced one is staying is the existing fa day loan person can get new a big and long that line there’s increased family’s eyes which has to satisfactorily explained and their existing residents has to be seventy-five percent or last space ponticar craze found in the current balance ND location but the big change here was before or it you should be a reasonable they don’t that the reason unreasonable commuting distance now they’ve defined as a hundred miles so if the person has existing at a chain alone and they want another testing FHA loan and they’re citing relocation as the example they have to be moving at least a hundred miles or they are ineligible family members we’ve talked about you use that term a lot and it really is defined a family member is totally now defined as either a child parent or grandparent including you know step or foster siblings include step in laws and circles including steps or laws if you’ll notice cousins have been removed so husbands are no longer consider family member but in-laws are now included previously in some instances they were not allowed that family member

become very important when you look dime on you spoke about na na tchuto barber I deti of interest requirement gift of FP so whenever there is a rule and it talks about a family member you’re going to have to document you can get an apt David and we don’t need pigs around the family you know during family reunion family vacations but you need some kind of reasonable statement in there go by every be explaining the relationship is if you’re going to use the family member definition Daniel even is really the same as it’s been for you are limited to an eighty-five percent MTB when an identity of interest exists this includes tenant and lambda relationships unless they’re covered by the exemptions below so if somebody is buying somebody else house in the relationship between the two individuals ah you are limited to eighty-five percent ltd unless you meet one of these exceptions family member purchasing another families members residents they’ve been a tenant for six months if he works for a builder in there buying a property you know new conduction home for them for their own use enjoyment corporate relocations and a tenant who’s been living in the property for at least months prior to execution of the contract of sale if you meet one of those for exemptions then you could use your math and financing otherwise you’re limited to an 85 to settle into value well here we go documents documents documents sure you will be alike every once in a while you just keep getting s for more documents and sadly new Gotham’s did nothing two games that first I want to talk about the fact that there are instances regardless what the D you set the file has to be downgraded to a manual underwrite if any of these situations exist and you know years ago even if you had a manual under right there was a lot of under our discretion under our discretion that’s been taken away or the past two years they had cut had already made them changes and in this manual it continues along that line um hug used to have suggestions now they use word like must or may not or men so what’s going to happen is we go on to support old score card sets um if there’s something that HUD feels total well if you withheld information on the 1003 at wooden gate the total score quatrevaux if you have disputed derogatory accounts of a thousand dollars or more um that means you have to manually downgraded if you don’t need the minimum waiting period for bankruptcies foreclosures pre-sales Dean lose short sets etc that’s a mantle downgrade much payment history on a perch or no cash out of any mortgage trade line reflects any of these delinquencies again you have to man you downgraded now cash out we did get a pickup goes previously if there was any delinquency over 12 months you were ineligible they’re allowing a delinquency within the past 12 months but then you would have to meet extenuating circumstance otherwise ineligible if isn’t unclosed mortgage get a credit report so include private mortgages that choir and business income that shows a greater than twenty percent decline over the analytics period even if they qualify at the lower amount you are required to man you down greatest file to a a man who will underwrite now an annual underwriters a couple things you have to remember number one there are minimum reserves regardless of ratios so alone is Emanuel underwrite meaning either the goal scorer HAMP total score card recommendation kmac as a refer or you have to manually downgrade it for one of the reasons i just spoke about couple of things i’m into play number one they have to have reserves i want to to you know property they need a minimum of a month and on a 32 Ford need a minimum of three month and that cannot come from gifts or cash back from the transaction that has to their own money you can’t conceive retirement funds in that reserve though it’s sixty percent excuse me listed value lesson bones now if the ratios would exceed 31 and 43 and by the way that’s individual we’re so used to just look at back-end ratios that in case of a manual underwriters an example if the ratios were 33 and 39 it doesn’t meet the guideline because you exceeded 31 so the 3143 guidelines have to be met individually and if they’re not met individually you’re ineligible um I’m going to show you a chart you have to have certain minimum reserves okay once you’re in a manual situation and in no circumstance can you ever ever ever exceed 40 and 50 individual ratio now the compensating factors Hut is fine minam observes or will increase in housing no discretionary debt you didn’t use additional income or they qualify to be a residual now Reverend old ladies do fly but one thing huh today in here is as an example if you have no fight the score and boat conferencing factors your

maximum ratios are 3143 querida end of story you have to have those minimum reserves they looted two before one month on a one to two family or three months on three to four but that’s your those are fact that it your cap you’re done if you can come up with one compensating factor which is I cash reserves minimal having increase or vidual then you can turn around and go to 3747 if you come up with to compensating factors you can go to 40 and 50 or if you have no discretion our debt 44 again you really want to be careful to first and when you get yokel score hard it comes back as refer you need to get your ratios very very carefully to see if eligible because these are not suggested ratios these are hard and fast rules you have to look at them individually and have to document your your accommodating factors you really really really want to make sure what’s going on here now the waiting period of derogatory credit this chart shows you what the waiting period is your standard being able to use all those score part or being able to use extenuating circumstance HUD has specifically stayed in their manual that the definition of extenuating circumstance is the death or serious illness of a wage earner divorce is not a reason even when attorney told don’t make the pains and let the house for the foreclosure tell returning to gamma mortgage clubs knocking it to them inability to sell a property so even if they could show i tried list and I’d like to do that try to jet again it’s not extending circumstance which means you need to need to wait a full weight period and the one thing that interesting HUD all along has said if there had been short sale and borrower was her enough time of the sale there in no way period ok so if they’ve made all their payment on time for at least 12 months prior to short sale date they do not have to wait the own waiting period short sales occurs as if they were delinquent at the time of you short sale all these wait periods now are based upon case number issuance date HUD was all over the map some guidelines were application date some guidelines for closing dates i’m tied with disbursement date they they doona form david a uniform position so in the example of a foreclosure you have to wait three year when the foreclosure was pleated until the case number is issued okay so they have turned around and um you know put those I’d lines they have not made any clarification or change the fact that let’s say somebody put a mortgage in their BK and so the note was discharged in that BK but the bank hadn’t gotten around for closing a property a bankruptcy and foreclosure are two separate legal transactions that have to occur or proceeds I should say HUD will not let you combine those so if somebody put their luggage in a BK in the BK God approved and everything was discharged even though the note was discharged so you can start your your cloth on the bankruptcy until the four Loeser starts you can’t even start your clock and if the bank has gotten around to foreclosing on the bar was in limo and there’s nothing that they can do some other important changes that occurred with this update authorized user account very frequently you would ignore the payments on an authorized user account since the bar is not legally obligated utters turned around and said no we’re not going with that anymore if this listed on their credit report is an authorized user you need the count holder to give a documentation that they made all pains required for the abuse 12 months from the case number asian state otherwise we’re getting the borrower with that payment of course they could turn around and drop themselves up the authorized as an authorized user but you have to get that paper work and process so again you really want to you know keep that in mind because that’s a lot of documentation to get and maybe the other person is not willing to give it to your borrower know if they don’t they ever have to get the belt off the situation or you have to have a mint in storm debt now here’s an interesting one um closed in debt we vote had this rule of thumb that if a deaths going to be paid in full within 10 months you didn’t hit with the payment well I was saying look even though it’s a short-term debt there’s a lot of mortgage paints that need to be majoring that tenma period and we’re certain that the borrowers are going to be stopped but we’re going to impose a five percent cap so as an example let’s say the borrower works five thousand dollars on okay five percent of five thousand dollars a month is 250 that means you could only exclude debts up to two hundred fifty dollars a month if it’s going to be paid in less than ten months if the sum was moving to 50 you to reoccur you’d have to return from 251 and up so what’s saying is they wanted a reason this test there as far as a percentage of their gross income the other thing is they’re not letting you pay damn debt in order to qualify so

somebody has a car loan or a person alone in this area i will pay down debt to the 10-month number and then if i was 5 10 you can do that so this is something that’s really important i mean what times we run a situation especially on FHA borrowers where it’s you know nylons eight month seven months and and you you have to have that represent test otherwise you can’t do it of course anything that is on negative income has to be subtracted from the board was gross monthly income and not consider reoccurring that unless otherwise noted alimony or child support page so one of the things that they’ve earned around and said they want to see 28 days a 28-day period consecutive Amon I appear on pace comes to show the not subject to garnishment that is requirement student loans Ricky so here’s thing with student loans if student loan if a student loan is in deferment they are not in a repayment plan yet you have to hit them with two percent of the outstanding balance this is probably them significant change I’ve made and again think of all those pre-approvals you may have qualified people or existing loans if you like case they’re expired and in all of the loans they didn’t have you weren’t hitting them with student loan payment and what would happen to the the loan if you hit them with it so what you want to do is if they’re in deferment and they have not started making a payment you have to take 2-10 of the outstanding balance yeah if they are in repayment you use the actual paint now that includes situations of income based programs so those that aren’t for me with it a lot of times wonder your stool own your addy deferment period you have to start payment you can apply the student loan agency and say look I want to aim and based upon my income and usually let’s face it you just gotta college edly you got a little dead but probably don’t have I paying job and do your earning very very little money um at pennant could be 0 pin it could be five dollars it could be ten dollars that is a payment though and you’re in repayment so for now I will allow you use the income based paint program and not to require a minimum remaining term however I caution everybody who took everybody about a minute to say wait a minute wait a minute so I’ve got somebody that’s good two thousand dollars worth debt and they barely have a job right now so if they were an income based payment is five dollars a month but if they stay in furman there are a thousand dollars a month in the example i’m showing on the screen I’m going to throw them I’m going to tell them volunteer to take self added Furman and go into repayment I suggest you be very careful there because HUD has already said there’s an inconsistency in their logic between how they’re treating deferment and income based and they’re probably going to read them and their decision on that so I wouldn’t want to be the one to a cited a volunteer to take themselves a deferment put them in inka base only to find a pub only use that guideline anyway but for today if they’re in deferment and not obligated to make a payment you have to use two percent of the bounce if the in repayment whether it’s redic own based repayment you use the current payment even if the payment is zero obviously you have to document all that and of course if the other things that if they’re in a kind of graduated payment plan so it says pay this much you know the first year there’s a bunch of second-year you use the current payment the other than they talked about is they reminded everybody if a timeshare appears on the credit port you have to treat that as installment death another change they make was with regards evaluating credit liability and debts so really there are two types of accounts clear the counts or revolving accounts and those are the ones where you can have a minimum monthly payment and then the 30 discounts or a charge card and that would be what we used to refer to as the niners club or the amount Express but even a murder express has allows from in payments now so what they’re saying is obviously the revolving is the same as it been use the man on the credit report if not you guessed get her statement or use high percent of ballots but I’m 30-day hounds the amps accounts diner Club accounts where they say oh no no no I paint in full every month you have to reoccur that Haman unless you can document the 12 months worth of statements that they paid the bill in full every single month otherwise you have to hit them with a minimum payment um and if not its are the minimum payment zone on the statement like sometimes amex will say info or you have this music a man option or five percent now if you can’t get the 12 months worth of statements obviously you have to deduct a balance from the current bounce from their asses this is a real big thing for a lot of people and sometimes what happens is you know people ain’t normal pay their amicus full every month so they give you 12 month the statements and 11 months they paid in full and one month they sided to make now a partial chemicals may be the balance just a little too I if you haven’t got 12 months the consecutive 12 but you have to hit them that payment

and that’s a big thing they’ve gone on to clarify about contingent liability um that you have to its bodies legally obligated unless the parties went to say they won’t sue collection which can imagine why I’d say that you have to hit them with debt now on cosine debts the one thing we want to remind everybody is in order to use the cosines emption of have evidence that um you’ve got 12 pay me or somebody else made the payment they have to be in the loan so as an example mom and dad buy a car for their son but they don’t put the Sun on the loan you could give me a hundred chaso in the Sun made the payments if the sudden wasn’t alone the cosign that doesn’t apply but mom and dad with the son of carp all soaped the Sun on the loan and then you get the 12 months worth of checks from the Sun showing he made the payment um then you don’t have to hit the bar with it ah business debt they’ve given us qualifications with debt is in the borough’s name is paid by their business as long as you considered in the cash flow of the business and the tax returns the business tax returns show that they were paying it you don’t have to come with the payment employment and income if the hours don’t vary they just use the current of hours they work each each month and of the current rate but if the hours vary you have to average it over a two-year period now let’s say you have somebody in hourly over two year period and they do qualify and they’ve away damn it they got a race you had ABS the number of hours they worked over the past year so you’ve got get that information from the employer they take their monthly average over a 12-month period and apply the current rate part time it has to be uninterruptedly years otherwise it cannot be considered and again if they’ve gotten a raise and you want to use the higher amount you have to do that 12-month averaging of the hours to get an average monthly hours and then apply the rate over time in bonuses it has to be they preferred to be here as they will allow one year if it’s likely to continuing you can get some strong documentation but if it’s less than one year you cannot use overtime or bonus to qualify on commission borrowers it’s and this is not what they’re qualified with this is the percentage of their total earnings if it’s less than twenty-five percent there’s no unique requirements if its twenty five percent or more you need tax returns if they’ve been earning it less than a year it’s completely ineligible now unlike Fannie Mae FHA does require unreimbursed expenses to be deducted from commission income and that’s usually a killer I know but you know that’s just the way they wrote the rule family-owned business they can qualify um and we won’t consider them as an owner obviously you have to get the documentation to show no ownership there is a requirement though about projected income which I’ll talk about in a minute us up self-employed borrowers they have to be self-employed for two years if they’re self-employed between one and two years you can consider it as long as during that two-year frame they were in at least the same line of work if they are self-employed less than a year they’re ineligible and they’ve removed allowing the education or training part as part of the two-year history the other thing isn’t talked about before if there’s a greater than twenty percent decline and self-employed income even if they qualify at that lower amount it doesn’t matter it has to be downgraded to a manual remembering those apps and compensating factors I spoke about earlier you today pls still a requirement but we did in fact it some relief that you’re not required to get a balance sheet if in fact they’re filing a Schedule C now HUD updated and said that they they really clarified somebody with temporary income short-term disability maternity things of that nature you need a letter from the borrower on their intent to return to work and you need a letter from the employer confirming that their right to return to work on the date then what you’re going to do is if they’re going to return before the first payment you can use their pretty leave salary you obviously get documentation for that if they’re going to return after the first payment you have to use their current income so the probably the disability amount plus any available surplus they have through reserves to supplement a freedom income alimony child support income they’ve changed that to allow for situations where there’s a voluntary arrangement so individuals maybe aren’t legally separated or maybe they were never married so there’s just a voluntary arrangement if it’s a voluntary arrangement as long as you can document it’s been received for 12

months it can be used dot alimony or child support is income that’s through illegal means such as a divorce decree of legal separation or court order you only need evidence of the three months and then they talk about the fact as long as it in a timely manner how you have to qualify the loan you can use the pest you can use the current payments but involuntary the most recent average of the six months if it’s not a timely payment over the odd you have to average over two years cost of living performance increased new job retirement now as long as it’s going to be received within 60 days of closing you can use that higher amount as long as you properly documented it’s not eligible though so if if for family if you work family member of business so let’s say kid works respondes business he’s making thirty five forty thousand dollars a year dad turns around and says always buying a new house I’m giving them a raise to fifty sixty seventy thousand you cannot use that higher amount as projected income non-taxable income they still allow that the only difference is that it used to be twenty five percent it is now at fifteen percent so that wasn’t change rental income of the subject property so if you doing a purchase if there’s no history of rental income for the subject property so it’s approaches you can use the proposed rent fired appraisal form and then you’re going to use income the lesser of the fair market rent or an income and operating statement if there’s a history of rental income so to refinance you’re going to use the two year average on the tax returns or since inception and you can add back in depreciation interest etc runs one income from other real estate on this is a big one if somebody is moving and changing their primary residence to an investment property we all know even today you need twenty five percent equity that has not changed but if they’re not moving a hundred miles away you can’t use the income so somebody’s living in a one unit property okay first test is well somebody’s leaving their primary residence first test do they have twenty five percent equity if they have it you’ve you’ve passed her on one second is are they moving at least 100 miles away if the answer just you’ve passed the second hurdle if the answer is no you can’t use the rental income for their unit so what does that mean if the out of their vacating is a one unit you cannot use any rental income to qualify but of course you’re going to hit them with the mortgage payment cuz they’re not selling the property if in fact is a two to four unit so let’s save as a four unit property then we’re owning they rented out the other three units you can continue to use the rent for the three units they have in renting but their unit they’re going to now right you cannot use the rental income if there’s again once there’s a history of rental income being we in my example the 224 unit you needed two year average assets again the minimum cash investment no real change here cannot come from the seller and the interested party or even be reimbursed by an interested party earnest money deposit has to be verified at one percent or if the GE underwriter feels it’s excessive and a large deposit is that as continues to be defined as a single deposit that is more than one percent of the adjust value gifts are a really big item um they’ve turned around first of all cash gifts can be from either a family member or employer close friend etc the gift of equity can only be a family member and that’s when we use the fiance example this cannot be reused for reserve that’s a big reminder and regardless of when the gift is made available the mortgagee must make a reasonable determination that it didn’t come from an acceptable source which means we basically have to source the donors gift we need the donors bank statements and if the donor has a large deposit we have to source it to make sure they weren’t used as kind of a go-between where the money came from an unacceptable source they gave it to a family member to throw it in the bank account and then flush it right out that’s not going to be acceptable give funds again we’ve talked about there in the borrower’s account what kind of documentation you need if they’re not in the borough’s account and if they paid directly to the settlement agent but you still need to see the donors bank statement even in the situation where it’s paid to within them settle major again what is being very particular they don’t want people back during the unacceptable party wreck and then again interested parties again allowed to make contributions up to six percent but they cannot be used to make the borrower’s minimum investment and now they also have to be itemized on the HUD and then in October how these seem to be closing

disclosure and with that no I exceeded our time frame so i do apologize um i think we’re in good shape now pama let you close it out well I do want to thank everyone for the questions please keep them coming we will be piling all the questions and posting it on w WR mmm sale com I’ve also gotten a couple of increase recording the presentation itself will be send that out as well to all the participants and at this time I want to invite the hallmark man Carly at us yes he’s very much payment thank you very much for all of you for attending this and not and grace were we know you went a little bit over but it was well worth that you do a phenomenal job with training training is part of our job there is one thing I want to mention one favor i want to ask of all of you and then one thing i want to mention is i don’t want you to forget that Roman hotel for years and years now offer same day turn times every single day with the initial under I but I also need a favor of all of you we all try helping other out if anyone knows of any underwriters in the woodland hills the LA County area or an Islam New Jersey on the East Coast we are looking for underwriters because Robert hotel is growing so that’s my my question my favor to ask of all of you I wish everyone a fantastic day and good luck all the changes that are hitting us over the next several weeks thank you very much everyone have a great day