Changes to FHA Mortgages effective September 14, 2015

Loan Clip ArtThe FHA Mortgage program has some new and important changes that will certainly impact borrowers. Check out some of the major changes:

1. FHA will no longer allow student loans to be deferred. Lenders have to include a 2% payment in the debt-to-income calculation.

2. Only recorded land contracts can be done as a refinance – if they are not recorded, they must be done as a new purchase.

3. Water tests will be required if a house is on a private well.

4. Streamline refinances can ONLY be done without an appraisal.

5. New net tangible benefit for reduction in term.

6. Secured borrowed funds can only be secured by financial assets or other real estate owned – in other words, you can no longer take out a loan against a car, etc.

7. Sourcing donor’s ability to give gift funds is now an FHA requirement.

8. Only borrowers on the loan can be on the purchase contract and those will be the only parties allowed on title.  A non borrowing spouse may be added to title, but only at the title company’s discretion.

9. Appraisal updates to expired appraisals must be done before the appraisal actually expires to extend the expiration date of the appraisal.

10. Non occupant co-borrowers must be US citizens or have a principal residence in the US.

11. Business disclosure relationship statements must be submitted by Sellers, Realtors, Borrowers, Loan Officers, Processors, Underwriters, Appraisers.

12. Flood insurance must be the lesser of the appraiser’s replacement cost (less land value,) the loan amount, or the flood program’s maximum amount allowed.