New updates to FHA Guidelines. New FHA CHANGES coming FHA has announced several underwriting changes that are coming September 15, 2015. Some changes are positive and some not so much.
Below – I have tried to highlight some of the major ones that I feel can have an impact on our business. Please review your existing clients and be sure that if anyone has a negative impact that you get them moving quickly before the changes go into effect. These changes will be effective with FHA case numbers issued September 15 or after. We will provide additional directive as we get closer with deadlines but I wanted to give you as much advanced notice as possible.
 Tighter guidelines: 
• Authorized user accounts must always be included in debt ratio
• Student loans must always be included in DTI, regardless of deferred status – when no payment exists on the credit report, we will use the greater of $10 or 2% on student loans and greater of $10 or 5% on all other debt.
 • Business paid debts must be on tax returns AND considered in the cash flow analysis of the borrowers business.
• 30 day accounts (AMEX) must now have 0x30 in the past 12 months AND must have funds to pay the account in full (extra reserves).
• If the borrower has more than 4 jobs in 12 months, we need to show required schooling or consistent increase in pay to qualify.
• Must hit client with Capital Gains losses
• Non-taxable income can only be grossed up 15% (not 25%)
• Max age of all docs is 90 days (was 120 days)
• Non-borrowing spouse must sign the 92900-A (the addendum to the loan application) at application and at closing
• Gifts cannot be used as reserves
• If rent free, need a letter from the person the borrower is living with
• When a client is relocating, the new home must be at least 100 miles away from their current residence when retaining current residence
• A maximum of 7 days per diem interest credit is allowed on all transactions (purchase/refi) – previously 7 days purchase/10 days refi
• Max CLTV on Streamline Refi with appraisal is 97.75% (No maximum CLTV on Streamline without an appraisal)
• On all streamline transactions, the client must prove occupancy with utility bills or employment documentation
 Looser guidelines: 
• Tax liens can remain open with payment plan, 3 months payments and a subordination agreement.
• Judgments can remain open with payment plan and 3 months payments.
• No payment listed on credit for student loan – 2% of balance instead of 3% Charge-offs are not considered collections and can be excluded from collection total (when calculating monthly payment)
• Short sales are allowed after 1 year with no late payments and a manual underwrite (must fit Refer guides)
• Balance sheet is not required for Schedule C borrowers (but still must have a P&L)
• Future income (new jobs) no longer requires a pay stub – can close with offer letter, provided that employment begins within 60 days of close.
• Can use 1 year commission income (instead of 2 yrs.), provided they are with the same employer
• We don’t need all pages of divorce decree – just the 1st and last pages and award with approve/eligible findings.
•  On streamline transactions, we do not need to document funds to close as long as they are less than the client’s new P&I payment