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FHA Eligible Borrowers,Property Types, Rule and Docs
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April 2008
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FHA Program
FHA Eligible Borrowers,Property Types, Rule and Docs
[Enter Post Title Here]
Eligible Borrowers
As a general rule, FHA mortgages are provided to individuals only, although they are available to government agencies and approved non-profitorganizations as well.
(see 4155 sec 2-2)
All Borrowers MUST provide picture identification and have a Social Security number (or equivalent), and be checked against the OFAC list as required by the PATRIOT ACT. Listed individuals will not be eligible for financing.
Borrower's Age:
•
There is no maximum age limit for an FHA borrower
•
The minimum age is the age at which the mortgage note can be legally enforced
in the state or other jurisdiction where the property is located.
Citizenship and Immigration Status:
Citizenship of the United States is not required for eligibility. FHA will insure mortgages
made to lawful permanent resident aliens under the same terms and conditions as U.S.
citizens. The subject property must either be the occupying borrower's principal
residence or, if an eligible secondary residence or investment property, the borrower's principal residence must be located in the United States. The borrower must also have
a social security number (or equivalent Employment Authorization Documentation or
EAD)
Co-Borrowers and Co-Signers
Co-borrowers may take title to the property and obligate themselves on the mortgage
note. FHA also permits a cosigner with no ownership interest in the property (does not
take title) to execute the loan application and mortgage note and, thus, become liable
for repayment of the obligation. The cosigner's income, assets, liabilities and credit
histories are
included in the determination of creditworthiness.
FHA does not permit an
individual to take an ownership interest in the property at settlement without
signing the mortgage note.
•
Neither a co-borrower nor a cosigner may be a party that has an interest in the
transaction, such as the seller, builder, real estate agent, etc. Exceptions may be
granted if the seller and co borrower/cosigner is a family member of the occupant owner.
•
The occupying borrower must sign the security instrument and mortgage note, and unless otherwise exempted (e.g., military service with overseas assignments, etc.), any non-occupying co-borrowers or cosigners must have a principal residence in the United
States.
Non-purchasing spouses:
If required by state law in order to perfect a valid and
enforceable first lien, the non-purchasing spouse may be required to either sign the security instrument or documentation evidencing that he or she is relinquishing all rights to the property. If the non-purchasing spouse executes the security instrument for such reasons, he or she is not considered a borrower for our purposes and need not sign the loan application. In all other cases, the non-purchasing spouse is not to appear on the
security instrument or otherwise take title to the property at loan settlement.
Except for those obligations specifically excluded by state law, the debts of the no purchasing spouse must be considered in the qualifying ratios if the borrower resides in
a community property state or the property to be insured is located in a community
property state.
FHA is designed for first-time homebuyers, and low-moderate income households. It is
NOT a program for investors. As such, as a rule:
In General - Only 1 Mortgage Per Borrower is Allowed!
FHA currently limits borrowers to only one FHA mortgage that can be outstanding at
any one time. Prior to 1992, each borrower was limited to one
high balance
(defined as
above 75% LTV) FHA mortgage outstanding at one time, but that is no longer the case.
There are a few exceptions to the one FHA mortgage rule for hardship situations:
•
Relocations
o
If not within reasonable commuting distance to current residence
o
Need not be employermandated
•
Increase in Family Size
o
Must provide proof of increased dependents and inadequate current residence
o
Must pay down current mortgage to 75% LTV or less (via appraisal).
•
Vacating Jointly Owned Property
o
Divorce situations
•
Non-Occupying Co-Borrower
o
May have interest in their OWN personal residence which is FHA-insured
In all other cases, the purchasing borrower must payoff the current FHA loan, or
terminate their interest in the property.
Published
Apr 01 2008, 02:07 AM
by
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