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Question on FHA Mortgagee Letter 2007-11

I must have read the letter several times. It looks to me like FHA has left the credit decision open to interpretation. Am I wrong? Can a borrower, who has a subprime mortgage that has reset, refinance under this program under the following scenario?

LTV and Debt rations are in line with guidelines
past mortgage history is 0 x 30 prior to reset - 1 late payment after reset.
has a couple open charge-offs and collection accounts over 2 years old - had when borrower took out subprime mortgage?

Any FHA Underwriters out there have an opinion?

Posted by John Popp Charlotte Home Loan and FHA Source on 09/05/2007 02:50 PM

Comments (5)

fha secure, fhasecure, fhasecure credit guidelines

5 Comments on Question on FHA Mortgagee Letter 2007-11

SEP

2007

I was the listing agent on an FHA deal a few weeks ago (right before the big crunch), and the lender that was underwriting the loan and told me that he was interpreting their credit individually w/o using the score. Of course, the same guy asked my clients and I to essentially commit commit fraud (disclaimer: We didn't commit fraud, and I did inform my broker of the incident).

In either case I just let the lenders do their job, and the lender did say he was interpreting their credit individually. Not sure how valid it truly is tough.

Eric C. Lowery, EquityShack.com, The Good Broker, LLC.

I'm not an underwriter, but I think that loan is doable. I think UW's look at the amount of the collections and chargeoffs as well. But if it's over a year old, they may not say anything about them. You should prob get a LOX on the accounts.

Eric and Hahra,

I spoke with the government lending division of Countrywide and Wells Fargo regarding the FHASecure Letter and it seems it will at least a week before "Lender" guidelines will be available. As I had stated, the FHA Letter is very general in its wording. I believe that we will end up with a great variety of Lender opinions on this initiative. I plan on researching my arsenal of FHA Lenders to make sure I place my borrowers with the right lender.

SEP

2007

Who do you find to be the quickest turn time for FHA? I have been using Flagstar and now they are 8 days to underwrite and 8 days to review conditions, that is craxy!

SEP

2007

Submit it...I think you have a good loan there.

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