Recently HUD has decided to make quite a few changes to their FHA program. Everyone is aware of the increases in the Mortgage Insurance Premiums. As if that wasn't enough, they are also placing restrictions on non-purchasing spouses in community property states that could prevent your buyer from qualifying. What I'm about to tell you was not specifically outlined in their mortgagee letter. Therefore, a lot of loan officers may not be aware of this until an underwriter declines their loan in the middle of the process. Here's what HUD said when asked about non-purchasing spouses outstanding collections and or disputed accounts:
If the property being financed is in a community property state, disputed accounts and collections with outstanding balances of the non-purchasing spouse would have to be considered in the $1,000 cumulative limit. The non-purchasing spouse’s debt would not be included if the borrower can provide documentation such as a copy of a marriage license to show the debt was incurred prior to the marriage, or a copy of the state’s law showing that community property did not apply to debts incurred prior to the marriage together with an attorney’s opinion letter stating that the borrower was not responsible.
Hope this helps! Any comments?
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