In a Letter dated December 18, 2012, Acting Assistant Secretary for Housing - Federal Housing Commissioner, Carol J. Galante address four topics of concern for FHA. On Saturday I covered the first topic that she coverd her letter FHA Clarifies Their Guidelines On Applying The 43% Debt-To-Income Ratio. In this blog I will cover the forth topic that Galante addressed in her letter. In the forth topic Galante expressed concern about Lenders who maybe understating the FHA Guideline on the waiting period after a Foreclosure. In reading Galante's letter I take Galante's statement more of a warning to Lenders to "Be Very Careful What You Say About FHA Foreclosures" than a concern.
Galante's warning is to important in my opinion to summarize so I am going to quote it in it's entirety below:
"Access to FHA Loans After a Foreclosure: Borrowers are able to access FHA -insured financing three years after they have experienced a foreclosure only if they have re-established good credit and qualify for an FHA loan in accordance with the fully documented underwriting requirements for any FHA-insured mortgage origination. FHA is concerned that a few lender are inappropriately advertising and soliciting borrowers with false pretense that they can somehow "automatically" qualify after three years. First and foremost, FHA will step up its enforcement for FHA-approved lenders with regard to such advertising and remind them of their duty to full underwrite loan applications in accordance with FHA guidelines. In addition, the credit score/DTI policy outlined above will be applicable to borrowers seeking to obtain FHA insured financing following a foreclosure. Furthermore, FHA is committed to performing additional data analysis to determine if the original cause of a borrower's foreclosure was do to a one-time economic event, such as the loss of employment that has since been regained, and whether that results in any different or better performance than other reasons for foreclosure. This effort may inform future policies in this area. Finally, as discussed in our annual report to Congress, FHA is also committed to structuring a new housing counseling initiative that would apply to a number of borrower classifications, including borrowers with previous foreclosures."
Lender's need to take this warning seriously, and I would also caution Realtors who I have seen inappropriately make similar statements in blogs here on ActiveRain. I would be especially advise the so called Self-Proclaimed Short Sale Experts that have written blogs making it seem like it is a piece of cake to qualify for a FHA Mortgage right after a Short Sale.
FHA is starting to clamp down on information being given to Borrowers. While the above statement is being directed at Lenders, I would not be surprised if FHA widen their circle of whom they will go after for misleading statements about FHA Programs and Guidelines. So a warning to everyone in Real Estate related Industries, Be Very Careful What You Say About FHA Foreclosures, Programs, or Guidelines. Do not add or subtract from them, doing so may prove to be costly.
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George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or firstname.lastname@example.org