Get Your FHA Buyers Re-Pre-Approved

Reblogger Barbara Todaro
Services for Real Estate Pros with RE/MAX Executive Realty 104763
https://activerain.com/droplet/5hW5

Did you kow this???  now you do....

Original content by John Meussner NMLS #138061 MMCD #1141

Get Your FHA Buyers RE-Pre-Approved

 

Have you heard the latest fashion trend in the mortgage industry?  Re-Pre-Approval?  No?  Well, that's OK, because it's not really a thing.  

 

 

BUT, FHA recently changed the way they score mortgage loans, and this month, the new rules/algorithms are in full swing.  What does that mean?

FHA guidelines

 

It means a buyer who was previously pre-approved through automated underwriting may no longer receive that preapproval, and since FHA dates adhere to timelines based on case # assignment (and if there's no property identified, there's no case #), your buyer's previous preapproval may be worthless today.

 

 

HUD has expressed some concern about the quality of FHA loans being insured, and specifically noted "layered risk" to be a top priority to address - layered risk is when there are multiple factors on a loan application that could result in a high likelihood of foreclosure or delinquency.  For example, if a buyer has both a high debt-to-income ratio AND a questionable credit history, this would be layered risk.  Or a very low down payment, poor credit, and no asset reserves - more layered risk.  

 

 

Over the past few years, getting approval through automated underwriting was a fairly simple and predictable task.  That has changed this month.  Automated underwriting now may reject files with layered risk, resulting in more strict 'manual underwriting'.  Unlike automated underwriting (DU/LP), manual underwriting comes with strict criteria that an underwriter is not allowed to override, including debt-to-income maximums nearly 10% lower than automated underwriting allows for.  Manual underwriting also has restrictions on rental lates that automated underwriting could not factor in - since rents are typically not a part of the credit report, if automated underwriting issued an approval and a note that "rental history documentation is not required", it didn't matter if a client had been 30 days late on their rent 10 times in the past year.  With manual underwriting, there is a hard stop on rental/housing late payments.

 

 

What does this mean to you as a real estate agent?  Well, if you have an FHA pre-approved buyer, it's a good idea to get them re-pre-approved.  Especially for buyers with questionable credit or high debt-income ratios, you'll need some reassurance to prevent a potential nightmare of getting a contract accepted only to find out in underwriting that your client is no longer approved.

 

 

This should be a really simple thing for a lender to do - just a couple of buttons pushed and a fresh approval should be available, but is VERY important to do for all FHA buyers that were preapproved before the start of this month.

 

Want to work with a lender with NO FHA, VA, USDA, or any other government loan overlays?  Give me a call at 484.680.4852.  Questions about the FHA changes?  Ask an expert here!

 

 

 

 

John Meussner

NMLS# 138061

Visit My Website!

 

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Rainmaker
2,682,878
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Barbara Todaro it is good to do re-pre-approval, can benefit buyers didn't do  unnecessary spending.

Apr 08, 2019 03:44 PM #1
Rainmaker
2,803,348
James Dray
Fathom Realty AR LLC - Bentonville, AR
Exceptional Agents, Outstanding Results

Morning Barbara.

learned something new today.  going to bookmark this for our next meeting.  I sure would have missed this one, thanks

Apr 09, 2019 02:30 AM #3
Rainmaker
3,163,256
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

Soo  important for agents and lenders alike to stay on top of lending practices..the transaction you save may be your own !

Apr 09, 2019 03:03 AM #4
Rainmaker
1,214,270
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Fantastic share Barbara Todaro ... as this is a very recent change made.  John Meussner and other experienced LOs will have already seen to this issue with their FHA clients ... but agents should be aware too and ask their LO about it.  It's smart to be proactive on your clients' behalf ...

Gene

Apr 09, 2019 12:55 PM #5
Rainmaker
5,221,829
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Thank you very much, Barbara, for sharing this excellent reblog selection.

Apr 13, 2019 11:57 AM #6
Rainmaker
4,832,734
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

thanks, everyone, for your nice comments....they're always appreciated...

Apr 13, 2019 11:59 AM #7
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Rainmaker
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Barbara Todaro

Marketing Agent for The Todaro Team
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