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Ohio FHA Home Loan
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FHA Credit Guidelines
FHA CREDIT ELIGIBILITY REQUIREMENTS : In
addition to the credit analysis described above, a borrower must be
rejected for any of the following reasons:
A) Suspensions and debarments. A
borrower suspended, debarred, or otherwise excluded from
participation in the Department's programs is not eligible
for a FHA-insured mortgage. The lender will examine HUD's
Limited Denial of Participation (LDP) List" and the
government wide General Services Administration's (GSA)
"List of Parties Excluded from Federal Procurement or
Nonprocurement Programs". If the name of any party to the
transaction appears on either list, the application is not
eligible for mortgage insurance. (An exception may be made
when a seller appears on the LDP list and the property
being sold is the seller's principal residence.)
B) Delinquent Federal debts: If the
borrower is presently delinquent on any Federal debt
(e.g., VA-guaranteed mortgage, Title I loan, Federal
student loan, Small Business Administration loan,
delinquent Federal taxes, etc.) or has a lien, including
taxes, placed against his or her property for a debt owed
to the United States, the borrower is not eligible until
the delinquent account is brought current, paid or
otherwise satisfied, or a satisfactory repayment plan is
made between the borrower and the Federal agency owed and
is verified in writing. Tax liens may remain unpaid
provided the lien holder subordinates the tax lien to the
FHA insured mortgage and, if any regular payments are to
be made, they are included in the qualifying ratios. Tax
liens may be eligible for inclusion in a refinance in some
cases.
C) Credit Alert Interactive Voice
Response System (CAIVRS): Lenders must screen all
borrowers using CAIVRS (except on streamline refinances).
If CAIVRS indicates the borrower is presently delinquent
or has had a claim paid within the previous three years on
a loan made or insured by HUD on his or her behalf, the
borrower is not eligible. Exceptions to this may be
granted under the following situations:
1)Assumptions: If the borrower
sold the property, with or without a release of
liability, to a mortgagor who subsequently defaulted
and it can be established that the loan was not in
default at the time of assumption, the borrower is
eligible.
2)Divorce: A borrower may be
eligible if the divorce decree or legal separation
agreement awarded the property and responsibility for
payment to the former spouse. However, if a claim was
paid on a mortgage in default at the time of the
divorce, the borrower is not eligible.
3)Bankruptcy: When the property
was included in a bankruptcy that was caused by
circumstances beyond the borrower's control (such as
the death of the principal wage earner or serious
long-term uninsured illness, etc.), the borrower may
be eligible.
CO-SIGNED LOANS: Also know as
contingent liability, exists when an individual would be held
responsible for payment of a debt should another party jointly
or severally obligated default on that payment. Unless the
borrower can provide conclusive evidence that there is no
possibility the debt holder will pursue debt collection
against him or her should the other party default, the
following rules regarding contingent liability apply:
1)Mortgage Assumptions: When a
mortgage applicant remains obligated on an outstanding
FHA-insured, VA-guaranteed, or conventional mortgage
secured by a property which has been sold or traded within
the last twelve months without a release of liability, or
is to be sold on assumption without a release of liability
being obtained, contingent liability must be considered
unless:
A) The originating lender of the
mortgage being underwritten obtains from the servicer
of the loan assumed a payment history showing that
mortgage has been current during the previous 12
months; or, b)An appraisal or closing statement from
the sale of the property supports a value that results
in a 75 percent loan-to-value ratio.
2)Co-signed obligations:
If the individual applying for a FHA insured mortgage is a
cosigner or otherwise co-obligated on a car loan, student
load, or any other obligation including a mortgage,
contingent liability applies unless the lender obtains
documentation that the primary obligor has been making
payments on a regular basis and does not have a history of
delinquent payments on the loan over the past twelve
months.
FUTURE OBLIGATION: If a debt
payment, such as a student loan, is scheduled to begin within
twelve months of the mortgage loan closing, the underwriter
will include the anticipated monthly obligation in the
underwriting analysis unless the borrower can provide evidence
that the debt may be deferred to a period outside this
timeframe.
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