Q&A – March 25, 2019

FHA – Water Test Requirements: Does FHA require a water test? I keep getting different feedback depending on the investor. [Mortgage Talking Point™ – Water Test Standards]

Answer: This is a tough one for me because I, too, heard about the back and forth between lenders after the 4000.1 was released and the pushback FHA received on this topic.  And I know that most investors won’t require a water test. If you call FHA (which I have several times), they’ll just put [...]

2019-03-25T08:55:59-05:00March 25th, 2019|

USDA – IRS Payment Plans: If a client has an IRS payment plan for the previous year and they will likely need one for the most recent year, how do we demonstrate that 3 payments were made? [Federal Tax Lien Requirements – All Agencies – Chart]

Answer: The three-month rule you are referring to applies to delinquent federal debt, and specifically refers to tax liens according to USDA. In your case there is no tax lien because the customer has set up a payment plan with the IRS, so the three-month rule technically would not apply.  I have seen underwriters in [...]

2019-03-25T08:56:26-05:00March 25th, 2019|

FHA – Minister-Clergy & Parsonage Income: Does FHA offer any guidance for qualifying with minister/clergy/housing/parsonage income?

Answer: FHA does not offer any clergy-specific guidance.  But they do offer a guideline on Employer Housing Subsidy (see below).  As you probably know, the unique situation with clergy is that their housing allowance is deemed income tax exempt by the IRS, and clergy can be an employee or self-employed depending on their circumstances.  If [...]

2019-03-25T08:54:08-05:00March 25th, 2019|

Fannie Mae & Freddie Mac – Business Debt Guaranteed by Borrower: Do I have to count a business debt in the DTI for a loan guaranteed by my applicant but paid for by his company? Debts Paid by Others Chart

Answer: This is something that originators come by quite often. If the borrower is personally obligated on the loan you mention, even though business debt, then you will need to follow the “business debt in borrower’s name” guidelines posted in our reference section.  If, on the other hand, the business debt is in the name [...]

2019-03-25T08:53:41-05:00March 25th, 2019|