Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans KY FHA LOANS

How are collections treated on a Mortgage loan in Kentucky for a FHA and Conventional Loan Approval?

Collection agency, Collections Accounts, collections fha loan, Credit and Collection, credit report, Credit Scores, fha collections, fha loan

Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans's avatarKentucky First-Time Home Buyer Programs | USDA, FHA, VA & KHC Loans

Collection Account Tips for Fannie Mae and FHA Loan in Kentucky. Do they have to be paid to get approved for a Kentucky Mortgage Loan?
Collection accounts  on the credit report can sometimes hurt your chances of getting approved for a Kentucky Mortgage loan in Two ways:
First, if collections are recent, they may drag down your credit score, and secondly, if large enough, sometimes they are required to be paid before closing and final loan approval
Collections accounts for a debt that have been submitted to a collection agency by the creditor generally due to nonpayment. Below are general tips and guidance on what the FHA and Fannie Mae Underwriters will require when collection accounts are reporting on a borrower’s credit report. Accounts that are reported as past due but not yet turned over to a collection agency must be brought current. These past due accounts are not considered…

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Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans KY FHA LOANS

Kentucky Private Mortgage Insurance or PMI

Credit score, Down payment, Fannie Mae, Federal Housing Administration, FHA, First-time buyer, Kentucky, Kentucky Housing Corporation, Kentucky-Louisville, louisville, Mortgage, Refinancing, USDA, VA loan

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Kentucky Private Mortgage Insurance or PMI.

via Kentucky Private Mortgage Insurance or PMI.

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Student Loans In Collections, What Can I Do to get Approved For A Kentucky Mortgage ?

Student Loans In Collections, What Can I Do?
If you have public student loans in collections, you really have three options to resolve it so it is not a CAIVRS issue.
1.      Pay it off in full – Not typically an option because very rarely do the clients have the funds to do so.
2.      Consolidation – Only takes about 90 days to consolidate and resolve CAIVRS issues. However, you push forward the last activity dates, DLA, and also introduce a new credit trade line that dilutes the length of the credit history. So you will normally see a drop in credit score.
3.      Rehabilitation – It is the slowest of all the options, but is the best thing for the clients’ credit scores. It is a 9 month commitment and once the client makes 9 consecutive payments, they will change the collection status to a good standing status. This will typically net a 40-100 point boost in the score depending on how many other collections are on the credit report.
If your client does not know who is servicing the student loan, they can contact the Student Loan Default Resolution Team at 1-800-621-3115 or visit the website at myeddebt.ed.gov
Bonus Tip: Private student loans do not adhere to consolidation or rehabilitation rules. If the client has private student loans in collections they will need to pay them off in full, or they will need to set up a payment plan on them. They will still remain in collections with a payment, but if you can get a qualified credit score you can push forward the loan including the liability payment towards the debt to income ratio.
As always, we bring you the best content so you can do what you do best, CLOSE LOANS! If you aren’t already sending us every credit challenged borrower you have, what is stopping you?
Guidelines for KY FHA, VA, USDA and VA Mortgage loans with Student Loans on A Credit Report:
Kentucky Fannie Mae or Conventional Guidelines for Student Loans:
  • If a monthly payment is on the credit report, the lender may use that amount for qualifying purposes.
  • If a monthly payment is on the credit report is incorrect, the lender may use the monthly payment on the most recent student loan statement
  • If the monthly payment on the credit report is zero, the lender must use one of the following options to calculate the payment for qualifying purposes
  1. Document the borrower is on an income driven payment plan and the actual monthly payment is zero
  2.  Use 1% of the outstanding student loan balance as the monthly payment
  3. Calculate a fully amortized payment using documented loan repayment terms
Kentucky FHA Mortgage Loans Guidelines:
Regardless of the payment status (currently in payment or deferred), the lender must use either:
  • The greater of:
  1. 1% of the outstanding balance; or
  2. The monthly payment reported on the credit; or
  •  Calculate a fully amortized payment using documented loan repayment terms
Kentucky USDA or Rural Housing Guidelines:
 
 
Regardless of the payment amount reporting on the credit, the lender must include the payment as follows:
  • A permanent amortized, fixed payment may be used in the debt ratio when the lender retains documentation to verify the payment is fixed, the interest rate is fixed, and the repayment term is fixed.
  • Payments for deferred loans, Income Based Repayment (IBR), Graduated, Adjustable, and other types of repayment agreements which are not fixed cannot be used in the total debt ratio calculation. One percent of the loan balance reflected on the credit report must be used as the monthly payment. No additional documentation is required.
Kentucky  VA Mortgage Guidelines for Student Loan:
  • If the borrower can document the student loan will be deferred 12 months from the closing date, the monthly payment does not need to be considered
  • If a student loan is in repayment or scheduled to begin repayment within 12 months from the closing date, the threshold payment amount must be calculated by  using 5% of the loan balance divided by 12 months
  • If the payment reporting on the credit report is greater than the threshold payment calculation amount, then the credit report payment must be used for ratios.
  • If the payment reporting on the credit report is less than the threshold payment calculation and the lender is using the lower payment to qualify the borrower then:
  1. A statement from the student loan servicer reflecting the actual loan terms and payment information must be included in the file.
  2. The statement must be dated within 60 days of closing
  3. It is the underwriter’s discretion to use the lower payment

As you can see, Fannie Mae or Conventional loans is the most lenient when it comes to qualifying for a mortgage loan with someone that has a lot of student loans on their credit report.

 

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HUD down payment assistance on Kentucky  FHA mortgages

 

The Department of Housing and Urban Development announced this week that it is issuing new rules for down payment assistance on mortgages insured by the Federal Housing Administration. Click the headline for a full breakdown of which rules are changing and why.

Source: HUD announces new rules for down payment assistance on FHA mortgages

The new rules are laid out in an FHA mortgagee letter titled “Downpayment Assistance and Operating in a Governmental Capacity.”

According to HUD, this “clarification” of the current documentation rules “should assist mortgagees in determining whether governmental entities providing gifts or secondary financing, or both, towards borrowers’ MRI are doing so consistent with FHA requirements.”

As the FHA states in its mortgagee letter, the current FHA handbook requires mortgagees to confirm that a “governmental entity is operating in its governmental capacity but, except for requiring a source of funds letter, does not specify the necessary documentation that demonstrates support for such a conclusion.”

According to HUD, that lack of “necessary documentation” is leading to some unnamed “entities” skirting the rules.

“It has come to FHA’s attention that certain Governmental Entities may be acting beyond the scope of any inherent or granted governmental authority in providing funds towards the Borrower’s MRI in circumstances that would violate Handbook 4000.1, the National Housing Act, and is contrary to established law,” the FHA said in the mortgagee letter.

In order to remedy this situation, the FHA is now stating that its current documentation requirements need to be “clarified to provide Mortgagees with specific guidance regarding documentation that will give greater assurances that the standards for providing the MRI have been satisfied by the Governmental Entity.”

According to HUD and the FHA, the new rules took effect on April 18, 2019.

To read HUD’s announcement of the rule change, click here.

And for a full look at how the rules are actually changing and what documentation will now be required, click here.

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

 

American Mortgage Solutions, Inc.

10602 Timberwood Circle 

Louisville, KY 40223
Company NMLS ID #1364

 

Text/call:      502-905-3708

 


email:          kentuckyloan@gmail.com

 

https://www.mylouisvillekentuckymortgage.com/

 

 

 

 

 

Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans KY FHA LOANS

Four Things Not to do When Getting a Mortgage

We discuss various things such as credit, income, assets, family, and future plans. During these discussions, I have discovered that not only must I tell the borrowers what to do, I need to place a lot of emphasis on what not to do.

1) Do not apply for credit cards while waiting to be approved for a mortgage. Most lenders will “monitor” your credit profile during the process or recheck your credit report before closing. More available credit can mean a lower credit score and a higher DTI (debt to income ratio used to determine if you qualify to buy – money coming in verses money going out). This can also delay a closing because the future homeowner may have to provide a statement from the account to the underwriter.

2) Do not be late on any payment. If you are late on a payment prior to closing, your score will drop. I saw one this morning drop from 679 to 582. Crazy! An underwriter will not approve your home loan if you cannot show the ability to pay a bill on time.

3) Do not quit your job. If anything changes regarding your employment, tell your loan officer. One of the last things a lender does prior to closing is verify employment. No job. No loan. This has actually happened.

4) Do not accept cash gifts and deposit them into your bank account. Cash gifts are very difficult,if not impossible to prove. If you are receiving a gift in order to make the down payment at closing, talk to your loan officer first. He or she can make your life a lot easier with just a little guidance and direction.

I know that the four items above may seem simple, but what if the buyer does not know and goes down that path? It is painful to have worked so hard to buy the home of your dreams only to have it taken away due to one bad decision. I work for one of the best mortgage companies in the country and I help people get a home loan every day. But it is also my job to inform inform inform.

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A credit card, the biggest beneficiary of the ...

I spend a lot of time advising potential home buyers regarding homes in Georgia.  We discuss various things such as credit, income, assets, family, and future plans.  During these discussions, I have discovered that not only must I tell the borrowers what to do, I need to place a lot of emphasis on what not to do.

1)  Do not apply for credit cards while waiting to be approved for a mortgage.  Most lenders will “monitor” your credit profile during the process or recheck your credit report before closing.  More available credit can mean a lower credit score and a higher DTI (debt to income ratio used to determine if you qualify to buy – money coming in verses money going out).  This can also delay a closing because the future homeowner may have to provide a statement from the account to the underwriter.

2)  Do not be late on…

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