Kentucky FHA, VA, USDA Government Underwriting Guideline Updates
Effective immediately, for all loans, the FHA, VA, and USDA Underwriting Guides have been updated with the below information.
USDA Updates to HB-1-3555
Delinquent Federal Debt
All borrowers must be screened using HUD’s Credit Alert Interactive Voice Response System (CAIVRS) except those borrowers financing a Streamlined-Assist or Streamlined Refinance.
CAIVRS will return the following results:
A: Approved by CAIVRS (no issues exist)
B: Multiple cases from one or more Federal agencies
C: Claim filed
D: Default on loan
F: Foreclosure of loan
J: Judgment filed
The only acceptable result is A: Approved by CAIVRS (no issues exist). Borrowers with delinquent federal non-tax debt are not eligible for a USDA loan until the debt is paid in full or a release of liability is documented.
The effective date of the appraisal report must not be more than 180 days of the Note date (previously 150 days).
Added that open and unpaid non-federal judgments are eligible when the borrower is not delinquent and has a payment arrangement with the creditor and has made regular and timely payments for the three (3) months prior to application date.
This update clarifies that the borrower cannot be delinquent, not previously specified.
Court-Ordered Child Support
Below highlights the current and new guideline.
Delinquent court-ordered child support must meet one (1) of the following:
Must have an approved repayment agreement with three (3) timely payments made prior to closing;
The arrearage is paid in full; or
A release of liability is documented.
Delinquent court ordered child support, subject to the collection by an administrative offset (allows for federal payments in order to collect past due child support) must meet one (1) of the following:
Must have brought payments current prior to closing;
The debt is paid in full; or
A release of liability is documented.
Multiple Parcel Requirements
Clarified that when multiple parcels are not adjoined, the parcel without a residence must be non-buildable (such as waterfront properties where the parcel without the residence provides access to the water) and the entire property will contain only one (1) dwelling but may have non-residential, non-income producing buildings, such as a garage.
Accessory Dwelling Unit (ADU)
Clarified that an ADU should support household members and not create potential rental income.
Individual Water Supply System (Well)
Updated the requirement that a valid water test from the local health authority or a lab qualified to conduct water testing in the jurisdictional state or local authority must be obtained and that the water analysis report must be no greater than 150 days old as of the Note date.
FHA and VA Underwriting Guideline Updates and Clarifications
Maximum Number of Borrowers
The FHA and VA Underwriting Guide has been updated with the maximum number of borrowers allowed for submission to DU or LPA.
Up to four (4) borrowers may be on a loan application and submitted to DU.
Up to five (5) borrowers may be on a loan application and submitted to LPA.
If the number of borrowers exceeds four/five, the loan must be manually underwritten.
Inquiries and Undisclosed Debt (FHA)
Updated the FHA Underwriting Guide to require the following: When the credit report reveals a significant debt not listed on the application, a written explanation from the borrower addressing the omission is required. The absence of a written explanation from the borrower may render the loan ineligible.
Future Income (VA)
For Future Income, when a borrower’s employment will begin after the Note date, employment must begin within 90 days after the Note date (previously 60 days).
Joel Lobb Mortgage Loan Officer Individual NMLS ID #57916
American Mortgage Solutions, Inc. 10602 Timberwood Circle Louisville, KY 40223 Company NMLS ID #1364
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org).