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Valued Contributor
Posts: 1,379
Registered: ‎03-20-2015

Fannie Mae, FHA, & VA Guidelines

[ Edited ]

For those who would like to look up any FHA or Fannie Mae guidelines, I want to provide a link straight to 'em.

 

 

FHA (all 867 pages in one PDF) - I recommend using "ctrl + F" to find keywords

http://portal.hud.gov/hudportal/documents/huddoc?id=40001HSGH.pdf

 

Fannie Mae

https://www.fanniemae.com/content/guide/selling/b/index.html

 

Fannie Mae Selling Guides (guideline updates) in one PDF

https://www.fanniemae.com/content/guide/sel082515.pdf

 

VA

http://benefits.va.gov/warms/pam26_7.asp

 

 

Hopefully this is helpful to some out there!

Mortgage Loan Officer in Northern California - lending in The Golden State from the Oregon border down to San Diego!


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Registered: ‎09-28-2015
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FHA's discriminatory rule, Oct. 2015, student loan debt DTI at 2% monthly

There is a charter school in Houston, Texas that has many hard working teachers trying to keep current on the latest research based best practices for their classroom.  To do that, they had to return to college.  Many of them obtained a Masters degree in Education, and some teachers are still attending college.  I am one of those teachers.  I have obtained my MA in Reading so I can provide more research based help to my students who are struggling to learn English, as they have come to this great country from places like India, Asia, Africa, and South America.   
 
For the last 50 years, HUD has been helping many people live the dream.  At least that's what they say... I recently decided to buy a home.  I found a real nice realtor and applied for an FHA loan.  My credit was good, and I wasn’t worried about not qualifying.  I took an 8 hour class to learn about the home buying process and then to my surprise, I was told by my lender that my DTI ratio is too high and that I could not get an FHA loan.  He stated that a new rule from FHA mandates all student loan debt, regardless of deferral status, teacher loan forgiveness programs, etc., be factored in at 2%.  For me, this equates to $2,000 of additional DTI.  Sadly, this disqualified me from having a home of my own.  I was under the impression that FHA was supposed to help people like me.  Isn’t that why it was started in the first place?  Firefighters, police officers, and teachers are paid very little and undervalued to begin with, and now we are discriminated against because of student loan debt.
 
This new rule is discriminatory, and I am looking into available actions that I can take to get this rule/law overturned or changed.
 
Can anyone explain to me why it is not OK to discriminate against race, sexual orientation, etc., but it is fine to ignore the options that students have for loan repayment from Fed Loan Servicing, another Federal agency, and mandate all student debt be added, regardless of deferral status, teacher loan forgiveness programs, etc., at a 2% rate. 

 

A message I received from the National Association of Realtors:

"Thank you for your message.  I would send your note to answers@hud.gov and address it to Kathleen Zadareky (Biniam Gebre is no longer there) and your email will be assigned a number and tracked by HUD.  In the meantime, we will use your story as an anecdote when NAR advocates for adjustments to student loan debt calculations (which we told FHA we would be watching closely).  We have heard that FHA is considering lowering it to be consistent with Fannie and Freddie loans. "

 

Does anyone know how I can get more students with student loan debt to file a complaint with HUD?  Maybe if enough people complain, they will lower this dti rule?

I was told to email answers@hud.gov and address it to Kathleen Zadareky.  

 

 

 

 

Contributor
Posts: 119
Registered: ‎11-23-2014

Re: FHA's discriminatory rule, Oct. 2015, student loan debt DTI at 2% monthly

The reason they don't take forgiveness programs into consideration is because there is no guarentee you'll complete the program to qualify. You might change schools to teach at, and no longer be in a high need area, you may decide to have kids and leave the profession, etc...

 

I do think there should be a stipulation for people who have been in the profession for several years, and have returned to school vs someone fresh out of school in their 1st year of teaching - there is a difference. 

 

That said - as far as I'm aware, the 2% rule only applies to loans without a payment amount, so once you are done with school, and loans are in repayment, it wont be an issue. I have over $100k in student loans, am on IBR, and will qualify for public service loan forgiveness, and got my mortgage based on my IBR payments. It was a bit of a process and had to do a 3-way call with the mortgage underwriter and SL servicer while they verified each loan number and payment (some payments only $2). 

 

You could also chose to put school on hold while you buy, so that your loans will go into repayment and post a monthly payment on your credit report, and then after you've secured your mortgage, continue classes.

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Registered: ‎02-06-2012
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Re: FHA's discriminatory rule, Oct. 2015, student loan debt DTI at 2% monthly

When I had a work slow-down in the end of '13 and needed temporary some loss mitigation help, having an FHA loan helped not at all.  I don't even see the advantage now of having your loan federally insured.  Your bank is supposed to follow certain rules under HUD and FHA in a foreclosure situation which they totally don't and no agency will help you.  Skip the FHA.  It's useless as far as I can see.

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Posts: 10,649
Registered: ‎03-06-2010

Re: FHA's discriminatory rule, Oct. 2015, student loan debt DTI at 2% monthly

[ Edited ]

1449 wrote:

When I had a work slow-down in the end of '13 and needed temporary some loss mitigation help, having an FHA loan helped not at all.  I don't even see the advantage now of having your loan federally insured.  Your bank is supposed to follow certain rules under HUD and FHA in a foreclosure situation which they totally don't and no agency will help you.  Skip the FHA.  It's useless as far as I can see.


^^^This statement is a common fundamental misunderstanding of the purpose of an FHA loan.

 

FHA insures the loan to induce lenders to make high LTV loans to those borrowers that do not have large down payments but who do meet specific income, credit and debt criteria.  FHA is not a lender, but essentially insures payment of X% to the lender if the borrower defaults and loses their home to foreclosureThis particular insurance is a federal government program and not a private program like conventional loans have with PMI (Private Mortgage Insurance). 

 

FHA guidelines are relatively loose when you compare their allowed guidelines to those for a high LTV type conventional loan. FHA payments for mortgage insurance are lower for borrowers with lower credit scores.  A very large portion of the buying public would not qualify for a mortgage if there were no FHA loans available. 

 

FHA is not there to help the borrower directly at all, the program was never designed to protect the borrower - only to insure the lender in case of borrower default. FHA is there to protect the lender in case of borrower default so that more borrowers can qualify for an affordable mortgage. The lender still has to underwrite the loan appropriately and the borrower has to qualify for the loan. Lenders are allowed to make their qualifying criteria more strict than what FHA requires because it is their money they are lending. 

 

Note: if you default and the lender doesn't follow the guidelines set forth for foreclosure, that is the individual lender servicer & the investor that owns the loan that is at fault. Not FHA...  FHA just pays the lender up to 35% of the loan amount (approx) when the lender sells the property in foreclosure to make the lender whole. Do some research so you have a solid handle on what exactly you are committing to when you sign for your mortgage. 

 

 

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Re: FHA's discriminatory rule, Oct. 2015, student loan debt DTI at 2% monthly

Thank you.




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Posts: 1
Registered: ‎04-12-2014

Re: Fannie Mae, FHA, & VA Guidelines

Whoa... how did you manage that? Who was your lender? I am a medical school graduate (now doctor in an anesthesiology residency) who is in IBR with payments of $230. That's a far cry from the $4750 they want to include in my DTI ratio. I was told only fully amortized plans count. And then it was the greater of the loan payment amount or 1% whichever was higher. Right now struggling to try and bring up my mortgage FICOs (which show a whopping 60-70 point difference from the FICO8 scores) so I can get an MD mortgage. Bancorp South will do them at a 640 middle score. My FICO 8's are around 670. My FICO 2,3,4? 599-609. It really sucks. It appears to stem from some old medical collections that are inaccurate.
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Posts: 7,915
Registered: ‎07-03-2007
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Re: FHA's discriminatory rule, Oct. 2015, student loan debt DTI at 2% monthly


student1234 wrote:
 
 
This new rule is discriminatory, and I am looking into available actions that I can take to get this rule/law overturned or changed.
 
 

 

 

 

 



they changed the rule after finding that people with high student loan debt deferred were defaulting on loans at a high rate.

 

 

i think it would be discriminitory to ignore your student loans and not ignore someone else's credit cards they ran up to start their business. but this isnt discrimination

 

 

 

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Established Member
Posts: 24
Registered: ‎11-16-2014
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Re: Fannie Mae, FHA, & VA Guidelines

The problem with this world is everyone feels so entitled. You feel like a mortgage is a right and not a privilege. And the same types of people will expect handouts when they default on debt, too. I have to wonder why you incurred so much student loan debt from a masters degree? $2,000 payment? That's a LOT!
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Posts: 20
Registered: ‎05-26-2015
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Re: Fannie Mae, FHA, & VA Guidelines

Fannie Mae recently changed their rules again in the last month and will use your actual IBR monthly payment.

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