By Rebekah Radice
Mortgage loan originator
Benchmark Mortgage
Can a Client Have 2 FHA Loans?
Believe it or not, there are times when this scenario may be allowed
If you have clients who bought their house using a Federal Housing Ad- ministration (FHA) loan, can they
purchase another house using an FHA
loan without selling their current home?
probably not — but there are exceptions.
Before we get into specifics, let’s
look at some reasons borrowers might
need a second FHA mortgage:
• they don’t have the necessary credit
score for a conventional loan.
• they don’t have enough cash for the
downpayment required on a conventional loan.
• they need gift funds from a family
member to make a downpayment.
When any of these situations fits
your borrowers, FHA financing might
be their best option. But how can you
qualify them for a second FHA loan
when the guidelines only allow one FHA
mortgage at a time?
It depends on the nuances of their
situation. Each of the following circum-
stances may be allowable on a case-
by-case basis. As you read the list, take
note of how you can help borrowers
make their argument.
same exceptions noted above:
• relocation: this exclusion allows
borrowers to rent their current property and count 85 percent of the
monthly rent to offset their monthly
mortgage payment. they’ll be required to provide a one-year rental
agreement, including a copy of the
security deposit or a copy of the first
month’s rent check — or both.
• Increase in family size: this exemption allows a current property to be
rented with the same rules as relocation. In both cases, an appraisal
must prove your clients have at least
25 percent equity in the initial home.
• departing a jointly owned property:
Your clients may be exempt if their
divorce decree grants the home and
the mortgage to their ex-spouse or if
they can prove that the person who
will maintain occupancy has been
making the payments from their own
account — not a joint account — for
at least the previous 12 months.
Non-occupying co-borrowers, mean-
while, could be slightly easier to qualify
if they’re not responsible for making
payments on the first FHA loan.
Rebekah Radice, mortgage loan originator with
Benchmark Mortgage, is an active loan officer
and mortgage-industry speaker. A self-proclaimed social media junkie and avid blogger,
Radice has trained thousands of industry professionals on how to build and maintain their
online marketing presence. Radice has been
profiled in national publications and recognized
as an industry leader in the book Stilettos in a
Loafer World: Mortgage Women Who Walk Their
Talk. Reach her at (719) 761-1999, Rebekah@
RebekahRadice.com or RebekahRadice.com.
By Vince Parlove
president
Michigan Mutual inc.
Brighter;Days;Lie;Ahead
For dedicated originators, market improvements should soon pay off
It’s been a harrowing few years. We witnessed plummeting home values, extremely low interest
rates, record foreclosures, widespread
borrower distress and the collapse of
numerous financial institutions. At the
same time, loan originators have made
considerable strides meeting marketplace and regulatory challenges, including higher net-worth requirements
and new compensation rules.
It’s safe to say not a single loan originator agrees with all the new rules
and regulations — which, when combined, have imposed stringent underwriting policies and overlays — and
that most believe the net impact will
lead to higher costs for consumers.
Nonetheless, most quality mortgage
shops have adjusted to the new tasks
and costs, and the industry at large will
continue to voice its opinion about future rulemaking and legal wrangling.
Overall, we can have confidence that
many destructive forces have been
purged from the lending and financial
markets. Other issues — such as a huge
inventory of new, used and defaulted
homes — will take time to overcome.
Ultimately, however, the absorption of
that inventory will improve market valu-
ations and bring housing supply and de-
mand back into balance.
Vince Parlove is president of Michigan
Mutual Inc., based in Southfield, Mich. the
company purchases mortgages from independent mortgage brokers, banks and credit
unions. For more information, call (248) 203-
1340 or visit www.michiganmutual.com.
